Papua New Guinea in the Marine Aquarium Trade

History of the Global Marine Aquarium Trade & PNG

One of the few economic and non-destructive opportunities now available to reef communities in the Pacific is the marine aquarium trade. This rapidly growing trade provides the highest rate of return per unit of effort, to collectors (fishers) of any activity on the reef. In the past the problems associated with this trade in the wider Pacific region include overexploitation of coral and fish resources, destruction of reef habitat, and the dominance of unfair or exploitive business practices. Most of the primary issues involved in reef destruction and resource overexploitation can be traced back to poor local resource management and fishing/collection practices, poor Government oversight and management, and low prices paid to fishers for an ever decreasing resource base and rising costs.

The marine aquarium industry in the US, Europe, and Australia is under pressure to reform itself and is taking direct steps to do so. Although it is recognised that the marine aquarium trade has a much smaller impact on a reef than other activities such as coral mining for road construction, or the removal of forest cover in a surrounding watershed and even food fisheries through the use of dynamite and other destructive fishing practices, all negative impacts on a reef contribute to its overall decline.

Through their buying decisions, a growing segment of marine aquarium industry is seeking and supporting sustainability throughout the entire market chain from reef to retail. Certification programs such as that designed by the Marine Aquarium Council (MAC) are an attempt to use market forces to support equitable human development and sustainable resource management. The global market demand for sustainably collected organisms is growing rapidly. Economic, social and legislative pressures are increasing this demand.

Papua New Guinea is the largest marine resource area country left in the world that does not have an active formal marine aquarium trade. Due to PNG’s geographic location and extended reef area around the country, there is potential to sustainably, equitably, and profitably develop this industry. PNG also has an unknown number of endemic species and varietals of regional species – adding further industry viability support. In most other supply countries, collection areas and communities have suffered environmental and social problems because the industry was unplanned, untrained, unmanaged, and inequitable. PNG’s resource tenure systems lend themselves well to best resource management practices that can be supported by sustainable marine aquarium organism collection programs and certified industry-buying decisions.

The marine aquarium trade  has traditonally been price driven, with exporters, importers, retailers and hobbyists constantly seeking out a lower priced animal with high animal mortailities considered part of the cost of doing business. Exporters were and continue to be the primary source and promoters of the use of cyanide in the collection of fish especially in PNG’s two largest competitors, Indonesia and the Philippines. Marine aquarium fish from these countries are generally assumed to be cyanide caught and of poorer quality by the global market. The marine aquarium products from Pacific island countries (considered to be of better quality and not cyanide caught) can and generally do command higher prices but are more limited in species mix with some countries relying heavily on just a handful of species to drive their markets.  PNG is very lucky in that sense, it’s resource base is equal to or greater than that of it’s two primary competitors, Indonesia and the Philippines.

No supply country actively promotes the trade in their marine aquarium products internationally. Some companies do (Fiji grown or Fiji harvested) but no Governments do with the exception of Papua New Guinea. Under the SEASMART Trade Management System, all marine aquarium private sector companies operating in PNG and elsewhere in PNG’s market chain will be able to take advantage of PNG’s country branding effort. This will require comnsiderably stronger management and monitoring capacity than is presently in National Fisheries Authority (NFA). The more this becomes a turnkey industry where the marketing, husbandry, handling, etc. systems and infrastructure are set up prior to private sector direct involvement, the easier it will be to maintain the quality control required to maintain PNG’s country brand.

In no major supply country do the local fishers have an equity stake in the most lucrative part of their country’s trade, export. Most export companies and all of the large ones are primarily foreign owned or owned by non-fishers or resource owners. In most countries, the trade is exploitive or highly exploitive of the fishers and resource owners/managers. In PNG’s two primary competitor nations, the Philippines and Indonesia, prices to the fishers have stayed the same or risen only slightly over the past 20 years despite local currency devaluation and other rising cost factors. This undervaluing of fisher harvests leads to a vicious cycle of overfishing, use of destructive fishing practices, and black markets to make up for the lower income the fishers receive for their efforts. PNG’s legally supported systems of resource rights and traditional land tenure enable PNG to take a different road to a more equitable trade development model.

A number of importing countries (US and in the EU) are considering full or partial bans on the import of marine aquarium organisms unless they are from a proven sustainably managed source. Some of the major issues of concern to these countries include the need for science-based fishery area management plans, the non use of destructive fishing practices, and the creation of suitable species lists to limit the trade in dangerous or endangered marine aquarium species. The marine aquarium trade system we are proposing PNG adopts will more than meet all these requirements and concerns.

 

Extent of the Global Marine Aquarium Trade

The United Nations (United Nations Environmental Program(UNEP)/World Conservation Monitoring Center (WCMC)) issued a report in 2003 which provides the best available data on the Marine Aquarium Trade & Market:

  • Over 20 million tropical fish from 1471 species exported into the United States in Europe annually.
  • Between 9 and 10 million other organisms, like molluscs, shrimp, anemones, etc. traded annually, comprised of some 500 species.
  • Up to 12 million stony corals exported to U.S. and EU annually.
  • Trade in marine aquarium life is between $200 to $330 million USD annually.

 

It is estimated that the Philippines and Indonesia supply approximately 80 % of the worlds’ marine aquarium life; mostly to the U.S. and Europe.  Over the past 10 to 15 years however, several other countries, (including the U.S.) have taken advantage of their coral reef resources and are currently involved in the marine aquarium life trade.  Some of these supply sources, primarily other Pacific Island Nations, have built a good reputation by providing higher quality livestock to an ever more demanding market.

Cyanide use along with over collection, poor handling and transport of marine aquarium life, threaten the sustainability and future of the trade where these destructive practices continue. This however does “open up the door” for more competition in a market which has been strongly dominated by only two countries. Better fisheries management, along with the ability to produce a higher quality, brandable product at an affordable cost in sufficient volumes, are some basic factors that would allow a country like PNG to become a serious competitor in the global marine aquarium trade.

 

Brief History of Two Other Coastal Fisheries in PNG

PNG was described as the “last frontier” in the mid 90’s for the live fish trade, where primarily Hong Kong operators had largely exhausted the SE Asian resources up to our door step, and PNG was still considered pristine. The two waves of the trade in PNG, interspaced by a several year moratorium on the fishery, have shown that despite all commitments, restricting harvesting to resource owners and the best intents, the foreign and local interests involved have promoted the use of foreign collectors, the extensive use of cyanide, and destructive fishing practices. Many of the same destructive, inequitable and unsustainable practices were also being carried out in the beche de mer trade, leading to a nationwide three-year moratorium on the harvesting and sale of all beche de mer species.

The live food fish and beche de mer trades, despite strong legal restrictions and two of the best Management Plans in place, have proven to be unmanageable and unsustainable, heavily foreign dominated, despite being the most regulated fisheries on paper. The reality is the management regimes in place are not working and prior to the moratorium, both industries had suffered from repeated environmental and economic fraud and abuse, leading to continued boom and bust cycles of development. These vicious boom-bust cycles have existed since pre-colonial times and are being perpetuated up to today by the poor business practices of many of the foreign owned and or managed, private sector companies involved. The future of PNG’s reefs and coastal community economic advancement remains in the balance.

 

Destructive Potential of an Inequitable, Poorly Monitored & Managed Nature of the Trade Marine Aquarium Fishery in PNG

The marine aquarium trade globally is typified by similar unsustainable practices, habitat degradation, and destructive and dangerous fishing methods, often evolving as a community level extension of the larger live fish trade. Organism mortalities are high with volumes of 15-45% shipping deaths are not unusual. Our Asian neighbor’s reefs are widely decimated and once again PNG is the “last frontier” of an industry, and the remaining corner of the most diverse reef ecosystem in the world; – the “coral triangle.”

NFA and PNG are under pressure to develop this industry quickly, utilizing old, unmanageable, and potentially destructive business models involving some companies with dubious or limited track records.  The SEASMART Program is working with committed private sector companies, NFA, Provincial fisheries, fishers and their communities to break this cycle of undue haste to open an industry before it is ready, and the dependence on and the exploitation by unscrupulous companies and individuals.

If not properly set up and managed in Papua New Guinea, the marine aquarium trade will be highly destructive to the resource base and its local resource owners. It can and will go the way of the beche de mer and live reef food fish trades with massive resource depletion, destructive fishing practices, deceptive marketing, inequitable development, low ball pricing, community and fisher dissention, local and national level corruption, and local and national industry collapse. A new business model is needed for Papua New Guinea. EcoEZ Inc. and the SEASMART Program are providing this new model and a way forward in PNG’s coastal fisheries development.

 

Benefit Potential of a Well Monitored & Branded Marine Aquarium Trade (and Other Artisanal Fisheries) in PNG

One of the few economic and non-destructive opportunities now available to reef communities in the Pacific is the marine aquarium trade. This rapidly growing trade provides the highest rate of return per unit of effort, to collectors (fishers) of any activity on the reef. In the past the problems associated with this trade in the wider Pacific region include overexploitation of coral and fish resources, destruction of reef habitat, and the dominance of unfair or exploitive business practices. Most of the primary issues involved in reef destruction and resource overexploitation can be traced back to poor resource management and collection practices, poor Government oversight and management, and low prices paid to fishers for an ever decreasing resource base and rising costs.

The marine aquarium industry in the US, Europe, and Australia is under pressure to reform itself and is taking direct steps to do so. Although it is recognised that the marine aquarium trade has a much smaller impact on a reef than other activities such as coral mining for road construction, or the removal of forest cover in a surrounding watershed and even food fisheries through the use of dynamite and other destructive fishing practices, all negative impacts on a reef contribute to its overall decline.

Through their buying decisions, a growing segment of marine aquarium industry is seeking and supporting sustainability throughout the entire market chain from reef to retail. Certification programs such as that designed by the Marine Aquarium Council (MAC) are an attempt to use market forces to support equitable human development and sustainable resource management. The global market demand for sustainably collected organisms is growing rapidly. Economic, social and legislative pressures are increasing this demand.

Listed below are the potential benefits of this trade to PNG dependant on specified cost and management factors being in place. Factors such as aquarium fishery management areas with Management Area Plans (MAPs) being set up and properly managed; equitable export business models with fisher equity stakes; effective certification, monitoring and reporting systems; organism traceability; “choke points” established for product export monitoring; effective and reliable funding; consistent Government commitment and support; ongoing research and resource assessment; and reasonable air freight pricing and market destination access (the two largest inhibiting factors in industry growth in PNG).

A properly managed marine aquarium trade in PNG will:

  • be worth a potential sustained worth of K100 million (US$34 Million) annually (from an annual global trade in marine aquarium animals estimated to be worth US$200-330 million – UNEP/WCMA 2002);
  • employ 10,000’s of rural people in an industry that is financially supportive of local traditions including customary resource ownership, political and social structures, and local work patterns allowing for less cultural disruption of participating communities;
  • build on and strengthen traditional customs of resource ownership and land tenure through market international support;
  • create conditions that are supportive of local community ownership and management responsibility of their marine resources;
  • produce community based management systems with direct market support providing for immediate payments of a community’s efforts in sustainable management and resource conservation;
  • offer coastal fishers an alternative or preferably an additional livelihood (from beche-de-mer and food fisheries) that is sustainable, and socially and economically viable;
  • restore damaged coastal marine aquarium fishery habitat (the same habitat of beche-de-mer and live reef food fish species);
  • develop newer aquarium community-based aquaculture and mariculture enterprises and markets;
  • produce a fisheries management, monitoring, branding, and marketing system that is easily applicable to other artisanal fisheries such as beche de mer and food fish trades;
  • provide a model to the world of what this trade can be like – equitable, sustainable and profitable; and
  • impart PNG a global leadership and market role promoting and supporting a more effective, efficient and cost effective way of indigenous business development, ownership and management.

PNG Way to Best Business Practice & the Need for Effective Branding

In order to be successful in its attempt to develop a sustainable, equitable and profitable marine aquarium trade, PNG will need to differentiate its products from those of its competitors in ways that allow for profitability throughout the market chain, sustainability of the resources base, and the stable economic development of the fishers and their participating community FMA’s. Sustainable prosperity is the SEASMART Program’s goal for participating fishers and their communities.

PNG’s competitors (Indonesia and Philippines) operate primarily as supplier of low cost, lower quality fish and corals. Both countries “Brands” have been devalued over time through the widespread use of destructive fishing practices, poor resource management, inequitable distribution of financial benefits of the trade, and bottomline poor quality and high mortality rate of their products. They’re marine aquarium products are sold without the added description of where they come from because it would have the effect of lowering even further the value of their product. Countries with higher standards such as Fiji and PNG, have their country’s names listed along with the species names being sold, thus able to command a higher price for many species.

Maintaining brand integrity is not easy and must be monitored and managed like any other important business component. Once the value of the PNG brand becomes devalued, a vicious cycle results of lower prices to both fishers and importers and increasing laxity in standards resulting in an ever inferior product commanding ever lower prices or prices that never change despite long term negative currency fluctuations. Both the Philippines and Indonesia operate this kind of industry. Both countries will find it very hard to restore lustre to their brands and compete with PNG for the market we are initially targeting.

Our ongoing PNG branding efforts are proceeding very well. PNG marine aquarium life has a solid industry reputation now for producing high quality fish at a reasonable although not cut rate prices. We have a series of articles on the PNG SEASMART Program coming up with a very prestigious industry magazine, “Coral.” These articles will be accompanied by articles in other frontline industry magazines like Tropical Fish international and FAMA. Our market outreach has gone into high gear with additional outreach and positive feedback coming from the SEASMART program’s Facebook page, Youtube channel, and blog site.

It is the intention of the SEASMART Program to lead PNG into global dominance of this trade. That is our longterm goal. It is an achievable one if we plan carefully for the long term; provide adequate funding; train trainers, fishers and others well; incorporate commited private sector investment efficiently; monitor effectively; and market aggressively.  To do this, however, will take concentrated Government commitment and support for up to ten (10) years or more if new fisheries are brought in to ensure wide coverage of the PNG SEASMART management and production system.

Economic & Environmental Benefits

The world’s coral reefs are now under extreme pressure and are drastically reducing in size each and every year. Yet, marine vertebrates (fish), invertebrates and corals are fished and removed from shrinking resources and transported to aquarium centers (businesses) around the world. They are then sold to marine aquarium hobbyists who display and maintain these corals and fish in their aquariums.

As a note, people keep and maintain marine aquariums gives them great pleasure and expands their knowledge regarding these organisms. According to the Global Trade Analysis by WCMC, a Global Marine Aquarium Database, 20-24 million fish are traded each year (of which there are 1,470 species). Major exporters are Philippines, Indonesia, Solomon Islands, and Sri Lanka. The marine aquarium industry continues to increase by 10%-30% per year. While 11-12 million of corals are traded each year.  The major exporters are Indonesia and Fiji while the main importers are U.S, Europe, Japan, and Canada. Since 1988, the trade in live corals has increased to 400%.  But the major issue of the trade is destructive and overfishing; use of poisons, removal of reef base (live rock/habitat degradation), unsustainable fishing, poor husbandry/handling practices (high mortality rates), diving from deeper reefs, and largely unregulated trade.

The fishing and the exporting of marine aquarium organisms have numerous benefits that are often overlooked by those criticizing the trade and the hobby. Due to the bad reputation garnered by most of the exporting countries, many perceive that the marine aquarium industry is damaging to the reefs. However, it is arguably one of the least threatening of all threats to coral reefs and also the most economically beneficial. The marine aquarium trade creates jobs and income in rural coastal areas that have limited resources and economic options. The marine aquarium organisms are the highest value-added product possible to harvest sustainably from coral reefs.

In addition, public and private marine aquariums in developed countries depend on wild harvested marine aquarium organisms for 98 percent of the reef animals in their tanks. Often these marine aquariums are a primary source of knowledge about coral reef organisms and ecosystems and their existence contributes to conservation awareness for coral reefs worldwide.

Alternatively, the loss of the marine aquarium industry would mean less jobs and less income for the family. This could leave rural coastal areas open to more destructive uses which in turn could increase environmental degredation. Eliminating the communities high value-added aquarium fishery would contribute to the poverty that drives people to use destructive fishing practices, such as blasting, to gather food for the community.

For local communities and fishers to benefit economically from their marine resources over the long-term, fishers must harvest and handle the marine aquarium organisms in a responsible manner to ensure that the coral reef is not damaged or overharvested.

Competitive Advantages of PNG in the Marine Aquarium Trade

All of the below advantages are covered in greater depth throughout this report.

Pristine Marine Environment

One of PNG’s great advantages is its coral reefs and the health of many of its reefs and other marine aqarium life habitats. While many places in PNG are not pristine, especailly those closer to urban centers, they are in much better shape than its main competitors. In some areas they are spectacular…the best in the world. The SEASMART program restores and maintains the health of these reefs. This is simply good business sense…healthy reefs = healthy industry.

Resource Abundance

In addition to the extent of pristine or largely undamaged conditions of its reefs, PNG in some places has an overabundance of marine aquarium life. In areas close to urban centers or other markets, the populations of larger, predatory food species has diminished allowing for a burst in populations and habitat of many aquarium species. Species found globally at much deeper depths are found regularly at less than 15m in depth (PNG SEASMART Program declared free dive limit). In total number of marine aquarium species, PNG matches or exceeds its two biggest competitors, indonesia and the Philippines. The high number and diversity of species in the country also provides an opportunity for discovering nerw species or unusual color morphs. Our ability to provide the market with examples of both of these, has already driven interest up in PNG product.

Close Proximity to the Resource

Papua New Guinea despite other cost impediments, can support and nurture a viable marine aquarium trade because physical access to collection areas is relatively easy. Compared to PNG’s primary competitors, access to marine aquarium life by local fishers is very easy and does not require much distance to access. Whilst our competitors must sometimes travel out for up to week looking for fish, or have to dive 30’ or more to find a certain specimen, PNG fishers have an abundant supply base right off the front of their communities with most market desired organisms to be found within 5’ meters depth. Both of these factors allow us to offset other higher cost factors such as transport and animal husbandry (careful in-sea screening, animal care, etc.)

Advantage of Resource Owner Participation

Papua New Guinea’s system of traditional resource rights is the key component to success of this new industry and PNG’s country branding efforts. The system of tradtional customary resource rights allows for the development and implementation of more effective management, monitoring and harvesting systems than would be the case if PNG’s marine natural resources were exploited through the “commons” system as are the Philippines and Indonesia. The SEASMART management model is based on active and commited local community management and support, building on traditional local management structures,  backed by good scientific resource data, and excellent training ensures that access to an area’s resource wealth is by and through the local resource owners. No fishers from outside an FMA are allowed to fish for the marine aquarium life market in that FMA even if SEASMART trained. A community owned Fishery Management Area (FMA) is the base management unit for the entire trade in PNG.

Sustainable Development & Use of Resources

Sustainability of PNG’s marine aquarium natural resource base is key to the success of the industry in PNG and is at the center of the SEASMART Programs international promotions. Unlike other indusrtry particpants who lay claim to sustainability, PNG can actually prove their claim and have the traceability and management mechanisms to back it up. This industry should last indefinitely and PNG’s resource extraction capacity should remain undiminished. It is not PNG’s reosurce base that this the issue, it is maintaining and improving it that are the real challenges. This is where the SEASMART program training, restoration, monitoring and management systems are most effective.

World-class Post-harvest Care for Products

PNG exports in 2010 have crossed over to a very unusual threshold in this trade, low organism shipping and holding mortalities. Since the beginning of 2010, we have managed to average under 1% mortlaity for most shipments. This is an unheard of statistic for most of the industry and only a dream for most exporters in Indonesia and the Philippines. This was made possible by a number of reasons including including but not limited to practical and effective fisher training, tight screening, superior handling and husbandry practices, and state of the art facility equipment that keeps the water at an even and safe salt content and temperature, disease free and mineral balanced. This combined with our improved packing and shipping systems allow for extraordinarily low organism mortality rates and high customer satisfaction rates.

Project Implementation

How We do it

The marine aquarium trade has traditionally been very price driven with little interest in sustainability. Exporters lack of interest was supported by the purchasing decisions made by importers, retailers and in turn the hobbyists. The result is a trade driven to desperate and destructive actions in many supply countries. Exporters are the number one source of cyanide for fishers in this trade as they were for the live food fish trade in PNG.  Fishers are spending longer and longer times out, needing to travel farther away, and do deeper dives to be able to make the same small amounts of money they did even 2-3 years ago. Their resource bases have been overfished, destructively fished, and driven to their present position by the desperation of local fishers and the low prices offered by the trade (fisher prices have not risen in Philippines for example for the last 20 years). This is the future of this trade in PNG if it is allowed to develop without strong management and monitoring especially if new investment is not carefully screened before licenses given.

Sustainability, equity and cost (affordability) are interdependent and each will not happen without the other

It is the intent of EcoEZ Inc. and the SEASMART program to ensure that that history is not repeated in PNG and that PNG is given a fair chance to succeed at a trade under its own rules.  The key PNG branding components of the SEASMART Program are as follows:

  • Sustainability: In almost all natural resource based, non-extractive, industries, proving the sustainability or growth towards sustainability of your product is of increasing importance to the marketplace. This is also true of the marine aquarium industry, which is also faced with additional threats of closure or extreme management measures by importing countries. The marine aquarium trade in most countries of operation is not sustainable and has traditionally been a destructive influence (not as severely though as many food fisheries, and land based pollution or sedimentation) on the environment and people’s lives albeit an important source of livelihood for fishers. PNG’s developing marine aquarium trade has working solutions for almost all sustainability issues faced by local FMA resource owners. Being able to prove that an organism comes from a sustainably managed source requires robust systems for resource surveying, mapping and planning; fisher training and support; species TAC setting by individual FMA (an FMA is the base unit of management); fishing to order; world class facility equipment and infrastructure; and traceability and third-party certification to prove all claims of sustainability.
  • Equitability: Throughout the world, the marine aquarium trade as with most uncontrolled or partially managed in-shore marine fisheries (the majority) is not owned or managed by the fishers themselves or in the case of PNG, the resource owners. Nowhere in the world are local resource owners in charge or managing their own resource base nor do they have a major or even minor ownership stake in the export side of the industry. PNG has a different model, one that pays fishers better, more consistently and with minimal or no waste of time and resources through our collect to order system. It is proposed that all export companies be required to maintain a 51% local ownership structure. Fishers, through the creation of a Fishers Trust, will maintain a 25% ownership stake in all PNG licensed export companies (this 25% can be counted against the 51% local ownership requirements. Value of ownership stake based on the value of product sold to the exporter by an individual fisher over the previous year.
  • Affordability: PNG marine aquarium life, although more costly in some ways to produce and market such as transport costs, is blessed with an abundant and productive resource base located close to local resource owners and fishers allowing for a much shorter market chain than is available in most other parts of the world including and especially PNG’s main competitor countries, the Philippines and Indonesia. Since PNG has a strong reputation now for producing very high quality marine aquarium life, we are able to maintain a pricing mechanism that is on the higher end of the market. Most of our product, though, is comparably priced with Indonesia and the Philippines or the Solomon Islands and Fiji. We are also able to improve margins and eventually profitability by pricing higher our species exclusives, and special pattern or color morphs.

Since the construction of the new facility in Port Moresby, we’ve had one small claim on dead fish from a wholesaler. This means that we do not lose money through fish mortality (trade averages between 5-25% on many species) and can price our fish accordingly. A quality product means we have less dead claims, allowing for a pricing regime that maintains a pricing regime that is more supportive of the fisher’s efforts and yet remains affordable in the international marketplace. Our best fisher, a woman from Fishermen’s Island has averaged between K150-300 per week since the beginning. Sales have steadily increased although have been somewhat limited in volume due to our present limited species mix (a problem which will be solved by expanding to other provinces). Fishermen’s Island, where people have to fish to survive, earned about K60,000 in 2009. Other FMA sites have done less well but are still earning substantial income from this trade. Actual statistics for all FMA’s and fishers are available from NFA upon request.

To carry out this program effectively and to meet the complex and sometime competing requirements of the trade, EcoEZ Inc. created the following SEASMART divisions capable of handling the cevelopment of all aspects of this new trade. All of them and their training and management systems have been designed to fit PNG conditions and requirements. These are components and divisions are all covered in depth by the report. These components are as follows:

  • Resource Assessment & Management (RAM)
  • Management Area Planning (MAP)
  • Fisher and Fishery Development (FFD)
  • Mariculture, Aquaculture and Restoration (MAR)
  • Export Trial Facility (EFT) including New Market Development
  • Smart Business Development (SBD)
  • MAC & ISO Certification and Standards Development
  • TRADE Management System including IT Systems Development, Product Traceability, Data and Personnel Monitoring and Management, Reporting, and Point of Sale Product Management.
  • Branding, Advertising and Promotions (BAP)
  • Government and Private Sector Capacity Building

Continue the SeaSmart Final Report with “Resource Assessment & Management (RAM)”