With a record trade deficit of almost $146 billion in 1986, and continued high deficits in 1987, there is growing concern about how continued deficits will affect the U. S. economy. Because fishery products had a record $6.3 billion deficit in 1986, the U.S. National Marine Fisheries Service (NMFS) has made the reduction of the fisheries trade deficit one of its top priorities. A recent NMFS trade objective was to "increase exports and domestic consumption of U.S. fishery products" which would lead to a reduction in the trade deficit. In this paper we explore this policy in terms of practicality and desirability

Lipton, Douglas W.

Siegel, Robert A.

Aquatic Commons

Toward a Rational Seafood Trade Policy 
DOUGLAS W. LIPTON and ROBERT A. SIEGEL 
Introduction 
With a record trade deficit of almost 
$146 billion in 1986, and continued 
high deficits in 1987, there is growing 
concern about how continued deficits 
will affect the U. S. economy. Because 
fishery products had a record $6.3 bil­
lion deficit in 1986, the U.S. National 
Marine Fisheries Service (NMFS) has 
made the reduction of the fisheries 
trade deficit one of its top priorities. A 
recent NMFS trade objective was to 
"increase exports and domestic con­
sumption of U.S. fishery products" 
which would lead to a reduction in the 
trade deficit. In this paper we explore 
this policy in terms of practicality and 
desirability. 
Composition of
 
Fishery Trade Deficit
 
In 1986, over $2.8 billion or 37 per­
cent of U.S. fishery imports were of 
nonedible products, principally jew­
elry containing some fish components 
such as shell. If we examine only 
edible fishery imports and exports, 
then the trade deficit is only $3.5 bil­
lion. In Figure I we see that seafood 
imports are concentrated in a relatively 
few products. Shrimp, by far the lead­
ing item, makes up 29 percent of 
edible imports. Groundfish, spiny 
lobster, tunas, and scallops along with 
shrimp make up 66 percent of our 
edible imports. 
Douglas W. Lipton is Marine Economic Spe­
cialist, University of Maryland, College Park, 
MD 20742. Robert A. Siegel is Senior Econo­
mist, Office of Research and Environmental 
Information, National Marine Fisheries Service, 
NOAA, Silver Spring, MD 20910. The opinions 
expressed in this paper are solely those of the 
authors and do not represent the position of 
either the University of Maryland or the Na­
tional Marine Fisheries Service. NOAA. 
51(1), /989 
Figure 2 demonstrates that edible 
U.S. seafood exports are even more 
concentrated than imports. Salmon 
products, at $726 million, account for 
56 percent of edible exports. The next 
highest products are shrimp ($69 mil­
lion) and herring ($66 million). The 
remaining 33 percent of exports are 
sc~ttered among a variety of products. 
When compared with what is occur­
ring in the overall U.S. trade picture, 
fishery products have actually fared 
very well. In Figure 3, U.S. exports 
and imports of fishery products are 
compared with total merchandise im­
ports and exports. Fishery exports 
form an increasing percentage of total 
merchandise exports, and imports a 
decreasing total. 
U.S. Outlook for Seafood Demand 
Current data suggest that seafood 
demand in the U.S. has been rising 
steadily over the past few years. 
···.··IIIIIl···SHRIMP

••••GROUNDFISH I(fresh/f,rozen) 
_ GROUNDFISH Blocks 
I I 
_ SPINY LOBSTER 
I I 
_ TUNA (fresh/frozen) 
I I 
• TUNA (canned) 
.SCA~LOPS I 
• SALMON (fresh/frozen) 
I 
•••••••• AL~OTHER 
a 500 1,000 1,500 
Imports (million dollars) 
Figure I. -Edible U.S. seafood 
imports, 1986. 
Figure 4 shows U. S. per capita con­
sumption of seafood and the consumer 
price index for fish and shellfish. Per 
capita consumption has gone up 
steadily since 1982 while real seafood 
prices have also risen. Rising con­
sumption in the face of higher prices 
indicates that seafood demand has in­
creased. The most recent increase in 
demand is partly attributed to an in­
creasing awareness of the healthful­
ness of seafood, particularly as it re­
lates to heart disease. 
A recent study by the Department of 
Agriculture (Blaylock and Smallwood, 
1986) makes projections about the 
U. S. demand for food to the year 
2020, based on the Bureau of Labor 
Statistics' Continuing Consumer Ex­
penditure Survey. The projections are 
based on U.S. Census Bureau projec­
tions of such factors as the age, racial, 
and regional distributions of the popu­
lation, in addition to their own projec-
Other 
$564 
Salmon 
$375 
Sockeye 
$351 
Figure 2. -U.S. edible seafood ex­
ports (major products), 1986. Data 
is in millions of dollars. 
/I 
--
t:: '" o 3.5 
0­
E 
~ t: 3.0 
o 
0­
X 
W 2.5 
ai 
.!!! 
"0 
<: 2.0
., 
.r: 
o Q;
::iE 1.5 
ui 
:> 1.0 
'0 
ell g> 05 
C 
ell 
o 
~ 0.0 1966 1968 1970 1972 1974 1976 1978 1980 1982 1984 1986 
D Imporl% 
• ExpOrl% 
-r­
- - ~ I-r- c- f­
- -- -- 1­- '- I­- l- I- r- r- c­- c- r­ ~ c- f­
-
~l- ~ --- ~ l- I­ ~ l- I­ I- r- r- c­-f­
- l- f­
.Iiil •• illllllllilIl-
Figure 3. -Fishery exports/imports as a percentage of total U.S. trade. 
there has been a significant increase in 
consumer demand for seafood since 
the expenditure survey was conducted. 
As a result, we estimate that 1986 at­
home seafood expenditures increased 
by 54 percent over the 1980-81 USDA 
study. This was due to a 34 percent 
increase in seafood price and a 15 per­
cent increase in per capita consump­
tion. These estimates far exceed the 
USDA projections. However, we 
assume that the demographic changes 
leading to changes in seafood demand 
occur on top of the recent increase in 
demand, and that percentage increases 
in expenditures predicted by the 
USDA model are still valid. Projec­
tions, however, will be more meaning­
ful if they are made from the higher 
base of 1986 consumption and expen­
ditures. 
According to the BLS 1980-81 con­
sumer expenditure survey, weekly per 
16 
c::::::::J Per capita consumption 
-+- CPI fish and shellfish 500 
14 
12 
10 
'" "0 
<: 8::> 
0 
C. 6 
- -
t­ -­
~ 
---r­
r-
r­
-.L -
~_~ 
400 
300 [
., 
)( 
200 
4 
100 
2 
0 
1980 1981 1982 1983 1984 1985 1986 
0 
1967=100 
Figure 4. -Per capita seafood consumption and prices (CPI), 1980-86. 
tions about consumer income. These 
projections depend on two key as­
sumptions: I) Preferences of the de­
mographic groups do not change over 
time (e.g., as an individual moves into 
a higher age group he or she adopts the 
tastes and preferences of that group), 
and 2) the relative prices of the food 
groups remain the same. With these 
caveats in mind, they find that by the 
year 2000 consumer expenditures on 
seafood consumed at home will in­
crease by 11.7 percent over 1980 ex­
penditures if consumer incomes in­
crease I percent annually; those 
expenditures will increase by 21. I per­
cent if incomes increase 2 percent an­
nually. (Census provides a low, 
middle and high series of projections. 
All results discussed here are based on 
the middle series.) 
The USDA study estimates what 
would happen in the seafood market if 
no other changes occur. In reality, 
capita food expenditures were $19.49, 
with $13.18 at home and $6.31 away 
from home. Expenditures on seafood 
during this period were 3. 1 percent of 
the at-home food expenditures or 
$0.41 per person per week. This was 
equivalent to total annual expenditures 
for seafood at home of $4.82 billion. 
NMFS estimates of total seafood ex­
penditure during this period was 
$12.84 billion. Thus, it was estimated 
that $8.02 billion was spent on seafood 
away from home. This is approxi­
mately I I percent of the total away­
from-home food expenditures esti­
mated in the BLS survey. Since 
seafood consumed during the 1980-81 
period averaged 2.92 billion pounds 
edible weight, the average retail price 
for seafood was calculated as $4.40 
per pound. 
Updating the above calculations to 
1986, we find that at-horne seafood 
expenditures were $7.67 billion, or 
$0.62 per person per week. Away­
from-home expenditures were $12.56 
bi II ion, or $\ .01 per person per week. 
The total of $20.2 billion represents a 
nominal increase in seafood expendi­
tures of 58 percent over 1980 expendi­
tures. 
Using the USDA projections, in the 
year 2000, at-home seafood per capita 
expenditures will increase from 9.3 
Marine Fisheries Review /2 
percent to 17. I percent over 1985 ex­
penditures. Using 1986 expenditures 
data as a base, this translates to an 
at-home per capita seafood expendi­
ture of $0.67-$0.73 per week. Away­
from-home seafood expenditures will 
increase to $1.09-$1.22 per week. 
Total annual seafood expenditures in 
the year 2000 are thus estimated to be 
$24.52-$27.17 billion. Using the 
assumption that real seafood prices do 
not increase after 1986, the quantity of 
seafood consumed will increase to 
4.16-4.61 billion pounds edible 
weight. This means that per capita 
consumption will increase another 
5-17 percent (15.5-17.2 pounds per 
person). Thus, for there to be no real 
increase in seafood prices, supplies of 
edible seafood will have to rise 18-31 
percent over 1986 levels. These 
projections are summarized in Table I. 
Outlook for U.S. Seafood Supply 
The real price of seafood has risen 
considerably since the time that the 
BLS survey was conducted. Yet, the 
projections from the USDA study re­
lied strongly on the assumption that 
seafood prices would remain steady. 
This assumption would be valid if 
supply were able to expand at the same 
rate as demand. However, with fishery 
resouces this is not likely to be the 
case. Domestic commercial landings 
have actually declined from 1980 to 
1986 by 7 percent. To keep up with 
increasing demand, imports increased 
by 20 percent over the same period. 
The increase in imports was partially 
fueled by a strong U.S. dollar making 
imports relatively cheap, but this was 
still not enough to offset the increase 
in demand, and prices rose 34 percent. 
To account for different supply con­
ditions and the result it will have on 
seafood prices, expenditures and quan­
tity consumed, we took an ad hoc ap­
proach by incorporating a price elastic­
ity from another study in the USDA 
model. Price elasticity measures the 
percentage change in quantity con­
sumed of a commodity due to a I per­
cent change in its price. A recent study 
by Cheng and Capps (1986) calculated 
an elasticity of -0.89 for shellfish and 
-0.67 for finfish. These values are con­
51(/), 1989 
Table 1.-Seafood expenditure and consumption. 
Expenditures (x 1,000) 
and consumption 
1980­
Item 1981' 1986' 
At-home $4,820 $ 7,670 $ 9.34-$10,170 
Away-trom-home $8,020 $12,560 $15,190-$17,000 
Per-capita 12.9Ib. 14.7Ib. 15.5-17.2 lb. 
consumption 
'Sources: Blaylock and Smallwood, 1986; Fisheries of the
 
United States, various years.
 
'Estimate.
 
3Projection, low figure based on 1 percent annual rise in
 
consumer income, high figure on 2% rise.
 
4Assumes no real price change for seafood.
 
Table 2.-Alternatlve seafood supply scenarios in the 
year 2000, 
Per 
Domestic capita 
landings Imports Price consump­
(million (million change tion 
Scenario lb.) lb.) (%) lb.) 
Base 3,393 7,360-8,157 0 15.5-17.2 
1986 Sup-
lies 3,393 6,227 14-21 13.1 
U.S. land­
ings grow 4,526-5,323 6,227 0 15.5-17.2 
sidered inelastic in that the percentage 
change in quantity is smaller than the 
percentage change in price. For total 
seafood elasticity, we used the mid­
point of the elasticity estimates, -0.78. 
Although it is not a statistically 
valid procedure to append the elastic­
ities to the USDA model, doing so 
provides a rough idea of seafood con­
sumption under various scenarios, 
without having to incur the costs of 
estimating a new model. The scenarios 
are based on different assumptions 
about price changes, U. S_ landings, 
and import levels. The results of the 
scenarios are summarized in Table 2. 
The first scenario or base case is the 
one discussed above where it is as­
sumed there are no price changes and 
U.S. landings are at their 1986 levels. 
In scenario two, U.S, landings and 
imports are set at their 1986 levels, 
resulting in a 14-21 percent rise in real 
price and a decline in per capita con­
sumption to 13. I pounds per person, 
The third scenario keeps imports at 
their 1986 levels and shows the in­
crease in U.S. supplies necessary to 
keep prices at their 1986 levels. These 
scenarios represent extremes. It can be 
expected that some supplies will be 
due to increased U.S. landings, some 
from imports, and that some demand 
will not be met by increased supplies 
leading to a real price rise. 
Potential Supply 
The techniques employed here are 
not suited to breaking out how the in­
crease in demand will affect individual 
seafood products. In fact, by aggregat­
ing all edible seafood into a single 
category, the approach assumes that 
the relative quantities consumed of 
each product do not change. Thus, an 
increase in seafood consumed of 18-3\ 
percent, as predicted in the base sce­
nario, translates into an increase of 
18-31 percent for shrimp, salmon, 
groundfish, etc., over the 1986 levels. 
We realize that the supply situation 
in fisheries can vary greatly from year 
to year for individual products. It is 
unlikely that the supply will expand 
such that all species are produced in 
the same proportions. It is more likely 
that supplies of some species will be 
higher and some lower. Consumers 
will substitute accordingly, and prices 
will adjust. For example, increases in 
domestic processing of Alaskan pol­
lock are likely to exceed the 31 percent 
limit in the base scenario. This, how­
ever, may make up for shortages in 
other groundfish species. The lower­
ing in price due to large pollock 
supplies will depend on how closely 
consumers' perceive pollock as a sub­
stitute for groundfish and other prod­
ucts. The closer the substitute, the less 
the price decrease. Much of the pol­
lock will be transformed into surimi 
and eventually analog seafood prod­
ucts. It is unknown where these analog 
products fit in seafood consumption 
patterns. Are they substitutes for other 
seafood, or expanding seafoods sub­
stitutability for other protein such as 
chicken or soy? 
The potential for the expansion in 
supplies of major seafood products 
varies by product. The most important 
product, shrimp, has the greatest po­
tential for expansion of supply. This is 
13 
2,500 
DWild 
_ Aquaculture 
c--C--
-
c--c--c--c--
c--
c-- c--
c--
c--
c--
--.-1 
1Il~156" 2,000 C)1Il 
o l:l: 
.- 0o. "0_ 
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:;. 1,500 Ol'­~ ~10til 
c: 
.!!! E 
.s 1,000 ~5
.g 
::J:= 
0==0; 
.. E 5 
:;; 500 Cl~ 
o1970 1975 1976 1977 1978 1979 1980 1981 1982 1983 1984 1985 1986 
Figure 5. -World shrimp catch. Figure 6. -World groundfish landings, 1970-85. 
198519801975 
Source: FAO data 
.--­
.--­
.--­ .--­ .--­
1970 
AK Pollock ------' 
Blue Whiting Source: FAO 
Pacific Cod 
Argentine Hake 01985 
.1970-1985 average 
.1985 
01970-1985 average 
Catch (million metric tons) 
Figure 7. -Major groundfish species with increasing 
5432 6 1.0 1.5 20 
Catch (million metric tons) 
Figure 8. -Major groundfish species with decreasing 
25o 
catches. 
due to the rapidly increasing produc­
tion of farmed shrimp. Although world 
production of wild shrimp has been 
fairly constant, aquaculture production 
has begun to rise tremendously (Fig. 
5). In contrast, the potential for in­
creases in world groundfish supplies is 
limited. Without aquaculture, produc­
tion of these products has not in­
creased over time (Fig. 6). Although 
certain products such as Alaska pol­
lock and blue whiting have increased, 
these have replaced major species that 
have decreased such as Atlantic cod 
and haddock (Fig. 7, 8). This shift in 
species distribution of the groundfish 
catch has been favorable to the United 
States because of the large Alaska pol­
lock resource in the U.S. exclusive 
economic zone. 
Summary and Conclusions 
The record seafood trade deficit is 
not a problem, but a sign of growing 
demand for seafood products. The 
United States cannot supply this grow­
ing market with domestic resources; it 
must continue to import more seafood 
products. Any policies that promote 
domestic consumption and exports 
lead to upward pressure on seafood 
prices and greater demand for imports. 
There are ways, however, that the 
growth in imports can be tempered. 
Some U.S. fish stocks (e.g., Atlantic 
groundfish) are depleted to a level 
where the sustainable yield is well be­
low the stocks' potential if allowed to 
rebuild. Reducing fishing pressure on 
these stocks can result in higher land­
ings in the long run, reducing the de­
pendence on imports. 
Another area where the U.S. can 
displace imports with domestic land­
ings is through developing substitutes 
for traditional fishery products. The 
best example of this approach is the 
use of surimi-based products to simu­
late items such as crab legs or shrimp. 
Still another approach is to get con­
sumers to accept species available in 
the U.S. exclusive economic zone as 
substitutes for products that are im­
ported. 
catches. 
Last, we propose that demand for 
imports can be tempered by removing 
the natural obstacle presented by the 
environment to increased U. S. produc­
tion. In other words, the development 
of an aquaculture industry would allow 
seafood producers to expand produc­
tion in response to real price increases 
for their product. The major aquacul­
ture successes in the United States are 
currently catfish, trout, and crayfish. 
There is tremendous potential for sal­
mon aquaculture and perhaps many 
other species demanded by U.S. con­
sumers. 
Literature Cited 
Blaylock, 1., and D, Smallwood. 1986. U,S, 
demand for food: Household expenditure, 
demographics, and projection. U.S. Dep. 
Agric., Econ, Res. Serv., Tech. Bull. 1713. 
Cheng, H., and O. Capps, Ir. 1986. Analysis of 
selected fresh and frozen finfish and shellfish 
species in the United States. Dep. Agric. 
Econ., Va, Tech. Univ., Blacksburg, Va. 
Manuscr. 
USDOC. Fisheries of the United States. U.S, 
Dep. Commer., NOAA, Natl. Mar. Fish. 
Serv., Curr. Fish. Stat. Var. years, nos., 
pagin. 
Marine Fisheries Review 14 


Toward a Rational Seafood Trade Policy

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