WA’s lucrative rock lobster industry has left itself dangerously exposed to the Chinese market, according to a report which warns that operators could be sent to the wall in the case of a disruption.
In a first for the industry, rock lobster fishers commissioned a so-called risk assessment that found a major shock in the Chinese market was “almost certain” to happen and would have extreme consequences.
China takes virtually all of WA’s commercially caught rock lobster, which is the State’s most valuable fishery and worth about $400 million a year.
However, with increasing competition in the Chinese market from east coast and international rivals, prices for WA rock lobster have tumbled from about $80/kg to less than $60/kg.
The report, commissioned by the Western Rock Lobster Council, said a major shock in China was by far the biggest risk faced by commercial operators.
Those shocks included China blocking entry by WA fishers or a free trade agreement between Australia and the Middle Kingdom falling over, along with the threat of competition.
In such events, the report warned the price of WA rock lobster could plunge below $50/kg, imperilling the livelihoods of many who had heavily leveraged themselves to get a slice of the once boom-time market.
To reduce the risks, the report recommended the industry work to ensure it had access to China via legal channels rather than the prevailing “grey channels”, which were less secure.
It said the industry should diversify its markets by re-establishing relationships with previous customers in countries such as Japan, Taiwan and the US.
Other key risks included a loss of rights to fish or access to the fishery, a lack of State or Federal political support and a breakdown in the chain of custody.
WRLC boss Matt Taylor said while there were multiple markets within China, all were potentially subject to decisions by the central government. He said the council was seeking to draw together data on the Chinese market to get a better understanding of it. He also noted that more WA rock lobster would start entering China through authorised channels once a 3 per cent tariff reduction came into effect on January 1.
Safety Bay rock lobster fisherman Peter Stanich, who has seen the emergence of China as WA’s number-one market, said it was inevitable operators would seek the higher prices.
But he agreed with the report’s call for the industry to better plan for contingencies.
“When I started it was all tails to the US and Taiwan and now we rely totally on China,” Mr Stanich said. “Where else do you go if they’re paying the premium price?”
By Daniel Mercer
The Western Australian