This shallow literature review addresses the determinants considered by exporting farmers in China and Thailand when adopting international voluntary certification schemes for farmed fish and shrimp.
Voluntary certification schemes (VCS) specify production standards as well as auditing processes that verify that those standards have been achieved. They allow suppliers to credibly communicate product qualities.
Importance: International VCSs are one of the few governance tools in aquaculture currently in use that demand improvements in the welfare accommodations of farmed fish and shrimp production practices. Knowing to what degree farmers register with certification schemes and what influences their decisions may inform future uses of this animal welfare advocacy strategy.
Certification rates: VCSs with international scope have seen limited uptake in Chinese and Thai fish and shrimp aquaculture. In 2015, less than 6% of global production that complied with major international or Chinese VCSs came from China or Thailand. This is surprising given the volume of Chinese and Thai exports and the proportion of standard-compliant production coming from developing countries.
Incentives and costs: The biggest incentive to get certified under international VCSs is access to wealthy markets, typically in Europe and North America. The biggest costs come from auditing and conducting more costly production practices. Small-scale farmers who are poorly connected to global value chains typically face higher barriers to certification, greater relative costs, and lesser benefits than large-scale farmers. Table 1 summarizes incentives, costs, and structural barriers.
Explaining low certification rates: For large-scale farmers, national certification schemes may offer cheaper ways to gain the same benefits that international VCSs offer. For small-scale farmers, poor business and technical infrastructure make certification less feasible, and the costs appear to far outweigh the benefits.
If international VCSs should expand: An increase in the popularity, scope, and number of international VCSs may lead to the following changes, compared to a world without such expansion in international VCSs. According to my own uncertain intuitions about the market forces involved, I expect:
Implications for advocates: I am generally pessimistic about approaches to improving Chinese and Thai fish and shrimp farming practices using international VCSs. Instead, I suggest animal advocates consider strategies to more strongly incentivize higher standards for the world's lowest-welfare fish and shrimp farming practices. I also suggest raising welfare standards in major national VCSs. I do not have great confidence in my suggestions.
Future research: For greater insight on the international impacts of VCSs, a good foundation would involve gathering better disaggregated data on certification rates among different species, farm sizes, geographical regions, and export orientations. Research that would be more directly useful for animal advocates might involve investigating what changes to existing certification schemes are most promising, how effective different strategies for improving certification uptake might be, and to what extent grants can help lower barriers to certification. I list many research ideas in this report.
Caveats: Evidence tends to be weak, outdated, or scarce. I also expect the findings of this report to be more pessimistic than modern data might suggest. This is because most empirical evidence is from the mid-2010s, and the state of certification seems to be improving over time. I also anticipate that my inclusion of non welfare-centered certifications may lead to some findings that do not generalize well into welfare-focused certifications.
Aquaculture is a large and growing industry. In 2017, an estimated 51 to 167 billion fish were farmed and killed for food (Food and Agriculture Organization of the United Nations [FAO], 2019). Especially in intensive systems, farmed fish can suffer from crowding, handling, starvation, slow or traumatic slaughter, and physical injuries (Cooke, 2016). Reducing suffering in fish aquaculture should be a priority for those concerned about animal welfare.
The last few decades have seen a proliferation of voluntary certification schemes (VCS) in aquaculture. These schemes verify that products or their production practices achieve certain standards. In aquaculture, VCSs address sustainability, genetically modified organisms, social welfare, worker rights, country of origin, organic status, food quality and safety, and more. Many VCSs combine criteria from different areas. Very few specifically target fish welfare, although many VCSs include criteria that relate to it, for example, reducing disease with the aim of minimizing fish loss.
VCSs can increase the welfare level of farming practices by making compassionate farming more profitable. They are credible signals that attract buyers who will pay more for high welfare levels. VCSs help avoid the scenario where welfare-conscious buyers choose cheaper, low-welfare options because they don’t trust unverified welfare claims.
Research on the impacts of aquaculture VCSs on production practices is limited, especially in Asian developing countries. This is in spite of Asia’s historic and expected dominance of global aquaculture production and exports (Mood and Brooke, 2019; FAO, 2020; Ababouch et al., 2021).[1] China and Thailand are the only upper-middle income countries in East Asia with significant aquaculture output, making it easier to assess them together.
This report addresses the determinants of adopting international VCSs for farmed fish and how an increase in VCSs might affect production practices in China and Thailand. I aim to:
The intended audience of this report includes people interested in conducting primary research related to fish welfare certification, prioritizing between fish welfare interventions, and building, refining, or advocating for standards or certification schemes.
This report does not focus on wild-caught seafood, expressions of standards other than voluntary certifications (for example, mandatory certifications or trade-linked standards), practices of farmers producing for domestic consumption, or how the adoption of standards affects fish’s subjective experiences. These important questions were excluded to keep the scope of this report manageable. I elaborate on my choice of scope in Appendix B.
Details about my literature search methods, standards, and inclusion and exclusion criteria can be found in Appendix A.
Standards bodies are the organizations responsible for designing certification schemes, defining the requirements (called standards or criteria) that suppliers should comply with, and approving the bodies that issue the certificates. Standards consist of specific normative statements, of which some are mandatory and others have little bearing on compliance assessment. In some cases, VCSs may also establish principles alongside their standards, which are more loosely defined than standards and may be implemented in flexible ways.
Private standards bodies tend to be based in developed western countries and may be nonprofit organizations, business associations, or businesses. Some major examples of international private certifiers include (Aquatic Life Institute, 2022):
In particular, ASC, GLOBALG.A.P., GAA, and FoS may soon incorporate stronger welfare criteria in future versions of their certification schemes.
To become certified, farmers usually first pick an appropriate conformity assessment body (CAB), also known as a certification body. These are authoritative, usually for-profit organizations with the power to affirm or deny whether a farm meets specific standards. In some cases, farmers do not pick the CAB first – instead, they contact the standards body first, which then presents a list of CABs for the farmer to choose from.
Once contracts with the CAB and standards body have been established and approved, the CAB sends farmers more information about the certification process, followed by auditors to assess the farms. Auditors may be employed by the CABs or belong to separate organizations known as inspecting bodies. They compare farmers’ practices, equipment, and outcomes against certification standards and principles.
If a farm meets the standards, the CAB issues the certificate and notifies the standards body. For consumer-facing VCSs, the farmer can then pay licensing fees to the standards body to use their name, logo, and scheme name on end-product labels.
Farms are reassessed at regular intervals (for example, eight or 12 months) to ensure continual compliance. Failing to meet standards when already certified may lead to rescinding the certification, depending on the severity of the transgression.
Note that this framework is somewhat idealized. In some cases, such as with the RSPCA, the standards body, CAB, and auditors belong to the same organization. This has attracted criticism in the past (Samerwong et al., 2018).
A concrete example of these bodies is as follows: GLOBALG.A.P. is a standards body, AFRICERT LTD is one of their accredited conformity assessment bodies, and IFA v6 for Aquaculture is one of their standards. A GLOBALG.A.P. certification scheme refers to a specific combination of standards, certification processes, and auditing processes.
At the moment, voluntary aquaculture certifications don't seem to be making much of a difference to the average farm (Ababouch et al., 2021; Nhuong et al., 2013). This section discusses the current state of international voluntary aquaculture certifications, specifically:
These are incomplete lists of certification schemes, but they include some of the biggest certifiers. For example, almost half of global certified aquaculture production was under GLOBALG.A.P., with BAP, ASC, and FOS making up similar proportions of the remaining fraction (Potts et al., 2016).
Rates of certification seem to differ greatly by country, species, and scheme.
I am uncertain whether rates of international VCS certification are higher in China or in Thailand at the time of writing, as information about certification rates is largely not detailed or not up to date.
In support of China having higher certification rates, researchers found that in 2009, Chinese food (not necessarily aquaculture) exporters were sometimes required to get certified under international schemes by the Chinese government (Gale and Buzby, 2010). In contrast, in 2014, the Thai government required some aquaculture exporters to register with national certification schemes, which may explain why many export-oriented farmers were nationally certified at that time (Nietes-Satapornvanit, 2014).
Being certified doesn’t necessarily guarantee compliance. Certification organizations may be corruptible (Bleakley, 2020), and there appears to be much leeway for major and minor infringements of certification standards before certification is rescinded.
The results of some studies tracking non-compliance with various schemes are below.
Kruijssen et al. (2021) also found a sharp increase in compliance over time. Between 2009 and 2010, six specific clauses in their social and labor standards had fewer than 10% of shrimp farms comply. By 2017-2018, the average compliance rate for any individual clause increased to over 83%. This may indicate that non-compliance could become much less of an issue over time.
Results can be confused by farmers’ uptake of their own national standards, rather than international ones coming from Western markets. For example, about 90% of shrimp farmers at a Thai national shrimp convention were certified by their national Good Agricultural Practices scheme (Samerwong et al., 2018). China and Vietnam also have national Good Agricultural Practices schemes called ChinaGAP and VietGAP. Many countries also have national Code of Conduct standards. Finally, there are certification schemes with a regional scope, such as the ASEAN Shrimp Standards Project.
Structural barriers are responsible for a great proportion of the costs individual farmers face. For some farmers, they can make getting certified nearly impossible. They appear in many forms, which I discuss below:
These structural barriers may be different for farmers operating at different scales and levels of integration with global supply chains. For the purpose of illustration, I characterize three types of producers for export:
In China, most farms run small-scale, extensive[2] pond-based operations (Gibson et al., 2020). However, China’s most highly exported fish are tilapia and penaeid shrimp, whose farms tend to be large-scale (Zhang, 2014). I would expect export-oriented farms raising other species to be mostly large-scale as well.
In Thailand, I expect farm size to have grown significantly since 2004, when even export-oriented, intensive operations were very small (Hall, 2004). In Thai coastal aquaculture, the most valuable and important exported species is whiteleg shrimp. Inland, Nile tilapia and hybrid catfish are farmed the most, though information on how these species contribute to the export industry is scarce (FAO, 2019b). I couldn’t find evidence on the average size of tilapia and catfish operations in Thailand.
Thai farms registered as companies–which tend to be larger–are more likely to comply with standards than unregistered, medium- and small-scale farms (Nietes-Satapornvanit, 2014).
Understanding what farm scale looks like in each country and industry, and how scale interacts with certification, is important to estimating the relative importance of the factors affecting certification uptake.
Farms in China and Thailand may lack technical and business infrastructure. This is especially true for small-scale or unintegrated[3] farms, though much less so for larger and better integrated farms.
On a technical level, especially in more rural areas, farmers may be missing energy, transport, water, and other infrastructure necessary for higher-welfare practices. For example, aerators may be required to keep oxygen levels comfortable for aquatic animals, but even if farmers owned aerators, they would need cheap and reliable electricity that their grid may or may not offer. Poorly developed roads not only limit animal transportation options, but make it hard to scale up operations to make the fixed costs of certifications worth the investment.
On a business level, infrastructure such as formal farm registration processors, producer groups that farmers can establish relationships with, finance, and trustworthy traders-credit relations can be missing (Ngoc et al., 2016; Phillips et al., 2007). This lack of infrastructure can increase farmers' financial risk. It can make it harder to secure long-term contracts and source finance for initial farm upgrading. Under these conditions, the smallest, most rural operators may especially suffer from poor traceability of farm inputs (Loc et al., 2010) due to weaker credit relations and less detailed record-keeping (Zhang, 2014). Traceability is very important to many schemes, so this can be a major disadvantage.
Moreover, belonging to less integrated supply chains limits Chinese and Thai farmers’ exposure to retailers and standards bodies, leaving them with only intermittent contact with pressure to certify (Washington and Ababouch, 2011). An example of this could be seen in Vietnamese shrimp industries in 2013, where roads, farmer coordination, or information flow was weak. Processors struggled to work directly with farmers and had to request certification from them through levels of middleman traders (Nhuong et al., 2013).
Given these limitations, it would be very unusual to expect many of these farmers to enter direct procurement contracts with big retail chains in the United States (US) or European countries selling high-value, processed, branded products in welfare-conscious regions of the world. But these direct supply relationships with stringent quality policies are exactly the ones which incentivise certification, and which offer benefits of product value-addition and access to lucrative developed-country markets (Washington and Ababouch, 2011).
Even if farmers meet requirements and wish to become part of certified value chains, they may not be able to access those markets. "The chains that producers feed into are often governed by a limited number of buyers" (Humphrey and Schmitz, 2001, p.20). Farmers need to directly or–more commonly–indirectly access those lead buyers, who integrate and coordinate links along supply chains all over the world. If key buyers and the wider ecosystem don’t favor farmers, things still may not work out (Islam, 2008).
Accessing a market doesn’t guarantee that farmers will be able to set their own prices. Wholesalers see fish processors from developing-country farms as higher risk and more difficult to risk-manage (Phillips et al., 2007). This is sometimes a reasonable perception, as smaller, poorer farmers may not yield consistent qualities and quantities. This perception potentially passes through to multinational processors and auctioneers, who may rightly begin to view partnerships with those farmers as higher risk, making it harder for these farmers to establish long-term buying contracts.
Market exclusion may also happen out of protectionism. Some think voluntary certifications can act like trade barriers. Countries that have many retailers toting voluntary certifications might prefer for the certified goods to be produced domestically, not overseas, in order to protect home industries (Beghin et al., 2013). This theme of standards-as-trade barriers has been explored in food safety legislation (Long et al., 2013) as well as labor economics (Flanagan, 2003).
Further research should be done on to what degree certifications tend to get introduced to developing industries through Western-owned vertically integrated enterprises, or to what degree native farmers who perceive an opportunity reach out to those global chains.
Farmers may face international competition in different ways, since their certified products may reach international markets under foreign brands, domestic brands, or no brand. The limited evidence I found suggests that most certified products from developing countries are sold under European and North American brands.
Reasons for this may include the following
In this sense, the narrative of better market access and product acceptance promoted by standards bodies may only be accurate to the extent that farmers end up supplying to the right brands–those which can afford to be selective.
Rather than take up these risks, some have suggested that improving food safety is an effective way to improve product acceptance and compete more effectively internationally (Athukorala and Jayasuriya, 2003). Comparing how effective food safety and animal welfare certifications are for increasing competitiveness in European and North American markets is beyond the scope of this report. Further research in this direction may help to investigate how much more competitive animal welfare certifications need to make a product.
A caveat to all this is that Chinese and Thai farmers tend to specialize in species such as tilapia, white shrimp and penaeid shrimp, which face less competition from countries with high rates of certification.
Adding to the complexity of the decision to certify, farmers often face knowledge and uncertainty issues. It may be unclear to them how certification systems work, whether policy reform could get in the way, whether there is a market for a certified product, or how to go about making changes even if they’re aware of what changes to make. Some of these barriers might be reduced by more clarity in certifiers’ communication, but oftentimes, important factors cannot be predicted, or there is a human capital issue keeping changes from being made.
In the presence of uncertainty, farmers are likely to “model themselves after similar organizations in their field that they perceive to be more legitimate or successful” (Ransom, 2007). In this case, most farmers do not go with certifications, so this reduces the chances of getting certified.
At the individual level, farmers face various benefits and costs to certification. These include:
In this section, I illustrate the various factors. I also speculate about the importance of their bearing on farmers’ decisions to get certified, though these costs and benefits have not been thoroughly measured and are difficult to quantify and compare against one another. I also touch on how farmers at different scales of operation experience costs and benefits differently. Further research in different farmer groups is needed to know how costs and benefits really weigh up.
A little work has been done on the incentives farmers perceive to get certified. Research across eight European countries (Chikudza et al., 2020) has revealed that farmers mostly see certifications as an opportunity to sell more fish at higher prices. These perceptions were stable across countries of different economic status, so I expect them to appear in China and Thailand as well.
Getting certified can increase sales by helping farmers secure supplier contracts and increase sales in European and North American markets. European farmers perceive that a significant number of retailers in rich, Western countries consider eco-labels a prerequisite for imported products (the picture is less clear for Asian farmers’ perceptions). Not only is certification increasingly demanded by consumers–a demand which in the past has not been adequately met–certification also assures importers of product quality.
Product quality assurances come from certification schemes often including food safety, transparency, and traceability criteria. These minimize safety issues and ensure that any which appear can be traced back to the source. Without proof of compliance, Chinese and Thai farmers may struggle to secure a place in global supply chains. Even if they have a solid contract with processors (cleaners, preparers, packers and storers of fish before export), their goods still go through transporters and distributors. There is the risk that fish is stopped at any of these points, or at import borders, if it fails to pass inspections.
In short, meeting retailer demands and lowering risks to their business partners helps farmers gain market access. It may be one of the more significant benefits (Boyd and McNevin, 2011). A supporting example is the major business-to-business certification GLOBALG.A.P., focusing on food safety (Forristall, 2011), which in 2012, accounted for almost 80% of “the eco-certified segment” (Jonell et al., 2013). Increasing sales by accessing more markets seems to be a powerful incentive for certification schemes in general, and especially for food safety schemes. However, I suspect that taking up specifically international or welfare-related certifications is not the most efficient strategy for gaining market access. I have seen no conclusive empirical evidence for this in aquaculture and base this hunch off the observation that many more export-oriented farms appear to be certified by national rather than international schemes (Nietes-Satapornvanit, 2014). Intuitively, this makes sense–national certification schemes can be internationally recognized, require standards that satisfy importing markets, and importantly, be cheaper and more accessible to farmers than international schemes are. Non-welfare certifications such as sustainable or organic may also grant better market access to farmers due to greater demand among overseas consumers, while also having lower auditing costs.
Farmers can sell certified fish at higher prices than uncertified fish (O’Sullivan and Bengoumi, 2008). There are two main reasons for this:
First, certified fish can break into wealthier European and North American markets, where fish generally sells at higher prices, certified or not. Consumers in those markets may be accustomed to paying higher prices for their domestically produced fish (World Bank, 2017). Asian exporters who sell there can afford to match domestic prices by raising their own.
Second, both domestically and internationally sold certified fish can fetch higher prices than uncertified fish. One reason for this is consumers' willingness to pay more for the assurance that their products meet certain requirements. Another is the fact that certified products tend to belong to value chains building up to higher-value products. Western sellers especially are more likely to import certified fish for further processing, packaging, or labeling under a reputable brand. These value additions lead to the final product being sold at a higher price (Chikudza et al., 2020).
Price premiums vary by species and region. In wild-capture fish products, consumers can pay up to 14%–20% extra for high-welfare, organic, or sustainable seafood (Ankamah-Yeboah et al., 2016; Roheim et al., 2011).[4] Around 2008, in China, certified organic fish sold in domestic markets for 75%-117% more than uncertified counterparts. In shrimp, the price premium was 50%-87% (Xie et al., 2013). This optimistic evidence about aquaculture premiums may be old, but I would expect premiums to grow over time rather than shrink, due to increased consumer interest in certification.
Unfortunately, in reality, price premiums may not translate to better farmer profits. Though I did not find clear evidence for or against this in China and Thailand, wider evidence from Swedish fisheries (Blomquist et al., 2016), pangasius aquaculture (Mantingh and Dung 2008 as cited in Loc et al., 2010), and non-fish trades (Boyd and McNevin, 2011) supports it. Economic theory also acknowledges the possibility (Yenipazarli, 2015). The difficulty of gaining certification-related premiums may be because of farmers’ limited power to demand higher revenues (Loc et al., 2010) or because extra revenues go towards covering the costs of certification (Yenipazarli, 2015). Standards bodies do not guarantee price premiums to farmers (Khiem et al., 2020).
As such, it would not surprise me if farmers in China and Thailand, who are responsible for many costs, generally distrusted purported benefits of certification. Some evidence of this is apparent with Vietnam pangasius farmers, who consider the uncertainty around the price premium a major limiting factor (Ngoc et al., 2016).
However, this state of affairs may not be set in stone. Ortega et al. (2014) derived a willingness-to-change figure for farmers suggesting that the typical Chinese farmer would be willing to adopt ChinaGAP’s food safety standards for a 2.49% higher sales price. To the degree that this willingness-to-change figure truly represents the ballpark of price premiums that producers would be happy with, and to the degree that ChinaGAP certifications have similar costs to other VCSs, it seems that price premiums can become meaningful incentives. However, both of these assumptions seem unlikely to me. Future research could affirm or deny the usefulness of improving financial incentives to farmers through mechanisms like guaranteed price premiums.
In this section, I explore benefits that, to my knowledge, farmers may not be aware of. Further research may be needed to confirm whether farmers perceive them.
Standards bodies or value chains farmers associate with may provide on-farm support through the certification process. The support may result in higher productivity, better human capital, and lower perceived risk from potential business partners. Standards bodies and other bodies in the value chain have incentives to do this in order to secure the quality and efficiency of supply. As private sector actors connected to farmers through supply chains, they may be among the better-placed actors for providing on-farm support.[5]
Hatanaka et al. (2005) provide an example of improved on-farm support. When investigating Integrated Pest Management in horticulture, they found that farmers engaged with GLOBALG.A.P. may benefit from training to reduce diseases in crops and remove contaminants in cheaper and more efficient ways. In some cases, standards bodies have even helped reduce post-harvest losses by verifying the quality of produce and demanding payment that might otherwise be withheld. Humphrey and Schmitz (2001) also observe that lead firms in highly governed chains who take up more sophisticated practices can pass these on to surrounding producers, thereby quickly and significantly improving the economic outlook of the entire region.
Personally, I would need to double check that the aquaculture industry in China and Thailand are sufficiently connected to global value chains before believing this claim. Loc et al. (2010) also echo my call for further research.
Another benefit to involvement with certification schemes may include improved domestic brand reputation (FAO, 2021a), though this may only be relevant to the smaller sector of exporters who supply both internationally and domestically. When considering welfare certifications, I expect this to be of comparatively less importance as Chinese and Thai consumers may not value welfare labels highly (Lin, 2020).
Certification criteria may benefit farm productivity and resilience, and this may be especially true for welfare-related criteria. Happier fish are healthier, calmer, and more efficient at feeding. This may lead to better feed conversion ratios, growth rates, and filet quality, as well as reduced mortality, need for drugs, fish aggression, fin damage, and feed waste. Many VCSs also have stocking density or spacing requirements, which can reduce disease rates on individual farms and prevent more serious and contagious diseases from causing massive industry-wide fish loss. Moreover, in times of surplus, farmers believe that certified fish will sell before uncertified fish will, which grants their business more security.
However, Thai shrimp farmers do not associate national standard compliance with better outcomes. And the benefits may not be reliable–for example, it was found that GAP compliance didn’t reduce disease in Thai Pacific white shrimp farming (Sanrak et al., 2010).
As we have seen, some of these hoped-for benefits do not get realized, which indicates that there may be barriers preventing farmers from receiving these benefits. More research is needed to find the major barriers to each benefit. Complicating the matter, some examples were drawn from other industries, countries, and non-animal welfare certifications, though I believe they are generalizable enough to include. Further empirical validation of benefits in Chinese and Thai aquaculture industries would be useful.
Farmers have in mind several costs, namely those related to:
Of the perceived incentives and barriers Chikudza et al. (2020) identified, all were similarly held between differently sized farms, at least in the nine European countries the authors surveyed, suggesting that they might hold in China and Thailand as well.
Of all costs, it is thought that auditing costs are the most difficult to overcome. The specific knowledge and skill sets required for a welfare auditor is difficult to come by, even more so than for sustainability auditors. Small farms especially would struggle with these costs (Moore et al., 2020) as auditing takes a roughly fixed cost per farm, and does not get cheaper just because one’s farm has fewer fish.
A few empirical observations have been made about the extra costs of switching to higher welfare slaughter practices in European countries (European Commission, 2018; G. Bridgewater and R. Springlea, personal communication, July 28, 2022). Estimates tend to fall between 0% and 4% of sales prices in Atlantic Salmon, European Seabass and Sea Bream, and Rainbow Trout. For French Rainbow Trout, costs increased by around 8% of sales price. For German and Romanian Common Carp, costs increased by around 22% of sales price. Costs of switching to higher welfare practices varied greatly by the size of the enterprise, where larger farms incurred lower costs.
It is unclear to me how costs might compare between European farms and Chinese and Thai exporting farms. On the one hand, costs may be lower in Asia due to lower labor, land, and energy costs. Alternatively, European costs may be lower due to better labor productivity, infrastructure, economies of scale, and geography.
All costs and benefits considered, Corsin et al. (2007) calculated that for many different (not necessarily animal welfare-related) certification schemes, certified farmers and workers bore significant costs while consumers and other parts of the supply chain tended to benefit. Further research can confirm whether the same relative benefits hold today.
Table 1 summarizes the various structural barriers, costs, and benefits farmers at different scales face as well as my best guesses at the direction and relative magnitudes of the effects. The Importance weighted by farm scale column indicates how important a factor is for certification uptake in general, placing heavier weight on larger compared to smaller farms. Information about the size distribution of farms producing for export is scarce, so I put low confidence on these weighted estimates. Advocates hoping to use this table should consider whether it is more cost-effective to affect many small farms or a few large farms.
Table 1: Summary of Structural Barriers, Costs, and Benefits to Certification.
| Small-scalea farm | Medium-scale farm | Large-scale farm | Importance weighted by farm scale | |
| Lack of technical & business infrastructure | - - | . | . | . |
| Market exclusion | - | . | . | . |
| International competition | - | . | . | . |
| Uncertainty | Varies by species | Varies by species | . | . |
| Market access | + | ++ | +++ | +++ |
| Price premiums | + | + | ++ | ++ |
| On-farm support | . | . | . | . |
| Domestic brand reputation | + | + | ++ | + |
| Farm productivity and resilience | + | + | + | + |
| Costs of changing practices | - - | - - | - | - - |
| Auditing costs | - - - | - - | - | - - |
| Stressful transitions | - | . | . | . |
Note: A period ( . ) represents a very minor or negligible effect. The Importance weighted by farm scale column indicates how important a factor is for certification uptake in general, placing heavier weight on larger compared to smaller farms.
a Definitions for scale of aquaculture operations vary in the literature and between species. Many sources categorize farm scale by geographic area alone. In general, for finfish, small-scale farms are less than 4.8 hectares, medium-scale farms are between 4.8 and 8 hectares, and large-scale farms are greater than 8 hectares (Nietes-Satapornvanit, 2014, Samerwong et al., 2018). Other definitions of farm scale incorporate farm productivity, ownership and management structures, export orientation and status as a registered company. The terms in my table lean towards the more holistic definitions of scale.
With all this in mind, it’s clear that various factors help explain the weak influence of international VCSs in China and Thailand. For small-scale, export-oriented farmers, the costs and barriers of certification tend to be much greater than the benefits, making certification a poor business strategy; benefits are far from guaranteed.
Unfortunately, the picture is less clear for large-scale, export-oriented farmers. My impression is that export-oriented, large-scale farms in China are rarely certified under international VCSs. But I would not be surprised if Thai farmed shrimp now enjoy relatively high rates of certification under these schemes. For now, under the current dearth of data, it is difficult to describe either certification landscape.
Thai shrimp aside, I did not find convincing explanations in the literature for why rates of certification among well-resourced, Western-market-facing Chinese and Thai farmers seems low. I speculate at two potential reasons.
First, perhaps the strongest draws to getting certified are not strong enough in these contexts. It’s possible that one of the most valuable benefits of international VCSs–granting market access to those who comply–can be gained at lower costs under different certification schemes. For example, national schemes mandated or recommended by their own country or the country they are exporting to may be more economical (or less avoidable) and grant market access just as well.
Second, perhaps the costs, even for large farmers, may still be too high relative to the price premium a certified product would fetch. Arguably, Chinese and Thai farmers, who mostly export tilapia, shrimp, and catfish, aim at lower-value market segments which optimize for cost-competitiveness rather than quality signaling. Quality signaling could instead be the specialization of farmers in other countries. Such farmers may not only focus on other high-value species such as salmon, tuna, and rainbow trout, but also move their products through more processing and branding procedures to target especially wealthy or welfare-conscious consumers. In other words, Chinese and Thai farmers may not be part of chains aiming for quality-related price premiums, and so it is not worth getting certified.
In conclusion:
In this section, I imagine a future where certification schemes become compelling to many more farmers on the margin, with the assumption that these changes primarily come from increased consumer interest in welfare-certified seafood. I’d like to explore what might happen to the size and composition of exporting industries in China and Thailand. I discuss several different potential outcomes that can be organized as:
In general, since the impacts of certifications on Chinese and Thai exporting farmers seem small, I expect even a large expansion of certification schemes to have only minor effects in these countries. I also expect any significant uptake of better production practices to be ultimately in response to changes in demand. In other words, I don’t think introducing new VCSs will by itself lead to major industry-level changes such as those described in this section.
These hypothesized effects are tentative and should not be viewed as predictions with high certainty. My conclusions come from economic intuition, which is fallible and can place too much confidence in market forces and the rationality of farmers while overlooking important factors.
First, I expect the number and proportion of higher-welfare farmed fish to grow as a direct result of the increased demand.
Second, I expect the size of the average farm exporting certified fish to grow. Since larger firms face lower proportionate costs to certification, they should cope better in markets where international VCSs have expanded to being meaningfully important to profit margins. In the case where consumer demand for welfare-certified goods in North American and European markets makes up a larger proportion of total demand, there will be a smaller market for non-welfare-certified Asian exporters to target. This could lead to greater competition between small-scale exporters. Necessarily, some small farmers could be squeezed out from those markets, resulting in larger average farm size. Belton et al., 2011 and Busch and Bain (2004) argue this has already happened.
Third, I expect polarization between the practices of larger and smaller farm operators. Larger farm operators will supply more to markets with interests in welfare certifications, perhaps signing contracts with businesses closer to the consumer end of the supply chain. They may also produce increasingly branded and processed products. The more vertically integrated they become, the cheaper and smoother the certification process will be. So I would expect a gradual shift from the current non-integrated state of the exporting producer industry, to a collaborative structure, and finally, to a more vertically integrated structure. On the other hand, smaller producers who do not engage with certification schemes may not have the same incentives. If anything, they may be more likely to supply locally, informally, with minimum processing and low welfare standards, and to stay fragmented.
The push-threshold model from Tlusty (2012) aligns with this, suggesting that certifications as they stand now could leave behind the farms with the worst animal welfare practices. In fact, most farmers may not change practices in response to expanding standards, largely because farms with the worst practices lag too far behind the certification threshold. It would take too many resources to generate sufficient welfare improvements to comply. Only those farmers close enough to the certification threshold–those farmers who already have mediocre welfare practices–may get certified. If certifications do not expressly target the worst performers, there may well always be producers specializing in low-cost, low-welfare seafood (Jonell et al., 2013).
Further support for this idea appears in production trends in Vietnamese pangasius. Trends appear to be highly cyclical, with smaller farmers moving in and out of production and larger farmers consolidating over time (Bush and Belton, 2011). This may indicate that instead of innovating or improving welfare practices to adapt to changing demand, farmers are instead primed to enter and exit opportunistically. It also reinforces the idea that small farmers are easily pushed out by events such as losing a harvest to disease, getting a low price for a couple of seasons, or struggling with feed costs and large debt (D. Waley, personal communication, September 6, 2022). In the short term, such opportunistic strategies may be appropriate. But to the degree that welfare demands become a long-term trend and certifications become mainstream, the sector of smaller-scale, cycling farmers may get smaller and smaller.
Fourth, I expect a risk of entrenching low-welfare production practices among native Chinese and Thai farmers. Developed economies currently seem to have the advantage with high-welfare production. It’s possible that in certain conditions, they could press this advantage, leading to a division where Asian countries specialize in low-welfare production while developed countries specialize in higher-welfare production (Busch and Bain, 2004).
This risk is heightened if:
Fifth, I expect the volume of fish and shrimp produced globally to shrink, relative to a world where voluntary certifications were not introduced. Across both markets, consumers demanding fish produced at higher production costs should on average reduce total production. The shrinking of global production may be more apparent in shrimp and mollusk export industries, rather than fish, since fish seems least sensitive to changing food safety policies compared to other seafood groups (Nguyen and Wilson, 2009).
The above expectation depends on the assumption that compliance is a burden on farmers, which seems fairly common regardless of country (S. Davis, personal communication, Sep 6, 2022). Alternately, in some scenarios, certifications may lead to an increase in global fish and shrimp production volumes. A variety of factors may support this outcome:
In these scenarios, even if a substantial proportion of fish are welfare certified, they may not have lives worth living. Then, certifications that increase global fish production could be a step back for animal welfare overall.
Finally, I want to address the possibility of fish production standards racing to the top. This occurs when certification at the highest standards has special profit advantages, which attracts investment in efficient and cost-effective ways to achieve those standards. Such investment could lead to diminishing costs of certification globally and higher global rates of certification. It is hard for me to get a read on the feasibility of this at the moment. But anecdotally, I have heard that farms have been able to produce standard-compliant fish on one side of their farm and non-compliant fish on the other. If it turns out that these split processors are feasible on a farm level, then a race-to-the-top scenario seems less likely to happen.
I do not hope for my writing here to be interpreted as what I think will actually happen. I mean to say that the expansion of certification schemes would put pressure on the exporting industry to evolve in these directions. In reality, there are so many other factors influencing how exporting industries evolve that certification schemes may have a negligible impact in comparison.
My research produces some action-relevant suggestions for welfare advocacy in Chinese and Thai fish and shrimp aquaculture. They are ranked in rough order of efficiency by my best guesses as indicated by [efficiency ranking, confidence level]. Very little empirical evidence, if any, backs up this ranking. And given the shallow nature of this review, these suggestions are mostly based on the expected direct effects. It's possible that indirect effects may make an approach much more or less promising than I expect. Moreover, these strategies are evaluated based on their anticipated effects in China and Thailand and do not take impacts on other geographies into account, which may be even more important. Almost all of these strategies should be better researched before going ahead.
[Moderately efficient, Moderate confidence]
The world's exporters with the lowest-welfare production practices may be a top choice for the world’s welfare-indifferent customers due to lower costs. When progress is made increasing welfare standards elsewhere in the world, the cost of fish and shrimp in those places may increase, pushing more consumers towards these lowest-welfare exporters. Strongly incentivizing welfare standards in lowest-welfare exporters, perhaps through trade-linked standards or bans, can help reduce this effect. Not only would the lowest welfare fish and shrimp live better lives, it could also magnify the impact of animal advocacy efforts everywhere else. Though tractability may be low, there are some countries where this approach could be promising (Cox, 2022 unpublished). Caution is still required, however. The same spillover mechanism that increases consumption of low-welfare fish from low-welfare places could happen between species. That is, if policies or campaigns dissuade the consumption of fish and push consumers toward (arguably lower-welfare) shrimp, advocates might actually cause harm.
[Weakly efficient, Low confidence]
Most farmers exporting to welfare-conscious markets such as the US, Europe, and others will become subject to food safety and traceability standards. These standards may be imposed by either the importing or exporting government. Examples include ThaiGAP and the US’s Hazard Analysis and Critical Control Points (HACCP). Their requirements are so widespread that a small welfare-relevant change to these could have very large impacts. Tractability is uncertain.
[Weakly inefficient, Low-moderate confidence]
Raising welfare standards may not have much direct impact on fish production practices in China and Thailand, given those countries’ small proportion of registered farmers. It may also lower certification rates worldwide, so the improvement in the certified fish’s experience would have to outweigh that downside. Advocates currently doing this should ensure that any extra stringency in existing standards meaningfully improves fish experience. However, there may be some important indirect effects where raising international welfare standards encourages other schemes to raise their own welfare standards.
[Weakly inefficient, Moderate confidence]
In most cases, small farmers do not seem like a very promising group to target. In China and Thailand, small farms are responsible for producing only a small proportion of exported fish and shrimp. The barriers they face are also less mutable. Nevertheless, the situation may be different in countries at different levels of income and development. Advocates who have good reasons to work with small farmers should consider strategies that reduce auditing and transition costs.
[Moderately inefficient, Moderate confidence]
Promoting international VCSs to Chinese and Thai producers doesn't seem very directly useful. Large-scale exporters are likely already aware of them. Small- and medium-scale farmers would probably find them too costly or inaccessible, especially compared to domestic schemes. It seems difficult to make a case for getting certified that is both honest and convincing.
[Strongly inefficient, Moderate confidence]
This is resource intensive and well outside the function of most advocacy groups.
More research questions of particular interest to advocates can be found in the section Questions Relevant to Fish and Shrimp Advocates and Grantmakers.
This report was a literature review on research relevant to how VCSs affect international producers. In this section, I present suggestions for research questions and methods in the following topics:
The language in this section will contain more economic jargon than other sections, as it is predominantly aimed at future researchers with some (limited) knowledge of economic methods.
Incentives, costs, barriers, and solutions
Farmers’ decisions are driven by a barrage of different factors. Understanding and quantifying these factors can help estimate how many farms at what scale will make changes. The following concepts may be gaps of particular relevance. My report has covered some of the literature on this, but it appears much more primary research is needed.
Price premiums:
How many farmers get increased revenues after certification compared to before? How much higher are those revenues? How much do price premiums differ between international and domestic buyers? Do price premium guarantees increase certification uptake?
Production costs:
How do fixed and unit production costs for exporters change?
Productivity:
How does overall productivity for exporters change and what are farmers’ perceptions?
Quantifying and comparing costs and benefits:
How do the costs and benefits listed in the Summary and Synthesis of Structural Barriers, Costs, and Benefits section above compare with each other? In the manner of Corsin et al., 2007.
Impacts of supplier groups:
How much more certification uptake does the presence of supplier groups lead to? Elaborated in the Implications for Advocates section above.
External drivers:
Do Western integrated firms bring certifications to Asian farmers, or do the farmers seek out certifications to get the benefits?
Alternative options:
What alternatives to welfare certifications do farmers seek for the same benefits? How do national VCSs compare in terms of costs and profits received?
Competitiveness of high-welfare industries
Consumers will substitute high- and low-welfare fish against each other, or high-welfare fish in one country against high-welfare fish in another. Determining the competitiveness of high-welfare sectors, both against different welfare levels and internationally, can determine, in the long run, how many fish are produced, and at what selling price and welfare level.
For empirically studying competitiveness, a European Commission study recommends assessing almost all of the following (Directorate-General for Health and Food Safety, 2017). Some of these are much more relevant for assessments of international competitiveness than the competitiveness of high versus low welfare industries.
Impacts on volume of production
Volume of production may give an indication as to how many individual fish are farmed at any point. It seems plausible that the aggregate welfare level of a fish industry is more dependent on volume-related changes caused by certifications than intra-fish welfare changes. For example, if certifications improved the subjective experience of a few fish by a small amount, this would be a less important effect if certification halved the total number of fish produced, where fish on average lived terrible lives. However, this rides on some philosophical assumptions, such as fish nonexistence being better than fish living “terrible” lives.
My intuition is that volume is more accurate than value as an indicator for the amount of fish suffering, though I am not certain. At the least, I expect volume per fish to vary less than value per fish over time, on average. Nevertheless, in this mini-section, “volume” can be substituted by “value.”
Volume of production is indirectly related to the number of fish farmed at any time. This number of fish, as well as each fish’s individual level of wellbeing, is important for estimating impacts on fish welfare across an industry.
Exporters’ animal welfare content:
After the introduction of voluntary certifications, how many more exporters are selling products with higher animal welfare content compared to before, both overseas and domestically?
Percentages of certified fish:
What percentage of the total volume of fish sold to welfare-conscious markets is certified? How does this percentage change before and after new certifications are introduced? After accounting for the volume of fish who were going to be raised in higher-welfare conditions anyway, this change in percentage would be a crude estimate of the impact of certifications overseas.
Trade effects:
How do changes in welfare-conscious markets (for example, in price, volumes of supply of different types of goods, market concentration, etc.) affect those same properties in exporter countries through trade?
Impacts on industry composition
Composition of value chains:
What proportion of farms in exporter countries, vertically integrated with leading sellers in welfare-conscious markets, cease to operate once certifications are introduced in that value chain?
Scale of farmers:
What proportion of total export volume/value is produced by farmers at small-scale, mid-scale, and large-scale? How does this change before and after the introduction of certifications, or in uncertified countries compared to certified ones?
Counterfactuals – would production practices have improved anyway?
Additionality:
To what degree are the changes related to certification criteria already changes farmers wanted to make? For example, farmers may improve fish welfare as a byproduct of attempts to reduce disease and mortality, and improve food safety and sustainability (Gibson et al., 2020). In the past, the salmon industry has introduced vaccines to reduce antibiotic use, increased farm monitoring technologies, and employed veterinarians and marine biologists, not necessarily in preparation for getting certified (Mjaugeto et al., 2017). Boyd and McNevin (2011, pp. A-57–A-64) further discuss counterfactuals.
Without paying attention to this, researchers could be overestimating the popularity of certifications among farmers. Researchers could look out for events such as the sudden dismantling or public relations crisis of a VCS as grounds for a quasi-experimental analysis.
Changes enforced by law:
Related to the above, to what degree does becoming certified allow farmers to pre-empt enforced changes to production practices (for example, relating to food safety, traceability, sustainability)? If voluntary certification introduction tends to be followed with mandatory standard introduction, certified farms may not end up paying a lot more than uncertified ones, and may in fact have an early mover advantage.
Comparative studies
Future researchers could study multiple regions with different outcomes in parallel. For example, throughout the report, I highlighted the special disadvantages small farms face. But some farm auditing shows that shrimp farms of different sizes in Thailand show no significant difference in compliance with GLOBALG.A.P. criteria. What makes Thailand different? What can other countries learn from it?
Gathering and using data
Future researchers can consider gathering data, as its scarcity at a disaggregated level has hindered research. Some important levels of disaggregation include species of fishes, type of product (for example, frozen or chilled), scale and location of farms, and certification status of farms or fish. There could be many uses for such a database. For example, volumes of fish production and trade could be translated into numbers of individual fishes, which could help improve estimates of welfare impacts.
Some data scarcity may be an intractable problem. Michelson et al., 1999 noted that, even for more widely known categories like “organic,” and in markets as established as European markets, distinctions between product types don’t appear in official statistical accounts. Washington and Ababouch (2011) struggled to find empirical data on how certifications affect markets, international trade, and actors in seafood supply chains. Boyd and McNevin (2011) pointed out the difficulty of estimating how market forces generated by aquaculture certifications might affect production practices.
In some places, data is available and the opportunity would be turning that information into reliable macro-level indicators of impacts arising from certifications, measured across all certification schemes, seem to be missing. For example, within better-established eco-labels, researchers have tried to use “land use changes, use of fish meal and other resources, water pollution, biodiversity impacts, predator control, food safety, and social issues,” as macro-level indicators common across all farms, certified or not (Boyd and McNevin, 2011). But the criteria for measurement differs among programs, meaning the data is not readily comparable. Levels of compliance relative to standards may also differ between schemes, complicating the issue.
Future researchers should also be aware of opportunities for improving the empirical picture. Researchers can consider tapping into data sources such as supermarket scanner data, which is becoming more available. Bigger research budgets could also afford other data-gathering methods, such as surveying supermarkets for disaggregated product data (O’Sullivan and Bengoumi, 2008).
Region
Future researchers can consider studying the same question in different regions of the world.
Asia:
Lower-middle income countries such as India and Vietnam are sizable producer-exporters who likely face the same struggles to an even greater extent.
South America:
Chile is an upper-middle income country with a large aquaculture export industry. It may provide an interesting contrast to China and Thailand because it appears to be more vertically integrated and more specialized in higher value species like Atlantic Salmon and Rainbow Trout. The Caribbean and, more generally, Latin America, also have large export surplus (FAO, 2020) and could be places to direct more research.
Europe:
highly developed Norway and the Netherlands are relatively large aquaculture producers deeply embedded in supply chains. Another point of difference is their locality to welfare-conscious markets, which could imply they suffer less of the trade, knowledge-of-the-market, and production constraint issues that China and Thailand might face (for example, whether transporting live or chilled fish to European countries is feasible). Studying them can bring a simpler, but perhaps clearer, perspective to the impacts of welfare certifications. Moreover, if we find that exporting countries won’t engage much with certifications until they’re well developed, it may make sense to study these more developed countries in order to apply those findings to advocacy in Asia later. Data is also likely to be more plentiful in these countries.
Animal
Future researchers can consider studying the same question in specific species of fishes or shrimp. I attempted doing this briefly, but not enough data was available in Asia. Outside of Asia, Atlantic Salmon is among the most-studied farmed fish species and could be a good candidate.
Actor
Future researchers can identify influential actors along aquaculture value chains and consider how they might react differently to voluntary certifications. For example, compare:
Analogies
Sustainability, Organic, Food Safety, and many other VCS types may share similarities with more welfare-related schemes. Discovering how other schemes are analogous or disanalogous with welfare-related schemes could help advocates draw and apply knowledge from existing sources.
Other expressions of standards
Voluntary certification schemes are just one expression of animal welfare standards. Standards can be public or private, international, domestic or linked with trade, voluntary or enforced. Table 2 illustrates how these qualities interact to produce different classes of standards.
Table 2. Expressions of Standards by Scope and Enforceability, With Examples.
| Types of Standards | Domestic | International |
| Enforceable | Laws and regulations: For example, the EU’s 2009 regulation on the protection of animals at the time of killing. This is an animal welfare regulation applying only to producers within the EU. | International laws and regulations: For example, US HACCP. This is a food safety regulation applying to all US-produced goods as well as imported food products.
Trade-linked standards or restrictions: For example, the WTO’s 2014 ban on the trade of seal products in the EU on the grounds of public concern for seal welfare. |
| Unenforceable | Voluntary certifications with local scope: For example, ChinaGAP’s fish welfare standards, to be voluntarily taken up only by suppliers in China. | Guidelines: For example, the OIE’s animal welfare standards provide general recommendations for production practices anywhere in the world. Different jurisdictions or private bodies may draw from it and refine it to create rules, regulations, or certifications.
Voluntary certifications with global scope: For example, GLOBALG.A.P.’s fish welfare standards, voluntarily taken up mostly due to pressure from Western consumers and retailers. Suppliers all over the world may become certified |
Note: This table presents a taxonomy of standards, classified by geographic scope and enforceability. This report focuses on international, unenforceable standards.
In this spreadsheet, I list several papers related to animal welfare, trade, labor, and environment. The papers include both empirical and theoretical methods which can be adapted to answer the question, “How do voluntary certifications affect international farming practices?” Some papers address components of the question. Others address it directly, with some modifications to the good, region, or standard in question. I expect extending and replicating many of the papers to be useful.
The columns in the spreadsheet contain information on the article name, author, date of publication, abstract, specific relevance to the question, methods used, product and region of interest, as well as some other information. More notes about the contents of the columns will be visible upon hovering over the column names.
Some of the most valuable papers there ask questions such as:
There are some limitations to this approach. Some papers that study the impacts of governance mechanisms on production practices do so by assessing animal welfare on the ground. These could be difficult to adapt to the aquaculture context because of a lack of comparable data about fish welfare. As of now, there is no standardized, widely-used fish welfare assessment protocol. Future researchers can consider formulating one that can scale.
In the rest of this subsection, I discuss some terms, topics, and methods that theoretical modeling techniques may connect to. Using these as search terms may be a good starting point for technically-minded economists.
Equilibrium modeling
Equilibrium displacement model:
A methodology for analyzing consumer demand and consumer welfare. Wohlgenant (2011) provides some introduction. Constructing equilibrium displacement models becomes more complicated when attempting to account for substitution between different products, as well as firm entry and exit.
Spatial equilibrium model:
These solve for the equilibria of markets in different regions at the same time. They can estimate the effects of transportation costs and trade policies on producer prices and volume and direction of trade. They may be especially useful for studying trade-linked standards. Bouët and Metivier (2016) has an introduction. Unfortunately, spatial equilibrium models may require region-, product-, and welfare-level-specific supply and demand elasticities, as well as cross-price elasticities, which may be difficult in fish supply chains. To address this, sensitivity analyses could be used to estimate these elasticities to within plausible ranges. Moreover, at least in comparison to equilibrium displacement models, spatial equilibrium models require linear or quadratic programming, so are more work to solve (M. St. Jules, 2022, personal communication).
Initial steps for researchers interested in equilibrium modeling may include outlining a model, listing the data that is needed to get it working in different contexts, listing ranges for the parameters of that model, and identifying how difficult data would be to get for different parameters. After this initial assessment, it may make sense to decide whether or not to go ahead with estimation. Awareness of data limitations seems especially important in the fish welfare context.
Concepts in marketing
Vertical product differentiation:
Occurs when, for example, two different goods exist and all consumers would prefer one to another if they were priced the same. Contrasts with horizontal price differentiation, where some consumers would buy one and some would buy the other at the same price.
Credence goods:
A good with “qualities … which, although worthwhile, cannot be evaluated in normal use. Instead the assessment of their value requires additional costly information” (Darby and Karni, 1973).
Information asymmetry:
“Occurs when one party to a transaction has more or superior information compared to another” (Bloomenthal, 2021).
Signaling:
Under information asymmetry, signaling refers to the market process through which one individual seeks information about an uncertain investment, and another individual transmits information about the quality of that investment through observable characteristics (Spence, 1973). Studies of signaling encompass theory models about labels, standards and certifications.
Screening:
Under information asymmetry, screening refers to “a strategy [by uninformed agents to] … filter out false information and retain only the true information” (Corporate Finance Institute, 2022). Screening may occur with 1) consumers supporting NGOs to expand certification schemes in order to use certifications as a screening tool for welfare content and 2) businesses closer to the consumer-end of the supply chain distinguishing between suppliers with different product qualities. For this second use, Sun and Wang (2019) discuss traceability.
Endogenous market segmentation:
Under information asymmetry, endogenous market segmentation refers to a theoretical process where “low-quality sellers voluntarily reveal the quality of their units” (Kim, 2012).
Pricing
Asymmetric price transmission:
A pricing phenomenon when downstream prices (for example, retail prices) react differently to upstream prices (for example, input prices).
Above, I discussed methods that could be used directly to answer the question, or components of it. The remainder of this section is a somewhat more miscellaneous collection of prompts and background. They came to mind during my reading and have not gone through great prioritization or deliberate idea-generation processes. As such, any claims I make about their importance, feasibility, or usefulness will be weak.
Voluntary certifications in other regions
Having spoken to many animal advocates over the course of writing this report, I got a sense that introducing welfare certifications in one country can encourage the introduction of certifications in other countries. It lowers the cost of having to develop standards and procedures from scratch. This is especially true for farming and slaughter operations that are especially uniform between countries, such as with broiler chickens. Indeed, we have seen the certification scheme ChinaGAP drawing from GLOBALG.A.P. And Brazil has stirrings of their own Better Chicken Commitment, originally from the United Kingdom (UK) and European countries.
Sometimes, the standards and procedures are directly ported over, and this can cause issues if the consumers in the different countries have different preferences. It can also be difficult to port standards over directly if farming procedures are drastically different. I expect these challenges to occur in fish, since species and farming practices can be drastically different between countries.
The strength of the effect of voluntary certifications in one country on their construction in another could also depend on the relative product ranges in each country. I expect that an increased product would require greater effort in building certifications, but could also make certification within each sector more approachable due to their smaller size.
Future researchers may gather evidence to affirm or refute these suspicions.
Standard harmonization
Throughout my search, many sources have suggested that the myriad of certification schemes is confusing for producers and consumers alike (Samerwong et al., 2017). There have been calls for harmonization across standards. As certification schemes grow, these calls may become even more insistent, leading to reevaluations of standards. Over time, a couple of standards may emerge to dominate future expressions of standards thereafter.
Relatedly, I have observed standards bodies gradually shifting from species-specific standards towards standards that apply to many species or species groups at once. On one hand, consolidation may streamline certification processes, reduce certifier manpower, or present a unified front that makes things less confusing for consumers and implementers. On the other hand, I would not be surprised if standards became less granular and therefore less appropriate for species who have different needs than their species group. How does consolidation of standards affect the uptake of standards and subjective welfare of different species?
Predicting how standards may evolve, converge, or diverge, may be useful for advocates hoping to promote the best standards for animal welfare in the long run. It may also be useful for certifiers to prepare for incoming changes in the regulatory landscape.
Government regulation
Voluntary certifications have the potential to both support and detract from public regulatory efforts. In 2011, no definitive information was available on this (Boyd and McNevin, 2011), though things might be different now.
Prompting public standards and certifications:
Governments already have a history of introducing their own voluntary or mandatory certification schemes. China and Thailand have ChinaGAP and ThaiGAP. The European Union (EU) has Organic standards. Many countries have food safety import restrictions. What opportunities do government sentiments afford animal advocates?
For example,
Influencing public standards and certifications:
To the degree that public regulatory efforts are similar to voluntary certification schemes, governments can draw from certifiers’ experiences. For example, public certification schemes could model after current private schemes’ methods for standard-setting, registering, auditing, and other processes. They can avoid mistakes public programs have already made, and they could use resources already collected by private bodies, such as a list of important or influential stakeholders to engage with.
Or not…?
There’s a possibility that voluntary programs are not stepping stones to public regulation, but part of a wider persistent shift of governance responsibilities to businesses. Will voluntary certifications really be replaced or complemented by more effective national regulations and guidelines? Or will rules and regulations in food production be increasingly the jurisdiction of private bodies? What would the implications be for fish welfare?
Methods for studying impacts on wider regulation
To study how voluntary certifications have impacted other regulations, future researchers could study regulatory documents that were written or updated after the voluntary certification schemes were introduced. Documents may include:
Researchers can look out for references to voluntary certification schemes or collaborations with those certifying bodies. The more references, the more likely that voluntary certification efforts made an impact. I admit this is a noisy method.
A second method could involve qualitatively assessing how attitudes towards animal welfare in an exporter country evolve as voluntary certifications hit their domestic markets. My sense is that animal nonprofits have already developed and executed this approach quite a bit.
Finally, there is already academic literature around public-private hybrid governance, which could be a place for researchers to start.
This question is crucial to understanding the impact of certifications on fish and more research is needed. However, it is out of the scope of this economics-focused report. Animal behavior and welfare scientists may be better suited to this question.
Nevertheless, a good place for economists to start may include researching whether welfare levels in certified, exporting farms is meaningfully different from welfare levels in uncertified, exporting farms. The spreadsheet in the section Adapting Existing Journal Articles has research designs for this.
Consumer demand
Ultimately, voluntary certifications improve producers’ abilities to differentiate products by welfare level, and for consumers to distinguish between them. Given a trustworthy way of pointing out the otherwise invisible welfare content of fish and shrimp, adverse selection is less likely to occur. Theoretically, consumers and producers should become more likely to buy and sell low-welfare products. Empirically, what evidence do we have that voluntary certifications increase consumer demand for high-welfare goods? What evidence do we have that the presence of high-welfare items in the market generate new norms of eating higher-welfare fish?
Innovation
Relatedly, as demand grows, it becomes more profitable to innovate other methods, equipment, and practices for all points along the aquaculture. Innovations can increase welfare levels or decrease the cost of farming at those welfare levels. As the high-welfare market becomes more and more established, these benefits become less risky for suppliers to pursue. How might the introduction of VCSs spur welfare-oriented innovation?
The following few questions are by no means the most important questions advocates and grantmakers should be answering. They have a place here because they came to mind most readily during my research. In fact, I expect some of the most important work facing researchers right now is figuring out what advocates and grantmakers really need to know, and then finding out whether those questions can be usefully answered.
Interventions such as subsidizing farmer certifications or promoting information about certification could help to overcome the cost and exposure issues farmers face. Considering these raises more questions. In particular:
Some candidate barriers that seem most difficult to address include the fixed-cost structure of auditing, the lack of comparability and transferability between private certifications, and the opacity of state certification.
Some evidence points to the possibility of a race to the bottom in the stringency of welfare certifications. In wild-captured fish, an FAO study by Lem et al. (2014) found that, after a group of Alaskan salmon processors withdrew from Marine Stewardship Council certification, they continued selling salmon under a local public certification program. Their sales were not affected much. If certifications are very substitutable, it may help to lift the lowest standards or combine standards to raise them together. On the other hand, it appears that markets which consume some certification type (for example, organic) may also be interested in another certification type (for example, sustainable). For certifications that are more complementary like this, it may help to support certification schemes that don’t yet have much traction.
Scheme stringency:
Loose restrictions may attract more producers than stricter ones, expanding the reach of a certification in a way that increases total impact. But weaker criteria can come at the cost of slightly lower welfare per fish, lose consumer trust, and on longer timescales, lower the chances of good welfare standards becoming enforceable through domestic law or trade agreements. What is the optimal stringency and in what species groups, countries, or production systems? How do the qualities of legal systems in different countries factor? How might multiple certification schemes coordinate to improve welfare across the board (Samerwong et al., 2018)?
Stepwise approach to welfare certification:
For different species groups, the standards body Global Animal Partnership offers a VCS where producers can achieve different levels of certification within the same scheme (Global Animal Partnership, 2022). Each level has progressively more stringent standards. The highest levels could draw in suppliers who target consumers with the strongest interest in certified food. The lowest levels could draw in disadvantaged exporters who need certification for economic benefits, but may not have the resources to comply with other existing VCSs. How promising is this approach for capturing farmers with different goals or resources at hand? How does a stepwise approach within a single VCS compare to a stepwise approach across the entire VCS landscape?
Group model to certification:
ASC, GAA, and GLOBALG.A.P. have begun introducing a group model to certification. In this model, many small-scale farmers may pool resources to apply for certification of the collective (FAO, 2021a, FAO, 2008). Only a sample of farms out of the group are checked. How many farmers improve their practices who otherwise wouldn’t? How great an effect does the looser auditing have on non-compliance? How likely is it that the legitimacy and representativeness concerns of the group model lead to reduced consumer trust?
Increased support to farmers:
Increasing financial support and offering information and training to farmers is thought to improve certification uptake (Samerwong et al., 2018), but naturally has its costs. What is the optimal level of on-farm support to offer? To whom should this support be directed? Who pays–consumers, philanthropists, or various suppliers?
Promoting interest to supplier groups:
Supplier groups are conglomerates of farms, processors and middlemen, but unlike lead firms of global value chains, their circle of influence may not be very integrated. Some existing supplier groups, such as the salmon group MAUI, have aimed to get all of its members ASC-certified by a certain date. Unlike standards bodies or CABs, they work with producers on the ground every day. Certifiers who support them may therefore have better access to changing production practices. However, I am skeptical that supplier groups would involve many small-scale farmers, or that less developed countries would have a critical mass of sufficiently connected suppliers to effectively coordinate. Further research into how effective targeting supplier groups might be could be useful.
Promoting interest along the supply chain:
Where along the supply chain are promotion efforts most effective? How do retailers, wholesalers, processors, or brokers exert different pressure on farmers’ practices? Humphrey and Schmitz, (2001) suggest targeting lead firms that govern global value chains. Samerwong et al., (2018) emphasize the importance of brokers.
Promoting interest to consumers:
To the degree that certification schemes are a tool for transforming consumer preferences into market forces, promoting consumer interest may be one of the more fundamental places to intervene. It is thought that standards appreciated by large consumer groups are more likely to become powerful (Alfnes et al., 2018). What effect does promoting consumer interest in welfare certifications have? How long does it take for consumer interest to translate into market forces? How persistent or self-sustaining are these effects compared to others?
Do welfare certifications ultimately condone and cement intensive farming?
Companies take up certifications with the hope to move more products at higher prices. They are not inherently driven by concern for animal welfare. How do strategies look different if radical rather than incremental change is attempted? How does the effectiveness of the two approaches compare?
My research has limitations. Data scarcity has made it difficult to make confident claims. It has also been difficult to reliably answer even simple questions like How much of total Asian production of different species is exported? or What proportion of the exporting industry ascribes to voluntary certification schemes? I encourage readers to clarify crucial considerations before acting on anything written in this report.
The scarcity of data and empirical research on how certifications affect Asian aquaculture will also challenge future research attempts.
Two of my choices during the design of this research could lead to biased findings. I made both of these choices to cope with data scarcity.
First, though I emphasize findings about certifications explicitly meant to improve animal welfare, I also include findings about certifications centered around other topics like sustainability and organic. This could introduce bias because VCSs differ in their requirements and contexts – farmers and industries respond differently to them. Despite increasing bias, broadening the scope of my search gives me more information to go off.
Secondly, though I emphasize findings about certifications coming from China and Thailand, I also include findings from lower middle income Asian countries such as Vietnam and Bangladesh. My search also reflects trends in past researchers’ interests, which has often focused on how small-scale farmers respond to certification schemes. Though small-scale farmers are very populous, they may not represent the typical farmer who is producing for export, or who animal advocates hope to target. Nevertheless, these findings may be relevant to poorer and less coordinated groups of producers in China and Thailand, so I have chosen to include particularly insightful studies.
To help address these biases, future researchers can consider investigating the differences between welfare certifications and other certifications. Grantmakers and advocates can consider incorporating research about larger exporters with better infrastructure into their decisions.
Finally, the age and type of my sources could be a limitation. As certification systems and economies evolve, old findings become less relevant. There is also the limitation of relying on a body of research that often resorts to case studies for empirical information (elaborated in Boyd and McNevin, 2011). Future researchers may need to focus research designs on less changeable aspects of certification schemes, for example, avoiding assessing the impacts of specific criteria in standards if those criteria are likely to be different within a few years. They should also consider designing research projects that yield more generalizable findings than case studies do.
As a literature review, this report suffers less from confounding and counterfactual issues. However, counterfactuals or natural experiments for future research about the impact of voluntary certifications may be difficult to find (Boyd and McNevin, 2011, p. A-57). Researchers may want to look out for events where a voluntary certification is suddenly dismantled or undergoes a PR crisis. They could be grounds for a quasi-experimental analysis.
Though much evidence is weak and outdated, international voluntary certification schemes do not seem very conducive to improving the welfare level of exporting farmers' production practices in China and Thailand. Volumes of fish and shrimp certified by VCSs have been low. Fortunately, certification rates seem to increase over time.
Various factors help explain the weak influence of international VCSs in China and Thailand. For small-scale farmers, the benefits are not worth the particularly high costs. For large-scale farmers, my guess is that there are cheaper ways to gain the same benefits VCSs offer and that VCSs do not help these farmers into their targeted market segments. For farmers of all scales, market access seems to be the most significant benefit, and auditing the most significant cost.
Should international VCSs expand, I would expect market forces to drive the following changes to Chinese and Thai exporting industries:
Much future research remains to be done in this area. In particular, I would recommend gathering better disaggregated data on certification rates among different species, farm sizes, geographical regions, and export orientations. Future research that could be especially useful to advocates and grantmakers includes investigating what changes to existing certification schemes are most promising, how effective different strategies for improving certification uptake might be, and to what extent grants can help lower barriers to certification.
This post was written by me, Jojo Lee, in my capacity as a research fellow at Rethink Priorities. Many thanks to Jacob Peacock, Neil Dullaghan, Trevor McCarty, Michael St. Jules, Shannon Davis, Douglas Waley, Michelle Lavery, Ren Springlea, George Bridgewater, Bob Fischer, Michael Windsor, Alex Suchy, Vicky Cox, Meghan Barret, Stephanie Ghishain, Jayasimha Nuggehalli, Daniela Waldhorn, and Jennifer Kirsch for their helpful support, feedback, and conversations. Special thanks to Samara Mendez and the Operations Team at Rethink Priorities for review and editing, and Adam Papineau for copyediting.
If you are interested in Rethink Priorities' work, please visit our research database and subscribe to our newsletter.
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TITLE-ABS-KEY ( ( certifi* OR standard ) AND ( "fish welfare" OR sustainab* OR "non GMO" OR "organic" OR "food standard" OR csr OR "social welfare" OR labor OR environment OR worker OR "country of origin" OR "responsible sourcing" ) AND ( "farmed fish" OR aquaculture OR shrimp ) AND ( exporter OR producer OR farmer OR processor OR supplier OR "value chain" OR vertical ) AND ( empirical OR data* OR estimat* ) )
Many other search terms and engines were used.
In this appendix, I justify the scope I chose to focus on in this project. I focus on farmed seafood (aquaculture) rather than wild-caught seafood (fisheries), voluntary certifications rather than enforceable production standards, responses of farmers targeting international markets rather than domestic markets, and upper-middle income Asian countries rather than any other region.
For much of world history, capture fisheries have been responsible for most of the world’s fish production. But from the 1990s onwards, the growth of the world’s aquaculture industries has been much faster than that of capture fisheries–between 1996 and 2005, aquaculture produced an average of 34.2 million tons per year. By 2018, production had more than doubled to 82.1 million tons in 2018. By contrast, fish capture has been holding mostly stagnant over that period, producing between 89 and 96 million tons per year. Figure A.1 presents a visualization of world trends (FAO, 2020).
Figure A.1: World Capture Fisheries and Aquaculture Production Update
I expect these trends to continue. Globalization, trade liberalization, and technological progress have made aquaculture more feasible and profitable than before. And aquaculture has the advantage of highly malleable production processes, with predictable production quantities. In contrast, capture fisheries are dependent on wild fish stocks, which are declining in quantity and sustainability (Kim, 2018). As such, aquaculture seems like a higher priority to research.
Asia is home to countries with some of the greatest world aquaculture production and export. In 2019, China, India, Indonesia, Vietnam, and Bangladesh were the biggest aquaculture producers of fish crustaceans, molluscs and other seafood groups (FAO, 2021b).
In particular, China, India, and Vietnam are especially large producer-exporters (see Figure A.2). These are all countries with trade surplus–they export more than they import (FAO, 2020, p. 76, Fig. 29)–implying that they are more susceptible to trends, attitudes, and demands in the countries they export to. And the scale of their operations means that affecting their production practices could have potentially large ripple effects through aquaculture industries in the rest of Asia and the world.
Figure A.2: Top Exporters of Fish and Fish Products in Terms of Value, 2018
Exported species include tuna, salmon, shrimp, catfish and tilapia. These go primarily to Europe, the US and Japan, as well as to each other (FAO, 2022a, FAO, 2022b, FAO, 2022c, FAO, 2022d, FAO, 2022e, Potts et al., 2016). Notably, Europe and the US are two trading blocs with significantly higher welfare standards than other large importers.
In the future, the aquaculture and fishery exports coming out of China are expected to grow at faster rates than more developed European countries (Ababouch et al., 2021), though these expectations are complicated somewhat by the inclusion of fishery product growth.
Unfortunately, export and production volumes or value may not have a close relationship with how much is produced domestically for export. For example, Indian finfish is largely produced for domestic consumption, but higher value products like shrimp, lobster, and tuna may be primarily produced for overseas markets (Gopal et al., 2009). The statistics about domestic production for export were hard to come by.
Additional reasons why Asian countries may be worth looking at is there is little domestic CSR pressure, so studies are more likely to be isolating the impacts of market forces, and animal advocacy activity in Asian countries is significantly underfunded and understudied compared to more western regions of the world.
Reasons why Asian countries may not be worth looking into for a literature review may include the scarcity of literature on their interactions with certification schemes. Europe and the US are better candidates in this sense. Historically, China in particular has been difficult to start grassroots change because starting charities there requires affiliation with Chinese politics. However, work there is becoming more accessible (Gibson et al., 2020).
I became interested in voluntary certification schemes standards because there seems to be more Effective Animal Advocacy work on them. So far, there has been a big push for them in chicken. There appears to be discussion for fish–also intensively farmed for meat–to come next. Getting a clearer idea of whether these certifications actually make a difference overseas seems valuable to funders and advocates in the EA fish space.
A second reason why it is better to look at farmed fish voluntary certifications rather than enforceable ones is because fish have very limited legal protections for enforceable standards to leverage.
The situation is worse for internationally enforceable standards: very few international regulations, restrictions, or agreements call on animal welfare specifically. When they have, scientific and public consensus on the importance of this animal suffering has been crucial (Sykes, 2019). In particular, involving animal welfare standards in import restrictions is thought to interfere with principles of free trade, a major legal hurdle, though some argue it can be overcome. In this category, wrapping animal welfare considerations into bilateral or multilateral trade agreements seems slightly more doable. This topic is elaborated on in the Legal Hurdles section of Animal Ask (2022). In general, advocating for the enforcement of international standards seems relatively more intractable than other animal welfare options (Cox, 2020).
I have also chosen to focus on international voluntary standards rather than domestic ones. This is because the theory of change for international standards is more direct. Domestically enforceable standards may be influential internationally only to the degree they are influential domestically. This mechanism would be better studied in two parts, and also seems understudied, making it unsuitable for a literature review of this small scale.
On the other hand, there are arguments that look into voluntary certifications with global scope might not be as impactful as looking into standards elsewhere in the matrix. One main possibility is that enforceable national-level regulations may be more feasible than I expected and also much longer lasting. In those and probably other scenarios, I would be more interested in the international impact of enforceable, domestic regulations than I am now.
Finally, I focus on both business-to-consumer and business-to-business certifications. So certifications with labels facing consumers as well as those designed to smooth business-to-business dealings are included in my investigation. Both can be relevant to animal advocates and changing production practices.
Another choice I made was to focus on exporters who are producing fish products destined for export rather than for local markets. These may be financed or owned by either Asian nationals or overseas groups.
I made this choice mainly because I felt that producers for export were much more likely to be affected by voluntary certifications building overseas. However, many producers are driven by domestic markets over international markets, so this is a gap potentially worth further investigation.
Because different species of fishes can have very different welfare requirements, I considered focusing on a specific species or seafood group. However, given the lack of empirical studies to draw from and my relative lack of focus on fish’s subjective experiences, I ended up reviewing literature relating to all farmed vertebrates in the clade Actinopterygii, referred to as “fish” throughout this report, as well as shrimp and prawns. I have excluded bivalves, molluscs, and other crustaceans from the study.
When more studies get published in the future, it may be worthwhile for future reviewers to focus on the species most exported from China or India to Europe or the US. Looking at intensively or semi-intensively studied species, which are more likely to have a wider scope of potential variation in production practices, could also be valuable. Toni et al. (2018) gives more details on more commonly studied fish species and how often different environmental parameters are observed.
Despite their importance, the following questions have also been excluded out of interest for time.
Projections are complicated by the inclusion of wild-capture product growth.
Aquaculture operations are classified as either intensive, semi-intensive, or extensive, to describe the amount of product that a site produces and, roughly, the amount of human intervention used to produce it. More formally, these classifications depend on the types of inputs, treatments, and outputs a site uses (Oddsson, 2020, pp. 6–7). Extensive operations involve the least human intervention and can be as simple as a fisherperson harvesting fish from a natural pond. Semi-intensive operations require stocking, feeding or fertilizing, and harvesting. Intensive operations require the most human intervention and can include stocking, supplying water and light, supplying nutrients and waste management, and harvesting.
Here, integration refers to the economic concept which describes how companies consolidate ownership through mergers, acquisitions, contracts, and legal agreements. Vertical integration, when a company acquires some or all of the companies in its supply chain, is most relevant in this context of building infrastructure and reducing transaction costs. Horizontal integration, when companies that sell competing products merge together, may also reduce transaction costs and create economies of scale, as well as capturing larger markets.
Interestingly, theoretical results show they might pay nothing more at all (Yenipazarli, 2015).
Loc et al. (2010) found that in Vietnam, private sector actors connected to farmers through supply chains respond to farmers’ needs better than governments can.
Market performance appears to be a vaguely defined term that can encompass labor productivity, growth, value added, firm turnover, market share, market structure, and more. A European Commission department once assessed the EU meat and dairy sectors’ market performance (Executive Agency for Small and Medium-sized Enterprises, 2016).
Internationally, comparative advantage can be found by analyzing trade flows. Specifically, for a certain good, a country has a comparative advantage over another country if it exports proportionately more–relative to its own total export–of that good than another country does.