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Opening Speech: 4th International Abalone Symposium,
Cape Town, South Africa 2000

ABSTRACT The world supply of wild fisheries catch and cultured abalone production are considered with implications of the past, present and future. Much of the data available in recent years from various government sources and even FAO have often been inadvertently misleading. Reporting has often combined a number of dissimilar abalone products (fresh in shell, frozen meat, canned, dried etc) with misleading results. Surprising numbers result from this effort to standardize the production and export information for both the commercial catch and cultured product. Discussion of factors affecting abalone FOB and CNF prices. Review of market form (live, fresh, frozen, canned, dried) and how pricing is affected by processing and packaging as well as economic conditions. A review of suggestions for value added abalone product and the challenges of sustaining world demand at premium prices.

KEY WORDS: abalone, abalone market, abalone prices, abalone process and packaging, abalone future

INTRODUCTION

World abalone supply statistics have not all been accurate over the past 30 years. In a re-examination of the statistics our industry has used for many years, I have found the need for some substantial adjustments in both the Fisheries and the cultured sectors. Annual data for some countries has substantial gaps in reporting. One Country has reported tonnage as "in shell" while another reports "meat only". This distinction alone can distort the comparative total production of an individual country by two to three hundred percent. To complicate the analysis further, export and import data often combine a number of dissimilar abalone products (fresh in shell, frozen meat, canned, dried etc) into a single number for tonnage and value. In an attempt to standardize the reporting of the world of abalone supply, the following definitions are applied:

Abalone Fisheries: The total allowable annual commercial landing quota (country by country) expressed in terms of "in shell" weight. This category would include the planting of seeds in large areas of the sea wherein the sea bottom has not been prepared with man placed rocks or structures.

This definition does not include the legal sport catch or any illegal catch worldwide.

Cultured abalone (expressed in terms of "in shell" weight) includes both:

Intensive Culture: The farming of abalone on land or sea - -contained in man made tanks, nets or structures.
and
Extensive Culture: Sea planting of abalone seeds in artificially arranged substrate or structures, with or without adding food.

The Illegal Catch: Any taking of abalone beyond the total allowable annual landing quota.

To discuss the topic of World Supply without consideration to the illegal catch would be grossly misleading.

10 YEAR FISHERIES COMPARISON

In order to compare the abalone fisheries and cultured totals on an "apples to apples" basis, we must apply a standard "in shell" weight. Retroactive reporting (in particular China, but other countries as well) dramatically changes the cultured abalone totals. We now know that the FAO Yearbook of Fisheries Statistics had been reporting China's production of several groups of cultured mollusks - -including abalone - -as shelled or shucked weight, instead of their "in shell" live weight equivalent which should be normal practice in submitting to FAO. This has grossly underestimated cultured abalone production. Adjustments must therefore be made to previous reporting over this10 year timeframe:

Ten Year Comparison:
Abalone Fisheries


Figure 1

Abalone Fisheries declined an additional 30% over the past 10 years.

1989 Abalone Fisheries Reported 12,995mt
1989 Adjusted 14,830mt
1999 EST: 10,150mt.

10 YEAR ABALONE FISHERIES COMPARISON BY COUNTRY
(Metric tons)

Ten Year Comparison:
Cultured Abalone

Figure 2

In this 10 year period, while the Abalone Fisheries declined 30%
---Cultured Abalone production increased over 600%!

1989 Cultured Abalone Reported: 689mt
Adjusted 1989: 1220mt
1999 EST: 7,775mt

World Cultured Abalone Production By Country
(Metric tons)

 Estimated World Cultured
Total Production 1998

Over 75% of the world's cultured abalone production
is developed in China/Taiwan.

Figure 3

Of the total estimated 1999 cultured abalone world production of 7,165mt, Asia accounted for 5,500mt or 75% of that total. Within Asia, the vast majority of the cultured abalone production is from China and Taiwan.

FOB AND CNF PRICE FOR SIMILAR SPECIES AND SIZE TENDS TO EQUATE WORLDWIDE.

Expressed in terms of "in shell" weight, the world price for the same size and quality "in shell" abalone tends to come together regardless of the form to market.

Example one: cultured Red abalone in the 90mm-size range. (The principle is the same with other species as adjusted for the size/weight ratio of that species). Many of the Asian traditional recipes call for dried abalone as their preparations began thousands of years before refrigeration. There are a few special (often secret) processing methods creating a dried product which sells for a minimum of $700 per kilo and as much as $2,000 per kilo or more. This dried abalone is not to be confused with the "standard" sun dried product that sells at lower price level. The preparation of this specialty-dried abalone is almost ceremonial, often prepared with unique coals and slow cooking in ceramic cooking utensils. Only about 10% of the "in shell" weight remains in the dried product. The preparation process is highly laboring intensive and takes months to complete. If the processor pays $32/kilo "in shell", and sells the premium product for $700/kilo, he is making only a reasonable profit for the effort.

Example two: A live 90mm abalone at the Japanese wholesale (auction) markets. There are fisheries pricing services that regularly publish an average of 10 major Japanese wholesale markets. For the sake of comparison, we will use a price of 4700 yen/kilo. This equates to approximately US$45/kilo. Does that mean you might sell these markets at a C&F level approaching these prices? Not by a long shot: there are auction commissions, wholesaler commissions, trading company commissions, local transportation, customs and duty - -all to be deducted from your selling price along with possible mortality deductions. In effect $45/kilo equates closer to $32/kilo.

Weight Loss - Canned Abalone

$20/Tin of just 252g of abalone = only $12/kilo "in shell"

Figure 5

Without the continued development of premium product and brand name tins, canned abalone will remain as a commodity with relatively lower prices.

THERE ARE ALTERNATIVES TO WORLD COMMODITY PRICING

Figure 6. 1999 World Abalone Market

Prices are currently driven by a handful of Asian Nations, guided by their historical and changing customs, preparations, populations and economies. An important additional influence is that of Asian populations living elsewhere in the world.
As displayed earlier, Regardless of the form to market (live, fresh, frozen, boiled, canned, dried etc) the abalone price "in shell" tends to equate worldwide. Of course there will be shorter-term price variances as the economies of that handful of Asian buyer countries weakens or strengthens. In recent years, we have seen a substantial weakening of the Japanese economy - -now recovering. On an equivalent yen basis, adjusted to US$, $37/kilo for a given size and quality in January 1998 would equate to $41/kilo in January of 1999 and $45/kilo in January 2000. During this same period, PR China's economy has markedly strengthened. Just a few years ago, the majority of the abalone farming production in China was designed to export this premium product to Japan and elsewhere. Today, virtually all 3,000+ tons of China's abalone production is consumed internally.

Break Away from World Pricing. If you are responsible for larger quantities of abalone, whether fisheries or cultured, you have some important choices to consider.

• Continue the selling pattern
• Develop premium market for export and within the exporting country
• Brand name product
• Multi functional processing and packaging
• Sous Vide and "skin packed" fresh and frozen
• Direct approaches to DWE's (distributors, wholesalers, major end users)

Continue the selling pattern. You may continue along the lines of the patterns mentioned earlier (prices likened to a commodity - -driven by Asian Markets - - varying by species and size) which tend to equate on an "in shell" basis worldwide.

OR, you may begin to break away from the "price equation" through implementing any one or several of the following choices.

• Continue to develop a premium export market for export and within currently exporting countries. The exporting nations must not take for granted that premium prices will continue forever. Considerable effort will be required. You may hear "we had a strong abalone market within our Country in the late 60's early 70's HOWEVER that was when prices were very low". Let's re-examine, on an inflation adjusted basis: a $30/kg price today would equate to a $6.79/kilo price in 1970 - -That "expensive" restaurant abalone meal at $45 today equates to a $10 "expensive" abalone meal in 1970. The premium pricing in the "home market" of the currently exporting nation will not remain as a "given". Abalone will never become a low cost food, however effort and promotion will be needed to maintain the highest market pricing levels.
  
• Brand name product. Much of the fisheries and aquaculture world has worked with brand names for many years. It is rare in the "abalone world". Premium (higher than the most common denominator) pricing is achievable through developing a high quality product and telling the world all about it.
  
• Sous Vide and "skin packed" fresh and frozen. We have a "food service" "ready to eat" "fast food" industrialized world, yet abalone traditionally goes to market in the same basic forms (live, fresh meat, frozen, canned etc.) and is distributed to the same standard markets. Larger producers should consider developing "heat and serve" processed, prepared abalone dishes. This may sound like heresy to the abalone traditionalist, however it is a clear path toward maintaining premium prices in the home markets of the abalone exporting nations. Some companies have been promoting vacuum pack/skin pack for many years and with rewarding results, however they represent only a small fraction of the marketplace. Fast food need not be a low priced food. A Hong Kong food chain is currently promoting an abalone fast food concept with a single unit generating over US$2,000,000 annually.
  
• Multi functional processing and packaging. Industrialized nations need to develop low cost production possibilities with highly mechanized food service facilities. (This level of processing is quite expensive, but could be accomplished on a co-op basis). Today several industrialized nations have such plants under operation for bivalves. A modern, low cost process complex might encompass six multifunctional production areas: raw material supply, raw material pre-treatment, processing/transformation, preservation, packing, storage.
  
• Direct approaches to DWE's (Distributor, Wholesaler, and major End Users). The methodology requires considerable effort, yet is rewarding. It is your market study that selects the DWE, not the reverse.

WORLD SUPPLY DEMAND RELATIONSHIPS: 1977 - 1999 - 2004

Abalone - Supply/Demand

Note: New market, smaller, lower value, cultured H supertexta
is not included in "supply" (5000 mt 1998, 6000 mt 2004)

Figure 7

1975 Supply 20,000mt (on an adjusted basis might have been 24,000 mt or more). There was no major shortage of product forcing a demand/supply balance.

The 1999 Supply was 18,000mt or 13,000mt (after deducting "new market" H. supertexta - -not a factor in the 1975 demand)

1999: Potential demand remains over 20,000mt

1999: Potential shortfall: 7,000mt

The 2004 supply is estimated at 21,000mt or 15,000mt (after deducting "new market H. supertexta - -not a factor in the 1975 demand)

2004: Potential Demand: well over 20,000mt

2004: Potential Shortfall: 5,000mt.

IN SUMMARY:

World Abalone Supply: Over the past 10 years, the Abalone Fisheries of the world have declined 30% while the worlds Cultured Abalone Production has increased over 600%. The trend toward larger cultured premium species will continue. Ten years ago a 70mm animal was considered "market size" whereas today it is closer to 90mm. Some production at 120mm or larger will be required in the future.

Looking ahead to the year 2004. We anticipate the abalone fisheries to remain fairly flat at the 10,000 to 11,000mt levels, while cultured abalone farms are anticipating very substantial increases. Political, environmental and pathological events will, of course, have some unknown impact on world abalone supply.

World Abalone Demand:

We have been discussing a strong world demand and "shortfalls". We are NOT discussing an automatic demand at a premium price. Outside of the Asian world, the desire for this "caviar in a shell" priced animal will be directly related to our industries quality effort in the marketplace. Among other things, this should include Sous Vide preparations, brand identification, sophisticated processing facilities and unique DWE programs.

For the sake of our own and future generations, we must do a better job of protecting the world's abalone fisheries, however it is the cultured abalone industry that must not only expand production, it must put forth efforts to assure a continual world premium market.

ACKNOWLEDGMENTS

I wish to thank the following for their research and personal observations:

Nagashisi Uki (Japan), Nie Zong Qing (China), Ray Fields (USA),Roberto Flores and Enriqe Vazaquez (Mexico), Atilio Ziomi (Chile), Michael Tokley (Australia)Rodney Roberts (New Zealand), Andre Du Plesis (South Africa), Gavin Burnell (Ireland and Europe), Alawi Salim Al-Hafidh (Oman)
And Agnar Steinarsson (Iceland).

REFERENCES

Antweiler, W. 2000. Historical currency exchange. Pacific Exchange
Service, University of British Columbia, Vancouver BC, Canada

Asakawa, T. 1998. Abalone Market in Japan, US National Marine
Fisheries (NMFS/F/TS2/Pfox)

Butcher, S. 1999. John Fairfax Group Pty. 12-99
FAO Report of the 23rd Session of committee on Fisheries. 1999
Rome. ISBN 9251043221

FAO Fish and Fishery Products. World Apparent consumption
Statistics. 1998 Series 821

Murphy, D.E. 1999, S.Africa Abalone Poachers. Times/Mirror Co.
Los Angeles Times 7-8-99

New, M.B. 1999 Global Aquaculture: Current Trends and
Challenges for the 21st Century. March 1999

Sunee,S.C. 1999 US National Marine Fisheries.
Fishery Market News. Prices, Tokyo Central Wholesale Market
January 2000.

Seafood International 1996/1999: General References

Australasian News Abstracts 1998/1999: General References

Central News Agency (Taiwan) 1998/1999: General Reference

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