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Exportation of Processed Fishery Products from Mozambique Exportation of Processed Fishery Products from Mozambique: Determinants and Technical Compliance Process By MENDIATE Rinaldo Ernesto Joao DISSERTATION Submitted in Partial Fulfillment of the Requirements for the Degree Doctor of Philosophy in International Development GRADUATE SCHOOL OF INTERNATIONAL DEVELOPMENT NAGOYA UNIVERSITY Approved by the Dissertation Committee: Naoko SHINKAI (Chairperson): Kiyoshi FUJIKAWA Shigeru OTSUBO Approved by the GSID Committee: May 18, 2016 i ACKNOWLEDGEMENTS I am sincerely and heartily grateful to my main and sub-advisors, Professors Naoko Shinkai, Kiyoshi Fujikawa and Shigeru Otsubo for the support and guidance they showed me throughout my dissertation writing. I would like also to thank Professor Hiroshi Osada (retired), my previous sub-advisory, for the useful comments and ideas. My studies in Japan would have not been possible without the Japanese Government Scholarship – Monbukagakusho – whom I would like to thank. To all Shinkai’s seminar members (April 2009 – March 2013) I would like to thank and wish all the best in their lives and academic journey. I am also grateful to my friends and colleagues, Christian, Carlos, Ando, Taka and Maloa, for their comments, ideas, support and encouragements. To my wife, Lucia, others parents, for their incentive and support the annoying times I had while writing this dissertation. To all my anonymous sources from where I got some data, information and resources, I want to say “thank you.” Mendiate Rinaldo Ernesto Joao ii TABLE OF CONTENTS ACKNOWLEDGEMENTS i TABLE OF CONTENTS ii LIST OF TABLES AND FIGURES vi LIST OF ABBREVIATIONS viii LIST OF METRICS xi SUMMARY xii CHAPTER 1: INTRODUCTION AND BACKGROUND 1 1.1 Problem, Justification and Motivation 1 1.1.1 The Problem and Justification 1 1.1.2 Motivation: Mozambique, Fishery Products and Technical Measures to Trade 4 1.1.3 Objectives 7 1.2 Definitions 8 1.2.1 Fish and Fishery Products 8 1.2.2 Export/Exportation 9 1.2.3 Determinants (of Exports) 10 1.2.4 Compliance Process to Technical Measures 10 1.3 Limitations and Significance 12 1.3.1 Limitations of the Dissertation 12 1.3.2 Significance of the Research 13 1.4 Plan of the Dissertation 13 CHAPTER 2: WORLD TRADE OF FISHERY PRODUCTS: DETERMINANTS AND THE IMPORTANCE OF TECHNICAL REGULATIONS AND STANDARDS 17 2.1 Introduction to Chapter 2 17 2.2 Determinants of Trade 19 2.2.1 Production Capacity and Processing Technology 19 2.2.2 Prices, Income and Consumption 22 2.2.3 Costs of Production and Technology 29 2.3 The Emergency of Technical Measures to Trade 29 2.3.1 Regulations and Standards for the Place and Mode of Production 30 2.3.2 Regulations and Standards for Product’s Characteristics 33 2.3.3 Regulations and Standards for Processing, Labeling and Packaging 34 2.3.4 How Technical Measures Impacts Developing Countries’ Exports? 35 iii 2.4 Learning from Some Successful Cases 35 2.4.1 African Developing Countries 36 2.4.2 Other Developing Countries 38 2.5 Chapter 2 Summary 39 CHAPTER 3: MOZAMBIQUE IN THE WORLD’S FISHERY MARKET: LOW-STANDARD COUNTRY SUPPLYING TO HIGHER-STANDARD CONSUMERS’ 41 3.1 Introduction to Chapter 3 41 3.2 Fishery Products, Production, Processing and Trade 42 3.2.1 Fishery Products and Production 42 3.2.2 Processing of Fishery Products for Export 48 3.2.3 Domestic Market, Imports and Exports of Fishery Products 53 3.3 Mozambique and Fishing Agreements 60 3.4 Domestic Laws and Fishery Technical Compliance Process 63 3.4.1 The Fishery Act (Lei No. 3/90, de 26 de Setembro) 63 3.4.2 The Regulation of Inspection and Assurance of Quality of the Fishery Products (Decreto No. 17/2001, de 12 de Junho) 64 3.4.3 The General Regulation for Aquaculture and its Annexes I, II, III, IV, V and VI (Decreto No. 35/2001, de 13 de Novembro) 65 3.4.4 Competent Authority: INIP (Decreto No. 18/2005, de 24 de Junho) 65 3.5 Investment and Governmental Support 66 3.6 Chapter 3 Summary 68 CHAPTER 4: PERFORMANCE ON SANITARY AND ENVIRONMENTAL INDICATORS AND THE DEMAND FOR EXPORTS OF FISHERY PRODUCTS: THE CASE OF SHRIMPS AND PRAWNS FROM MOZAMBIQUE 70 4.1 Introduction to Chapter 4 70 4.2 Literature Review on the Importance of Technical Measures and Quality 72 4.2.1 Importance of Quality in Goods (and Services) 72 4.2.2 Trade in Shrimps and Prawns and Sanitary and Environmental Conditions 73 4.2.3 Shrimps and Prawns from Mozambique 80 4.3 Methodology and Data 83 4.3.1 Export Demand Approach 83 4.3.2 Data Sources and Description of the Variables 84 4.4 Results and Discussion 89 4.4.1 Results of the Estimations 89 4.4.2 Discussion on the Determinants of Export Demand 92 iv 4.5 Chapter 4 Summary 93 CHAPTER 5: SIMULTANEOUS MODEL OF THE SUPPLY AND DEMAND FOR MOZAMBICAN EXPORTS OF FISHERY PRODUCTS: FROZEN SHRIMPS AND PRAWNS AND DRIED FISH (KAPENTA) 96 5.1 Introduction to Chapter 5 96 5.2 Simultaneous Equation: Literature Review for Fisheries 97 5.3 Methodology: Simultaneous Equations 99 5.3.1 The Nature of the Simultaneous Equations 99 5.3.2 Specification of the Models 100 5.3.3 Identification and Estimation 102 5.4 Data, Sources and Tests 104 5.4.1 Data and Description 104 5.4.2 Summary Table and Descriptive Statistics 111 5.4.3 Test for Unit Root 115 5.5 Results and Discussion 116 5.5.1 Results of the First Stage and Discussion 116 5.5.2 Results of the 2SLS and Discussion 117 5.6 Chapter 5 Summary 121 CHAPTER 6: FOOD SAFETY REGULATIONS AND MEASURES AND THE EXPORTS OF FISHERY PRODUCTS FROM DEVELOPING COUNTRIES 124 6.1 Introduction to Chapter 6 124 6.2 Examples of Economic Impact of Food Safety Regulations 126 6.2.1 Example of Impacts at Macro-Level 126 6.2.2 Example of Impacts at Micro-Level 128 6.2.3 Lessons from the Examples of Macro and Micro Costs of Compliance 130 6.3 Global, Regional and National Fish Trade Regulations 131 6.3.1 Global Level: UN System and WTO Agreements 131 6.3.2 National Level: Requirements of the World’s Main Importers 136 6.3.3 Differences in National Food Safety Regulations 146 6.4 Reducing Differences in Food Safety Regulations 146 6.4.1 Harmonization of Rules, Standards and Measures 147 6.4.2 Equivalence or Mutual Recognition 148 6.4.3 Coordination 149 6.5 Chapter 6 Summary 149 v CHAPTER 7: COSTS AND BENEFITS OF COMPLIANCE WITH TECHNICAL MEASURES: INVESTING IN FISH INSPECTION LABORATORY 151 7.1 Introduction to Chapter 7 151 7.2 Literature Review and Economic Analysis 154 7.2.1 Literature on Costs to Compliance to Technical Measures to Trade 154 7.2.2 Current Situation and Actors in the Value Chain 159 7.2.3 Main Services from Fish Laboratory Inspection and Objectives 162 7.3 Operational and Business Strategies 163 7.3.1 Operational Costs and Capital Investments 163 7.3.2 Operational Benefits 165 7.4 Methodology 166 7.4.1 Data and Sources 168 7.4.2 Calculating the Present Value for Benefits 169 7.4.3 Calculating the Present Value for Costs 170 7.5 Results and Discussion 171 7.5.1 Result for the Net Present Value 171 7.5.2 Result for the Benefit-Cost Ratio 171 7.6 Chapter 7 Summary 173 CHAPTER 8: CONCLUSIONS AND RECOMMENDATIONS 175 Summary of the Dissertation 175 Conclusions and Main Results 178 Recommendations 179 REFERENCES 183 ANNEXES 203 vi LIST OF TABLES AND FIGURES LIST OF TABLES Table 1.1 Table 1.1: Mozambique Top 10 Export Commodities: 2007-2009 4 Table 2.1 Table 2.1: World Captures and Aquaculture Production and Utilization, including China (P.R.) (1994-2009) 28 Table 3.1 Export Diversification of Fishery Products from Mozambique (1980-2010), in Percentage 55 Table 3.2 Mozambican Export of Fishery Products 1976-2009 57 Table 4.1 Shrimps and Prawns Trade, Quantity (Tons) 74 Table 4.2 Shrimps and Prawns Trade, Value (USD 1000, Nominal) 75 Table 4.3 Shrimps and Prawns Production in Mozambique 2006-2011 (Tons) 80 Table 4.4 Results of the Export Demand Equation (Equation 4.2) 89 Table 4.5 Results of the Export Demand Equation (Equation 4.2) (except Japan) 90 Table 4.6 Results of the Export Demand Equation (Equation 4.2) (except Japan and Italy) 91 Table 5.1 Summary of the Data, Sources, Descriptions and Units of Measurement 112 Table 5.2 Descriptive Statistics – Equation for Shrimps and Prawns, Frozen (1990-2014) 113 Table 5.3 Descriptive Statistics – Equation for Fish, Dried (2000-2014) 114 Table 5.4 Results of the First Stage: Shrimps and Prawns, Frozen (1990-2014) and Fish, Dried (2000-2014) 116 Table 5.5 Results of the 2SLS: Export demand equation: Shrimps and Prawns, Frozen 118 Table 5.6 Results of the 2SLS: Export demand equation: Fish, Dried (Kapenta) 120 Table 6.1 Selected Cases-Study showing the Macro Economic Impact of Complying with Technical Measures to Trade (Fishing Sector) 127 Table 6.2 Selected Cases-Study showing the Micro Economic Impact of Complying with Technical Measures to Trade (Fishing Sector) 129 Table 6.3 Compliance Costs over Exporting Values: Samoa, Solomon Islands and Thailand 131 Table 7.1 Projected Staffing Costs for Fish Inspection Laboratory 165 vii LIST OF FIGURES Figure 1.1 Export Destinations of Mozambican Fishery Products 3 Figure 1.2 Dissertation Structure 14 Figure 2.1 World Production by Species 1950-2010 (Tons, Millions) 20 Figure 2.2 Fishery Production by Continents (Captures and Aquaculture, Inland and Marine) 1950-2010 (Tons, Million) 21 Figure 2.3 Rising World Prices: Farmed Fish Prices’ Increasing more than Wild Fish (1000 USD per Ton) 22 Figure 2.4 Overview of the Determinants of Prices for Fishery Products: Mixed Sizes, Grading and Species 24 Figure 2.5 Consumption of Fish (kg per capita) and Income (GDP per capita, 2000 USD Constant) 1961-2009 25 Figure 2.6 Examples of How Exporting Countries
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