Organization of marketing - Aquaculture products

Organization of marketing

As mentioned earlier, the simple system of the producer selling directly to the consumer exists only in small-scale rural aquaculture, especially in developing country situations. Medium-scale operations, raising high-valued species for urban restaurants, also undertake direct delivery of products when the farms are located in the suburbs or at short distances from the points of delivery. In other cases, marketing is usually done through intermediaries or middle men. Aquaculture products have to be distributed in as fresh a condition as possible, as consumer preference for farmed products is often based on quality and freshness. It is seldom possible for producers to undertake distribution and sales themselves, in highly dispersed distant markets. So it becomes necessary to use middle men or wholesalers, even though this will result in higher retail prices and/or lowering of the profit for the producers. Very often, marketing of fish and fishery products is dominated by middle men and market entry by individual aquaculture producers may prove very difficult. Also in areas where aquaculture products are considered to be of inferior quality or where there are prejudices against their consumption, as in the case of fish grown in sewage-fed ponds, there may be some disadvantages in making use of traditional fish marketing channels.

Another reason why many producers use the traditional fish marketing system is the opportunity to make up a deficient supply of a particular species from capture fisheries during off-seasons. As mentioned, in a harmonized development of fisheries aquaculture may be seen as a means of meeting demand for fresh products during off-seasons or filling deficits in supplies from fishing. It may be a deliberate policy to avoid any semblance of competition with capture fisheries to ensure that aquaculture can develop within the fisheries sector. It is often held that the farming cost of a species that is important in capture fishery should be such that it can be sold at a lower price than the current market price of the species. The reasoning is that if the availability of a species is improved as a result of successful farming, the product price will fall. If the technology does not allow it to withstand such price reduction, the farming enterprise can soon collapse.

In areas where aquaculture has developed to a significant level, the general trend now is to educate the public on the quality of farmed products and use this as a selling point. Many countries have established specialized sales federations, cooperatives or similar organizations to reduce the number of intermediaries involved, harmonize marketing within the country and compete effectively in export markets. Such organizations are able to under-take useful promotional and publicity programmes and thus improve sales. They are also able to regulate production according to market demand and avoid gluts in the markets and the consequent fall in prices. Companies undertaking large-scale farming can, of course, and do organize the distribution of their products directly to major markets and to consumers. If the primary producer sells to a small number of large customers, as for example major restaurant chains, which place large orders at longer intervals, it should be possible to minimize or even eliminate the involvement of intermediaries. There will also be situations where a producer finds it not advantageous to use established distribution channels and attempts to use an alternative system. Chaston (1983) cited the example of the Scottish salmon aquaculture industry, where some processors decided to avoid the traditional wholesale/retail distribution system and started marketing their product directly to private households through mail order.

The efficiency of the physical distribution is of special importance in being able to utilize the inherent advantages of aquaculture products. The majority of aquaculture products are sold fresh or on ice. This requires delivery to the point of sale in as short a time as possible. Depending on the time required for transport and delivery, fish may be gutted or even filleted, and shrimps headed, before transport. Besides preventing deterioration of the product, considerable savings are made in shipment costs. Depending on consumer requirements, fish like salmon may be smoked and packed for transport. The success of the market depends on the speed with which handling, processing, packing and transport can be accomplished. The success of Norwegian salmon in export markets in the USA, Europe and Japan is ascribed to the incredibly short interval between harvesting and delivery at the markets. Obviously air transportation is the only means of achieving this.

When the product needs more elaborate preservation and processing, especially forexport, it is generally carried out by specialized processing and exporting companies. Either the producers deliver their harvests to the processor or the processor arranges to buy the product at the farm gate and transports them to the processing plant. Some of these industrial buyers may not actually do any special processing, but may only be involved in sorting and packaging according to size and quantities preferred by customers; they then distribute the finished products to grocery stores or super-markets, marking up prices to compensate for the services rendered.

Many of the better-organized marketing arrangements referred to in this section are rare in developing countries, even though overall aquaculture production in these countries is much higher. However, conditions are gradually changing, with large-scale organized farming becoming more common. The formulation and implementation of a suitable marketing strategy would greatly assist the development of a profitable industry in these countries.