Why do Taiwan, China tilapia prices crash every three years? An analysis of the industry's fate

Taiwan tilapia fishermen have had a run of bad luck this year: in February, cold damage killed tens of thousands of fish, yet prices did not rise as a result. With export orders declining, the price has now fallen to just 25 yuan per jin, almost below cost. Some in the industry say outright that in theory, only fishermen with farming registration who report their stocking volume every year should receive related subsidies, but because local elected representatives speak up "for the people," every subsidy gets handed out regardless, and the policy simply cannot be implemented.

Problem One: Fewer Export Orders, Nowhere for Fishermen to Sell

Jiang Longzi, a fisherman from Budai, Chiayi, said helplessly that the purchase price around the same period last year was about 30 yuan per jin, but this year it has fallen to only 25 yuan, almost the same as his costs. Moreover, the big wholesalers are not coming to buy, so he has no choice but to keep spending money on feed to raise the fish, growing them a bit bigger to make fish fillets.

Why did fish prices fall instead of rise after the cold damage? The Fisheries Agency, the Taiwan Tilapia Association, and fishermen all point to exports. Shi Yuanyuan, chief executive of the Taiwan Tilapia Association, said that fish prices were high in the previous two years, which caused the loss of many export orders, and because fishermen increased their farming volume when prices were good, the surplus flowed back into the domestic market, pushing prices down.

Taiwan tilapia exports can be divided into the "frozen whole fish" form of whole fish exports, or frozen fish fillets and sashimi-grade fillets. The size is roughly 800-1200 grams, while the domestic market is mainly 600 grams.

The main export market is the United States for "frozen whole fish," which has the lowest price among the three, making it easily affected by price. After farming took off in China and Southeast Asia in recent years, Taiwan tilapia exports have fluctuated widely: in 2014 there were still about 24,000 metric tons, while last year, because prices were good, export volume fell to only 19,000 metric tons.

There are no statistics yet for this year, but the purchasing situation gives a glimpse. Jiang Longzi said his fish have already grown to more than 800 grams, but there are still 30,000 to 40,000 jin of fish in his pond, waiting for the big wholesalers to come and buy.

In fact, as early as the beginning of the year, many fishermen and wholesalers noticed that export orders were declining. Prices fell to more than 20 yuan at the start of the year, and although they briefly rose to 32 yuan because of the cold damage, overall supply still far exceeded demand, and they could not escape a market collapse. Fishermen said even more bluntly that if there had been no cold damage, it might have been even worse.

Problem Two: Pressure from Elected Representatives Makes Farming Registration Hard to Implement

Rising stocking volume and falling export orders may look like no one's fault, but neither was an unpredictable natural disaster. The persistent failure to grasp the market and demand volume is the key to the rise and fall of Taiwan tilapia prices.

"In fact, most people know in their hearts that it runs in roughly a three-year cycle. When prices are bad this year, fewer people invest, and next year prices may rise again." Facing this cycle, Lin Duyi, a Taiwan tilapia fry dealer in Chiayi, said outright that there is "no solution," because Taiwan is a free market, fry cannot be controlled, and the government cannot possibly buy at a guaranteed price.

Shi Yuanyuan said agriculture is not industrialized production, and there are too many uncontrollable factors. A target output may be set, but weather can make it impossible to achieve, and fry dealers still have no consensus.

In fact, the Fisheries Agency long ago required fishermen to have farming registration and to report their stocking volume every year. In theory, only those who comply with the rules can receive government subsidies, but in reality that is not how it works. People in the industry say outright that the government certainly does all these things, but many local elected representatives speak up "for the people" and pressure the central government, so in the end, whether or not there is registration, everyone gets a subsidy. Actual farming volume is certain to exceed reported volume, and "this year a whole crowd came out to collect cold-damage subsidies."