Fishing Markets - Essay Sample

Introduction

The fishing market refers to the market place where fish products are sold in either wholesale trade between merchants and fishermen or the sale of seafood to individual consumers by fishermen. The fish market may range in size where small fish are sold to the large fish markets where tons of fish are sold. However, the term fishing market may refer to the process of marketing fish and all the processes involved in the fishing of fish from the deep seas, lakes or rivers by fishers, processing of fish products to the sale to the final consumers around the world. As a result of mechanization of fishing, most fish markets have turned into wholesale trade as fishers can catch tons of fish at a go, refrigerate them for months, process them and sell them to merchants who finally sell to final consumers. Just like any other form of business and markets, the fishing market also relies on the forces of demand, scarcity and marginal analysis in decision making. The paper thus discusses the fishing market from factors such as scarcity, the marginal analysis in decision making, marginal costs, and resources involved in the fishing market, demand and supply as well as the marginal benefits that characterize the fishing market.

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The fishing market follows all the principles of a market. For a trader, a fisherman or a merchant to undertake business in the fishing market, they have to identify the opportunity cost in the fishing market. Opportunity cost refers to the act of forgoing an alternative to undertaking another venture. For instance, a person may be involved in the trade of car spares as a means of living but forgoes the opportunity to venture into the fishing market. Therefore, these are the opportunities that had to be forgone for one to undertake the fishing business either as a fisherman or a merchant. Also, other market functions such as the production function dictate the operations in the fishing market. For instance, a fisherman requires various factors of production such as fishing nets to avail the fish to the market. The cost of all these factors of production plays a role in determining the prices of fish in the market as well as the demand and supply of fish to the market. For instance, when the cost of the factors of production are high, it means that the fisherman has to incur a lot to bring a certain volume of fish to the market and thus to attain the profits that motivated them to forgo other opportunities for fishing they have to escalate the price of fish. Such factors also affect the supply of the commodity which in turn affect the demand level and thus the costs of the same.

Just like any other market, scarcity plays a significant role in the determination of how the fishing market fairs. For instance, in the year 2018, the fishing market was faced with the scarcity of mackerel fish for close to three weeks a situation that led to the escalation of the price of fish. Instead of the usual price per kilogram which to consumers was still expensive, the scarcity led to the increase in price by almost 20% of the usual price. The traders of the species of fish claim its scarcity, is responsible for the high price of the fish an aspect that brings about the element of how demand and supply determine the prices of various products in a market. When the commodity's quantity goes down like the case of the Maquerrel fish, the demand for the product increases thus causing an increase in the market prices of the commodity. According to the Centre of Regional Delegate of Trade the scarcity of fish is caused by failure by the various authorities over the world as well as fishermen to adhere to the laid down commands regarding fishing which determines the levels of supply of the various fish species in the market. Further, unavailability of specialized industries in fishing proceeds generally low and the catch from the countries with such specialized industries do not meet the increasing demand for fish across the world. As a result of this low supply, scarcity of fish is common in the market.

Figure 1: Determining the best market price using demand and supply ratios

Moreover, there exist many fish species ranging from tilapia, Nile perch and mackerel among others. All these species are not readily available in all parts of the world, and that's why the demand in different regions varies thus also varying the prices of the fish in the market depending on their availability. When a specific fish species is scarce in the market, its price is bound to increase above the prices of the fish species whose supply in the market is high as their demand shoots when supply is low and vice versa as shown in Figure 1 above. However, there are cases where the prices of fish have been escalated beyond the recommended price and the price control team has in many instances stepped in to conduct investigations in the market and those retailers that are caught up in such practices end up sanctioned in terms of fines and seizure of goods. Also, the government has come up with regulations such as the catch shares that has maintained the demand and supply levels of fish thus giving an favorable price (Equilibrium price) for both consumers and sellers shown as price P in Figure 1 above By doing this, the prices of fish have been contained at manageable levels in the markets despite the forces of demand and supply being responsible for the overall prices.

Further, profit maximization occurs at a margin when the marginal revenue is equal or more than the marginal cost. Therefore, for the fishing market, profit maximization is vital, and thus ration between the marginal revenue and the marginal costs play a critical role in determining the operations within the said market.

Figure 2: Determining maximum possible profit using the marginal revenue and marginal cost ratio.

When the marginal revenue from the sale of fish within the market is higher than the marginal costs of availing the commodity to the market as shown in figure 2 above, the retailers are profitable. This means that the marginal costs of labor and nets need to be maintained at the lowest level to ensure that the market prices for fish remaining favorable for the final consumer. Failure to keep the marginal costs low will expel most fishers from the business which will result in the low supply of fish and consequently lead to scarcity which affects the demand of the same. When demand is high, then the prices for the commodities will shoot high since the forces of demand and supply control the fishing market just like any other free market. Besides, with the fishing market being competitive, lack of regulations will make the market monopolistically competitive since many suppliers are supplying a homogenous product by the name fish. When this happens, the marginal benefits derived from the market are likely to decrease since there may be an oversupply of the commodity and thus the consumers may not pay much for the additional supply of the fish.

Additionally, government interventions in the fishing market such as the catch shares are critical in avoiding failure of the fishing market. Assigning a secure share to individual fishers and companies for their exclusive use helps minimize the chances of fish market failing. This is because such catch shares will regulate overfishing which is the main cause of market failures whenever consumers demand all varieties of fish. Besides, fish market failures have been caused by governments when they provide subsidies aimed at helping the fishing industry to realize a decrease in food prices as fish has become a subsidy of the traditional staple foods in most countries. When such subsidies are implemented, there is over-consumption of fish which lead decline in the fish markets as some specific species of fish become extinct thus affecting the overall market. When the supply of such species become extinct in the market the overall demand of such fish increases leading to the increase in prices above what consumers can afford and with less affordability the fish market is likely to decline.

However, government interventions such as the imposition of catch shares are significantly helping correct the chances of market failure. With the government assigning the various fishers exclusive use of certain catch shares, over-fishing and oversupply of the commodity has been countered and thus aided in the reduction of monopolies. Nevertheless, this strategy by governments to implement catch shares has made market power another problem that is affecting the fishing market since those fishers that have been assigned bigger catch shares enjoy a monopolistic market power that cannot be countered by other fishers. This aspect has brought about unhealthy competition in the fish market which has made it hard for the players to compete healthily.

As a result of the issues surrounding the fish market which leave the society at the verge of being exploited in the market, it is essential for the government to pass legislation governing the size and nature of fish to be availed to consumers. This is because with such interventions as catch shares some fishers may end up providing sub-standard quality fish that may not give the consumers the value for their money. Besides, the fishers should be tasked with the responsibility of safeguarding the ecosystems within where they carry out their fishing activities as failure would expose the society to adverse effects. Also, some fish species should be regulated as their numbers are quite small and if such regulations as the number that can be caught are not put, they may become extinct as the fishers may overfish them for the favorable prices they fetch in the market.

Bibliography

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"Overfishing (Market Failure)." Capital. Last modified August 9, 2013. https://friedmanseconomy.wordpress.com/2012/12/03/over-fishing-market-failure/.

"Scarcity of Fish in the Market: Trade Delegate Attempts an Answer." Cameroon Radio Television. Last modified January 16, 2018. http://www.crtv.cm/2018/01/scarcity-of-fish-in-the-market-trade-delegate-attempts-an-answer/.