Seafood labelling; choice or necessity

ADVANCED LESSONS IN FISHERIES & AQUACULTURE ECONOMICS
Santander (Spain), 22-26 July 2013
Seafood labelling:
choice or necessity ?
Philippos Papageorgiou
Aquaculture Consultant
Email: p_philippos@hotmail.com
f.papageorgiou@kefish.gr

I. Background Info
II. Why Labelling ?
III. Understanding Certification Scheme
Dimensions
IV. Basic Certification & Labelling Requirements & Schemes
VI. How Much Should It Cost ?
V. Choice or Necessity ?
Lecture Structure
Seafood labelling; choice or necessity ?

From Fishing ....
Fish hook made from bone
Stone Age ~ 40.000 -2.000 BC
Minioan fisherman Fresko Art,
Santorini.
Late Bronxe Age ~ 1600 BC
Fishermen collecting fish
Mereruka’s Tomb –
Egypt 6th Dynasty ~ 2300 BC

.... to Trading
A woman carrying herring to
be sold at a market
Paris, ca 1500
A woman selling fish
Anonymous India, ca 1800
A Newhaven Fishwife
Alexander Ignatious (1861-
1921)

Egyptians bringing in fish,
and splitting for salting
Reconstruction of the Roman
fish-salting plant
.... through Processing
17th century herring
factory in Amsterdam
anonymous 17e century
Drying fish, Burgeo, NL,
Photo by William
McFarlane Notman
1908

.... to Value-Adding

SEAFOOD  Most traded food commodity
Perishable nature
Short ‘shelf’ life
Local markets
Processing / preservation
Longer ‘shelf’ life
Distant markets
From Local …….to Global

SEAFOOD  Most traded food commodity
1976 2008
Trade value (US$)8 bn 101.8 bn
1985
104%
Exports
1998
50%
Global
Production
~ 40% International
Trade
Source:FAO.TheStateofWorldFisheriesandAquaculture2010

Global
Production
~ 40% .
International
Trade
Developing Countries
~ 50% of value
Developed Countries

Utilization of Global Seafood Production

-
20.000.000
40.000.000
60.000.000
80.000.000
100.000.000
120.000.000
140.000.000
160.000.000
180.000.000
1950 1960 1970 1980 1990 2000 2002 2004 2006 2008 2010
Capture Fisheries Aquaculture (brackish) Aquaculture (freshwater) Aquaculture (marine)
Source:FAOFishStatJ
Global Seafood Production

Production
Market
Consumption
The Seafood Industry

Seafood Industry Market Dynamics
Health-conscious
Environment-conscious
Labour condition-conscious
Free trade-consicous
Food-Safety conscious
Env. & Socially responsible
Food –safety
assuring
Other
Env. & Socially responsible
Food –safety assuring

Market CompetitionThe Competition
Within national markets of seafood products, as
imported VS nationally produced goods
Within the seafood market, as
farmed VS captured
(fresh/chilled (whole) VS processed, value-added etc)
Within the global food market, as
‘seafood’ supply VS ‘other food protein’ supply
VS
alternative food offerings

• A means of communication to reinforce the purchasing decision of
consumers and customers.
• A market based instrument aiming to
direct consumer’s purchasing behavior to
product attributes other than price.
 addresses social & psychological expectations
 points out any actual & perceived attributes
 promotes product as part of a lifestyle
 makes consumer feel part of that lifestyle
Addresses concerns of potential consumers.
ie: we might have the product which solves your
problem/addresses your concern.
Why Labelling ?
One of the easiest ways that consumers/custpmers can affect change
(ie environmental –social responsibility) through their purchasing/bargaining power.

Any tag, brand, mark, pictorial or other descriptive manner, written, printed,
stenciled, marked, embossed or impressed on, or attached to, a container of
food
Codex Alimentarius, 2007
Why Labelling ?
All information placed on the package or on the label
accompanying a product.
 Legally compulsory information (weight, nutritional value, exp. date etc)
(Fish: species name, catch area, production method)
 Specific labels (seals)
 Environmental
 Quality
 Social
 Other

Quality / Safety labels

Provenance - Sustainable Fisheries labels

Sustainable Fisheries labels

Dolphin safe Labels

Organic Aquaculture Labels
Globally ~ 80
EU ~ 18

…… labels

Seafood Standards & Certification Schemes
Source:FAOFisheriesandAquacultureTechnicalPaper.No.553.Rome,FAO.2011

Labelling ‘’Noise’’

Deceiving Appearances

Mechanisms to ensure the sustainability of fish stocks have
been introduced by governments at the national, regional and
international levels.
 the United Nations Convention on the Law of the Sea
(UNCLOS) (1982);
 the FAO Code of Conduct for Responsible Fisheries (1995);
 the United Nations Fish Stocks Agreement (1995);
 various regional fisheries management organizations
(RFMOs).
Public Policies and Regulatory Framework

Article 2
Objectives
1. The CFP shall ensure exploitation of living aquatic resources
that provides sustainable economic, environmental and social
conditions.
For this purpose, the Community shall apply the precautionary
approach in taking measures designed to protect and conserve
living aquatic resources, to provide for their sustainable
exploitation and to minimise the impact of fishing activities on
marine eco-systems. It shall aim at a progressive
implementation of an eco-system-based approach to fisheries
management. It shall aim to contribute to efficient fishing
activities within an economically viable and competitive
fisheries and aquaculture industry, providing a fair standard of
living for those who depend on fishing activities and taking
into account the interests of consumers.

Who is Responsible for Fisheries Sustainability ?
Global online survey
25 420 consumers
50 countries
Governments
43%
Fishing Industry
29%
Fish
manufacturers
and processors
18% Retailers of fish
products
10%
Source:NielsenGlobalOnlineSurvey,March2009.PresentationbyJ.Banks,Nielsen,atOECD/FAORoundTableon
EcolabellingandCertificationintheFisheriesSector,TheHague,April2009.

The Stakeholders
Public
Sector
Private
Sector
Civil
Society
Fisheries
Authorities
Environment
Authorities
Trade &
Consumer
Authorities
International
Organisations
Science &
Academia
Fishing
Industry
Aquaculture
Industry
Processing
Industry
Trade
Industry
Certification
Industry
Science &
Academia
Consumers
Certification
Industry
Science &
Academia
NGO’s
Adaptedfrom:OECD(2011)Fisheeries&AquacultureCertification,OECDPublishing

The Stakes
Public
Sector
Private
Sector
Civil
Society
TAX PROFITS
BALANCE
FOREIGN
TRADE
ATTRACT /
MAINTAIN
INVESTMENTS
FINANCIAL
RETURNS
(R.O.I.)
FOOD SAFETY
ENVIRONM.
PROTECTION
EMPLOYMENT
CUSTOMER
SATISFACTION
EXPLOITATION
OF MARKET
OPPORTUNITIES
PUBLIC
AWARENESS
SUSTAINABILITY

Private Standard Development Drivers
Development of private labelling schemes
 are an indication that retailers and commercial brand owners are
assuming some part of this responsibility
 offer trust when there is a loss of faith in regulatory systems or the
administration of those systems, either at home or in exporting
countries.
 are considered to be more flexible and responsive to changing market
conditions, whereas the public regulatory process is seen as less
proactive and adaptive to market and industry dynamics
Perceived failure of public governance

Development of private labelling schemes
Biotic level increase (education, economic, social/ env. awareness)
Globalisation of markets
Consumer:
consumption trend
ethical values
financial status
Industry / NGO’s:
marketing psychology
sociology
behavioural economics
Private Standard Development Drivers

SELF-based
STANDARD-based
1st Party certification
2rd Party certification
3rd Party certification Accreditation
Government Private
Mandatory Voluntary
Production
CLAIM
Processing Distribution Consumption
Process Product
Single Multiple
Env. sustainability Food Quality Social Resp.Food-Safety Legality Other 1 Other 2
B2B B2CB2I (CSR)
Certification Scheme Dimensions

Certification Scheme Dimensions
SELF-based
STANDARD-based
1st Party certification
2rd Party certification
3rd Party certification Accreditation
Government Private
Mandatory Voluntary
Production
CLAIM
Processing Distribution Consumption
Process Product
Single Multiple
Env. sustainability Food Quality Social Resp.Food-Safety Legality Other 1 Other 2
B2B B2CB2I (CSR)
Initiator
Nature
Level
Subject
Attribute
AddreseeADVANCED LESSONS IN FISHERIES & AQUACULTURE ECONOMICS

The Upsise & the Downside of Labelling
Certification
Schemes
& Labels
Confuses & often
misleads
consumers
Provide stimulus
for supply-chain
modernization
investments
Provide incentives for
better safety and
quality control
practices
Clarify the roles
of the state in
food safety and
production
practices
Increases
bargaining power
of retailers
Introduces
barriers to
international
seafood trade
Barriers to
alleviate hunger
and to improve
livelihoods

i. In accordance to commonly agreed international guidelines
ii. In a balanced way towards small-scale producers (fishermen,
fish-farmers, processors)
iii. In the aim of including rather than excluding, thus allowing for
fair competition
iv. In the aim of harmonizing different schemes for cost reduction
ad higher market access (BUT not at the expense of the consumer’s
health, the environment, and local communities)
v. Ensure independence from the supply chain and other forms of
conflict of interest
Schemes / Standards must be developed:
How ?
By increasing awareness along the supply chain
( ie: each link must promote to next and demand from previous)
Basic Standard Requirements

International Protocols for Certification
1. The FAO Guidelines for Aquaculture Certification
2. The FAO Code of Conduct for Responsible Fisheries
3. The FAO Guidelines for Ecolabelling of fish and fishery
products
4. The Global Food Safety Initiative
Four Main internationally-accepted codes or protocols:

FAO Guidelines for Aquaculture Certification
2001: established by FAO / COFI
Scope : provide guidance on how credible aquaculture
certification schemes should be:
 developed,
 organised
 implemented
Cover : any or more of:
 health and welfare
 food safety and quality
 environmental integrity
 social responsibility
Aims at :
 Standard setting bodies
 Acreditation bodies
 Certification bodies
Source:http://www.seafish.org

FAO Code of Conduct for Responsible Fisheries
1995: developed by FAO
Scope : provide a necessary framework for national &
international efforts to ensure sustainable
exploitation of aquatic living resources in
harmony with the environment
Principles : recognises and takes into account aspects
such as:
 nutritional,
 economic,
 social, environmental
 cultural
 biological characteristics of resources and
their environment
 interests of consumers and other users
Aims at : National & International legislative and
regulatory bodies

FAO Guidelines for Ecolabelling
1996: Marine Stewardship Council Initiative
1998: FAO technical consultation on feasibilty
of such guidlines
2005: Adopted by FAO/COFI
2009: Revised
Scope : outline principles, terms and deﬁnitions,
minimum substantive requirements and the
procedural and institutional aspects for
ecolabelling of ﬁshery products.
Principles : schemes should:
 Be consistent with the FAO CCRF
 Use objective, third party fishery
assessments based on scientific evidence
 Be fully transparent in all aspects - not just
assessment processes but also in relation
to organisational structures and financial
arrangements

Global Food Safety Initiative
2000: Launched
Scope : A worldwide initiative, to deliver continuous
improvement in food safety management by
benchmarking best practice through its
Guidance Document. .
650+: Members
70: Countries
Objectives :
 Reduce food safety risks
 Manage cost by reducing duplication and
improving efficiency
 Develop food safety competency and
capacity
 Provide an international platform for
stakeholder collaboration and knowledge
exchange

Choices ?? ....  Decisions !!
Public
Business-to-BusinessBusiness-to-Consumer
Private
Product Process

B2B vs B2C
Business-to-Consumer
Typically : Food safety
Food quality
Communicates assurance to
buyers that the supplier
complies with the food safety
and quality standard
(a quality mark may be marketed
directly to consumers).
Business-to-Business
Typically : Sustainability
Env. Protection
Organic production
Marketed to consumers at point-
of-sale, often through a label
attached to the product.

Marine Stewardship Council
1996: Joint initiative by WWF - Unilever
Issues addressed: Environmental sustainability
Principles
 Sustainable fish stocks: Fishing activity must be at a level which is sustainable
for the fish population.
 Minimising environmental impact: Fishing operations must be managed to
maintain the structure, function, and diversity of the ecosystem on which the
fishery depends.
 Effective management: Fishery must meet all local, national and international
laws and have a management system in place to respond to changing
circumstances to maintain sustainability
Production Method: Capture Fisheries
Complies with:
 FAO Code for Responsible Fisheries
 FAO Ecolabelling Guidelines

Alaska Responsible Fisheries
Developed by the Alaska Seafood Marketing Institute
Requirements:
 Fisheries management system
 Science and stock assessment activities
 Use of a precautionary approach
 Management measures
 Implementation, monitoring and control
 Serious impacts of the fishery on the ecosystem
Complies with:

Iceland Responsible Fisheries
Requirements:
 Adoption and implementation of a structured fisheries management system
to limit TAC at levels permitted by the relevant authorities.
 Fish stock shall not be overfished as verified through scientific research &
assessment by international experts.
 Implementation of an effective legal & administrative framework with
mechanisms for monitoring, surveillance, control & enforcement.
 Effects of the fishery on the ecosystem be limited
Complies with:
2008: Launched

Social Welfare
Food Safety
Requirements:
 Use of selective fishing gear / Recovery of lost fishing gears /
Management of vessel discharges /Recovery of marine litter / Accurate
catch records
 All crew to have completed training in safety, sea survival, fire fighting
and first aid
 Skippers and crew must have catch handling and food hygiene
experience.
 Vessel standards, capture methods, handling and storage procedures
must maximise and maintain catch quality.
Complies with:
2006: Launched
Seafish Responsible Fishing Scheme

Requirements:
 Ensuring good practice during handling and storage of the catch,
 Provenance (the fish/shellfish sold under the label is fully traceable
back to an Irish vessel)
 And environmental responsibility (selective fishing gear)
2012: Launched by BIM (Board Iascaigh Mhara)
Responsible Irish Fish

Aquaculture Stewardship Council
2010: Developed in partnership by WWF – IDH (Sustainable Trade Initiative)
Social Welfare
Animal Welfare
Food Safety
Production Method: Aquaculture
Complies with:
 FAO Aquaculture Certification Guidelines
Includes
 CoC assurance
 Traceability
Standards: 12 species (fish, crustaceans, shellfish)

Friend of the Sea
2006: Developed by the Dolphin Safe Project (Italy)
Social Welfare
Animal Welfare
Aquaculture
Complies with:
 FAO Ecolabelling guidelines
Principles
 No critical impact on habitat / negligible escapees/no use of
antifoulants –GMOs-growth hormones etc
 Maximum 8% discards/ No bycatch of endangered species
 Compliance with international norms on Child Labour
 Salaries at least to legal minimum wage / access to medical care /
safety measures in accordance with legal requirements

Best Aquaculture Practices
Developed by GAA (Global Aquaculture Alliance)
Social Welfare
Animal Welfare
Food Safety
Complies with:
 FAO Aquaculture Certification Guidelines
 Global Food Safety Initiative
Includes
 CoC assurance
 Traceability
Standards: Shrimp farms and hatcheries / salmon, tilapia,
channel catfish and Pangasius farms /seafood
processing plants and feed mills

Soil Association
1946 : Founded in UK
Social Welfare
Animal Welfare
Food Safety
Principles
 Produce high-quality food products free from artificial ingredients
 Use minimum inputs
 Create minimal environmental impact
 Ensure the health and welfare of the stock
 Minimise use of veterinary products
 Eliminate reliance on chemical pesticides
 Develop local employment and services

IFFO RS Certification
2001: Established
Food Safety
Production Method: Capture Fisheries (Whole fish& by-products)
Aquaculture (by-products)
Complies with:
Principles
 Sourcing from responsibly managed fisheries
 Good manufacturing practice for safety, purity, and traceability
100+ factories
9 countries
Members: 2/3 fish-meal & Fish-oil producers
80% of global supply

BRC Global Standard for Food Safety
1998: Introduced the BRC Food Technical Standard
Issues addressed: Food Safety
Aquaculture
Complies with:
 Global Food Safety Initiatives
Principles
 Senior management commitment and continual improvement
 Food safety plan (based on HACCP)
 Food Safety and Quality Management System (on principles of ISO 9000)
 Site standards
 Product control
 Process control
 Personnel (including training, protective clothing and hygiene)
15,000 certified sites
more than 115 countries

GlobalG.A.P
1997: Introduced as Euro-Retailer Produce Working Group (EUREP)
Complies with:
 Global Food Safety Initiatives
Principles
 Environmental management of waste, water and effluent / Maintenance of
impact assessments and biodiversity plan / Control of predators, etc
 Occupational health and safety/ Health and safety of workers
 Biosecurity and food defense procedures / Record keeping and hazard
analysis / Controlled use of medicines and treatments etc
 Fish health, welfare, management and husbandry / Hatchery management
/ Feed management / Harvesting and slaughter practices, etc
Social Welfare
Animal Welfare
Food Safety
93,000 certified producers
more than 100 countries

Revenues = no of users Χ usage rate
 Attract new users
 Enter new markets /
market segments
 Atrract competitor’s
users
 Increase usage rate
from existing users
Why Certify & Label ?

PROBLEM
OPPORTUNITY
t-1 to t+1
Loose customers -
Loose market share
Expand Sales -
Enter new
markets
Why Certify & Label ?

How Much Should It Cost?
CASE STUDY: Company A
 Sales (kg) = 2.000.000
 Sales (€) = 10.000.000 (5 €/kg)
 Labelling costs =
 10.000 Compliance cost
 3.000 Audit cost
 2.000 Annual fee
= 0,008 €/kg
+ 0,50 €/kg additional prod costs (sust feed, lower densities, admin cost)
+ 0,10 €/kg tagging cost
= 0.61 €/kg Total Cost
= 1,220,000 €
BREAK EVEN 1) sell same quantities at ~ 12% Price Premium
2) sell at same price ~ 12% more quantities (+244 tons)
3) sell at a combination of 1 & 2

Product A
Do not certify / label
+600 tons @ 12% Price premium)
+ 4.560.000 € sales increase
60%
No change in sales
+400 tons @ 25% Price premium
30% x 4.560.000 € = 1.368.000 €
CASE STUDY: Company A
 Sales (kg) = 2.000.000
 Sales (€) = 10.000.000 (5 €/kg)

Product B
+600 tons @ 12% Price premium)
+400 tons @ 25% Price premium
30% x .6.010.000 € = 1.803.000 €
CASE STUDY: Company B
 Sales (kg) = 2.000.000
 Sales (€) = 10.000.000 (5 €/kg)
- 200 tons (10%) @ 5% price discount
- 1.450.000 € sales decrease

• Global Population Increase
• Household Purchasing Power Increase
• North America, Europe (1970-2008)
• China, India, Brazil (late 1990’s +)
• Strong increase in animal-protein consumption
• Consumers' shift towards more healthy products
• Increased scientific evidence & marketing of ‘seafood’ health benefits
• Consumption of aquatic food in many developed and developing countries is
still low compared to other food items
Aquatic Food Consumption Increase
Global Seafood Demand Trends

Global Seafood Demand Gap
0
20
40
60
80
100
120
140
160
180
2000 2005 2010 2015 2020 2025 2030
Aquaculture Production- growing population & seafood consumption
Aquaculture Production- growing population & static seafood consumption
Static capture fisheries production
Declining capture fisheries production
Min. supply gap
Max. supply gap
Source:FAOTheStateofWorldFisheriesandAquaculture2010

 Which Label ?
Necessary Choice
Labelling: Choice or Necessity?
 Who for ?
Identify & categorize customers
(existing & potential ones)
 Why ?
Project benfits / losses
(market share – value)
 How much ?

How Local is ‘’Local”
Fish Farm
Country C
Retailer
Country A
Filleting/Processing
Country B
Packaging
Country C
Juveniles
Country D
Eggs
Country E
Feed production
Country F
Feed raw material
Country G

Seafood labelling; choice or necessity

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