9MEAR3 Development of Centeral American Markets for Tilapia Produced in the Region

Collaborating Institution

University of Arkansas at Pine Bluff

Carole R. Engle

ObjectiveTo conduct an analysis of potential Central American markets for tilapia and to develop marketing strategies for tilapia produced in the region.

Significance
Much of the PD/A CRSPs research efforts have resulted in increased yields and production of tilapia. If markets are not expanded and developed, increased production will result in a decline of farm-gate prices that can have a negative impact on the incipient tilapia industry in Central America. This activity will identify potential new domestic markets for Central American tilapia that will avoid price declines from increased quantities supplied.

A limited amount of work has been done on markets for finfish in Central America. The few studies that have been carried out focused on the catch from commercial fisheries in Panama (Matton, 1981) and in Costa Rica (Scheid and Sutinen, 1979). Head et al. (1994) developed market guidelines for saltwater cultured Florida red tilapia in Puerto Rico. Several studies conducted in the US have examined the potential to develop markets for tilapia (Crawford et al., 1978; Nelson et al., 1983; Galbreath and Barnes, 1981). More recently, Swanson (1995) described US market requirements for tilapia. Engle (1997a) interviewed intermediate seafood buyers in the US to determine the potential to increase sales of fresh and frozen tilapia fillets in the US. However, virtually no work has been done on the potential to develop domestic markets in Central America for tilapia. Engle (1997b) describes the domestic markets that have emerged in Columbia for Columbian and Ecuadoran-produced tilapia. Development of domestic markets diversifies market opportunities and functions to stabilize industries from external shocks common in export-oriented markets.

Anticipated Benefits
This activity will provide guidelines to develop domestic markets for tilapia in Central America and reduce market risk by developing more diverse marketing strategies. The Federacion de Agroexportadores de Honduras (FPX) currently sells to only one buyer in the US. More comprehensive market information will provide opportunities for Central American tilapia producers to take advantage of reduced transportation, storage, and handling costs by understanding volume, packing, and labeling requirements of the most important domestic market channels. This activity will provide information that will allow the tilapia industry in Central America to develop and access new markets, increase the volume of goods sold, diversify marketing strategies, and improve financial success of tilapia growers. Results of this activity will be published in English and in Spanish.

The primary direct beneficiary of this study will be the Central American tilapia industry. Tilapia growers will benefit from the market information made available to them and from the training on marketing strategies that will be provided through this grant. At the present time, they are struggling to develop and maintain export markets without the benefit of comprehensive market information and in competition with other tilapia exporting countries. This is particularly true for small-scale growers who have greater difficulty in meeting the volume and sizing requirements of export markets. The proposed training workshop will teach tilapia growers, small and large, how to develop and maintain markets so that they will be capable of adapting to changing market conditions. While the primary focus is on the Central American industry, information on how to develop a domestic tilapia market will be of interest also to Thailand, other Asian countries, and to African nations on how to develop domestic markets for new species or non-traditional species. The PD/A CRSP will be a secondary beneficiary because improvements in market development will result in industry expansion that will allow for greater adoption and need for PD/A CRSP research results. The overall impact of the PD/A CRSP will be greater as the industry grows in Central America. Honduran university students will also benefit from the experience and skills gained through participating in this project.

Activity Plan
Location: The activity will be conducted by UAPB economists and will target seafood markets in Honduras and in Nicaragua.

Methods: Market structure and performance will be evaluated for fresh and frozen fish products in Honduras and in Nicaragua. Market structure is influenced by the numbers of buyers and sellers, barriers to entry, product differentiation and vertical integration. The current market structure of the wholesale seafood sector in Honduras and in Nicaragua will be analyzed. Lists of wholesalers, distributors, and restaurant and supermarket buyers will be obtained through contacts with FPX, the Universidad de San Pedro Sula, the Instituto Tecnológico de Honduras, the Asociacion Nacional de Acuícultures de Honduras (ANDAH) in Honduras and with the Universidad Centroamericana in Nicaragua. A variety of potential market channels and levels will be evaluated. Faculty and students from these universities will participate in study design, interviews, data collation, and will review final analyses and reports. Survey instruments will be designed in Spanish to elicit descriptive information on distribution channels, constraints , and efficiencies, product differentiation, product forms, price structures, volume requirements, packaging, labeling, product form, price, and other perceived characteristics of fresh and frozen tilapia products and other finfish that are close substitutes for tilapia. Following pre-testing and revision, direct personal interviews will be conducted. Existing market channels for fish and seafood will be identified and characterized. Potential customers and characteristics of potential tilapia buyers will be determined and evaluated. Market trends will be documented. Potential target market segments will be identified.

Price information and trends will be used to estimate potential marketing margins for domestic markets in Honduras and in Nicaragua. Marketing costs, including transportation, processing, storage, packaging, and promotion will be estimated using standard techniques. Comparisons of marketing margins to marketing costs will provide estimates of the feasibility of developing domestic markets for tilapia. Based on the marketing information obtained, guidelines on specific market opportunities will be developed. These guidelines will specify volume, price, product form, size, and other requirements for each type of market outlet identified. A preliminary trip to Peru will serve to identify the extent of the need for market analyses in Peru and to collaborate with the PD/A CRSP investigators there.

Regional Integration
The Regional Plan for Latin America identifies several constraints to aquaculture development in the region that include: lack of adequate economic and marketing information, and poorly developed local markets. This activity will address these issues by developing a base of economic and marketing information, developing guidelines and recommendations for effective marketing strategies, and conducting workshops to disseminate the results. This activity supports the effort described in the Regional Plan to extend efforts into Northern Honduras by providing marketing support to the rapidly growing commercial tilapia industry there. Furthermore, this effort will enhance regional integration by including Nicaragua in the activity and to conduct a workshop in addition to the market analysis in Nicaragua as well as Honduras. The need for a similar effort in Peru will be evaluated over the course of this activity.

Schedule
Year 1 (1/1/99 - 12/30/99): Collect and analyze information in Honduras. Organize workshop in Honduras.
Year 2 (1/1/00 - 12/30/00): Publish results of Honduran activity in English and in Spanish. Collect, analyze, and publish market information on Nicaragua. Hold workshop in Nicaragua.

Report Submission
Year 1: Report on Honduran marketing results will be completed by 1/31/00.
Year 2: Report on Nicaraguan marketing results will be completed by 1/31/01.

References
Crawford, K.W., D.R. Dunseth, C.R. Engle, M.L. Hopkins, E.W. McCoy, and R.O. Smitherman, 1978. Marketing tilapia and Chinese carps. In: R.O. Smitherman, W.L. Shelton, J.H. Grover, (Editors), Culture of Exotic Fishes Symposium Proceedings. Fish Culture Section, American Fisheries Society, Auburn, Alabama, pp. 240-257.
Engle, C.R., 1997a. Economics of tilapia (Oreochromis spp.) Aquaculture. In: B. Costa-Pierce and
J. Rakocy (Editors), Tilapia Aquaculture in the Americas, volume 1. World Aquaculture Society, Baton Rouge, Louisiana.
Engle, C.R., 1997b. Marketing of the tilapias. In: B. Costa-Pierce, and J. Rakocy (Editors), Tilapia Aquaculture in the Americas, Volume 1. World Aquaculture Society, Baton Rouge, Louisiana.
Galbreath, P. And T.A. Barnes, 1981. Consumer preference for color and size of tilapia sold in supermarkets. Proceedings Catfish Farmers of America, Research Workshop 3:47-48.
Head, W.D., A. Zerbi, and W.D. Watanabe, 1994. Preliminary observations on the marketability of saltwater-cultured Florida red tilapia in Puerto Rico. Journal of the World Aquaculture Society 25(3):432-446.
Matton, E., 1981. Mercadeo de los recursos piscícolas de los grandes lagos de Panamá. Proyecto TCP/PAN/2303. Organización de las Naciones Unidas para la Agricultura y la Alimentación, Roma, Italia.
Nelson, R.G., L.L. Behrends, P.F. Galbreath, and T.A. Barnes, 1983. Estimating relative sales potential of tilapia in supermarkets. Proceedings of the Annual Conference of the Southeast Association of Fish and Wildlife Agencies, 37:314- 326.
Scheid, A.C. and J.G. Sutinen, 1979. The structure and performance of wholesaling marketing of finfish in Costa Rica. ICMRD Working Paper No. 4, Univ. Rhode Island, Kingston, RI.
Swanson, W., 1995. Marketing farm-raised tilapia. Mimeo. D.A. Larson Company, Minneapolis, Minnesota.