Costs mounting from China's aquaculture clean-up program

A prioritization of environmental laws by the national government is bumping up against local ambitions to grow aquaculture in China.

There have been distressful scenes in past weeks at fish farms around the country as farmers have met the full impact of government’s new get-tough approach to water pollution. Farmers of perch, bass, and other species in Guizhou Province protested after being forced to quit their cages on Guang Zhao Lake. Elsewhere, the Central Environmental Protection Inspectorate (an inter-ministerial joint working group led by the Ministry of Environmental Protection) forcibly removed cages the Luoma Lake area of Jiangsu Province.

The sudden closure in Jiangsu led to a collapse in carp prices after a surfeit of stock was dumped on local markets. And the fish farmers in Guizhou complained that they received little prior notice of the shutdown from the national environmental police. They also claimed that local government supported them and even part subsidized the setting-up of their cages in 2009.

Documents released by the Central Environmental Protection Inspectorate claim it offered compensation to fish farmers in Guizhou of up to CNY 300 (USD 47.03, EUR 39.71) per square meter for large cages. However, it also issued an accompanying stark warning.

“Those who don’t remove the cages themselves, a team will remove them ... the team won’t take responsibility for equipment removed,” according to the document.

Such closures, which are part of a government plan to pursue greater environmental protection shift to quality over quantity in aquaculture, are rapidly becoming a new norm in China. This spring, China overhauled its environmental enforcement regime through a restructuring of ministries. The change has had a ripple effect throughout the country; in Guizhou, a subtropical province bordering Sichuan and Yunnan provinces, the change resulted in the “Three Great Rivers Clean-Up” program, created to rein in pollution in the Mekong and the Yangtze, two of Asia’s biggest rivers, which pass through the region. 

In January, Vice Minister of Fisheries Yu Kangzhen promised a crackdown on “excess” cage culture and aquaculture pollution, with a focus on improving the quality and safety of China’s aquaculture output. Last year, China experienced a 2.7-percent drop in growth of its overall seafood output in 2017 (production from wild-catch fishing dropped by 4.7 percent, according to data from the Fisheries Bureau at the Agriculture Ministry), which Yu attributed to the shift in policy. Yu said he believes environmental protection is not compatible with any further growth of aquaculture output in China. That will likely mean a smaller, cleaner aquaculture industry that invests in the methodologies and technologies required for cleaner output.

However, the shift in policy is already leading to friction over compensation for aquaculture farmers. That risks stunting aquaculture production in China as farmers rethink expansion of production, while those in situ on waterways will not be in the mood for investing in their ponds over fears of being told to quit. 

As a result, small-scale farmers may either choose or be forced to leave the industry, leading to more corporate control by industrial giants like Baiyang, Guolian, and Tongwei, referred to as “dragon heads,” or local champions by government. The national government would like to see the advance of dragon heads, which are seen as a guarantor and driver of standards and quality. However, these firms have recently been looking away from aquaculture to other industries like new energy (in the case of Tongwei) and education (Baiyang) as new drivers of profitability. It’s not clear if their focus is on seafood anymore. 

In its move, the government is also responding to popular pressure to reduce water, soil, and air pollution and the consequent effects on local food safety, which have become top political issues. In many ways, China’s massive expansion of seafood production was achieved by ignoring its consequences on the environment and China is currently in compensation mode. China’s previous model was achieved through massive subsidies – by making land and water and other utilities available at low cost to producers and processors - for which China is now paying, as it spends billions of yuan on environmental clean-up costs.

It’s in this context that government appears willing to ignore or sacrifice the complaints of small-time aquaculture producers, such as those which have recently been forced to quit lakes and other waterways. Neither is China’s fight against water pollution being limited to the aquaculture sector. A campaign to improve water quality has seen a mass shutdown of pig farms without slurry facilities and a pollution tax has been levied on agriculture waste. 

Pork and poultry industries are largely in the grip of huge firms, many of them publicly listed. They have been investing in the kind of waste management systems that have helped them comply – for now – with environmental regulations. That’s less the case in aquaculture, though there may be a shift to more standardized production through the rise of the dragon heads like Tongwei, if they’re interested. 

Ultimately, China’s existential worries over water pollution will trump the rights of aquaculture farmers. However, dismissal of farmer’s rights won’t reassure potential investors, who will calculate that ultimately, if China were to pass the real costs of inputs like water – and the cost of the environmental cleanup – onto its seafood producers (and buyers), it would likely do fatal damage to the international competitiveness of the country’s seafood sector. 

For aquaculturists in China, getting closed down on water pollution grounds may be the most pressing worry for the moment. But even larger threats loom – climate change is impacting water temperatures, disease rates are rising in Chinese aquaculture, and huge demographic change is emptying rural areas of the cheap labor that has made Chinese aquaculture so cost-competitive. With so many issues of grave importance facing them, 2018 may prove a year of evictions, protests, and exits for many of China’s fish farmers.