What shapes food value chains? Lessons from aquaculture in Asia

Food Policy 49 (2014) 228–240

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What shapes food value chains? Lessons from aquaculture in Asia Karen Sau Jespersen a, Ingrid Kelling b, Stefano Ponte c,⇑, Froukje Kruijssen d a

Danish Institute for International Studies and Department of Society and Globalisation, Roskilde University, Østbanegade 117, 2100 Copenhagen OE, Denmark Management Education Center, University of Stirling, Stirling FK9 4LA, Scotland, UK c Department of Business and Politics, Copenhagen Business School, Steen Blichers Vej 22, 2000 Frederiksberg, Denmark d WorldFish, PO Box 95001, 1090 HA Amsterdam, The Netherlands b

a r t i c l e

i n f o

Article history: Received 19 December 2013 Received in revised form 25 August 2014 Accepted 28 August 2014

Keywords: Aquaculture Value chains Governance Institutional frameworks Asia

a b s t r a c t In this article, we explain what shapes food value chains through the analysis of selected aquaculture industries in four key Asian producing countries. Worldwide production of aquatic resources has grown rapidly in the past few decades, and aquaculture production in Asia has played a decisive role in this growth. We examine the main forms of coordination found along these value chains and the role that institutional frameworks play in governing them. We observe that negative publicity, driven by NGO and media campaigns, has led to increased use of third-party certification and the adoption of public and private standards. We find that the most sophisticated aquaculture operations in Asia are found in value chains led by retailers and branded processors and where the quality of domestic institutional frameworks has facilitated compliance with increasing demands from buyers overseas. Finally, we reflect on the sustainability challenges of aquaculture and provide four broad observations on the governance of food value chains. Ó 2014 Elsevier Ltd. All rights reserved.

Introduction Seafood is one of the most internationally traded food commodities (Tveterås et al., 2012) and worldwide production of aquatic resources (excluding aquatic plants) has grown rapidly in the past few decades – from 141 to 158 million tonnes between 2007 and 2012 alone (FAO, 2014a). However, only about 3% of this growth can be attributed to growth in capture fisheries, while the aquaculture sector has continued to grow at an average annual rate of over 6% in the same period (FAO, 2014a). The contribution of aquaculture to total fish production has increased from only 13.4% in 1990, to 25.7% in 2000, and to 42.2% in 2012 (FAO, 2014a). China has remained the top producer in the aquaculture sector in this period (with 62% of the total), while the share of production of other Asian countries has grown from 21% in 2000 to 27% in 2012 (FAO, 2014a). Trade in aquatic resources has also grown significantly, with global exports increasing at an average annual rate of 8.3% per annum in terms of value (FAO, 2014a). About 39% of the value of world exports (or 50.4 billion USD) originated from Asian countries in 2011, more than doubling in value from 2002 (FAO, 2014b). Historically, the main importers of seafood have been the US, Japan, EU, and China. However growth in imports has been ⇑ Corresponding author. Tel.: +45 3815 4265. E-mail addresses: [email protected] (K.S. Jespersen), [email protected] (I. Kelling), [email protected] (S. Ponte), [email protected] (F. Kruijssen). http://dx.doi.org/10.1016/j.foodpol.2014.08.004 0306-9192/Ó 2014 Elsevier Ltd. All rights reserved.

more rapid in China and the EU than in the US and Japan between 2002 and 2012 (FAO, 2014a). This rise in aquaculture production has increased the attention for the environmental and social impacts in producing countries (e.g. Barrett, 2002; Naylor et al., 2000; Páez-Osuna, 2001; Stonich et al., 1997), as well as food safety aspects for consumers in importing countries (e.g. Bagumire et al., 2009; Sapkota et al., 2008). This has been accompanied by a proliferation in mandatory and voluntary standards and third-party certification schemes regarding both food safety and sustainability aspects in the value chain (Ponte, 2007; Washington and Ababouch, 2011). In this article, we examine what shapes food value chains through the analysis of selected aquaculture industries in four key Asian countries (shrimp/prawn in Bangladesh, tilapia in China, shrimp in Thailand, and pangasius in Vietnam). Asia is the world’s leading aquaculture production region (Asche et al., 2009) and these four countries belong to the top ten aquaculture producers worldwide in terms of volume (with China producing 41.1 million tonnes, Vietnam 3.1 million, Bangladesh 1.7 million and Thailand 1.2 million tonnes; 2012 figures; FAO, 2014a). Together, they represent more than half of total seafood exports from Asia and 20% of world exports (2011 figure; FAO, 2014b). Shrimp was among the first farmed species to be traded internationally, while exports of white fish species, especially tilapia and pangasius, have grown rapidly more recently (Asche et al., 2009). These four countries play a predominant role in production and trade of the species

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selected for this study: 41% of the volume of globally traded shrimp and prawn originates from these four countries, with Thailand as the largest exporter; China dominates the international market for tilapia, supplying 82% of world exports; and Vietnam dominates the international pangasius market, with a 91% share (2011 data; FAO, 2014b). We examine these aquaculture industries through the lenses of Global Value Chain (GVC) analysis, focusing in particular on institutional frameworks and value chain governance. The concept of governance in GVC analysis is based on the observation that value chains are rarely coordinated spontaneously through market exchange (Gereffi et al., 2005; Gibbon et al., 2008). Instead, they are shaped as a result of strategies and decision-making by specific actors, usually large firms that manage access to final markets, but also at regional and national/local levels. The relevance of governance to GVC analysis is that it highlights the concrete practices and organisational forms through which a specific division of labour between lead firms and other actors arise and is managed. ‘Lead firms’ are groups of firms that operate at particular functional positions along the chain and that are able to shape who does what along the chain, at what price, using what standards, to which specifications, and delivering at what time. Much of the GVC literature has focused mainly on governance mechanisms that are carried out by internal value chain players – those dealing with the production, processing, trade and retail of products. In other words, much attention has been paid to the governance features shaped by ‘lead firms’ and other internal value chain actors. Many GVC studies have also included a thorough examination of institutional framework factors and actors, such as domestic and international regulation and the role of ‘external actors’ – those who can be influential but do not handle the product itself, such as NGOs and standards setters – in shaping value chains (see among others, Gibbon and Ponte, 2005; Nadvi, 2008; Neilson and Pritchard, 2009; on aquaculture, see Islam, 2008; Tran et al., 2013). But most studies have treated institutional factors as a ‘frame’ within which internal governance mechanisms are then examined in detail. In this article, we seek to explain what shapes aquaculture value chains by integrating governance and institutional framework in our analysis, and by highlighting their mutual influence and collective impact. We examine value chain-relevant regulation (national, international and regional; and standards set by public authorities, usually referred to as technical regulations), media pressure and private standards (voluntary standards set by industry associations, NGOs and multi-stakeholder initiatives) and certification systems on food safety, ‘Good Aquaculture Practices’ (GAPs), social conditions of production and environmental sustainability – and related actors. This implies examining complex networks and interactions between business, civil society and the state – including not only internal value chain operators as agents of governance but also industry associations, lobbies, farmer associations, certifiers, multi-stakeholder initiatives, NGOs, social movements, expert communities, etc. (for recent contributions to these debates in specific relation to aquaculture, see Konefal and Hatanaka, 2011; Hatanaka, 2010, 2013; Pham et al., 2011; Tran et al., 2013). A limitation of our approach is that we focus on value-chainspecific institutional factors and actors, which means that we do not explicitly address wider institutional and regulatory features (such as taxation and foreign investment regimes, management of public infrastructure, or exchange rate and other macroeconomic policies) that may also indirectly shape aquaculture value chains. In the rest of this article, we first highlight our integrated approach to the analysis of institutional frameworks and GVC governance, followed by a short discussion of research methods. In the following two sections, we provide a summary of results presented

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in detail elsewhere in Working Paper format (Jespersen et al., 2013) on the institutional frameworks and governance features of the selected aquaculture value chains. In the last section, we highlight the common features emerging from the case studies and provide some concluding remarks.

Institutional frameworks and value chain governance In a recent programmatic article, Ponte and Sturgeon (2014) called for an integrative approach to GVC governance that brings together various strands of analytical developments that took place in the literature in the past 20 years. They provided a modular framework on GVC governance at three scalar levels: a micro-level dedicated to understanding how linkages (or forms of coordination) and conventions are forged at individual nodes of the value chain; a meso-level to assess how easily mechanisms of exchange at one node ‘travel’ up- and down-stream in the value chain; and a macro-level dedicated to understanding how governance is shaped at the level of ‘whole chain’. Due to space limitations, in this article we focus on the micro-level forms of coordination at various value chain nodes and the macro-level of ‘whole-chain’ governance. We also integrate the role of institutional framework factors and actors. This way, we can determine the key features of GVC governance (polarity, identity of key drivers and degree of driving) in a holistic manner. In order to apply this framework, we take three steps. In a first step we identify the prevalent forms of coordination at various nodes in the value chain. To do this, we follow the well-known analytical framework developed by Gereffi et al. (2005), which builds on previous work by Humphrey and Schmitz (2004a, 2004b). This entails the identification of five possible forms of coordination (market, modular, relational, captive and hierarchy) that arise from the combination of three independent variables: the complexity of the information and knowledge required to sustain a particular transaction; the ability to codify and transmit efficiently this information between the parties; and the capabilities of the supply base in relation to the requirements of the transaction. Market coordination refers to spot or repeated exchange; modular coordination usually involves more specialized suppliers who finance part of production on the part of their buyer, but whose technology is sufficiently generic to allow its use by a broad customer base; relational coordination involves multiple interdependencies, often based on close social ties; captive coordination usually involves one-way dependency of suppliers, high levels of supplier monitoring and high costs of switching for suppliers; and hierarchy denotes vertical integration (Gereffi et al., 2005). In a second step we identify the main institutional actors and factors, how they interact with each other, and how they contribute to shaping the specific value chains under consideration. Aquaculture value chain governance is shaped by regulation at multiple territorial levels: international, regional and by bilateral trade agreements covering tariffs and non-tariff measures. Examples include mandatory sanitary and phytosanitary standards and technical specifications covered by World Trade Organization agreements, national regulation determining food safety, a variety of social and environmental standards, industrial policy restricting or facilitating investment, tax regimes, and licensing requirements. We focus on key institutional framework factors and actors that specifically affect aquaculture value chains in the four selected countries, rather than covering all the possible institutional elements that may contribute in shaping value chains. For example, rather than examining the role played by import country regulation in general, we focus on specific issues, such as US import alerts and anti-dumping tariffs (which affected exports of tilapia and pangasius from China and Vietnam); rather than examining the

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domestic regulatory framework in general (and other factors that affect, e.g., the ease of doing business, transparency in contracting, and/or corruption), we focus on value chain-specific issues – such as lack of coordination among regulatory authorities in Bangladesh, or the positive role played by the Thai Ministry of Fisheries in requiring the registration of chain of custody. But we go beyond the analysis of public institutions and regulatory bodies – we also examine the relevant private and hybrid standards and certifications which play an important role in the institutional framework of aquaculture governance – these include the Aquaculture Stewardship Council (ASC) certification system and related Aquaculture Dialogues, the Global Aquaculture Alliance’s (GAA) Best Aquaculture Practices (BAPs), and GlobalGAP standards (Belton et al., 2009, 2010, 2011a, 2011b; Kalfagianni and Pattberg, 2013; Tran et al., 2013). Although some value chain operators have been involved in standard-setting and management, ‘external’ actors (such as international NGOs and process consultants) have been key players in these initiatives. It should also be recognized that the effect of environmental certification to reduce possible negative impacts has so far been limited due to the fact that only a limited share of global aquaculture production is currently certified. While ASC has only recently started certifying farms, species presently being certified are predominantly destined for EU and US markets with limited reach in Asian markets (Bush et al., 2013; Jonell et al., 2013). In a third step we analyse ‘whole-chain’ governance as the process shaped by institutional frameworks and by one or more groups of ‘lead firms’ that operate at particular functional positions along the chain. These firms are able to shape who does what along the chain, at what price, using what standards, to which specifications, and delivering at what time. They organize activities with the purpose of achieving a certain functional division of labour along a value chain – resulting in specific allocations of resources and distributions of gains (Gereffi, 1994). This kind of analysis (as suggested in Ponte and Sturgeon, 2014) entails: (1) identifying a group of ‘lead firms’ occupying a functional position (e.g. processing, retail) that drive a value chain by defining the terms of chain membership, incorporating/excluding other actors accordingly, generating rents and re-allocating value-adding activities (Gereffi, 1994; Gibbon and Ponte, 2005; Gibbon et al., 2008); (2) determining whether the value chain is driven by one group of firms (e.g. retailers) carrying out a specific function in the value chain (unipolar value chain); by two groups (e.g. retailers and branded processors) competing with each other in governing (bipolar, or twin-driven, value chain); or by more than two groups (multipolar value chains); (3) qualitatively assessing the degree of driving that lead firms can exert on the value chain – a way of determining how much power they have in shaping governance; this is measured by the degree of lead firms’ ability to define the terms of chain membership, incorporate/exclude other actors accordingly and re-allocate value-adding activities; and (4) integrating lead-firm effects and institutional frameworks to explain ‘overall governance’.

Methodology Four countries (Bangladesh, China, Thailand and Vietnam) and four species, Pangasius (P. sutchii and P. hypophthalmus); Prawn (Macrobrachium rosenbergii); Shrimp (Penaeus monodon and Litopenaeus vannamei); Nile Tilapia (Oreochromis niloticus) and its hybrids, were selected for this article. The four countries are important aquaculture producers and exporters but represent different farming systems and different stages of upgrading (on upgrading, see Ponte et al., 2014). The target species are those that are systemically important in terms of aquaculture exports in the

four countries. We also researched shrimp in Vietnam and tilapia in Thailand, but due to space limitations and given that these species are covered in other countries already, we do not examine them in this article (see Jespersen et al., 2013; Ha and Bush, 2010; Tran et al., 2013 for more information on the shrimp value chain in Vietnam). In some cases, the selected value chains are surrounded by controversy regarding sustainability issues such as increased soil salinity, destruction of mangrove forests for the construction of ponds, loss of biodiversity, and reduced water quality (Asche and Khatun, 2006). All four target species have shown consistent growth in production volumes and tolerance of a range of environmental and management variables. The species are omnivorous, in contrast to most species cultured in Europe, North America and Japan, which has important consequences for feed inputs. In Asia, fieldwork was conducted in the four countries by two researchers in slots of 2–3 months between September 2010 and December 2011, for a total of 11 months. In addition to gathering secondary data, most of the fieldwork consisted of semi-structured interviews. Respondent selection was carried out to cover all key actors in the value chain and relevant policy makers and other ‘influencers’ (such as NGOs). Interviews in Asia were conducted through a translator or in English when possible. Between September and December 2011, fieldwork was also undertaken in the EU, focusing on Germany, the United Kingdom and France, given their relative importance in terms of consumption of the target species from the four Asian countries, as well as Belgium and the Netherlands because of their role as import hubs. Observations on other end-markets (especially the US) are based on statements made by exporters in the origin countries. An interview guide with key topics assisted with the structuring of the interview discussions. Questions for value chain actors were based on the GVC analysis areas of mapping, coordination, institutional framework, governance and upgrading (the analysis of upgrading is available in Ponte et al., 2014), with emphasis on the demands placed by buyers and upgrading responses by value chain actors. Before fieldwork began, a list of value chain actors was developed based on a review of aquaculture value chains in the four countries. High priority was given to individuals in nodes of the chain through which aquaculture products were exchanged (such as hatcheries, farmers, processors and intermediaries), while medium priority was given to individuals in service and support organizations such as marketing, training, certification, financial assistance and trade associations. Low priority was given to additional inputs to the chain such as feed and ice inputs. Informants were selected according to their ability to provide efficient (i.e. with first-hand experience) and accurate information about the value chains. Eighty-four interviews were carried out in Bangladesh, 32 in China, 75 in Thailand, 56 in Vietnam and 36 in the EU (for a breakdown of interviews by type of actor, see Jespersen et al., 2013). The selection of key informants was based on their specific roles in the value chain and relied on snowball sampling. A range of firm sizes was included to capture variations in operational practices. It proved difficult to gain access to processors and to obtain reliable data from them, especially on costs and other factors that are considered key for competitive advantage. In Vietnam, this was further hampered by the portrayal of pangasius as ‘unsustainable’ in the press and by an influential international NGO at the time of fieldwork.

Institutional frameworks and value chain governance in selected Asian aquaculture value chains In this section, we discuss country-by-country results in the three-step format outlined above: (1) we identify the main forms

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of coordination prevalent at key value chain nodes (see Figs. 1–4; Table 1); (2) we highlight the role of specific institutional framework factors and actors – as relevant to the country and species under analysis (see Table 2); and (3) we provide an analysis of ‘whole-chain’ governance (see Table 3). Bangladesh: shrimp/prawn The most common forms of coordination in the value chains for shrimp and prawns in Bangladesh are market and captive (see Fig. 1 and Table 1). A large number of small-scale producers regularly sell small amounts to the nearest chatal (auction market), depot (collection centre) or via a faria (middleman) through spot marketing. Market coordination is common in other value chain nodes as well, with products sold to the highest bidder and with prices between processors and commission agents fixed daily in the harvest season. Captive relationships are also observed, linked to informal credit provision. Formal loans usually require collateral such as land, which is often difficult for farmers in Bangladesh to provide. Instead, informal loans and microfinance enable farmers to purchase seed and feed on credit, usually from commission agents who act as intermediaries between producers (via chatals and depots) and processors. Market coordination and captive relationships are also present between exporters in Bangladesh and importers in the EU due to dependency by suppliers on importers. Captive relationships arise from the reputational risk associated with exports from Bangladesh, which reduces the number of buyers willing to source from there. Importers who do source shrimp and prawn from Bangladesh may experience high monitoring costs for import testing. Bangladesh exports arrive into Europe in response to orders made by European buyers between three and six months previously (for

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transportation by sea), although this is dependent on volumes, season or product specialization required. In the case of high-risk products, a ‘forwarder’ may handle the actual import procedure including paperwork and sometimes storage before onward distribution, without handling the actual procurement of aquaculture products itself. Smoothing the arrival of products into the EU is contingent on both a safe product and appropriate documentation. Forwarders often carry the risk of a document or product safety failure and in such cases are responsible for negotiating returns, payments and paperwork associated with a rejection. Within the European segment of the value chain, market coordination is dominant between importers and low-end foodservice operators and wholesalers – where price is key and informational complexity is low. Both parties’ costs of switching to new suppliers under these conditions are low. An importer may buy shrimp and prawns in volumes that exceed their orders and then sell surpluses in the spot market (e.g. by ‘cold-calling’ restaurants, wholesalers and other suppliers). Some importers only buy seafood from Bangladesh on the spot market, and only when supply is not available from other countries. Higher risk is associated with shrimp and prawns from Bangladesh – indicated by its high number and heavy proportion of notifications in the EU’s Rapid Alert System for Food and Feed (RASFF) (Nazmul Alam, 2013), a system that shares information between EU member states on measures taken responding to serious risks detected in relation to food or feed. This, combined with low-end foodservice and retail markets that do not demand further environmental or social certification discourages more sophisticated forms of coordination between importers in the EU and processors/exporters in Bangladesh. The institutional framework has an important influence on the features of the shrimp/prawn value chain in Bangladesh because the domestic regulatory framework has detrimentally impacted

Fig. 1. Forms of coordination in selected nodes of shrimp and prawn value chains from Bangladesh. Elaboration by authors.

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Consumpon Wholesale / Foodservice (low-end)

Retail / Restaurants (high-end)

Forms of coordinaon: Market Modular Relaonal Capve Hierarchy

Imporng / Trading

Middlemen

CIQ farmers

Processing / Exporng

CIQ farmers (contract)

Own-farm producon

Inputs (seed, feed, chems, finance) Fig. 2. Forms of coordination in selected nodes of the tilapia value chain from China. Elaboration by authors.

Fig. 3. Forms of coordination in selected nodes of the shrimp value chain from Thailand. Elaboration by authors.

the export competitiveness of shrimp and prawn (see Table 2). In Bangladesh, inefficiencies in the national legal framework, such as the many government agencies involved in planning, research, promotion, development, management and regulation of the seafood sector has led to a lack of enforcement of existing regulations. According to an ex-Director of the Department of Fisheries, policy reform, regulatory reform, conformity of law enforcement agencies, greater awareness of food safety laws, capacity building within government agencies, stronger laboratory facilities, HACCP and traceability at all levels, and improved inspection procedures are required in order to reduce the reputational risks associated with exports from Bangladesh (statement given at the ‘Policy Level Stakeholder Workshop’, 28 September 2010, Dhaka). In the meantime, the sector relies heavily on technical and financial support by local and international NGOs, thus on insecure funding, and has limited prospects in promoting value chain upgrading (for a more specific discussion on upgrading in these value chains, see Ponte

et al., 2014). Consequently, interviews showed that some European importers (e.g. in Germany) have had to adopt higher levels of verification and oversight for products from Bangladesh. In terms of whole-chain governance, the value chain for shrimp and prawns in Bangladesh can be characterized as being driven by importers. While Islam (2008) characterized this value chain as ‘twin-driven’, he included as drivers both ‘internal’ value chain actors (importers) and ‘external’ ones (international NGOs). In our approach, we focus on the polarity of internal driving, and then reflect upon other institutional factors influences on the overall governance of the value chain. Therefore, from this point of view, the value chain for shrimp/prawns in Bangladesh is unipolar (see Table 3). The level of driving, however, is low due to the basic quality of products, destined primarily for wholesale and foodservice, sporadic interactions between value chain actors, and downward pressure on prices. Driving is carried out mainly through demands for basic product safety. There is little incentive to transfer infor-

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Consumpon Wholesale / Foodservice

Forms of coordinaon: Market Modular Relaonal Capve Hierarchy

Retail

Imporng / Trading

Processing / Exporng

Preferred suppliers

Independent farmers

Contract farmers

Own-farm producon

Inputs (seed, feed, chemicals, finance) Fig. 4. Forms of coordination in selected nodes of the pangasius value chain from Vietnam. Elaboration by authors.

Table 1 Summary of main coordination mechanisms.

Farmers–processors Processors–importers European Union Importers–retailers–wholesalers

Bangladesh

China

Thailand

Vietnam

Market (some captive) Captive (some market)

Captive market (some hierarchy) Market (moving toward captive)

Captive (some market and relational) Captive, modular

Hierarchy, relational, captive, market

Market

n.a.

Relational, modular, captive

Market, captive (some relational)

Market, captive

Elaboration by authors.

Table 2 Key institutional framework factors and actors shaping aquaculture value chains in the four selected countries. Country

International and import country regulation

Domestic regulation and policy

Private and hybrid standards and certifications

Key influential actors and institutions: international

Other influential actors and institutions: domestic

Bangladesh

GSP Preferences, EU import notifications, mandatory preexport testing of shrimp; testing of shrimp import consignments in the EU US import alerts and antidumping tariffs

Farm and processor registration and food inspection (UNIDO/DoF); export subsidies

ISO, BRC, HACCP, BSTI, IFS, GAA-BAP, SSOP, SOP, Naturland

EU donor agencies and the US Agency for International Development (USAID), UN; international NGOs

Local NGOs, export-level industry associations

Farm and processor registration, and food inspection (CIQ), certification & labelling

GSP Preferences

Registration Chain of Custody (DoF), ThaiGAP and traceability (Movement Documents)

US FDA, US Southern Shrimp Alliance, Food & Water Watch, Monterey Bay Aquarium, WWF, Sustainable Fisheries Partnership ASC, Naturland

AQSIC/CIQ

Thailand

ISO, BRC, HACCP, GAA-BAP, ASC, GlobalGAP, IFS, SSOP; pollution free and ‘green food’ certification (for the domestic market) ISO, HAL-Q, GMP, BRC, IFS, SQF, HACCP, GlobalGAP, GAABAP, Fairtrade, ThaiGAP; organic Thai certification

Vietnam

US anti-dumping tariffs, EU import notifications

Processor registration, Food and farm inspection (NAFIQAD); promotion of Best Management Practices and VietGAP standards

ISO, BRC, HACCP, SQF, GlobalGAP, GAA-BAP, ASC Naturland

Catfish Farmers of America (CFA), consumer groups, WWF, Dutch Sustainable Trade Initiative (IDH), media

China

Thai Department of Fisheries; farmer- and export-level industry associations NAFIQAD, Export level industry associations

Notes: ASC (Aquaculture Stewardship Council); AQSIC/CIQ (General Administration of Quality Supervision, Inspection and Quarantine/China Inspection & Quarantine); BRC (British Retail Consortium); BSTI (Bangladesh Standard Testing Institution); GSP (Generalized System of Preferences); GMP (Good Manufacturing Practices), HACCP (Hazard Analysis & Critical Control Points); HAL-Q (management system for quality control of halal food); IFS (International Featured Standards); ISO (International Organization for Standardization); NAFIQAD (National Agro Forestry Fisheries Quality Assurance Department); SQF (Safe Quality Food); SSOP (Sanitation Standard Operating Procedures); US Food and Drug Administration (FDA); UNIDO/DoF (United Nations Industrial Development Organization/Department of Fisheries); WWF (World Wide Fund for Nature). Elaboration by authors.

mation related to other quality demands or certification, or to develop capabilities in collaboration. The institutional framework has a strong and negative impact on the functioning of the value

chain, mostly arising from domestic factors. A weak domestic regulatory framework is only partially compensated by technical and financial assistance by donor and NGO projects, leading to a high

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Table 3 Summary of overall value chain governance. Polarity of Lead firm groups governance

Features of ‘driving’ Ability to Main mechanisms of driving reallocate valueadded activities

Weak domestic regulatory framework; only partially compensated by technical and financial assistance by donor and NGO projects; reputational risk associated with exports from Bangladesh due to food safety import failures VCA: VCA: Demands for high quality Medium Increased scrutiny of Chinese seafood imports by the US-FDA High raw material, food safety, VCB: Low competitive price, and and campaigning by NGOs and consumer groups, leading to sustainability certification VCB: Demands for basic product Chinese authorities (CIQ) to qualifications and food safety tighten regulation and inspection of the tilapia industry High Key role of Thai government in Medium– Product innovation; demands assisting the industry to meet high for strict product qualifications, international export standards high volume, consistency, through early intervention and logistics specifications, technical assistance; facilitated sustainability certifications; introduction of labels and despite sophistication of Thai certification processors, EU processors keep value addition functions, marketing and R&D VCA: VCA: Demands for high grade/ Medium Increased regulatory monitoring of Asian imports in High quality, complex product specs, the EU resulting in tightened food safety, competitive price, VCB: Low volume, logistics and domestic regulation and inspection; NGO and consumer sustainability certification VCB: Demands for basic product group campaigns had strong qualifications and food safety; impact on overall governance flexibility of importers’ sourcing arrangements between networks of suppliers

Importers

Low

China

Value chain strand (A): Retailers and restaurant chains

VCA: High

Thailand

Vietnam

Value chain strand (B): Importers supplying wholesale and low-end foodservice Multipolar Retailers, high-end foodservice, branded processors, importers

Bipolar

Value chain strand (A): Retailers

Value chain strand (B): Importers supplying wholesale and low-end foodservice

Overall Summary of most level of important IF factors driving

Ability to define terms of chain membership

Bangladesh Unipolar

Bipolar

Effect of institutional framework (IF)

VCB: Low

High

VCA: Medium/ high VCB: Low

Low

Low Demands for basic product qualifications and food safety; low levels of driving due to due to basic levels of quality, short term-relationships and low price

Intensity, impact and nature of IF factors

Strong Negative Domestic

Medium Positive International

Strong Positive Domestic

Strong

Positive International

Elaboration by authors.

reputational risk associated with a history of food safety failures (Nazmul Alam, 2013). China: tilapia In term of forms of coordination (see Fig. 2 and Table 1) interviews with tilapia processors in China indicate that most of them source the majority of their raw material from China Inspection & Quarantine (CIQ) registered production bases or from farms with which they have supply agreements or contracts. The responsibility for export food safety lies with the General Administration of Quality Supervision, Inspection, and Quarantine (AQSIQ) and its provincial branches. Exporting companies are required to procure raw materials from a registered production base – a farm controlled by the company directly or a fixed group of suppliers approved by CIQ on the basis of mainly record-keeping (see Gale and Buzby, 2009). It is not clear how binding or formal these agreements are, but typical aspects addressed are chemical residue testing, farmer record-keeping and minimum weight of the fish, although this latter aspect may be a buyer requirement rather than one imposed by CIQ. The farm gate price depends on the international market price and the size of the fish and is determined at harvest. Prior to accepting the raw material from CIQ registered farms, processor personnel will take samples to own or third-party laboratories

for testing of antibiotic residues. In some cases a contract or agreement may imply that the processor supplies seed, feed on credit, transport and/or technical assistance to the farmer. According to a few processors, some of their contracted suppliers are organized in farmer associations – an institutional development which can be seen as a response to technological advances, market volatility and the demand for high quality and safety of food products (see also Jia and Huang, 2011). In response to rising demands in overseas markets and increasing scrutiny of Chinese aquaculture products, seafood processors/ exporters are steadily increasing their control over raw material production and sources of inputs. As a result, many enterprises source part of their raw material from their own farms – some of which are GAA-BAP certified and preferably located in remote production areas, such as reservoirs, where water quality is considered superior. This own-farm sourcing strategy seems to serve several purposes. Firstly, it enables full control of the processor supply chain with regard to food safety and inputs used (seed, feed and chemicals); secondly, if GAA-BAP certified, own farm production provides a practical tool to communicate sustainability as well as traceability to buyers; and thirdly, it is an important aspect in producing high quality raw material where production conditions, such as water quality, are key. Chinese tilapia processors generally operate two or three different forms of coordination with farmers (see Fig. 2; Table 1).

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Although CIQ registered farmers can be considered independent, i.e. not owned by a processor, some are registered production bases of specific processors and contractually obliged to supply a particular enterprise. This type of arrangement could be described as captive coordination mainly due to one-way dependency of the suppliers. CIQ registered farmers that are not affiliated to a specific processor may supply multiple firms (or middlemen) and thus operate under market-type coordination mechanisms. At the same time, the trend towards own-farm production indicates hierarchical coordination with processors vertically integrating upstream. Further downstream in the value chain, Chinese processors are linked to overseas importers through two main types of coordination: short-term market exchange and long-term supply agreements (captive coordination). Short-term contracts are preferred by most processors because of fluctuations in the market and the possibility of making larger profits when prices are high. Importers supplying supermarkets, on the other hand, prefer long-term contracts of at least six to nine months so they can negotiate a fixed, and according to processors, often relatively low price. Long-term agreements may pose a risk for processors in the event of changes in the exchange rate or if the buyer does not honour the contract. Despite the alleged disadvantages of long-term contracts, processors make use of short- as well as long-term agreements to gain access to lucrative markets and customers, and to increase their sales volumes, an important factor given their small profit margins. The coordination mechanisms characterizing the relationships between processors and importers to a large degree resemble market coordination. Firstly, a significant amount of the trade takes place through spot or repeated market-type inter-firm exchanges. Secondly, the complexity of information exchanged is relatively low and can be transmitted through clear product specifications or are codified in standards and certification schemes verified by third-parties. Thirdly, price is a crucial element for overseas buyers due to the low-value status of frozen tilapia in export markets. Fourthly, processor capabilities are, if not high, at least generic and due to internal competition between processors, the cost of switching suppliers is limited for importers. In turn, because of the possibility for processors to tap into different markets and buyers, their costs of switching to new partners are low. However, processors’ increasing control over raw material production reflects a partial trend towards more captive coordination between processors and overseas buyers, given the increased focus of high-profile retailers and chain restaurants on food quality, safety and sustainability. The institutional framework has an important bearing on the tilapia value chain in China. Chinese exports of aquaculture products became subject to increased scrutiny in the US and EU in the 2000s following reports of contaminants including banned antibiotic residues and heavy metals in fish and shrimp (FDA, 2008 in Broughton and Walker, 2010; Liu et al., 2012; see Table 2). Regulative measures in the US, such as the increased scrutiny of Chinese seafood imports by the FDA, are partly an outcome of lobbying and campaigning by environmental NGOs and consumer organisations to draw attention to the alleged weak regulation of food safety or aquaculture in importing and producing countries. This has meant that Chinese authorities (CIQ) have also tightened regulation and inspection of the tilapia industry in an effort to curb negative publicity and loss of market access (Gale and Buzby, 2009; Hanson et al., 2011). The increased stringency of CIQ in turn means that Chinese processors are under pressure to control their own raw material supply base. However, most Chinese processors also supply less demanding customers in low-end foodservice and wholesale markets, where external actors and factors play a smaller role in shaping value chain governance. In terms of whole-chain governance, the Chinese tilapia value chain is driven by different groups of buyers (depending on the

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value chain strand) in main export markets – the US, and increasingly the EU. For most processors interviewed during fieldwork, the US remains the main export market accounting for between 60% and 80% of export volumes. Mexico is also an important, yet less demanding export market, while the EU is still a comparatively small, but steadily growing market. The processors however supply a wide range of customers in many different countries – all of which have different food safety regulations, product specifications, and consumer preferences. A processor may thus supply both high-profile retailers and restaurant chains in the US or EU and less demanding customers in Mexico or Russia, where HACCP and food safety nevertheless are basic requirements. Chinese processors rarely supply retailers or restaurant chains directly, but through overseas importers and traders who in turn may also supply the wholesale market and foodservice sector (catering, restaurants, schools, etc.). Although Chinese seafood processors supply a wide range of market channels in different export markets, large US retailers and chain restaurants (and their dedicated buyers) play an important role in influencing the business strategies and conduct of seafood processing companies. An indication of the significance of US buyers in driving the value chain is the prevalence of GAA-BAP certification amongst Chinese tilapia processors. Interestingly, although the EU is still a comparatively small market in terms of volume, British Retailer Consortium (BRC) certification was also widespread amongst processors. According to respondents, BRC certification is advantageous when supplying European retailers, such as Safeway and Metro, but also for buyers outside Europe e.g. Walmart in Canada. These different value chain strands may thus display different governance features depending on the end-market that the suppliers feed into (see Table 3). In one value chain strand, high-profile retailers and restaurant chains are the main drivers. As high-profile retailers and restaurants are often the focus NGO campaigns to promote safe and sustainable aquaculture products, levels of driving in this value chain strand tend to be high and driving is based on demands for high quality raw material, food safety, competitive price and sustainability certification. In the value chain strand destined for wholesale and low-end foodservice, importers are the lead firms. However, the level of driving they can exert is lower than in the other strand – and typically based on demands for basic product qualifications and food safety. Therefore, taken as a whole, the value chain for Chinese tilapia can be considered to be bipolar and to exhibit a medium level of driving. It is bipolar in the sense that two main groups of internal chain actors in different functional positions drive the chain. Finally, the impact of the institutional framework on governance can also be considered to be medium (see Table 3). It has tended to have positive outcomes in terms of value chain functioning (see Ponte et al., 2014) and has been shaped mainly by international factors, chiefly the increased scrutiny of Chinese seafood imports by the US-FDA and campaigning by NGOs and consumer groups, which led the Chinese authorities (CIQ) to tighten regulation and inspection of the tilapia industry. Thailand: shrimp Captive forms of coordination dominate the shrimp value chain in Thailand (see Fig. 3; Table 1). They are the result of low supplier capabilities, but high informational complexity and a one-way dependency of suppliers. This is exhibited in relationships between input suppliers and both independent farms and integrated farms, where seed, feed, chemicals and funding may be provided on credit. At the farm level, the ‘tighter’ the relationship between processors and farmers or brokers, the more likely the processor is able to source according to the qualifications it seeks.

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Private industry is extremely powerful in Thai farmed shrimp production and the largest companies carefully manage production and processing, even from the research stage. A number of large processors contract farms to produce shrimp. The aim of contract farming is to ensure a stable market for the producer and a stable supply for the processor. In contract farming, the price, tonnage and shrimp-size at time of harvest is agreed in advance and the farm produces to the processor’s ‘order’. An agent contracted by the processor may undertake the actual harvest and transport the shrimp directly to the factory. This is different from a processor employing the services of a broker, where the processor informs the broker of the size of shrimp they want, quantity and price. The broker then sources this order and sends it directly to the factory. Relationships between processors and contract farms often exhibit captive characteristics, but because farmers are not obliged to sell to processors even when they have received assistance from them, when prices rise farmers have strong bargaining positions. In these situations, contracts are waived in favour of market coordination – selling shrimp to the highest bidder. All processors interviewed stated that they no longer trust their suppliers to honour contracts if prices rise. The most successful contracts (i.e. those that were honoured) were between large farms and large processors, born out of mutual dependence and relational coordination. Although the vertical integration of farms (where fry production, grow-out and processing are all part of one company operation) may seem the most likely method to source according to the credentials a processor seeks, in practice processors do not wish to operate such systems, due to the specific technical expertise and company oversight required at the grow-out stage. Some larger processors operate ‘integrated farms’ instead, which they formally own but place under farmer management (a set-up that is closer to captive coordination than full hierarchy). Smaller processors, however, deliberately avoid tight forms of coordination with farmers and order from brokers instead. Independent farms and processors normally operate market forms of coordination. A number of small-scale independent farms may also ‘cluster’ around a processor, which are normally captive to the procurement practices of the processor. Between European importers and Thai processors, coordination is more codified but remains captive in nature. The type, extent and formality of contracts are often dependent on the reputation and reliability of the supplier. However, once a quality supplier is located and a trusted relationship is built, Thai processors may benefit from advantageous conditions, such as higher prices, renegotiation of contracts if there is a supply failure, technical assistance and even investments in certain aspects of production. A few highly capable processors have advanced technical capabilities and often offices in Europe, and their relationships with downstream value chain players are more modular than captive. Within the EU, relational coordination characterizes the relationships between retailers/foodservice providers, brand manufacturers (who may undertake secondary processing) and importers. This is because value chain actors in the EU have similar access to knowledge of final markets and product segments, thus balancing power relations. Nevertheless, the picture is slightly different depending on seafood end-market characteristics. For example, in the UK, relational coordination is based on verbal agreements in the context of long-term and trusted relationships between importers, distributors, processors, retailers and the foodservice industry. In France, modular coordination is more common as the seafood market is less commoditized due to national regulation that supports independent businesses. In Germany, captive relationships are more likely to be present due to the market power of discounters. A strong institutional framework has played an important role in shaping the shrimp value chain in Thailand, contributing to

enhanced quality and food safety (see Table 2). The Thai government has played a key role in assisting the industry to meet international export standards through early intervention and technical assistance, leading to the development of processors’ competences and innovation, and to higher quality products. The government has also invested in public infrastructure such as convenient and efficient transport facilities; power supplies and local marketing facilities; technical extension services; internet-based information services; and market facilitation. Other government assistance includes non-financial subsidies, such as exhibition attendance for those at export nodes of the value chain, encouraging direct access to market information. The Department of Fisheries regulates inputs such as feed, seed and equipment, and also provides technical assistance such as the dissemination of new aquaculture technologies. Farm registration and Movement Documents (MDs) introduced by the government also supported the introduction of standards and certification in the Thai industry, which has contributed to added-value production and a generally positive industry image. All of the processors interviewed have their own Quality Control departments and onsite testing laboratories. In terms of whole-chain governance, Thailand’s reputation as a provider of high quality production and volume, availability, consistency and certified sustainability, means that its exports are primarily destined for retail chains and the high-end foodservice industry in the EU (see Table 3). These buyers have strict product and often process specifications. They transfer their requirements to brand manufacturers (producing for their own or the retailer’s own-label) or to importers who provide product specifications and logistical requirements to Thai processors. Importers also provide innovation in ‘product stories’ for high-end retailers. As a result, the shrimp value chain from Thailand is multipolar and highly driven by groups of lead firms occupying different functional positions. Lead firms in the EU drive Thai shrimp production in two main ways. First, they maintain value addition operations in Europe rather than Asia. Individually quick frozen (IQF) shrimp is shipped to Europe before rapid defrosting and cooking according to customer orders, after which the product is distributed as a frozen or chilled product. According to our interviews, EU-based companies believe this is the most effective method of supplying a superior quality product rapidly, as per customer orders, which may be received only a day or two in advance. Asian countries do maintain a competitive advantage in processes requiring high labour inputs, but the extent to which high-labour primary processing is undertaken in Asia, depends on the season and exchange rates. Second, European lead firms drive the shrimp value chain through innovation. A number of large European suppliers have the marketing competences and research and development skills to develop new shrimp products, either in partnership with retailers or for their own brand. These collaborations lead to joint driving in chains as processors then make requirements on their suppliers for new product forms. While some large Thai suppliers have a sufficient market presence in Europe and R&D departments to support product innovation, European value chain actors claim that most processors in Thailand who are involved in new product development follow specifications set by their buyers rather than experiencing successful implementation of their own ideas. Finally, the impact of the institutional framework on governance in Thailand has been strong, leading to positive impacts (see Ponte et al., 2014), and mainly arose from the ability of the Thai government in assisting the industry to meet international export standards through early intervention and technical assistance, and in facilitating the introduction of labels and certification that help meet demands of high-end buyers.

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Vietnam: pangasius In relation to forms of coordination, the existing literature on the pangasius value chain reports a general trend for processors in Vietnam to invest in their own farm production to supply the most demanding export markets in terms of quality, safety and sustainability criteria. Another growing category of raw material supply is through producer associations or networks of affiliated farms that operate larger farms able to provide high and consistent quality fish on a regular basis (Khoi, 2011). According to Belton et al. (2011a, 2011b) association members do not receive preferential prices for their products, but are guaranteed to be able to sell once they reach market size. Finally, processors are said to source around 20–30% of their raw material needs from independent farmers in order to be able to supply ‘lower quality’ markets in Russia, Ukraine, the Middle East and South America (Bush and Belton, 2012). These general trends are partly supported by our fieldwork interviews, which indicate that processors source anywhere between 20% and 80% of pangasius from what they refer to as ‘own-farm’ production. This category in some cases also includes networks of affiliated farms or preferred/contracted suppliers linked to processors through formal or informal connections. The processors source the remaining share of raw material from independent farmers with whom they have no contracts – usually small-scale family holdings. The processors may thus operate different forms of coordination upstream: own-farm production (hierarchy), relational or captive coordination of suppliers depending on the nature of relationship (preferred suppliers or contracted farmers) and market coordination of independent farmers (see Fig. 4 and Table 1), although the relative power of processors appears to fluctuate with international market prices. In the node between Vietnamese processors/exporters and overseas importers, two types of coordination mechanisms are dominant: market coordination through short-term spot exchange and longer-term captive relationships. The Vietnamese processors supply a wide range of products to numerous customers who in turn supply different market channels in a plethora of different countries. Fieldwork interviews highlighted that it is not unusual for an individual processor to sell products to distributors in 20– 30 different countries. This marketing strategy corresponds with Sturgeon’s (2009: 130) observation that ‘when supplier capacity is generic, suppliers can and do spread their risk across a large and diverse pool of buyers’. More specifically, supplying a large, diverse pool of buyers also enables the processors to profit from variations in the quality of the raw material (e.g. colour and size) and benefit from economies of scale by increasing sales volumes. According to some processors, the advantage of spot market sales is that they can yield good profits when the market price is high. Long-term supply arrangements, on the other hand, provide steady orders of large volumes, but not necessarily higher prices. The dependence of processors on European importers supplying retailers is offset by their diversification of buyers and markets. Forms of coordination in Europe appear to be dominated by market coordination in the node between importers and wholesale/foodservice and captive coordination between importers and retailers. However, relational coordination is also evident when retailers rely on importers to supply complex, often sustainably certified product specifications. International actors and factors forming part of the institutional framework have had a strong influence in shaping the pangasius industry in Vietnam (see Table 2). Vietnamese pangasius exports became subject to a number of notifications associated with antibiotic and microbiological contamination, pesticide residues and labelling issues following the elevation of the EU RASFF to a legal requirement in 2004. Pressures to address food safety concerns

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to ensure continued access to export markets resulted in heavier domestic regulation on value chain actors under the Ministry of Agriculture and Rural development (MARD) with the National Agro Forestry Fishery Quality Assurance Department (NAFIQAD) responsible for inspection and implementation (Tran et al., 2013). In addition, the Vietnamese government turned to private governance arrangements, such as GlobalGAP and SQF, in an attempt to increase the credibility of Vietnamese products internationally (see also Ha and Bush, 2010). NGO and consumer group campaigns and negative media publicity in importing countries have had a tremendous impact on the Vietnamese value chain for aquaculture products (Pham et al., 2011; Bush et al., 2009; Little et al., 2012; Bush and Duijf, 2011). As a result, there is a general trend towards increasing control of supply chains by retailers, importers and domestic processors and vertical integration in the Vietnamese part of the value chain. In terms of whole-chain governance, the EU constitutes a key market for Vietnamese pangasius exports, and European chain actors, especially retailers (such as Metro and Ahold) and importers, play an important driving role (see Table 3). Large supermarket chains often source through dedicated importers who transmit the retailers’ demands in terms of price, volume, logistics, quality and sustainability to processors/exporters in Vietnam. Importers themselves typically supply a range of different buyers – from large supermarket chains to wholesale buyers supplying the industrial foodservice sector. The bifurcation of importers’ value chains appears quite common and implies two parallel strands: one for higher grade/quality and/or sustainably certified products, driven by retailers; and another for more standardized, non-certified or medium/lower grade products, driven by importers. The former strand exhibits higher levels of driving than the latter, where importers have greater flexibility in sourcing arrangements between different networks of suppliers – as long as these products meet the quality requirements of specific orders and contracts. Therefore, taken as a whole, the value chain for Vietnamese pangasius can be considered to be bipolar and to exhibit a medium level of driving, mirroring in many ways the situation in the Chinese tilapia value chain. Differently from the latter, however, the institutional framework has had a strong and positive impact on the functioning of the value chain in Vietnam (see Ponte et al., 2014), chiefly arising from external factors, such as NGO and consumer group campaigns, and increased regulatory monitoring of Asian imports in the EU resulting in tightened domestic regulation and inspection.

Discussion and conclusions In this article, we examined what shapes selected aquaculture value chains originating in four Asian countries through an analysis of forms of coordination, institutional frameworks and overall value chain governance. First, in relation to forms of coordination, we found that in several value chain nodes multiple mechanisms are at work at the same time (see Table 1). For instance, in the node between farmers and processors in the Vietnamese pangasius value chain, hierarchy, relational, captive and market forms of coordination are all present simultaneously, though trending toward hierarchical forms as the industry consolidates. In farmer–processor nodes in the three other countries, combinations of market, relational and hierarchy coordination are present, but with captive coordination playing a particularly significant role. Moving downstream, in the node between Asian processors/ exporters and overseas importers, captive and market forms of coordination are dominant. In Bangladesh, this node is mainly characterized by captive coordination; in China and Vietnam, coordination is also based on market mechanisms, but moving towards

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captive coordination due to buyers’ increased focus on quality, safety and sustainability and increased monitoring of suppliers. In Thailand, this node is mainly characterized by captive coordination, however modular coordination is also present in cases where highly competent processors are able to provide high quality and/ or value-added products to retail chains and the high-end foodservice industry in Europe. In the node between importers and different types of foodservice and retailer buyers in overseas markets, coordination ranges from market mechanisms in value chains sourcing shrimp/prawns from Bangladesh (due to low costs of switching suppliers), to modular, relational and captive mechanisms in value chains sourcing various aquaculture products from Thailand, China and Vietnam. Captive mechanisms emerge in cases of one-way dependency of suppliers, while modular and relational mechanisms are the result of long-term partnerships characterized by mutual inter-dependencies where retailers rely on importers to supply complex product specifications or innovative products. Second, we highlighted the importance of specific international and domestic regulation, private and hybrid standards and certifications, and a range of actors and institutions that are not direct operators in these value chains but are nevertheless influential in shaping it (see Table 2). These institutional factors interact with other elements that shape overall governance, thus impacting upon value chain operations. A first common feature has been that domestic regulation in exporting countries must be sufficient in scope, depth and enforcement to ensure compliance, provide key attributes such as internationally-acceptable traceability and testing systems and offer a firm basis on which third-party certification can be built. In doing so, the reputation of the exporting country is raised in international trade of aquaculture products, bringing both financial and non-financial benefits. All four countries have at one time or another suffered from an underdeveloped domestic institutional and regulatory framework, coupled with poor enforcement that led to food safety regulatory failures and increased sector scrutiny and mandatory testing at the point of import to the EU. However, some of these countries have extended and strengthened, to different degrees, their institutional frameworks in order to meet import requirements and raise standards. Private (industry) and sometimes international assistance and NGO technical programmes supported this process. A second common feature has been the influence of negative publicity, driven by NGO and media campaigns in the EU and the US, which has led to increased use of third-party certification and the adoption of both international public and private standards as well as domestic public standards, with the exception of Bangladesh, which serves wholesale and low-end foodservice markets rarely targeted by NGOs. The issue of negative publicity points to the importance of assessing the complex networks and interactions between civil society, industry and the state. In the case of aquaculture value chains, this interaction has served to produce an environment in which developing countries and firms are faced with increasingly stringent food safety regulation and greater demands for transparency (in the form of traceability) and sustainability in key export markets. This could promote more sustainable production practices among those supplying such markets. At the same time, stricter import-level regulation and more stringent public and private standards in the EU and the US have also led suppliers in Asia to seek new market destinations for their products, especially in other Asian countries, Russia and the Middle East which place lower (sustainability) demands on suppliers. Third, we applied a whole-chain governance approach embedding the analyses of coordination mechanisms at individual value chain nodes and of institutional frameworks – and reflecting upon polarity, main drivers and key driving mechanisms (see Table 3). Similarly to the case of coordination mechanisms, governance

dynamics in the different value chains are also diverse. The Bangladeshi shrimp/prawn value chain is unipolar and characterized by low levels of driving applied by overseas importers on domestic processors. The impact of the domestic institutional framework on its functioning has been strong and negative, which resulted in a general lack of upgrading (see Ponte et al., 2014). This value chain caters mainly for low-end buyers with few quality demands and is considered risky by high-profile buyers due to a negative international reputation arising from repeated food safety failures. The Chinese value chain for tilapia is bipolar. It displays different drivers and degrees of driving, depending on the value chain strand in question – with higher levels of driving being applied in retailerdriven and restaurant chain-driven value chains than in those driven by importers. Here, the impact of the institutional framework on the functioning of the value chain has been medium and arose mainly as a response to international pressure. The Thai value chain for shrimp is multipolar and highly driven by various groups of actors (retail chains, high-end foodservice and brand manufacturers/importers) through demands placed on certification, high product quality, volume, availability, consistency and certification, and through product innovation and the determination of the location of value addition. The impact of the institutional framework has been strong and positive on upgrading, mostly arising from domestic regulatory and institutional support. Governance dynamics in the Vietnamese pangasius value chain resemble those identified in China – it is bipolar and driven by EU retailers and importers, with levels of driving differing according to the endmarket the value chain feeds into, but generally moving from lower towards higher levels. In this case, the impact of international institutional framework factors on the functioning of the value chain has been strong and led to positive outcomes in terms of upgrading (see Ponte et al., 2014). Overall, Asian suppliers are increasingly able to meet demands (related to price, volume, logistics, quality, innovation, food safety, sustainability, etc.) placed by overseas drivers of seafood value chains. However, meeting such demands does not necessarily guarantee long-term or more equal relationships, as value chain drivers keep control of product innovation, value addition and capture the benefits of certification. At the same time, the value chains that are characterized by bipolar or multipolar governance seem to be providing more options and flexibility for value chain operators in exporting countries. On the one hand, they are exposed to increasingly sophisticated demands for product quality, logistics, consistency, volume and food safety and sustainability standards. On the other hand, they can tap into alternative markets and product quality portfolios that allow them to escape the most damaging forms of spiralling demands and downward pressure on prices typical of other agro-food value chains. The aquaculture industry still faces great sustainability challenges, given that global population is projected to reach nine billion by 2050. Expected increases in disposable incomes for a growing urban middle class in developing countries means that the demand for seafood is likely to rise substantially in the near future (World Bank, 2013), with Asia continuing to be the main supplier. While the drivers for ensuring sustainability are presently coming from higher-end consumers in overseas markets, regional, domestic and low-income consumers are likely to become increasingly important. Heavier local competition for the seafood that is produced will mean that buyers overseas are likely to need to further develop longer-term relationships with their suppliers in Asia, and to support them in promoting the sustainability of the sector. It will be insufficient for this to occur solely in the high-end value chain strands where sustainable production practices may have a clearer demand. However, the lessons of past efforts to improve food safety standards in the four value chains we examine shows that these measures tend to slowly spill over from the higher qual-

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ity-end to the lower quality-end of export value chains strand as well as to domestic markets. The media and civil society groups are likely to continue to play an important watchdog function to promote sustainability through the transmission of information on production practices or the sustainability of sourcing policies. Media outlets are used as a conduit for NGO campaigns that encourage change in consumer purchasing drivers and decisions, support particular procurement strategies by lead firms, and influence the development of environmental and social standards. At the same time, the media can also overly sensationalize some of the problems encountered in the aquaculture sector, actually hampering efforts to improve sustainability (Little et al., 2012). Finally, our analysis supports four broad observations on the governance of food value chains more generally: (1) value chain governance can arise from a combination of a variety of forms of coordination at various nodes; a dominant form of coordination in one key node thus does not necessarily determine the main characteristics of whole-chain governance; (2) different groups and types of actors drive food value chains, applying distinctive driving mechanisms; and when value chains are bipolar or multipolar, value chain actors in exporting countries seem to have more space for manoeuvering and alternative options for engagement; (3) levels of driving tend to be higher in chains led by retailers and branded processors than those led by importers targeting wholesale and catering markets; and thus these kinds of food value chains are where sustainability demands are more likely to travel upstream; and (4) domestic regulation and institutional support in exporting countries are extremely important in facilitating the proper functioning of food chains and in opening up space for better bargaining for local actors in global value chains. Acknowledgments This research was financed by the European Commission under the 7th framework programme (EU-FP7 Grant Agreement No. 222889). Additional support was received from the CGIAR Research Program on Policies, Institutions and Markets. The authors gratefully acknowledge the inputs from all SEAT country teams in Bangladesh, China, Thailand and Vietnam and the support to fieldwork conducted for this paper. Especially valuable assistance in terms of access to value chain actors as well as vital translation and logistics assistance was provided by Dr. Md. Abdul Wahab, Dr. M. Mahafujul Haque, and Mr. Ali Hazrat and Mr. Palash Halder in Bangladesh, Dr. Liu Liping and Mr. Zhang Zongfeng in China, Dr. Kriengkrai Satapornvanit and Ms. Apinyaruk Wankeo in Thailand, and Dr. Phuong Thanh Nguyen and Mr. Dao Minh Hai in Vietnam. The authors also thank all key informants and related institutions that provided valuable time and knowledge. The article greatly benefitted from feedback by David Little, Francis Murray and two anonymous referees. Thanks also to Marc Bellemare for attentive and constructive editorial work. Any remaining errors are the sole responsibility of the authors. References Asche, F., Khatun, F., 2006. Aquaculture: Issues and Opportunities for Sustainable Production and Trade. ICTSD Natural Resources. International Trade and Sustainable Development Series Issue Paper No. 5. International Centre for Trade and Sustainable Development, Geneva. Asche, F., Roll, K.H., Trollvik, T., 2009. New aquaculture species – the whitefish market. Aquacult. Econ. Manage. 13 (2), 76–93. Bagumire, A., Todd, E.C.D., Muyanja, C., Nasinyama, G.W., 2009. National food safety control systems in Sub-Saharan Africa: does Uganda’s aquaculture control system meet international requirements. Food Policy 34 (5), 458–467. Barrett, G., 2002. There are more vets than doctors in Chiloé: social and community impact of the globalization of aquaculture in Chile. World Dev. 30 (1), 1951– 1965.

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