Fish Processing Activities: Fisheries is classified as part of the animal food-producing sector
and covers finfish, mollusks, crustaceans and any aquatic animal that is harvested.1 As capture fisheries declines, an increasing proportion of stocks are being farmed. Fish farming is the principal form of aquaculture and is the fastest growing animal-food producing activity. It now accounts for roughly one-half of all fishery production2. Somewhat over three-fourths of global fishery production is destined for human consumption, and the remaining amount is used for the production of fishmeal and fish oil. About one-half of all fish destined for human consumption is in live and fresh forms, and the other half undergoes some degree of processing. About three-fourths of all processed fish is in the form of frozen, cured and prepared or preserved products. Freezing is the main method of processing fish for food use, accounting for one-half of total processed fish for human consumption, followed by prepared and preserved fish (about 30 percent), and cured fish (20 percent).
Indonesia capture fisheries contribute about 60 percent of the gross value of fishery output, and aquaculture accounts for the remaining share. Of the total fishery supply, marine fish account for over 1 Throughout this report, the term industry and sub-sector are used interchangeably and both refer to a subset of activities of the sector
to which the industry belongs.
2 Food and Agricultural Organization (FAO) of the United Nations, “The State of World Fisheries and Aquaculture (SOFIA)”. Available: http://www.fao.org/publications/en/.
60 percent of the total, crustaceans represent 12 percent and mollusks 3 percent. The remaining products are classified as miscellaneous aquatic animals3. Aquaculture in Indonesia is practiced in fresh, brackish and marine water using a variety of species, production facilities and methods. Ten years ago, this type of fisheries contributed less than 19 percent of total output; today its contribution is estimated at well over 40 percent (Figure A1.1).
Processing Industry: Modern processing units
in Indonesia generally process products for export. They include shrimp, tuna and skipjack, fish fillets, tuna loin and tuna steak. There are several processing operations that have good potential, including (a) freezing, cold storage and ice production; and (b) product processing with value added, to meet the increasing market demand for fishery products that are ready to cook (so-called convenience products). Examples
of these products are Individual Quick Frozen (IQF) products, shrimps, breaded fish, and fish balls. Basic processing activities involve simple methods of transformation, such as filleting, salting, canning, drying and fermentation. More advanced value-adding activities involve the preparation of convenience foods and a wider variety of high value-added products in fresh, frozen, breaded, smoked or canned forms. These high value-added activities require sophisticated production equipment, processing methods and, consequently, substantial capital investment.
Importance of Fishery Industry: Fish is a staple food in the diet of Indonesian families, and about 90 percent of the country’s total fish production is consumed domestically. The remainder is destined for external markets. Although frozen forms of fish and crustaceans dominate exports, Indonesia is increasingly supplying processed products to overseas customers. Globalization of fishery value chains is also growing fast, and large retailers are increasingly controlling international distribution channels. A growing number of producers in Indonesia and other developing countries are therefore linking their export-oriented fishery products with firms located abroad.
Outsourcing of processing operations is also spreading quickly. For example, whole fish from the European Union are being sent to Asia, particularly China as well as India and Viet Nam. These countries fillet and package the product and then sell it back to European distributors. The major impediment to outsourcing to processing operations in Indonesia is sanitary and phytosanitary (SPS) requirements in the EU and other developed market. As Indonesian processing facilities gear up to meet quality and safety standards in Europe, their lower processing costs will compare favorably with EU fisheries that face reduced margins from higher capital and labor costs and the growing scarcity of fish stocks.
Employment and SMEs – Approximately 90 percent of Indonesia’s fishery industry can be classified as small-scale industry4. Fishery activities in Indonesia are highly labor intensive and the country ranks among those having the largest number of fishers and fish farmers, the other countries being China, India, Philippines and Vietnam. More than 2.7 million of Indonesia’s population is directly involved in capture fisheries, and another 2.5 million is directly employed in aquaculture activities. Fishery production is concentrated in Java (67 percent of total country area), followed by Sulawesi 3 Based on information derived from FAO - Fisheries and Aquaculture Information and Statistics Service. Available: http://www.fao.org/
fishery/statistics/en.
4 Food and Agricultural Organization (FAO) of the United Nations, “Information on Fisheries Management in the Republic of Indonesia“. Available: http://www.fao.org/fi/oldsite/FCP/en/IDN/body.htm.
Source: FAO Fisheries and Aquaculture Information and Statistics Service.
Figure A1.1:
Growth of Indonesia’s Aquaculture and Captured Fisheries Output
Aqua-culture Capture Fisheries 1980 1984 1988 1992 1996 2000 2004 2008 8 6 4 2 0
(10 percent) and Sumatra (9 percent).5 Small-scale fish farming in these areas is concentrated in freshwater ponds (54 percent), followed by paddy fields (24 percent), brackish water ponds (16 percent), mariculture (4 percent) and floating cage culture (2 percent).6 Because of the high participation rate of labor in all types of fishery activities, the Government of Indonesia has placed a high development priority on fishery sector in terms of its national goals for employment creation and poverty alleviation.
Types of Fishery Exports – Indonesia’s largest category of seafood exports is frozen or prepared crustaceans, which mainly consists of shrimp,
crabs, lobsters and prawns. These products account for 43 percent of the country’s total exports of fishery products (Figure A1.3). Another 36 percent of Indonesia’s seafood exports consists fish exports. The forms of these exports are divided fairly evenly into fresh or chilled, frozen, prepared and fillet fish.
Among individual product exports, shrimps account for 31 percent of all fishery exports and other forms of crustaceans, consisting of crabs, lobsters and prawns, contribute another 19 percent. Tuna accounts for 16 percent of all exports, and other fresh, frozen and processed fish represent 22 percent of the total. Internationally, shrimp, both farmed and wild-
5 Based on data from Badan Pusat Statistik of the Republic of Indonesia. Available: http://dds.bps.go.id/eng/aboutus.php?tabel=1&id_ subyek=56
6 In brackish water culture, most (55 percent) of the households involved in fish farming have less than 2 hectare, while 27 percent have 2-5 hectares, 12 percent have 5-10 hectares and only 6 percent have more than 10 hectare of land. In freshwater culture, 64 percent of households in fish farming owned less than 0.1 hectare, 22 percent owned between 0.1-0.5 hectares, 9 percent owned between 0.3-0.5 hectare and only 5 percent owned more than 0.5 hectare. For details, see Food and Agricultural Organization (FAO) of the United Nations, “National Aquaculture Sector Overview: Indonesia“. http://www.fao.org/fishery/countrysector/naso_indonesia/ en#tcNA0052.
0.0% 15.0% 30.0% 0.0% 15.0% 30.0%
Figure A1.2:
World’s Top Fisheries Producers and Exporters, 2009 (Percent of world)
Top Producers Top Exports
5.5% 4.7% 4.6% 3.5% 3.1% 3.0% 3.0% 2.9% 2.4% 6.3% 5.2% 4.8% 4.4% 3.5% 3.4% 3.1% 3.1% 5.5% 12.2% 11.9% China Indonesia India Peru Japan Philippines USA Chile Viet Nam Thailand China Norway USA Canada Chile Thailand Denmark Sweden Indonesia Russia
Source: FAO Fisheries and Aquaculture Information and Statistic Service and United Nation, COMTRADE database
Source: United Nation, COMTRADE database
Crustaceans, frozen Crustaceans, prepared Fish, fresh or chilled Fish, frozen Fish, prepared Fish fillets Other 0% 10% 20% 30% Figure A1.3:
Indonesia‘s Types of Fishery exports (percent of total exports)
caught, is the highest value seafood export, accounting for 16 percent of worldwide exports of all fishery products.
Major Fishery Export Markets –The European Union is the world’s largest importer of fishery products, accounting for 25 of the world total. Yet the EU market only accounts of 11 percent of Indonesia’s total exports (Figure A1.4). The United States and Japan each account for a much lower share (16 percent) of total world imports. Nonetheless, Indonesia exports 35 percent of its fishery products to the United States and another 27 percent to Japan.
There is considerable scope for Indonesia to increase the amount that it exports to the EU market. If it were to expand its share of exports to the EU market to the same proportion as the European Union’s share of world imports, Indonesia’s foreign exchange revenue from its fishery exports would more than double, expanding from US$253 million to US$561 million in terms of the value of those exports in 2009.
Major Global Competitors - China has
dominated the global seafood markets for both processed and unprocessed fish since 2002. In addition to exports from domestic fisheries sources, China also exports reprocessed imported raw material, adding considerable value
in the process. Today, China retains 12 percent of the world seafood market (Figure A1.5)7. Indonesia ranks number 10. Other major exporters are Norway (15.5 percent), the United States (6.1 percent), Canada (5 percent), Chile (4.6 percent), Thailand (4.3 percent), Netherlands (3.6 percent), Denmark (3.4 percent) and Sweden (3.2 percent).
7 Statistics reported by China have been subject to question since the early 1990s, which puts into question the reliability of global estimates. For details, see FAO, Fisheries Production Statistics. Available: http://www.fao.org/fishery/statistics/en
United Kingdom 2.6% Belgium 2.2% Netherlands 1.9% Germany 1.7% Italy 1.1% France 1.1% Other 26.4% EU 11.3% USA 35.0% Japan 26.9% Th ailand 2.7 % Sin gapo re 3.3 % Ch ina 5.8% Figure A1.4:
Distribution of Indonesia Fishery Export by Major Market in 2009
Source: United Nations, COMTADE database
Figure A1.5:
World’s Top Fisheries Producers and Exporters, 2009 (Percent of world)
Source: United Nation, COMTRADE database
C hi na N or w ay U S A C an ad a C hi le Th ai la nd N et he rla nd s D en m ar k S w ed en In do ne si a 12% 8% 4% 0% Table A1.1:
Indonesia Major Fisheries Products, 2009
Million
US$ Percent
Shrimps and prawns, frozen 694 30.9% Crustaceans, prepared or preserved 313 14.0% Tunas, whole or in pieces 190 8.5%
Fish meat, frozen 184 8.2%
Tunas, fresh or chilled 96 4.3%
Other fish, frozen 83 3.7%
Other fish, fresh or chilled 75 3.4%
Tunas, frozen 66 3.0%
Cuttlefish, octopus and squid, frozen 64 2.8% Other crustaceans, frozen 54 2.4%
Flat-fish, frozen 40 1.8%
Fish, live 35 1.5%
Fish, dried 32 1.4%
Flat-fish, fresh or chilled 31 1.4% Salmonidae, frozen (excluding livers
and roes)
24 1.1% Herrings, sardines, whole or in pieces 23 1.0%
Other 2,243 10.6%
Note: Fishery products are covered under Standard International Trade Classification (SITC) 03.