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Fishing Murky Waters: China's Aquaculture Challenges Upstream and Downstream

October 01, 2008 // 9:00am11:00am
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By Linden J. Ellis

China has a 2,000-year history of cultivating fish, making it the first civilization to do so. Of China's total seafood output, 64 percent comes from aquaculture, making it the only country in the world where aquaculture outstrips wild catch. Since 1978, China's aquaculture production has increased 490 percent, elevating it to the largest producer of farmed seafood in the world, accounting for 57 percent of global output. Aquaculture—including a wide variety of freshwater and saltwater finfish, shellfish, crustaceans, and aquatic plants—is a vibrant industry in China. Local governments promote aquaculture as a poverty alleviating industry and have therefore subsidized production of lucrative species. As incomes rise, China is turning from herbivorous fish, such as carp, to carnivorous fish, such as grouper, which require greater inputs of wild caught "trash fish"—often imported from Chile as China's own wild fish stocks disappear. This trend is both a threat to global fisheries and to local waterways, as "trash fish" are a major source of pollution.

China supplies 70 percent of the tilapia imported to the United States and is also its fourth largest supplier of shrimp. Due to the retention of pollutants and chemicals in the flesh of fish, food safety has become a major challenge for Chinese aquaculture. International concern about food safety has cost China's aquaculture dearly, as countries ban species they discover to be contaminated. In 2007, the industry was hit by a U.S. ban on 5 species of Chinese seafood. Chinese consumers also are increasingly concerned about the safety of the fish they eat due to water pollution, dangerous farming practices, and poor processing in the aquaculture industry. In terms of ecological impacts, the rapid development of China's aquaculture industry has seriously polluted rivers, lakes, and coastal waters and the increasing demand for fishmeal is driving stock depletion in the oceans.

Upstream: Challenges and Incentives
"The challenges facing the aquaculture industry in China are similar to those facing the Chinese food industry in general" and result in crises like the recent milk scandal, stated speaker David Barboza of The New York Times. Based on interviews with farmers, aquaculture experts and scientists, Barboza concluded that China's water pollution is the major problem facing aquaculture—and food products in general—because it afflicts virtually every part of the country. Rapid economic growth has created environmental degradation on an unimaginable scale, and among other problems, lack of clean water will inevitably mean a lack of healthy seafood. While researching a story on aquaculture in China in 2007, Barboza specifically targeted heavily polluted areas to see if there was fish farming there—there always were.

In fact, pollution forces many fish farmers to inoculate their fish with dangerous illegal veterinary medicines, leading to a cycle in which massive aquaculture operations contribute to the pollution that harms fish through unnatural population densities, chemicals and antibiotics and overfeeding. This leads not only to fish disease—which in some cases can spread to wild fish—but also to nutrient and chemical pollution in already dirty water.

A weak and often corrupt regulatory system is also a challenge to China's aquaculture. Powerful local government officials often partner with businesses, and therefore have an incentive to reign in regulators, or at least give their business partners some kind of advantage or protection. While regulation and enforcement in coastal areas of China are improving, like factories, many of China's aquaculture facilities are beginning to move west in search of friendlier regulators and cleaner water.

Another, oft overlooked challenge to improving the environmental and food safety impacts of China's aquaculture is the farmer-entrepreneur seeking wealth in an increasingly competitive system. With rampant uncertainty stemming from a rapidly changing business environment and property rights, farmers investing in this sector think short-term for their business deals and land use. Every farmer is competing with other farmers who they know are willing to cheat and break the law to provide a cheaper product. When combined with weak regulation and legislation, such deals can prove very costly for human and environmental health both in China and abroad.

Non-Chinese companies seeking the "China price" are under similar pressures to compete in China and are influencing aquaculture both positively and negatively. On the one hand, foreign companies pressure their suppliers to cut costs and sometimes look the other way rather than investigate how such costs are achieved. It appears that there is very little due diligence and testing done by many international food companies before doing business in China, even though they know of China's regulatory and food safety problems. For example, one African company that Barboza interviewed reported that they had found their Chinese pet food supplier on the Internet and began purchasing their products with only a few tests. The product was later found to contain melamine—a coal-based industrial chemical. However, on the other hand large international food companies are willing to push the Chinese government to enforce its laws and regulate the market. For example, many such companies bring modern techniques and improved testing methods to China, and help create new food safety systems. Understanding the challenges and motivations of the people doing business in China is perhaps the key to solving that country's aquaculture problems.

Downstream: Fisheries Regulation
In order to address the threats of severe water pollution, there are new developments in Chinese legislation on the prevention and management of water pollution. There are three basic laws governing water pollution in fisheries: (1) the Fisheries Law; (2) the Marine Environmental Protection Law; and (3) the Law on the Prevention and Control of Water Pollution (LPCWP). Speaker Wang Hanling from the Chinese Academy for Social Sciences elaborated on how the 2008 revisions to the LPCWP are the latest development towards protecting and mitigating water pollution related to fisheries in China.

Under China's revised water pollution control law, the Fisheries Department is authorized to supervise and regulate the prevention and control fisheries water pollution. The Fisheries Department is involved in environmental impact assessment and has the power to deny construction projects that potentially cause environmental degradation. The law established Protection Zones for Important Fisheries Waters (PZIFW), which are assigned by governments at the county level or above to protect fisheries' water quality. Discharge of any pollution is illegal within these zones. Moreover, the Fisheries Department is now in charge of managing pollution from fishing boats and is empowered to investigate and punish these sources of pollution.

According to the water pollution control law's article on prevention of aquaculture pollution of fisheries waters and environment, aquaculture should be cost-effective and healthy. This article specifically provides for strict monitoring of water quality and mechanisms for polluted water mitigation. Advantages of the new revisions include:

• Strengthened power of the Fisheries Department to investigate water pollution in the fisheries sector;
• Imposing the burden of proof on polluters instead of the victims and the improvement of compensation and mitigation mechanisms; and,
• Expanding the mandate of the Fisheries Department to include training officials and raising awareness among the public and fisheries workers.

While overall regulation of fish products has been weak in China, CEF's Jennifer Turner noted that there have been initiatives in some cities to better protect citizens from unsafe fish. For example, Shanghai and Beijing have taken the lead after numerous carcinogen-tainted fish were found in major markets. The Olympics served as a good blueprint for how China's leaders are taking a top-down approach to try to develop a safer food system. Specifically, for the Olympics Beijing established lists of approved suppliers of all food products and ingredients and used a complex tracking system to monitor the food. Such a system caused food and particularly fish prices to rise significantly, and even encouraged corruption to get companies on supplier lists. However, cities like Shanghai are tying to combat such incentives with aggressive testing systems including barcodes on all packaged fish. Notably in China, the challenge of tracking food is complicated by the preference for live, obviously unpackaged, seafood and by the fact that suppliers often outsource to other, less careful, suppliers to increase their profits.

Lessons from the U.S. Experience
Teresa Ish from Environmental Defense Fund (EDF) discussed how her nongovernmental organization (NGO) has been instrumental in bringing market-based solutions to polluted fisheries in the United States. EDF works with corporations, such as McDonalds, to align economic savings with the environment. The core of all partnerships focus on 3 main pillars: (1) achieve environmental gains; (2) provide business benefits; and (3) transform industry. By publicizing information on these partnerships, EDF is pushing the whole fish industry towards adopting more sustainable processes.

EDF has been applying this concept to fisheries by partnering with Wal-Mart, Wegmans and Bon Appetite. However, tracing products back to farms can be difficult with small companies whose traceability ends with the supplier. Further, 80 percent of farmed shrimp and salmon—our main sources of seafood—in the United States is imported from developing countries where fishers and suppliers generally rely on cash, which makes traceability of the fish difficult.

Globally, there are three main certifications for aquaculture: Friends of the Sea, Global Aquaculture Alliance, and GLOBALGAP. Although these certifications are quite different, all three prompt companies to look deeper into how their products are produced. Wal-Mart in particular has set ambitious goals regarding certification of aquaculture.

Another cornerstone of EDF is standards for individual buyers, which has worked particularly well for shrimp. Setting buyer standards is about protecting a company's brand name. Under the shrimp program, there are 12 standards addressing the main impacts of shrimp farming, including antibiotic use. The producer must meet 9 of the 12 within the first year, which must be verified by a third-party auditor and made publicly available.

Such systems rely heavily on consumer purchasing preferences to drive change, says Ish: consumers must "vote for conservation with [their] wallet." Thus the public availability of information is key to success. Also, traceability and third-party verification is essential, which has been a major factor in many Chinese seafood products being labeled unsafe.

China's system of governance remains vastly different that the United States, yet public pressure appears to be a main driver behind many recent improvements in the food safety system in China. Wang says that we have not seen major class action cases around food safety in China mainly because in cases like the recent milk scandal, the government has rapidly taken action against those responsible. Intriguingly, in the this and other recent scandals, the government has bowed to the will of "netizen"—mostly fast, anonymous, web-savvy bloggers—and forced responsible regulators to resign. In the milk case the head of the General Administration of Quality Supervision, Inspection and Quarantine (AQSIQ), Li Changjiang, was forced to resign after netizens found classified government documents and posted them online showing that AQSIQ had turned a blind eye to the developing crisis. Turner and Wang pointed out that some class action cases, including at least one headed by the Chinese NGO CLAPV, have been successful with regards to aquaculture kills stemming from point-source pollution. However, broader food safety cases have not emerged yet, probably due to perceived stability implications of such a case. A freer press would go a long way to educating the public and frightening companies into compliance with the law, concludes Barboza.

Ultimately for China to improve the safety and sustainability of its huge aquaculture sector the government must develop better regulations with enforcement from the top-down and from the bottom-up. Wang expresses optimism that food safety is now fully at the forefront of government priorities in China and, as demonstrated by the success of the Olympic food safety initiative, the government can provide safe food when it focuses on it. Due to globalized food distribution and the global impacts of food and water insecurity, aquaculture presents a major opportunity for U.S.-China cooperation on technology, such as alternative aquaculture feed and operations, and better fisheries management.

  

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