Value Chain Opportunities for Pacific Coastal Resources

Abstract

Oceanic tuna fisheries are a major contributor to the economic health of Pacific Island countries (PICs), with coastal fisheries underpinning the livelihoods of locals, providing food security, significant employment, culture, and human welfare. Livelihood development across various PICs is hindered by the inability to harness the maximum potential of coastal fishery resources, particularly through the lack of identifying targeted development needs. Development of coastal value chains facilitates resilience by reducing local reliance on tuna fisheries and associated vulnerability to tuna industry dynamics to support socio-economic development throughout the PICs while maintaining food security. The aim of this paper is to identify priority opportunities for developing coastal resource value chains in PICs, targeting increased local economic resilience and food security. A methodology developed by the World Bank was used to assist stakeholders and policymakers to coalesce around common strategies for the value chains. Six value chains were identified: beche-de-mer; ornamental black pearls and Trochus shell; fresh fish for the domestic market; reef fish exports; export of live lobsters; and export of aquarium fish products. Porter’s Five Forces framework was used for value chain analysis, and strategic repositioning considerations and areas for investment support within high-priority value chains were identified. Fisheries data collection, community-based sustainable management and aquaculture restocking programmes, habitat restoration, development of the cold chain, air freight logistics for export, and facilitating international market connections and market access were identified for external investment support.

1. Introduction

The Pacific Island countries (PICs) are a group of island nations comprising 24 countries and territories that are characterised by their geographical isolation and their limited natural resources. PICs have immense national ocean boundaries and exclusive economic zones (EEZs) relative to their respective land areas, and the optimal use of their ocean resources is thus paramount for national development prospects, sustaining livelihoods, and fostering local prosperity. The PICs are reliant on oceanic tuna fisheries in the Western Central Pacific Ocean (WCPO) for economic development and generating public revenue [1], such as by leasing the rights to access their valuable tuna resources to foreign countries through the Parties to the Nauru Agreement (PNA) Vessel Day Scheme (VDS). However, the changing proportion of the WCPO region’s tuna catch distribution among countries influences the potential revenue that can be generated as well as other tuna industry dynamics [1]. It is thus imperative that other marine resources are developed to contribute to the economic health and sustainability of the PICs, such as developing coastal fisheries and coastal resources that underpin the livelihoods of most PIC nationals.

Coastal fisheries and resources are fundamentally important in Pacific Island countries as a source of nutrition, human welfare, culture, employment, and recreation, and as such, they are essential for the continuation of current lifestyles, opportunities for future development, and food security. Coastal fisheries provide most of the non-imported fish supplies to the region, and Pacific Islanders themselves take nearly all the coastal catch, with very little access by foreign fishing vessels. Most of the coastal fisheries constitute subsistence activities, with most PIC households relying on fish and seafood (87%), as evidenced by high per capita fresh fish consumption at 53 kg per annum [2], emphasising the importance of coastal resources for local food security. Coastal fisheries exist as commercial and subsistence activities, and the value of subsistence coastal fisheries has been estimated at USD 280 million (124,000 t in 2021), whereas commercial coastal fisheries were estimated at USD 170 million (50,000 t in 2021) [2,3]. Subsistence coastal fisheries have been estimated to contribute USD 250 million to the regional gross domestic product (GDP) in 2021, whereas the contribution from aquaculture production was considerably lower at USD 85 million (7500 t in 2021) [2]. Many coastal fisheries are for subsistence needs and domestic use (fresh fish for domestic use and local restaurants); however, the following constitute the main products for export: live aquarium fish and products, live fish exports (including both reef fish and lobsters), beche-de-mer, Trochus shell, and black pearls.

Since the onset of COVID-19 and the associated loss of employment, the reliance on coastal fisheries for livelihoods and food security is likely to have increased, necessitating the development of coastal resources. Previous efforts at developing coastal resources in the PICs have had varied success [4,5,6] (among others). The proportion of PIC fisheries budgets allocated to coastal fisheries increased from 36% in 2017 to 47% in 2022 [2], and PIC governments’ financial commitments to coastal fisheries as a proportion of their total national budgets increased from 0.27% in 2022 (5 PICs) to 0.37% in 2023 (17 PICs) [2]. In addition, 15 PICs have adopted national coastal fisheries strategies or roadmaps for the development of their national coastal resources [2]. However, the number of coastal resource development initiatives implemented in partnerships with institutions have decreased: 80% in 2005 decreased to 23% in 2015 (of the total number of projects conducted over this period) [2], hindering development and limiting the number of accurate records of coastal fisheries production across some PICs [5,7,8].

Global trends that influence WCPO coastal fisheries need to be considered in the context of developing PICs’ coastal resources so that additional benefits can be derived for PICs’ national development and the livelihood development prospects of locals. Development of coastal value chains facilitates resilience by reducing reliance on tuna fisheries and the associated vulnerability to tuna industry dynamics. Given that coastal fisheries constitute a significant source of nutrition, food security, and livelihoods for PIC nationals, there is an associated need to harness the maximum potential of the available coastal resources through value chain development (where a value chain is a series of activities that a business performs to create and deliver a product or service to a customer). However, specific development needs for the distinct segments that make up coastal fisheries have not been identified, hindering the development of coastal resources across PICs. In addition, the failure to identify specific development priorities for coastal resources’ value chains has contributed to the lack of investment support from interested parties.

The aim of this paper is thus to identify priority opportunities for developing coastal resource value chains in PICs, targeting increased local economic resilience and food security. Six distinct coastal value chains can be identified in the PIC context: beche-de-mer; ornamental black pearls and Trochus shell; fresh fish for the domestic market; reef fish exports; export of live lobsters; and aquarium fish products (tropical fish, clams, and live rock to the United States of America, USA). The added value of this paper lies in its adopted approach (commonly employed by the World Bank) to assist both industry stakeholders and policymakers around a common strategy for the sector [9]. The approach involves the strategic segmentation and benchmarking of coastal fisheries value chains by their underlying activities and analysis of each value chain. Recommendations regarding strategic repositioning options given current trends and the proposal of different opportunities for external investment support (such as through the World Bank) were subsequently developed. This paper is intended toward coastal resources stakeholders and investors, policy developers in the WCPO region, and decision makers within regional development organisations.

The rest of this paper is structured as follows: a methodology section discusses the methods used for the value chain analyses; a results and discussion section discusses coastal value chains and the strategic repositioning options for industry development within each value chain; and the paper concludes by recommending proposals for external investment support.

2. Method

This paper utilises the strategic segmentation method developed by the World Bank [9,10,11,12]. Applied in several industry analyses such as “A Strategic segmentation of the Horticultural Sector” [9,10,11,12,13], Phase 2 of the “Croatia Competitiveness Reinforcement Initiative” 2016–2018 [14], and by the European Foundation for Cluster Excellence, it contributes to helping market agents (business leaders, R&D institutions, etc.) and policymakers coalesce around a common strategy for the sector [13]. Strategic segmentation of an industry is well suited to policy-making needs, as each strategic segment has a different value chain that requires a different strategy for entry, survival, and growth. As such, value chain analysis has move beyond a mapping of firms to the analysis of the whole set of activities from production to consumption [9,10,11,15].

This method goes beyond quantifying “how much value” is created by different participants and instead focuses on how value is created and by which participants. Subsequently, specific areas of the value chain can be targeted for concurrent development action across all value chains and coastal resources as an industry. Thus, it allows for the identification of attractive business models and strategies within a global industry. Importantly, this analytical approach permits policymakers to move beyond data (and a dependence on product codes in particular) toward policy and investment recommendations that support the development of “strategic segments” that increase the opportunities for expansion into higher value-added activities.

Six value chain segments were identified for the WCPO coastal fisheries, focusing on both market demands and the different solutions to address them (on the supply side): beche-de-mer (branded and processed sea cucumbers); ornamental black pearls and Trochus shell (processed); fresh fish for the domestic market (fresh basic needs products); reef fish exports (live branded products); export of live lobsters (premium products); and export of aquarium fish products (ornamental live products, including tropical fish, clams, and live rock). These value chains (“segments”) were constructed from personal communications with stakeholders and are based on industry benchmarks and supporting service providers that are already competing in coastal fisheries [16].

Each value chain has a different set of supporting services and activities, which are mapped and benchmarked in Figure 1. Value chain activities present in PIC territories were distinguished from activities outsourced to other countries (and were considered investment opportunity areas for value chain development). Supporting services were benchmarked as being associated with the public good; common good; club (or group) good; or private good (Figure 1). Each of the activities were benchmarked according to the intensity of four different factors of production (Figure 1): capital intensity (indicator of the investment cost); labour intensity (indicator of the number of staff involved); knowledge intensity (indicator of the required years of training); and natural resource intensity (indicator of input cost). Factor inputs are marked with colours to show how resource intensive that factor is for the given activity. The combination of these factors and of their intensity aid in determining the scale needed to take part in any given activity. Linkages between activities are denoted by lines that indicate the time and knowledge exchange intensity of the linkage.

Thereafter, the value chains were analysed according to Porter’s Five Forces framework, which has become an accepted industry standard for analysing and formulating corporate strategy since its publication, significantly influencing subsequent research and business practices [17,18]. Each value chain was analysed by the evolution of substitutes, existing rivals, new entrants, suppliers, buyers, trending markets, and minimum efficient size of production (Figure 2), and the priority areas for potential support within each value chain were identified and compared. Detailed value chain analyses and additional contexts for coastal fisheries value chains are provided in Annex A (Supplementary Materials).

Any value chain development should consider and contextualise the global trends and drivers that affect PIC fisheries to facilitate meaningful industry development. The current global (macro-level) trends that affect PIC fisheries are summarised in Annex B (Supplementary Materials). Given the anticipated changes from global trends, the identification of development needs and strategic repositioning recommendations (in the context of policy development and investment support) were formulated with the aim that coastal fisheries can be developed commercially to reduce reliance on WCPO tuna fisheries (and associated vulnerability to tuna industry dynamics). Such repositioning and development are hoped and expected to improve the socio-economic condition of PICs while more effectively supporting local livelihood development. Subsequently, development opportunities within coastal resources value chains were identified for external investment support (such as from FFA or the World Bank). While this paper proposes some preliminary strategic options, country-specific assessments are needed to identify strategic repositioning options for a country of interest, including which segment(s) could be targeted; viable policy options to maximise value addition within the segment(s); and necessary investments and institutional changes that would be needed to support the development of a country’s productive capacity within each segment.

3. Results and Discussion

The outcomes of analysing each value chain differ (discussed below). All supporting services across all value chains were associated with serving the public good (Figure 3, Figure 4, Figure 5, Figure 6, Figure 7 and Figure 8).

3.1. Beche-de-Mer (Sea Cucumber)

The harvesting of sea cucumber (also called sand fish) for drying and processing into beche-de-mer for export as a non-perishable product (Figure 3) is a long-established fishery in the PICs. There is growing demand in China due to increasing local affluence, and most of the product is destined for export to markets in Hong Kong and elsewhere in China. The industry is regarded as boom or bust, with the resource vulnerable to over-exploitation, resulting in some preferred species of sea cucumber being over-exploited in some locations [19]. Governance and management of sea cucumber fisheries is a major issue affecting their sustainability, with over-fishing and smuggling difficult to control [19]. Technical advancements in aquaculture have made it possible to propagate juveniles for restocking coastal resources, but this has not been successfully applied in the Pacific, despite technical capacity for aquaculture being strong across some PICs [19]. The value of beche-de-mer varies considerably according to the species and the processing methods followed. An increase in the preferred species and the application of better harvesting and processing techniques can result in premium prices, but standardisation is unlikely due to the variable occurrence of encountering desired species during harvesting wild stocks.

Rivalry among competitors is significant for beche-de-mer through the international competition for supply and premium prices paid for superior products. The threat of new entrants (the risk that new competitors pose to existing businesses in an industry) is significant for beche-de-mer. There is competition because the PICs only have a small share of the world market, and sea cucumber is also harvested in other countries (Sri Lanka and Madagascar). The supply of raw sea cucumbers can be increased through the establishment of aquaculture operations across PICs to supplement wild stocks. The threat of substitutes for beche-de-mer does not exist as it is a unique product. For beche-de-mer, there are only a limited number of inputs required in production and processing (apart from labour), and suppliers have limited bargaining power (the ability of a party in a negotiation or dispute to influence the outcome and force an agreement on their own terms). Processors’ bargaining power is limited due to competing for the same raw material. In the market, buyers have greater bargaining power, but this is constrained due to broad variation in prices depending on the species, size, and quality.

Figure 3. Benchmarking the value chain for Processed Branded Beche-de-mer.

Figure 3. Benchmarking the value chain for Processed Branded Beche-de-mer.

Development options to compete include (i) standardisation of processing methods to deliver a product of recognisable quality across a variety of species; (ii) supply of efficient, targeted harvesting and diving equipment; (iii) promotion of fishing methods and operations that conform to internationally accepted standards for labour employment conditions, health and safety, management of plastic waste, and conforming to sustainable fisheries management within national contexts; (iv) enabling community access to specific fishing grounds; and (v) institutional collaboration for sustainable management of the resource. Strategic options to participate include (i) supporting the development of hatchery facilities for the propagation of juveniles for restocking coastal fisheries with preferred species; (ii) support for the development of sustainable fisheries through the provision of facilities, such as enclosure fences, for the restocking and farming of sea cucumber and improved processing of the product; (iii) support for the sustainable management of fisheries to reduce overall exploitation and protection of the resource; (iv) support for the enforcement of regulations and management quotas for sustainable harvesting; (v) support for the health and safety for divers (labour) involved with harvesting through proper training and the enforcement of regulations and standards for the operation of diving equipment and processes; and (vi) brand development through the promotion and marketing of sustainably harvested and processed sea cucumber (sustainability certification).

3.2. Ornamental Black Pearls and Trochus Shell

This segment is composed of two products (Figure 4): the cultivation of black pearls from oysters (primarily for sale to tourists) and collection and export of raw and semi-processed Trochus spp. shell for processing into mother-of-pearl buttons.

Figure 4. Benchmarking the value chain for processed branded ornamental black pearls and Trochus shell.

Figure 4. Benchmarking the value chain for processed branded ornamental black pearls and Trochus shell.

The production of aquacultured black pearls from the black-lipped oyster (Pinctada Margaritfera) is a long-established industry in French Polynesia, especially Tahiti, and more recently in the Cook Islands, Fiji, and other PICs [20,21]. Local tourist markets are a major outlet for black pearls. The financial profitability and sustainability of the industry is influenced by supply and demand, environmental conditions, and farming practices. Black pearl aquaculture has significant barriers to entry, including high initial investments, high operational costs, and the requirement of a high level of technical skill [21]; and alternative pearl products are increasingly being investigated in attempts to mitigate risk [21]. The pearl industry in French Polynesia receives significant support from the local government, whereas the establishment of a viable sustainable industry in the Cook Islands has been less successful. The black-lipped oyster is also present in other PIC countries, which signals the potential for the establishment of a cultivated black pearl industry.

Harvesting of herbivorous Trochus molluscs to export the shells for mother-of-pearl buttons is a long-established industry in the PICs. The WCPO region is a significant producer of Trochus, producing most of the global supply. While Trochus flesh is often used for food for coastal communities, the shells can be processed (or semi-processed) to sell as ornamental decoration and for jewellery. Trochus is a low-value product with declining demand and value, leading to a decline in exports. Most of the Trochus shell is exported in unprocessed forms to processors and manufacturers in Vietnam, China, and Indonesia before sale to end users for the manufacture of buttons. A limited amount is processed by PIC in-country processors. Although there have been restocking programs in the past to support production [22], poor management of the resource and declining profitability mean there is limited potential for expansion and revitalisation of the industry in the current situation.

Rivalry among existing competitors is limited because the PIC-exporting countries are the major international suppliers of trochus, and black pearls are unique to the PICs. There could be competition between the PICs—because the PICs are responsible for the majority of world production, they compete with each other in the supply of the raw materials. The threat of new entrants is limited for black pearls because the products are unique to the PICs. Fashion trends and national tourism influence demand and price. The threat of new entrants is high for Trochus shell due to low barriers to entry (which is mostly harvesting labour). The threat of substitutes is significant as both black pearls and Trochus shell compete with alternative products, such as alternative shell materials and cheaper or freshwater pearls in the international market. World competition for pearls is increasing, with a resultant drop in prices as aquaculture leaders in Asia (e.g., China) develop their cultured pearls industry. Supplier bargaining power is limited for Trochus, as there is a limited demand for inputs other than labour for the harvesting and processing for export. The bargaining power of suppliers to the black pearl industry is stronger, considering the specialised skills and aquaculture inputs needed. Buyer bargaining power is strong because buyers transact with several suppliers and set quality standards. Downstream processors gain the most from added value.

Development options to support the black pearl industry include (i) development of pearl farming community management plans and quality standards; (ii) monitoring of environmental conditions to understand the growing environment for sustainable farming and improved production; (iii) introduction of early warning systems to alert growers of adverse biological conditions and potential disease outbreaks (allowing timely remedial action); (iv) financial support for the establishment of pearl farms (also risk mitigation); and (v) promotion and marketing of black pearls as a unique PIC product. Development options to support the Trochus industry include (i) development of community management plans to manage the resource and prevent over exploitation; (ii) support for regulations and enforcement (on the permissible shell size, closed harvest seasons, permits, and licences); and (iii) the development of pilot projects using existing knowledge in French Polynesia to combine shell and algae production to tackle both biodiversity and climate change challenges.

3.3. Coastal Fisheries for the Domestic Market

This segment involves the supply of fresh products from coastal fisheries (fish, invertebrates, shellfish) to meet local demand for subsistence consumption and supply to local markets (Figure 5). The harvesting and supply of fresh fish and marine products for domestic consumption and sale in the PICs is the main function of coastal fisheries with production approximately at 150,000 mt annually [2,3]. Most of the resources are managed by the community and are over-exploited to an unsustainable level in some locations, with inadequate resource management and enforcement of regulations. There is limited application of added value for preservation to extend product life through freezing, smoking, and drying owing to less demand for smoked and dried fish products as consumers prefer fresh fish (or using ice to extend shelf life). Freezing to extend shelf life is problematic due to the logistics of maintaining freezers, ice plants, and a frozen cold chain from producers to consumers.

Figure 5. Benchmarking the value chain for processed coastal fisheries for the domestic market.

Figure 5. Benchmarking the value chain for processed coastal fisheries for the domestic market.

There is no significant inter-regional trade in coastal fish products in the Pacific and consequently no rivalry amongst producers because each PIC supplies its own domestic market. Most of the harvest is used for subsistence consumption and is not marketed. The threat of new entrants is limited except for competition from the supply of other sources of animal protein (such as imported canned meat and bycatch and discard tuna from oceanic fisheries). The threat of substitutes is limited, and there are no significant alternatives to the supply of domestic fish species. However, bycatch and discard tuna diverted to supply the local market can compete on price with domestic supply. The threat of new entrants is limited to imported canned mackerel, the diversion of the bycatch and discard tuna from oceanic fisheries, and canned meat (bully beef) and poultry. The bargaining power of input suppliers to coastal fisheries is relatively strong because there are not many suppliers and because of constraints to the supply chain through the high cost of transportation in providing spare parts and servicing of equipment. The large subsistence sector and relatively low costs of harvesting fish products limits the impact of these constraints. Buyer bargaining power is neutral. Supply and demand determine price, but buyers (consumers) have more influence because their purchases are price sensitive, and they can purchase other sources of animal protein such as canned fish and meat; however, individual buyer bargaining power is limited due to several consumers in the market.

Development actions to compete include (i) supporting data collection and analysis to record coastal fishery production more accurately and determine the available resources for sustainable exploitation; (ii) sustainable community management of coastal fishery resources; (iii) support for fishing gear and fish aggregating devices (FADs), ice plants, and interventions to increase the supply and marketing of fishery products; and (iv) supply of bycatch and trash fish from tuna oceanic fisheries to supplement the domestic subsistence demand. Strategic options to participate include (i) support for community-driven pilot projects that regenerate natural habitats for increasing fish biomass; (ii) enhance awareness of interdependence between coastal habitats and fish abundance; (iii) develop incentives for international businesses to establish processing facilities to supply the domestic market through instruments such as duty-free access, tax holidays, and the repatriation of profits; and (iv) enhance coastal capacity to harvest higher-value species (tuna and tuna-like species).

3.4. Reef Fish Exports

This segment concerns the export of live reef fish caught in PIC coastal waters for restaurant markets (Figure 6). Live fish are held in tanks on fishing vessels for delivery to markets, and some are air freighted. Live fish capture from the PICs’ coastal fisheries is mainly to supply Hong Kong and Taiwan with preferred species, such as coral trout (Plectropomus leopardus), that can command very high prices for high-end dining (also inter-regionally but less so) [23]. Current estimated exports from PICs is 1500 mt annually, at a much lower level than previously due to more stringent conditions imposed by PICs to maintain the sustainability of fisheries, which interact strongly with local food fisheries [24]. These fisheries are vulnerable to overexploitation and mismanagement through foreign fishing operators using destructive fish capturing techniques, including the use of cyanide and destruction of the coral reefs. For these fisheries to be managed on a sustainable basis, better supervision and management of the resource and operators is required [24].

Figure 6. Benchmarking the value chain for live branded reef fish.

Figure 6. Benchmarking the value chain for live branded reef fish.

Rivalry among existing PIC competitors is high, despite only commanding a small share of the global market. Production from the PICs has declined in recent years, and the subsequent loss of their competitive strength is associated with the high threat of new entrants. Despite certain species being in high demand in Hong Kong and China, aquaculture products and fish from other fisheries constitute the threat of substitutes. From the PICs’ perspective, supplier bargaining power is relatively low because most inputs for product and transport are sourced on the international market, where there is more competition and less constraints to enter the input-supply market. Buyer bargaining power is constrained for foreign fishers due to permission requirements to access fisheries from the PICs, through the local community in control of the coastal resources, or at higher government levels. PICs can control access to the resources, impose access fees, and insist on local involvement in the capture of fish through the employment of local fishers and monitoring the sector by having observers on foreign fishing vessels.

Development options to compete include (i) developing sustainable local fisheries management programmes to develop the resource (such as habitat restoration, establishment of protected areas and spawning grounds, closed seasons); (ii) using non-destructive fishing methods or capture techniques that preserve the local environment; and (iii) regulating fisheries through public institutions for long-term sustainable extraction (e.g., establishing licensing schemes). Strategic options to participate in the industry include (i) development of supervision, surveillance, and management of live fish capture through allocation of fishing access rights, observer programmes, and the employment of locals; (ii) supporting local fishing enterprises to become involved with established foreign operators to facilitate export and market access; (iii) brand development when environmentally friendly or approved harvesting methodologies are used and social benefit programmes that direct a portion of proceeds back to locals; (iv) marketing and promotion of PICs’ coastal fish as a unique product; and (v) sustainability certification (Marine Stewardship Council).

3.5. Live Lobster Export to Premium Markets

This segment concerns the export of live lobsters caught in PIC coastal waters for premium markets (Figure 7). Lobsters are harvested manually by divers or through baited lobster traps. The export of live lobster is limited in the PICs but has potential where there is a sustainable and productive resource and effective logistical connections to markets. There are limited exports of fresh common lobsters from Fiji and other PICs [25], but the industry is at a disadvantage as the species of lobster common in the PICs (Panulirus penicillatus primarily, but also P. versicolor, P. ornaturs, P. longipes spinosus) are not as productive or appealing as the lobster exported from New Zealand and Australia (Jasus edwarsii), and the industry is unable to support an adequate throughput for an export market [24].

Rivalry among existing competitors in the export of live lobsters is high, with Australia and New Zealand as major regional players. There is a high threat of new entrants due to several PICs that have access to the common resource. Local lobster species compete with species that are perceived as more desirable (from other countries) in foreign markets. The threat of substitutes to live lobsters is low because they are a unique product, and significant aquaculture advancements are needed for feasible production to occur. Supplier bargaining power is high due to the constraints in supplying inputs to the sector for materials and airfreight. Buyer bargaining power is high as buyers can dictate the terms in the marketplace.

There are limited resources of lobsters in some PICs, with the potential for export through a chilled or live fish state to discerning markets in Asia and the USA. Development options to compete require efficient air freight connections and phytosanitary protocols to ensure quality is maintained and in terms of food health and safety. Strategic options to participate include (i) support for the establishment of the resource and maximum sustainable yield for the fishery in local contexts; (ii) the provision of training for the logistics of exporting a live product to the marketplace (market connections, permits, and licensing requirements for export); (iii) marketing and promotion of PIC lobsters as an attractive and unique island product in destination countries; and (iv) consolidating scattered regional export through a selected number of approved exporters to facilitate efficiency in the logistics and administration involved with exportation.

Figure 7. Benchmarking the value chain for the export of live lobsters.

Figure 7. Benchmarking the value chain for the export of live lobsters.

3.6. Export of Aquarium Products

This segment is composed of the supply and export of aquarium products (tropical fish, clams, live rock) to the United States of America (USA). In some PICs, the capture and export of live ornamental fish and other reef products (invertebrate colonised rock) are carried out by private sector-led initiatives. These industries operate under stringent management conditions and are thriving in several PICs, particularly those with airfreight connections to the USA. Aquarium species are rarely taken for food in the Pacific Islands, and this does not interfere with subsistence fishing activities. The aquaculture of specific products for the aquarium trade is also present. Nine PICs are currently active, with Fiji having half of the market share. PIC aquarium products have a reputation for high quality (no chemicals involved in capture), with several rare and unique fish species that command higher value. In 2020, it was estimated that the Free-on-Board (FOB) export value of the sector was USD 7.4 million [26]. Compliance with the requirements of the Convention on International Trade in Endangered Species of Fauna and Flora (CITES) to facilitate exports is a constraint for some aquarium items.

Rivalry among existing competitors is high. Several PIC exporters are competing to supply products to the same market in the USA, and PICs are competing with other suppliers from around the world. The threat of new entrants is high due to substantial competition in the market, especially from aquaculture producers. This is balanced by the uniqueness of the PIC products, ability of the buyers to source alternative products, and sensitivity to price. Suppliers typically have close links to the buyers and distributors in the USA. The threat of substitutes is substantial. Although there are limited direct substitutes for species-specific PIC products, prices are determined by global supply and demand, rather than by the rarity of a species in the country of origin. Input supplier bargaining power is relatively strong for imported materials (tanks, pumps, other specialised equipment), and there is limited access to airfreight. Market supplier bargaining power is balanced by the uniqueness of PIC products and the ability of the buyers to source alternative products and sensitivity to price. Suppliers typically have close links to specific buyers and distributors in the USA, and buyer bargaining power is neutral.

An element needed to compete is good logistical airfreight connections with the west coast of the USA; however, exports can be routed through other PICs, where efficient air freight infrastructure exists. Knowledge of desired species and products is required to compete, as well as market connections with buyers and distributors. Strategic options to participate include (i) support for community management plans to manage the resource and prevent over exploitation; (ii) support for the facilitation of exports in compliance with CITES for some items (export certification); (iii) logistical support for establishment of efficient air-freight connections; and (iv) developing good market connections and relationships with buyers in the USA.

Figure 8. Benchmarking the value chain for live ornamental aquarium products.

Figure 8. Benchmarking the value chain for live ornamental aquarium products.

Table 1. Summary of fisheries value chain analysis: market potential, competitiveness, and development priority.

Commodity	Market Potential	Value Added	Job Creation	Competitiveness	Development Options	Priority
Beche-de-mer	Increased supply of premium product from sustainable fisheries from aquaculture	Considerable for superior processed product from preferred sea cucumber species; wide variation in the prices of the final product according to species, size, and quality	Low	High demand for a superior product	Standardisation of processing methods; supply of efficient targeted harvesting equipment; develop incentives for fishing methods and operations that conform to international standards for labour, health and safety, plastic waste management, sustainable fisheries management (certification); development of hatchery facilities to restock coastal fisheries with preferred species; provision of aquaculture facilities and supplies; support for regulation enforcement; support for sustainable management of fisheries; brand development through promotion of sustainably harvested products	High
Black pearls	Cultivated black pearls from the indigenous black-lipped oyster, largely marketed to tourists in French Polynesia and Fiji	High value added	Medium—management of farmed pearls is labour intensive	Black pearls compete with other pearl types internationally	Development and implementation of pearl farming community management plans and quality standards; oceanographic monitoring of environmental conditions for facilitating ideal culture conditions and developing sustainable farming practices; development of early warning systems to alert growers of adverse biological conditions and potential disease outbreaks; financial support for establishment of pearl farms; promotion and marketing of black pearls as a unique PIC product	Low
Trochus shell	Harvesting and export of Trochus shell for the manufacture of mother-of-pearl buttons	Low—most shell is exported in raw form as a low-value product	High—collection and handling of shell is labour intensive	Competition from other suppliers to a declining market	Community management plans to manage the resource and prevent over exploitation; regulation for sustainable fisheries management (permissible shell size, closed harvest seasons, permits, licencing); develop pilot projects, using existing knowledge in French Polynesia, that combine shell and algae production to tackle both biodiversity and climate change challenges	Low
Coastal fisheries (fresh)	Supply of fresh fish products from coastal fisheries to the domestic market threatened by over-exploitation	Support for data management and confirmation of resources, improved resource management, and support for fishing infrastructure to improve supply; cold chain to reduce post-production losses and facilitate transport and marketing	High—Large percentage of population involved with coastal fisheries; coastal fisheries largely local and artisanal	Low—The domestic market is self-contained	Support for data collection and analysis to accurately record production volumes and determine available resource for sustainable exploitation; support for community management of coastal fishery resource; support for fishing gear and fish aggregating devices (FADs), ice plants, and interventions to increase the supply and marketing of fishery products; supply of bycatch and trash fish from tuna oceanic fisheries to supplement domestic subsistence demand for fish in the PICs; development of pilot projects that create and regenerate natural habitats for increasing fish biomass production; enhanced awareness of interdependence between coastal habitats (and their quality) and fish abundance; enhanced coastal capacity to harvest higher value species (tuna and tuna-like species)	High
Coastal fishery products (processed)	Increase the shelf life and supply of fish for the local market through developing a cold chain and freezing, drying, and smoking	Low—Product for the domestic market	Medium	Low—Internal domestic market prefers fresh fish; processed fish products—canned fish and meat—compete with alternatives	Support for fishing gear and fish aggregating devices (FADs), ice plants, and interventions to increase the supply and marketing of fishery products; incentives for international businesses to set up processing facilities to supply the domestic market (duty-free access, tax holidays, repatriation of profits); develop community employment through training fish processing	Medium
Live reef fish exports	Large market in Hong Kong and China where favoured species (e.g., red coral trout) command high prices	Favoured species command high prices and high value-added potential	Fish are mostly captured by use of hand lines and traps to supply foreign carrier holding ships and foreign fishing vessels; good potential for involvement of local people	High competition among PICs despite small collective market share; competition with exports of coral trout from Australia from aquaculture	Sustainable local fisheries management programmes to develop resources (habitat restoration, establishment of protected areas and spawning grounds, closed seasons); non-destructive fishing methods or capture techniques that preserve the local environment and keep the resource intact; regulation of the fishery through public institutions for long-term extraction; establishment of licensing scheme to control extraction and for data collection to enable management; support monitoring and management of live fish capture through allocation of fishing access rights and observer programme; support for local fishing stakeholders to collaborate with foreign operators for market access; brand development when environmentally friendly or approved harvesting methodologies are used and for social benefit programmes that direct a portion of proceeds back to locals; marketing and promotion of PIC coastal fish as a unique product; sustainability certification of suppliers such as through the Marine Stewardship Council (MSC)	High
Lobster	Export of live lobsters to premium markets: China, Japan, and USA	Large value added for premium products	High level of job creation for local people in harvesting, transport, and marketing	High—Lobsters are also exported from New Zealand and Australia; PIC resources limited, of inferior quality, and vulnerable to over-exploitation	Efficient air freight connections and infrastructure; phytosanitary protocols and standards for export; support for the establishment of the resource and maximum sustainable yield for fisheries in local contexts; provision of training and support for the logistics of export of a live product to the marketplace; marketing and promotion of PIC lobsters as an attractive unique island product in the destination countries; consolidating regional export through a selected number of approved exporters to facilitate efficiency in the logistics and administration involved with exportation	Low
Aquarium products (ornamental fish, coral, live rock, and clams)	Strong global market with the USA as the main market	High value added to middlemen and exporters; important determinants of the cost structure are air freight costs, diver’s pay, electricity and holding and packaging costs.	Labour intensive for capture of wild fish	High—Major producers are Indonesia and the Philippines, accounting for most of USA imports; Pacific Islands’ competitive advantages are a relatively short supply chain, reputation for high quality, low mortality, and good availability	Training in knowledge of desired species and products; support for community management plans to manage the resource and prevent over exploitation; support for the facilitation of exports in compliance with CITES for some items (export certification); logistical support for establishment of efficient air-freight connections; facilitating good market connections and relationships with buyers in the USA	High

summarises the outcomes of the coastal fisheries value chain analyses and indicates the relative priority that the development of each value chain should be attributed considering their potential to return benefits to the PICs (directly and indirectly). The beche-de-mer, coastal fish for the domestic market, export of live reef fish, and aquarium products value chains were identified as high-priority targets for development due to the broad range of value addition and development options available to derive increased benefit (Table 1). The export of beche-de-mer, live reef fish, and aquarium products has significant potential as they can yield premium returns for products of quality, whereas coastal fisheries for the domestic market are a significant contributor of social benefits like employment, culture, food security, and supporting local livelihoods for a large proportion of local PIC populations (Table 1). The processed coastal fish value chain was identified as a medium-priority development target due to the limited demand for processed coastal fish in the domestic market and difficulties in maintaining the frozen supply chain in PIC contexts (Table 1). The ornamental black pearls and Trochus shell value chain was identified as a low-priority development target due to the significant competition from other suppliers, a declining Trochus shell market, and the significant threat of substitutes (for black pearls, Table 1). The export of premium live lobsters was also identified as a low-priority value chain due to being highly vulnerable to over-exploitation and PICs’ lobsters being perceived as inferior compared to exports from Australia and New Zealand (Table 1).

3.7. Strategic Repositioning

Strategic repositioning of the PIC coastal fisheries value chains will be needed to keep pace with anticipated global trends and uncertainties, to ensure that alternatives to the oceanic tuna industry can support socio-economic development in the PICs, to develop resilience and reduce vulnerability to tuna industry dynamics, and to support livelihood development and social sustainability of PIC nationals. The following may need to be considered in terms of policy development for the strategic repositioning of PIC coastal value chains.

3.7.1. Data Limitation for Sustainable Management

Coastal fisheries are largely based on the supply of fresh fish to the domestic market and the capture, processing, and export of a limited range of fishery products internationally (beche-de-mer, black pearls, Trochus shell, live fish and invertebrate exports, aquarium products). Data on the present production and extent of resources for sustainable exploitation are limited, and their absence is a constraint on the efficient and sustainable management of the resources. Other drivers affecting the sustainable management of coastal fisheries include population growth and the associated increased demand as well as climate change phenomena affecting the stable long-term sustainable extraction prospects of the industry, thus necessitating improved management and the need for data to inform management. Directed efforts and programmes for data generation (and simulated data in scenarios influenced by global drivers) in coastal fisheries value chains may inform and thus aid industry development.

3.7.2. Governance and Management

Many local fisheries agencies are under-resourced and focus mainly on the oceanic tuna industry, as significant public revenue is generated from VDS access fees [1]. The number of coastal fisheries development programmes have also decreased over recent years [1]. There is a subsequent need to support and develop local institutions to develop and manage local coastal fisheries sustainably. National fisheries departments and agencies require financial support to allow them to fulfil their functions and responsibilities in managing resources, data collection and monitoring, and for the enforcement of regulations. Additional support is required for involving coastal communities in the management of the coastal resources under their jurisdiction and so that value chain development and management programmes can be conducted with local user inputs. Various stakeholders may need support with involving women, youth, and disadvantaged groups in decision making and providing them with access to the benefits of marine resource use. Women and youth are closely involved in harvesting, processing, and selling marine resources [27,28,29] but may be less likely to respect management measures or if they are not consulted or involved in community management of the resources.

Empowering communities to manage their resources should be supported by strong and contextually appropriate legislation, policies, and development plans. Strengthening enforcement will be needed for proposed management and development plans by community-authorised officers, fisheries and law enforcement officers, and customs officials (concerning export). There is potential to redirect staff and resources from the oceanic tuna-focused institutions to supporting community-based management and enforcing national regulations and restrictions for coastal fisheries where appropriate.

3.7.3. Reallocation of Public Finance for Fisheries Management

The revenue generated from access fees from oceanic fisheries contributes to the public revenue and in some cases constitutes a major source of revenue for certain PICs [1]. There is potential to dedicate funds from this revenue stream for fisheries management to support the coastal fisheries sector to provide and support ongoing operation and maintenance of the assets involved in coastal value chains, such as the replacement of FADs, operation of ice plants, surveillance facilities, regulation enforcement, and data collection (among others). Some PICs have established dedicated coastal community funds from tuna revenues to invest in habitat restoration (such as through reef restoration programmes) that facilitate fish biomass regeneration through ecosystem services (like providing safe nursery grounds) to supplement coastal fish stocks [30,31,32]. Coastal community funds are a public resource and can also be used to develop and maintain key infrastructure, social welfare programmes (such as more employment opportunities), and goods related to coastal fisheries. This approach should be investigated for implementation across all PICs where it does not exist.

3.7.4. Increasing Production from Coastal Fisheries for Food Security

The global population increase over the coming years suggests additional demand for seafood products from coastal fishery value chains in both basic needs and premium markets. Increased demand for products from the beche-de-mer, coastal fish for domestic consumption, live reef fish, and live lobster export value chains can be expected, whereas demand for ornamental coastal fishery products may increase but to a far lesser degree. The demand for fish to meet the domestic market is projected to increase as populations increase locally. The supply of by-catch and waste fish from oceanic tuna fisheries need to be promoted to increase the supply for the local market, and there will be a need to develop the necessary facilities for the storage and distribution of the fish.

There is a need to provide support for increased production from coastal fisheries to enhance food security through a variety of measures, including the installation of near-shore FADS, ice plants, cold chains, and distribution systems and the development of fish processing (freezing, drying, smoking) to increase the shelf life of products and provide added value. This also includes support for the domestic fishing fleet through the development of appropriate fishing craft and gear, training, and alternative methods of financing. However, the approach of extending the shelf life of seafood from coastal fisheries stands in opposition to consumer preferences for fresh fish. Support for the development of efficient cold chains and ice plants to keep fish as fresh as possible until it reaches the consumer may be preferred over the development and proliferation of other processing methods like smoking, canning, and drying.

As many coastal fishery resources are destined for local use and needs [2], support for environmental protection and community-driven sustainable fisheries and areas management has significant potential in increasing the supply of fish biomass through healthier coastal habitats, thus facilitating a greater potential supply of fresh fish [31,33,34].

3.7.5. Aquaculture, Cultivation, and Fishery Supplementation Programmes

There is significant potential for aquaculture to support existing value chains in PIC coastal fisheries, and aquaculture already constitutes the major source of production for specific value chains (such as the production of black pearls). For example, where the beche-de-mer value chain is concerned, the production of raw sea cucumber (sand fish) products stems from wild stocks, but desired species can be produced in aquaculture, which has the potential to constitute new forms of livelihood development. Aquaculture techniques can also be used to support wild capture fisheries through the production of desired species of juveniles that are released into the wild through restocking and ranching programmes. However, significant developments in aquaculture technologies and research may be required to address production challenges stemming from complex biological processes involved in the natural life cycles of certain species. The challenges of implementing specific aquaculture methods in the PIC context would also need to be overcome, as some methods may not be suitable to certain PICs. There is significant potential for community involvement in aquaculture operations, particularly where restocking and ranching programmes that support and supplement wild resources are concerned and where the development and enforcement of appropriate regulations is concerned.

3.7.6. Facilitating Market Access for Exports

Several coastal fishery value chains involve the export of products to other countries to reach their target market (beche-de-mer; live reef fish; live lobsters; aquarium products). There is thus a need for facilitating the process of exportation in some PICs that have limited transportation connections and infrastructure available. Significant opportunities and profit may be gained by facilitating transportation connections (such as sea freight and air freight) and resolving the administrative requirements for exports (customs clearance). There is a particular need for facilitating market connections and market access for specific products (particularly where products are intended for premium markets) such that new players can more easily participate in such value chains (by reducing the barriers to entry) and so that these value chains have the necessary incentive to continue to grow.

3.8. Recommendations for External Development Support

Four coastal fishery value chains were identified as high priority development areas: beche-de-mer, coastal fish for the domestic market, export of live reef fish, and aquarium products (Table 1). These value chains are candidate areas for external investment support (such as from the World Bank), as developing these value chains has greater potential to result in more significant socio-economic returns for coastal fisheries stakeholders and PICs (compared to others). External investment support may be considered for the following:

(i)

Beche-de-mer: Efforts and initiatives that address the boom-and-bust exploitation of fisheries should be supported, particularly efforts concerning sustainable management and restocking and aquaculture programmes. Developing standardisation and training programmes surrounding the specific processing involved with the production of premium beche-de-mer is recommended.

(ii)

Coastal fisheries (fresh for domestic market): Efforts and initiatives that support fisheries data collection is essential for the required stock assessments for fisheries management to improve the supply of the resource. Support for infrastructure related to the development of the cold chain across PICs will improve supply by reducing post-production losses and spoilage while satisfying consumer preferences.

(iii)

Export of live reef fish: The establishment of sustainable fisheries management programmes is needed (including data on the fisheries). Initiatives that centre on habitat restoration to increase fish biomass are recommended due to the potential variety of reef species preferred by offshore markets. Further support can be directed to facilitating collaboration between local fishing stakeholders and foreign operators for market access.

(iv)

Export of aquarium products: The establishment of community management plans is needed to manage resources and prevent over exploitation. The establishment of efficient air freight connections can facilitate value chain participation where it does not exist. Further support in facilitating market connections and relationships with buyers in the USA has significant potential for success.