Universidad Nacional Mayor de San Marcos

Universidad del Perú, Decana de América

Facultad de Ciencias Administrativas 

Escuela de Negocios Internacionales

TRABAJO DE INVESTIGACIÓN
 
“Cadena logística de la exportación de harina de pescado a China” 

INTEGRANTES

Cano Chinchay, Joseph Anthony

Cabello Cordova, María Esther
Salazar Ocrospoma, Franz

DOCENTE

Sara Tupac Travezaño

Lima, Perú
2020
ÍNDICE

PRESENTACIÓN

CHAPTER 1: GENERALITIES

1.1. Background.

Fishmeal is a derivative that is obtained after removing all the water content and much of its

fats and oils from the fish, leaving after this process the protein as a solid part, which is dried

and then ground to the degree of a flour.

Fishmeal in Peru is manufactured from anchovy, which is the only species allowed by the

Ministry of Production for this purpose. (National Society of Poker, 2020).

Among the main destinations of Peruvian fishmeal exports, we have Chinese, with which

Peru also has an FTA that was signed on April 28, 2009 in the city of Beijing-China by the

then Minister of Foreign Trade and Tourism of Peru, Mercedes Aráoz and by the Deputy

Minister of Commerce of China, Yi Xiaozhun. That agreement entered into force on 01

March 2010. (MINCETUR, 2020)

This allows for a better trade relationship between these two countries, integrating the

production chains of both, promoting customs cooperation. This is reflected in a large volume

in Peruvian exports to China:

80% of Peru's fishmeal exports in the first half of this year go to China, and

amounted to $892 million, more than 4% to the similar period of 2018, said

the Coordinator of International Administration and Business at the

Universidad Privada del Norte (UPN), Berenice Cajavilca.

According to figures from the Adex Trade Intelligence System for Foreign

Trade, Peru is the world's leading producer of fishmeal, and traditional

 fisheries are the best performing sector, compared to the same half of 2018,

with growth of 37.7%. (Andean, 2020)

In 2020, fishmeal exports were growing:

Peru's fishmeal and fish oil exports would amount to about US$2 billion by 2020, slightly

higher than in 2019 despite the late start of the fishing season due to coronavirus, the industry

guild said Wednesday. (Management 2020)

1.2. Justification.

This research work will be carried out for educational purposes and will aim to publicize the

logistics chain of the export of Peruvian fishmeal to China, developing the key points of the

topic so that international trade students and entrepreneurs understand the operation of the

same and can apply this knowledge in their future research and projects.

1.3. General Objective

Analyzing Peru's fishmeal export logistics chain to China

1.4 Specific Objectives

Analyzing the Chinese market for the export of Peruvian fishmeal

Determine the profitability of exporting fishmeal to China

1.5 Peruvian and international statistics regarding the product and sector

1.5.1. Regarding the fishing sector

It is important to be able to differentiate between the fishing sector and the aquaculture

sector, the first of which has in its activity the capture of wild species, while aquaculture tries
to domesticate species for their production (BlogAcuicola.com). In the case of the product

covered in this work, as it is extracted from the anchovy in the Peruvian case, the sector to be

analyzed is the fishing sector, for which we will detail important points of its current

development in the world and in our country

1.5.1.1. In the world

Production

At the international level, until 2018, the world production of capture fisheries reached a

record figure of 96 million tons, which represents an increase of 5.4% compared to the

average of the previous three years. The 2018 increase was mainly driven by marine capture

fisheries, whose production increased 84.4 million tonnes that same year. The top seven

capture fisheries producing countries (China, Indonesia, Peru, India, the Russian Federation,

the United States of America and Vietnam) accounted for almost 50% of the total world

capture fisheries production.

The UN through its annual report on the State of World Fisheries and Aquaculture maintains

that catches of anchovy (Engraulis ringens) by Peru and Chile accounted for most of the

increase in catches in 2018, after relatively low catches of this species in recent years, which

made it the main species, with more than 7.0 million tons. Alaska pollock (Theragra

chalcogramma) ranked second with 3.4 million tonnes, while skipjack (Katsuwonus pelamis)

was third for the ninth year in a row, with 3.2 million tonnes (FAO, 2020). Below we can

observe the evolution of the production of the fishing and aquaculture sector in general from

1950 to 2018, showing a constant rise.

Exports and imports

As of 2019, China is the main exporter of seafood both in terms of volume and value,

continuing with a growing trend that originated almost a decade ago, followed by Norway.

Both countries have added more than USD 2 billion to their seafood exports in the last five

years (2012 to 2018). However, there was only a minor increase in exports in volumes.

Vietnam surpassed Thailand in seafood exports, ranking third among the best seafood

exporters in value. The increase in Vietnam's exports was mainly due to the white fish and

shellfish trade. India also made a big jump from 8th place to 4th place, with an increase of

USD 3.7 billion, also driven by the increase in shrimp exports. In the coming years, we

expect China and Norway to maintain their positions as the top seafood exporting nations.

However, we expect a slower growth rate in Chinese seafood exports. We observe a graph of

exports of the fishing sector at the country level in 2018 as a function of value (Rabobank,

2020).
Source: FAO, 2020

In terms of imports, the EU continues to be the main consumer of fish and shellfish,

increasing its imports by USD 4 billion from 2012 to 2017. The second largest importer of

seafood, the US, also imported more seafood products. sea in the last five years, with an

increase of USD 5 billion. China also significantly increased its imports of seafood by more

than USD 3 billion. This increase in value in the EU, US and China is mainly driven by

increased imports of salmon and crustaceans. We observe a graph of the imports of the

fishing sector at the country level in 2018 as a function of value (Rabobank, 2020).
Source: FAO, 2020

In the near future, we expect that the EU and the US will remain the main importers of

seafood, due to the high demand for seafood in these regions. However, China could overtake

Japan in the future, as there is growing demand for imported products and, in particular,

premium seafood products due to increased purchasing power and concerns about food safety

in China. .

1.5.1.2. In Peru

Production

The fishing sector has been for many years one of the GDP contributors with the highest

growth year after year, so much so that according to the latest data obtained by IMARPE, the

fishing sector generates 1.5% of GDP, contributing to more than 700 thousand jobs job.

Despite the current situation, the fishing season turned out to be a success, this is evidenced

in the possibility of having caught 100% of the assigned quota, this supported by an optimal
state of biomass, citing the case of anchovy, which was located at 10.1 million MT, according

to scientific evaluations carried out by the Instituto del Mar del Peru.

According to official PRODUCE figures, the landing of hydrobiological resources in 2019

registered a negative inter-annual variation of 34% with 4.75 million tons, as a result of the

lower discharge of anchovy (-44.2%) for the processing of fishmeal and fish oil . Mainly due

to the interruption of the second fishing season for this resource due to the presence of

juveniles, which led to not reaching the established quota. In the case of direct human

consumption (DHC), significant growth is observed, reaching a record figure for the last 10

years, mainly justified by the landing for the frozen food line (SIICEX, 2020).

Source: PRODUCE, 2020

The processing of hydrobiological resources decreased by 27.5% in 2019 due to the lower

production of fishmeal (-42.7%) and crude oil (-54.9%). However, production destined for

human consumption increased by 172 thousand tons, which meant a growth of 43.4% thanks

to the greater processing of frozen and canned products (SIICEX, 2020)

Source: PRODUCE, 2020

Exports:

The fishing sector is located within the group of the four economic activities with the highest

foreign exchange earnings to the country, according to the Central Reserve Bank of Peru. It

represents approximately 7% of Peruvian exports. At the world market level, Peruvian fish

exports are also positioned at an expectant level and in the case of shipments of marine

ingredients it leads the ranking according to the IFFO Statistical Yearbook 2015. Peru is

responsible for approximately 25-30% of world fishmeal and oil production (SNP, 2020)

Source: SUNAT, ADUANET

The composition of the main markets for direct human consumption products in 2019 has not

changed significantly with respect to what we have been analyzing in recent years. However,
it should be noted that the US fell to fourth place with a 20.3% drop, from US $ 241 to US $

192 million. In the second table we can see the last result of our exports in the sector,

belonging to the first season of 2020.

Source: SUNAT-ADUANET

For its part, China experienced an increase of 101.8% in its purchases, going from US $ 154

to US $ 312 million and ranking first with 20% of the market, as a result of a significant

increase in exports of squid. While Spain experienced a 1.2% drop, going from US $ 252 to

US $ 249 million, dropping to second place with 16%. In third place we find South Korea,

which increased its purchases by 35.5%, from US $ 151 to US $ 201 million and covered

13% of the market.

In 2019, Peru exported its products to 148 different destinations, generally observing an

increase in relation to the 139 countries to which it was exported in 2015. Regarding indirect

consumption products, a slight fall is observed, from 41 countries in 2015 to 40 countries in

2019, however, in the case of direct consumer products there is an increase, going from 82 to

85 countries in the last 5 years.

Source: SUNAT, ADUANET

1.5.2. Regarding the product: Fish meal

In the world

Worldwide, Peru is the main producer and exporter of fishmeal, and China is our main

market, according to WTO data, the development of this market was due to the FTA signed

with that country, before signing of this, the main market of Peru was the USA.

Regarding the world production of this commodity, Peru is followed by the European Union,

Vietnam, Chile, China, Thailand, the United States, Norway, Japan and the others, according

to IndexMundi data as of 2019.

In terms of exports and according to WorldBank data, for the year 2019, Peru ranked first

with more than 1,062 million USD in value traded with the world, followed by Denmark and

Chile. For 2018, the outlook was different, with Chile being the second largest exporter in the

world, this mainly responds to a precipitous double-digit decline suffered by Denmark in that

year, a situation that was reversed for last year (WITS, 2020). Below we show the table of the

Top 10 exporters in 2019.

Source: World Integrated Trade Solutions, 2020

In terms of imports and according to WorldBank data, for 2019, China positioned itself as the

main large importer of fishmeal, representing more than 40% of the world total purchased.

By 2018, Norway was in second place, however a growing domestic consumption industry

reduced the import of flour, relegating that country to fourth place. Highlight the participation

of the European Union, which for last year managed to place itself in second place with 15%

of the world total imported.

Source: World Integrated Trade Solutions, 2020

The outlook for world fishmeal trade indicates that a considerable but declining proportion of

fish production across the globe will continue to be transformed into fishmeal and fish oil.

Fishmeal and fish oil are still considered the most nutritious and digestible ingredients for

farmed fish. However, their inclusion rates in compound feed for aquaculture have shown a

clear downward trend.

In its latest study on world production and fisheries, the Food and Agriculture Organization

of the United Nations notes that capture fisheries production is expected to remain at high

levels, reaching some 96 million tonnes in 2030. Between Factors influencing sustained

production from capture fisheries include: i) increased catches in areas where stocks are

recovering; ii) increased catches in the waters of the few countries with under-exploited

resources; and iii) improving the utilization of catches. The proportion of capture fisheries

production that is reduced to fishmeal and fish oil is expected to decline slightly in the next

decade. (FAO. 2020)

In Peru:
Fishmeal exports currently represent more than 40% of the total exported from the Peruvian

fishing and aquaculture sector. During the last 5 years, fishmeal exports have been variable,

without being able to find a trend, this is mainly explained by climatic changes, which are the

most determining factor to understand the evolution of fishmeal exports . This is due to the

fact that climate changes have a decisive impact on the availability of anchovy for capture

since they impact on the nutritional development of the anchovy biomass and on the place of

establishment of the species within the Peruvian coast for its subsequent capture

(PRODUCE , 2020).

Fishmeal exports to international markets depend on the availability of anchovy for capture.

The more anchovy caught, the higher the fishmeal production. Below is the behavior of

Peruvian exports to our main fish markets.

Source: Trademap

Since 2017, the actors in the Peruvian anchovy fishery have been working on a PROME (or

FIP, for its acronym in English), in which the Ministry of Production, IMARPE, CeDePesca,

the SNP and direct human consumption companies (CHD). This work has allowed, by the

industry, the creation and implementation of an ambitious monitoring program called

Salvamares, which aims to demonstrate that the extraction strategy takes into account the

needs of the ecosystem; as well as building a database from industrial fishing vessels; among

other aspects that can enhance future extractions of anchovy and thus the production of fish

meal. For this year, we observe the monthly development of fishery exports in thousands of

MT.

Source: SUNAT-ADUANET

For the year 2019, the main markets were: China, Japan, Vietnam, Germany and Taiwan.

Regarding the last fishing season, the main destination countries for fishmeal were the

following:
Source: SUNAT-ADUANET

Regarding the main exporting companies of this product in 2019 they were: Tecnológica de

Alimentos SA (23% participation), Corporación Pesquera Inca SAC (14% participation),

Pesquera Exalmar SAA (13% participation), Pesquera Diamante SA (11% stake), among

others. Below is a table of the main exporting companies with the total value and volume

traded by each of them for the year 2019.

Source: National Fisheries Society (SNP), 2020

1.6. Trade agreements and applied tariff benefits

 For the heading of this product, 2301.20 "Flour, powder and pallets, of fish or crustaceans,

molluscs or other aquatic invertebrates" we have international agreements with a total of 51

countries grouped in 19 commercial agreements, all of them are of indeterminate validity ,

with the exception of Norway and Mexico, which are ready to culminate at the end of this

year 2020. In addition to these we have the PECO (Peruvian-Colombian Customs

Cooperation Agreement), which is negotiated under the subheading NABANDINA. Below is

the consolidated table of all our commercial agreements in force, with their respective base

tariff and percentage released or percentage margin for fishmeal.

PERCENTAGE
COUNTRY OR
EFFECTIVE BASE RELEASED OR
COMMERCIAL INTERNATIONAL AGREEMENT APPLY
SINCE TARIFF PERCENT
BLOCK
MARGIN
VENEZUELA 229 - PARTIAL SCOPE AGREEMENT OF 2013 TLC --- 100%
COMMERCIAL NATURE PERU
ALADI 358 - ALADI, ACE 58 PERU - ARGENTINA, 2011 ALADI --- 100%
BRAZIL, URUGUAY AND PARAGUAY
BRAZIL 504 - REGIONAL SCOPE AGREEMENT NO. 2000 ALADI --- 6%
4 - PAR 4 PERU-BRA-CH
CHILE 504 - REGIONAL SCOPE AGREEMENT NO. 2000 ALADI --- 10%
4 - PAR 4 PERU-BRA-CH
USA 802 - PERU - USA COMMERCIAL 2013 TLC 12% 100%
PROMOTION AGREEMENT
CANADA 803 - TLC PERU - CANADA 2018 TLC 12% 100%

SINGAPORE 804 - PERU - SINGAPORE FREE TRADE 2018 TLC 12% 100%
AGREEMENT
CHINA 805 - PERU - CHINA FREE TRADE 2012 TLC 0 0%
AGREEMENT
KOREA 806 - PERU - KOREA FREE TRADE 2012 TLC 0 0%
AGREEMENT
AELC 807 - PERU - EFTA FREE TRADE 2020 TLC 12 12%
AGREEMENT
THAILAND 808 - PERU PROTOCOL - THAILAND 2011 TLC 12 12%

MEXICO 809 - PERU - MEXICO COMMERCIAL 2020 TLC 12 12%

INTEGRATION AGREEMENT
JAPAN 810 - PERU - JAPAN ECONOMIC 2012 TLC 0 0%
ASSOCIATION AGREEMENT
PANAMA 811 - PERU - PANAMA FREE TRADE 2012 TLC 0 0%
AGREEMENT
EUROPEAN 812 - TRADE AGREEMENT PERU - 2013 TLC 0 0%
UNION EUROPEAN UNION
COSTA RICA 813 - PERU - COSTA RICA FREE TRADE 2013 TLC 0 0%
AGREEMENT
HONDURAS 814 - TLC PERU - HONDURAS 2017 TLC 0 0%

CHILE-COL-MEX 815 - ADDITIONAL PROTOCOL TO THE 2016 TLC 0 0%

FRAMEWORK AGREEMENT OF THE
PACIFIC ALLIANCE
AUSTRALIA 816 - PERU - AUSTRALIA FREE TRADE 2020 TLC 0 0%
AGREEMENT
Source: ADUANET, own elaboration
CHAPTER 2: PRODUCT ANALYSIS

2.1 Product description

The fishmeal that Exalmar produces is a steam-dried red fishmeal, putted into bags and

treated with antioxidants. It contains 68% of high quality proteins and rich in Omega 3.

2.2 Data sheet product

FISHMEAL
HS Code 23.01.20.11.00
Protein 68.00 pct
Fat 7.48 pct
Moisture 7.90 pct
Antioxidant 340 ppm
Salt and sand 4.61 pct
Sand alone 0.16 pct
TVN 104.71 mg/100 gr
FFA 8.07 pct
Histamine 531.80 ppm

2.3 Applications

Fishmeal, being a highly protein product, is used as an essential source of food and energy for

raising animals in the livestock, sheep and pig industries, being the most important nowadays

the aquaculture.

2.4 Production process

The fishmeal production process begins with the weighing and storage of the raw material, in

which the quality of the raw material is analyzed with the use of determined parameters.
The next thing is the cooking of the raw material, which is intended to stop the

microbiological activity and coagulate the proteins in the solid phase, allowing the separation

of oil and liquid viscous residues.

Third, it’s the mechanical pressing of the raw material that separates the liquid part from the

solid. Then, the solid part is compacted forming a mass.

Fourth, it´s the indirect drying of the compacted mass that seeks to reach a moisture value of

less than 10% to avoid microbiological activity. This indirect drying is done using the steam

technique.

After the indirect drying, the product is not completely done. So, cooling is required before

being bagged and then, the product has to be stabilized with antioxidants to avoid the

oxidation of its fats.

Finally, it’s the grinding process, which consists in getting the fishmeal uniform and ready to

be packed in polypropylene bags.

2.5. Main production zone of Peru and the world.

2.5.1 zone production fishmeal in Peru

The main production zone in 2001 were the ports of the north of the country (as usual),

highlighting Chimbote (460 thousand MT), Paita (113 thousand MT), Chancay (128 thousand

MT) and Chicama (165 thousand MT ). Then , for the year 2018 and 2019, the panorama

changes slightly for the transformation of anchovy into flour and fish. It is observed that the
predominant places with the highest flour production were Chimbote (42.1%), Chicama

(28.6%) and Coishco (8.5%).

Participation in the processing of fishery products for CHI by item and according to place of

processing (November 2018 - November 2019)

Source: MPE- Monthly fishery statistics

In Peru also, he 2nd fishing season in the North/Centre went surprisingly well and the 2.1 Mn

T quota was practically filled early January. It was one of the best 2nd fishing season in

recent years (graph 15) and it concluded the year 2018 with a total, until December 31st of

6.2 Mn T, the best season in recent years (graph 16). From the opening day, on November 15,

fishing started quickly. During the 16 fishing days of November, 42% of the quota was

already caught with limited juveniles in the Pisco/Tambo de Mora region which led to the

first “mini-fishing bans”.

In January 2019, total landings reached 163.7 Thd T (8% of the quota) with weekly oil yields

averaging 3.3% to 3.4%. From December 25th 2018 onwards, daily landings declined

steadily mainly in Pisco/Tambo de Mora and the Centre and practically stopped on January12

(Graph 17). But many vessels left the North/Centre region after they had filled their quota
and moved to the southern region to start fishing under the new 535 Thd T quota which had

just been opened (Graph 18) to go fishing in the south region.

Graph 17

Source: IMARPE processed by Fish Oil & Meal World.

Graph 18

Source: IMARPE processed by Fish Oil & Meal World.

2.5.2 Zone production OF fishmeal in the world

5 main fishmeal producing countries (Peru, Chile, Norway, Denmark, Iceland), which

represent 80% of world production and zone production fishmeal have got important fishmeal

cities—Chimbote, Peru; and Iquique and Talcahuano, Chile (Wintersteen, 2011).

Years later, the sensation of production shortfall which had dominated the last half of 2017

was progressively replaced by a feeling of ample supply during the year 2018. Indeed, at 5.53

Mn T, 2018 world fish meal production rose 17% year to year and exceeded the 5.0 Mn T
level for the first time in seven years (graph 2). Most of the increase came from Peru (graph 3

on next page) but Chile, China and the USA also contributed significantly to this

performance. Finally, aside from the larger producers (see listing on page 13), a number of

“other”, smaller, producers from all over the world continue to supply roughly 16% of world

production every year

Graph 2- World Fishmeal Production 2005-2019 (F)-in Million T

Graph 3-World Fishmeal production-years 2008 to 2019 (f)

Source: IMARPE processed by Fish Oil & Meal World.

Fishmeal-.by
Source: IMARPE processed World Supply
Fish Oil & Meal World
Chile: The North of Chile is currently under the usual fishing ban at this time of the year with

no ending date but possibly until mid-February. In the south, the industry is increasingly

fishing jack mackerel and also processing salmon trimmings, representing a total raw

material processed of about 20 Thd T/week. For 2018, fish meal production year 2018,

mostly in the last months of the year (graph 22) while in the south, the year started quite well,

at parity with the previous year (graph 23) but did finish the year about 100 Thd T below the

previous year. Overall, at 1.8 Mn T, the 2018 fishing year in Chile has been one of the best in

recent years (graph 25) with 373 Thd T of fish meal produced, up 14% year to year and even

up 74% above the poor year 2016.

graph 22 -Chile North -Cumulative Weekly Landings (est.)

Years 2015 though 2018 (in T of fresh fish)

graph 23-

graph 25
The U.S.A.: The 2018 menhaden fishing season proved to be one of the best in recent years

(graph 26). At 667 Thd T, total landings were 13% up year to year and close to 10% above

the 5-years average (608.7 Thd T). Landings in the Gulf represented 78% of the total, at

525.6 Thd T (graph 27), a 14% increase year to year. The Atlantic side landed 141.3 Thd T,

up 9.6% year to year. These landings are estimated to have given a production of 148.2 Thd

T, the best production since 2013 (graph 28). When including fish meal production from

other sources, mostly from Alaska where white fish meal is produced from trimmings of

Alaska pollack, total US fish meal production is currently estimated at 282 Thd up from 258

Thd T in 2017.

Graph 26
Graph 27

Graph 28

2.6. Comparisons with international competition

At 5.12 Mn T (graph 4), 2018 world fishmeal domestic consumption witnessed a rise of only

3% year to year. Although rising modestly, 2018 world domestic consumption was the

highest in 10 years (graph 4) with China, alone, representing 36.7% of the total (graph 5), the

highest market share in recent years (graph 6). With a declining Peruvian share of world

production, the large Chinese demand has to rely more than ever on other origins, many of

them in Asia but also in Africa and other American countries. At 25.8% of the world total,

domestic consumption in the key Asian countries other than China reached 1.32 Mn T, up

from 1.28 Mn T in 2017 (+3.4%). The third largest fish meal consuming region is Europe,
including EU-28 plus Norway at 796 Thd T, practically unchanged from the previous year.

At 12.4%, fish meal consumption in the American continent is more or less stable at about

630 Thd T

graph 4

graph 5

graph 6
For 2019, we estimate that world fishmeal production will remain at a high level around 5.27

Mn T (graphs 2 and 3 above). This estimate is based on the assumption of the return to a less

exceptional fishing activity in Peru, more in line with the average 2014/2017 landings,

although still at more than 5.0 Mn T. This assumption implies the forecast of a 200 Thd T (-

15%) decline of fish meal production in Peru from the previous year. But Peru would still

supply close to 24% of world production.

It is very difficult to assume a large rise of domestic consumption in 2019 on account of

prices that remain high against what we see as a general trend towards lower prices for

competing commodities. However, the current pricing trend of Peruvian fish meal should

help 2019 world consumption to remain at a high level, at around 5.17 Mn T (graph 4 above),

slightly higher than in 2018, mostly on account of a continuous large domestic consumption

in China, (nearly 2.0 Mn T).

At 3.22 Mn T, world fish meal exports (excluding intra-EU 28 trade) rose modestly by

2.3% year to year (graph 7 and graph 8 for the detail for a selected number of key exporting

countries) but comforted the 20% rise between 2016 and 2017. A large share of this increase

originates from Peruvian exports which, at 1.1 Mn T in 2018, a recent record, rose 73.2%

from the low 2016 exports. In 2018, Peruaccounted for 34.2% of world exports, up from 32.8

% in 2017 and up from 24.2% in 2016 (graph 8). Exports from Iceland, Norway, Chile and

Thailand together rose 17% year to year to a total of 529 Thd T against 453 Thd T in 2017.

The role of “Other” origins, other than the key exporting countries (EU-28, Iceland, Norway,

USA, Peru, Chile, Thailand and Vietnam) also enable them to represent slightly more than

32% of total world exports (graph 10). With world exports representing between 58% and

66% of world production, the fish meal industry, whether from wild resource or from fish

“trimmings”, is highly oriented to supplying the world protein market, a characteristic not
shared by many of the other major farm commodities. Our world export forecast for 2019

continue to rise to 3.29 Mn T, up more than 2% year to year.

graph 7

graph 8

graph 9

graph 10
At 1.47 Mn T, 2018 fish meal imports into China were the second largest ever after the

record year 2017 (1.58 Mn T) and represented 47% of total world imports (graph 12 and 13).

Imports into China grew from 30% of world imports in 2003 (803 Thd T) to the current 2018

level. Aside from China, six other countries imported more than 100 Thd T fish meal in 2018:

EU-28 (238 Thd T), Norway (170 Thd T), Japan (194 Thd T), Taiwan (149 Thd T) Turkey

(140 Thd T) and Vietnam (124 Thd T). Together those seven large importers imported a total

of 2.49 Mn T, corresponding to 79% of total world imports, down 2.4% from the previous

year but +22% above 2016 exports. While China is on a rising long term trend, the six other

“majors” are on a stable if not slightly declining trend. In the case of

“Europe+Norway+Turkey” (graph 13), the rise of Turkey as a major importer partially

counterbalanced a decline of imports in both EU-28 and Norway.

graph 11

graph 12
graph 13

The ample world fish meal production in both 2017 and 2018 led to a more comfortable

world supply and helped meet a rising demand, mostly from China. This additional

production which came in part from improved fishing conditions in Peru, led to a 70% rise of

ending stocks in December 2018 (graph 13). Actually, it was the return to a more usual

situation resulting from the good 2nd fishing season in Peru. From a low 508 Thd T in

December 2017, physical stocks at end of 2018 are estimated at 864 ThdT (graph 12), in line

with the 2008/2012 average (878 Thd T) and with both years 2015 and 2013. But more than

two third of these physical stocks are located in two countries: Peru and China. About 40% of

these stocks (349 Thd T) are located in Peru (graph 14), where the production of a large part

of the 2nd fishing season will be exported in the first months of 2019. Our forecast of world

ending stocks in 2019 does rise to 925 Thd T in view of our assumptions of a continuation of

good supplies from the major producers and persisting demand at the level of 2018.
graph 12

graph 13

graph 14

Market review – Peru – China- fishmeal prices

In Peru: As the 2nd fishing season was coming to an end and producers were starting to

accumulate significant unsold stocks, trading started to be active attracted by price discounts

particularly on the super-prime quality for which the lowest price was $1500/T FCR China,

equivalent to $1480/T Fob. Based on an estimated fish meal production of 500 Thd T (both

north/centre and south) since November 1st, it is estimated that total sales of the “new crop”

would reach about 410 Thd T (including Peru domestic consumption), leaving about 90 Thd

T unsold stocks or less. In recent days, prices rose a bit as buyers accepted prices up to

$1520/T FOB for super-prime quality and $1280/T for the standard quality (graph 29 – green

and blue lines). Given the current prices in China, expressed in US dollars, the latest FOB

Peru price for super-prime does not enable the buyer to cover the cost of shipping plus

handling/storage in Chinese ports.

In Europe:

• CIF European port prices were stable just below $1500/T CIF. Prices reported for the

Danish 72% continue to show a premium of $270/$290 above the CIF Europe.
In China (see all graphs on next page): Fish meal prices have been stable since the beginning

of the year 2019 with imported super-prime fish meal at RMB 10600/T (equ. to $1560/T) and

imported standard fish meal at RMB 9700/T (equ. to $1428/T), both basis ex-port storage in

Shanghai (graph 30). These prices are roughly 24% below previous year level. The

progressive downward trend of fish meal prices in 2018 was very similar to the trend

developed in 2011, with the same starting point and a similar ample supply in Peru (graph

31). Also, in 2011, fish meal stocks in Chinese ports were about the same as today (graphs 32

and 33)

graph 30

graph 31
Graph 32

graph 33
2.7. International Certifications

IFFO Code of Practice

IFFO The members of the European Fishmeal are
committed to following the Code of Practice
developed by the International Fishmeal and
Fish Oil Organization (IFFO).

MarinTrust The MarinTrust Standard has been developed as a

credible, robust tool that enables producers of raw
materials in the fishmeal and fish oil industry to
demonstrate responsible practice. It was formerly
known as the IFFO RS Standard and the IFFO RS
Version 2.0 Standard.
ASC The ASC label guarantees the customers sustainable
management of our sectors as well as a controlled
impact on ecosystems. ASC’s standards help to
protect people and the environment, and they are
focused on ensuring the sustainability of the
aquaculture industry.
The MSC label applies to wild fish or seafood from
MSC fisheries that have been certified as sustainable,
according to the MSC standard. This label ensures
the conservation of the marine environment, the
sustainability of fish stocks and the effective and
sustainable management of fisheries.
Certificate n° : MSC-C-52476
IFS The n°1 quality standard that ensures product quality
and safety for importers and trading agencies.
Certificate n° : 505519K

Prepared by research team

2.8 SWOT analysis of the product.

Table 2: Analysis of internal factors evaluation (IFE, Strengths)

Strength Weight Rank Weight

score
1.Several years of working experience 0.09 4 0.36
2.Appropriate infrastructure facilities 0.05 3 0.15
3.Raising relative fish waste to raw materials 0.04 3 0.12
4.Demand and high profits 0.05 3 0.15
5.Higher quality than the same foreign product 0.07 3 0.21
6.Existence of Unions 0.03 3 0.09
7.Utilization of technology 0.03 3 0.09
8.Personnel skill 0.05 3 0.15
9.Following international standards 0.03 3 0.09
10.A suitable laboratory 0.02 3 0.06
11.Providing new employment 0.01 3 0.03
12.High local demand 0.02 3 0.06
13.Higher quality than the same foreign product 0.01 3 0.03
0.5 1.59
Prepared by research teaTable
3: Analysis of internal factors evaluation (IFE, Weaknesses).
Weakness Weight Rank Weight score
1.excess installed capacity 0.11 1 0.22
2.Exhausting equipment and machinery 0.05 2 0.10
3.High depreciation of machinery 0.02 2 0.04
4.Environment problems and effluent exit 0.05 1 0.10
5.Expenses of the accessories 0.03 2 0.06
6.Lack of proper storage 0.02 2 0.04
7.Shortage of working capital 0.01 2 0.02
8.Low efficiency 0.02 2 0.02
10.lack of a strategic plan in the industry 0.07 2 0.14
11.Lack of supporting regulations and rules 0.12 2 0.24
0.5 1.02

Prepared by research team

His greatest strengths are Several years of working experience and Higher quality than the

same foreign product , as indicated by the rating of 4 and 3. The most important weaknesses

The main factors are excess installed capacity and environment problems and effluent exit

. The total weighted score of 2.61 indicates that it is above average in terms of its overall

internal strength then it is strong.

Table 4: Analysis of external factors evaluation (EFE, Opportunities).

Opportunities Weight Rank Weight
score
1.Supporting domestic production 0.1 4 0.4
2.Low price of the local fishmeal as compared to 0.06 3 0.18
imported ones
3.Existence of machinery inside the country 0.08 3 0.24
4.Exportation possibility of fishmeal 0.11 4 0.44
5.Possibility of using manpower 0.1 4 0.4
6.Improvement of the market* 0.05 2 0.1
7.The possibility of obtaining credit facilities 0.03 1 0.03
8.Increased demand due to the growth of 0.1 4 0.4
aquaculture
9.Sanctions and reduction of importing 0.06 2 0.12
10.Using up sophisticated technology 0.1 3 0.3
11.Increase of fish wastes because of growth on 0.06 2 0.12
aquaculture
12.Ability to compete internationally 0.1 4 0.4
13.Accessibility of scientific manpower 0.01 1 0.01
14.Access to the shoreline of the Humboldt 0.04 3 0.12
Current marine ecosystem
1 3.26

Prepared by research team

Analysis of external factors evaluation (EFE, Threats)

Threats Weight Rank Weight
 score
1.Problematic governmental regulations 0.14 4 0.56
2. Lack of experienced and skilled labor 0.03 1 0.03
3. Increasing costs of raw materials 0.12 4 0.48
4. Increase in foreign currency fluctuation 0.1 2 0.2
5. Increase of salaries and insurance 0.09 3 0.27
6. Inflation 0.1 3 0.3
7. Importing of the fishmeal 0.02 2 0.04
8. Increase of production costs 0.11 4 0.44
9. Hardship for getting licenses 0.02 1 0.02
10. shortage of marine resources 0.04 1 0.04
11. Illegal fishing 0.13 4 0.52
12.Stagnation 0.06 1 0.06
13. “El-Niño” -“warm event” would affect the 0.04 1 0.04
development of the coastal fish resources
1 3

Prepared by research team

conclusion

the Company strategies effectively take advantage of existing opportunities and minimize

the possible adverse effects of external threats.

Strategies for the fishmeal industry

Invasive strategy (So)
Increase efficiency of fishmeal
product with farmed fish waste
usage
providing for more exportation
Conservative strategy (WO)
Use new technology and interaction with the global
market
Using eco-friendly technologies More Interaction
with government through Unions to obtain low
interest loan

Competitive strategy (ST)
More interaction with the
government to the benefit of
fishmeal industry
Supporting decrease of the final machinery cost
Continue to support production of domestic goods
Defensive strategy (WT)
Supporting production of needed technology
domestically More efficiency Using more new
resources for procurement of raw materials

Prepared by research team

CHAPTER 3: PRODUCT LOGISTICS

3.1 Supply chain

The logistics process begins from the anchovy fishing in the sea, moving them to the

production plant in Callao where the fishmeal will be elaborated and be packed in bags for

easy transfer.

In the bagging area, the bags with fishmeal go out through a conveyor belt, each bag is duly

coded, sewn and with an average weight of 50kg (+ - 0.50 kg) The final part of the conveyor

belt faces the outside of the bagging area at an exit with a height of approximately 3.50 mt.

Next, a transport unit is parked near the conveyor belt, where stevedores are located on their

platform to receive the bags with fishmeal and accommodate them on the platform. The

arrangement they carry out is 27 bags per row and they form 14 rows, finally in row 15 they

place 22 bags, for a total of 400 bags with fishmeal for each transport unit loaded, with a

theoretical net weight of 20 TM each unit.

The fishmeal goes from the production plant to TRAMARSA’s warehouse waiting to be

exported.
In the warehouse, the product is unloaded by stevedores who move it from the platform of the

transport to the designated and delimited space in the pampa. The bags are arranged on a

blanket that serves as protection against the ground, then, the bags are collocated into piles

(1000 bags per pile) and covered with polypropylene blankets that protect against climatic

factors (rain, wind, etc.) During this period, the product has a routine maintenance program,

which consists of cleaning, fumigation and systematic inventory of the product.

Once the customs clearance day has arrived, the bags are moved from their formation in the

pile to the platform of the transport units, the bags are loaded at an average of 600 bags per

platform. After completing its loading, immediately each transport unit moves to the

weighing area where it is weighed on the digital scale and its documentation is completed,

then the transport unit goes to the terminal of Callao.

Once the transport unit has arrived at the terminal in Callao, it is placed in the container yard

next to the designated empty container, then the stowage of fishmeal bags is carried out

inside the containers, where they are arranged in a formation of 13 rows with 40 bags per

row, for a total of 520 bags of fishmeal in each container.

3.2 Packing, marking and unitization

Fishmeal only uses polypropylene bags as packaging. The weight that each bag should have

is 50 kilograms with variations of 5 kilograms.

The bags have the company logo, the name of the product, the net weight and the

manufacturing method (steam drying)

The fishmeal bags have their respective labeling; indicating the product, the nutritional values

and its production date.

3.3 Incoterms

3.3.1 Justification of Incoterm to be used

The Incoterm that the seller used was CFR, because it’s exclusively used in maritime

transport and the seller will not have to pay the insurance of the transported cargo.

3.3.2 Responsibilities of the parties: buyer and seller

The seller has the following obligations:

• Delivery of the product and documents

• Packaging of the product

• Inland transportation in the country of origin

• Customs clearance at origin

• Expenses at origin

• International maritime freight

The buyer has the following obligations:

• Payment of the product

• Expenses at destination

• Payment of customs clearance at destination

• Inland transportation in the country of destination

• Payment of taxes

3.4 International transport

3.4.1 Justification of the mode of transportation to be used

The transport to be used is the maritime provided by the maritime agency COSMOS S.A.

with the vessel Santa Ursula V008W.

The reason why maritime transport was chosen is because of the quantity to be transported,

which is equivalent to 396.98 Tons distributed in 7860 bags and collocated in 15 containers,

being more efficient to deliver by sea for a reason of low cost and large cargo volume.

3.4.2 International transport route

The route chosen is the Asia Pacific route, because the point of origin is the port of Callao

and the point of destination is the port of Dalian (China).

3.4.3 Itineraries available according to mode of transportation and average transit times
3.5 International Transport Insurance

CFR doesn’t stipulate the obligatory use of insurance by the exporter, being only a priority of

the buyer in China.

The buyer will decide, whether or not to cover the merchandise and the using of type A, B or

C insurance depending on the risk they will assume and what they want to cover.

3.6 Documents required for export

The documents used in the export of fishmeal were:

• Invoice

• Bill of lading

• Packing list

• Customs declaration

• Certificate of origin
• Weight certificate

• Analysis certificate

• Sanitary certificate of fishmeal

• Producer’s certificate

• Fumigation certificate

• Container cleanliness certificate

• Declaration of dangerous goods in container certificate

• Letter of credit

• Purchase order

• Pre-shipment certificate