TED Case Studies

CASE NUMBER: 530

CASE MNEMONIC: EELFARM

CASE NAME: Eel Farming in Taiwan



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I. Identification

1. The Issue:

The Republic of China on Taiwan is an island located in the Asian subtropics and is suitable for aquaculture. The role of aquaculture in Taiwan's overall fishing industry has been growing steadily over the years, and now accounts for more than a third of Taiwan's total seafood production. Taiwan's most important farmed fish is eel, the annual production of which fluctuates between 26,000 and 56,000 metric tons, and is worth more than US$400 million. In addition to exporting for foreign exchange, eels are also a sort of popular seafood for Taiwanese. The market for domestic use is growing rapidly. Eel aquaculture is undoubtedly a highly lucrative and profitable industry in Taiwan. However, aquaculture development has not come without environmental cost. It brings environmental problems, such as water shortages, land salination, and land sinkage caused by the heavy extraction of groundwater. Much of the damage is irreversible. Above all, due to over-exploitation of groundwater for aquaculture's use, land sinkage in the coastal areas has deteriorated. Fish farmers earn profits, but the whole society pays a huge cost for environmental loss. With a population of 21.5 million in 1997 living in 35,873 square kilometers, Taiwan's population density is the second highest in the world after Bangladesh. How to optimize the utilization of the limited lands has become an urgent and solemn issue for the Taiwanese government.

2. Description:

Eels are a high-value product suitable for intensive pond cultures. Taiwan's main export market for eel is Japan, taking up 90% of the eel exports. Eel farming is at the top of the fishery industry in terms of export value. The first experimental eel farm in Taiwan was established in 1952. Small-scale commercial eel farming on the island began in 1958. The first large-scale expansion of eel farming took place in 1964, in the form of a nursery operation, raising glass eels to stocking size fingerlings for Japanese eel farms. Throughout the history of eel farming in Taiwan, the industry has mainly been developed for exploiting the eel market in Japan. The first exportation of market-size eels to Japan, however, did not begin until 1970. In 30 years, eel farming in Taiwan has developed into one of the largest segments of the aquaculture industry on the island.

a. Eels' Life Cycle

There are thousands of eel species in the world that spend their whole lives in the sea and hundreds of species which live their whole lives in freshwater. But by a quirk of nature, only the Anguilla eels have a life history half in the sea and half in freshwater. The family of Anguilla encompasses Anguilla japonica--the Japanese eel, Anguilla anguilla--the European eel, Anguilla rostrata--the American eel, and Anguilla australis--the Australian and New Zealand eel. The peculiar habits of Anguilla eels have mystified people for centuries. No one has ever found ripe eggs in Anguilla eels. All other freshwater fish contain ripe eggs at some seasons, but never eels. How then do eels reproduce? In fact, eels breed in the sea, far from land, and their sexual organs do not mature until after the adult eels migrate back from the rivers into the sea. That is why no eggs or sperm can ever be found in an eel captured in freshwater. However, judging from live features of the eels, people undoubtedly regard eels as a fish. Many ages ago Anguilla eels were marine fish like conger eels, and later they somehow developed the habit of entering freshwater during the growing period of their lives. The story of how the amazing life cycle of Anguilla eels was discovered is a major epic of science. The early scientific investigations on eels all centered on the European species Anguilla anguilla. This was due to the fact that in the 19th century scientific research existed only in Europe.

The story of the eel was for a long time mysterious and much of it is still today. The larvae of the European Eels travel with the Gulf Stream across the ocean and after three years reach England at the size of 45mm. They migrate up the rivers, crossing all kinds of natural challenges, sometimes by piling up their bodies by the ten thousands to reach even the smallest creeks. They can wind themselves even over wet grass and dig through wet sand to reach headwaters upstream and ponds. In freshwater they start pigmentation,turn into elvers and feed on live creatures like small crustaceans, worms and insects to grow up in 10 to 14 years to a length of 60 to 80 cm. They are called yellow eels because of their golden pigmentation. But then in July their instinct drives them back toward the seas, crossing even wet grasslands during the nights to reach their rivers.

In Asia, the Japanese eels spend from 5 to 20 years in freshwater and grow to a size of about 45cm or longer before reaching sexual maturity. At this time they descend to the sea toward their spawning ground. After hatching, the transparent leaf-like larvae drift with the Kuroshio current along the Western Pacific coast up to Japan. They are believed to have about 5-6 months of pelagic life before metamorphosing into elvers and beginning their river ascent. At this time they are still totally transparent but have the body shape of an eel and are called glass eels. The glass eels are carried by tides into the estuaries of coastal rivers where they undergo further development to become elvers (up to 1-3 years of age), which have adopted the adult form in all respects other than size. The elvers then undertake a more active secondary migration into the freshwater, upper reaches of the catchment where they grow and develop into sexually mature adults before returning to the sea to spawn (average 10-25 years of age, although this varies with species and location).

b. The Development of Taiwan's Eel Farming

The Japanese eel species is called Anguilla japonica or unagi in Japanese and is one of 16 species of Anguilla eels in the world. Anquilla japonica is the only species that performs adequately in Taiwanese ponds, because of the different temperature preferences and of serious disease problems with the other species. With climatic advantage and geographical adjacency, Taiwan provided the Japanese comsumers with the largest proportion of eel products among exporters (see Table 1 below). Eel culture in Taiwan can be in the form of a nursery operation, raising newly transformed elvers of Anguilla japonica to fingerlings, in the form of a production operation, raising fingerlings to market size eels, or a combination of the two.

Table 1: Importation of eel into Japan in 1986

Live eel Processed eel Elver

ton yen/kg ton yen/kg ton yen/kg
Taiwan 20,054 1,813 11,044 2,395 72 366,028
China 863 1,472 431 1,875 3,190 306,272
Korea 9 1,611 _ _ 31,255 26,609
Hong Kong 132 1,017 _ _ 7,391 334,718
France _ _ _ _ 10,196 12,903
USA _ _ _ _ 362 52,856
Total 21,058 1,794 11,475 2,375 52,466 85,001
Source: Data extracted from 1986 and 1987 issues of the Fish World Magazine

The Japanese eel occurs naturally only in waters of China, Korea, Japan, and Taiwan. With a total dependence on natural sources, the supply of glass eel is limited, very unpredictable, and is the bottleneck in the development of eel culture. Many people thus place their hope for the future for eel farming on artificial propagation. Induction of ovulation through hypophysation, artificial fertilization of eggs, and hatching of such fertilized eggs has been carried out successfully in Japan and Taiwan. The cultivation of such larvae to the elver stage for the farming industry, however, will probably not be possible in the near future. It needs time to break through technological obstacles before eel nursery operations can become reality.

The world aquaculture production of freshwater Anguilla eels is currently estimated at more than 130,000 t/year, worth over US$1.3 billion. The bulk of this production occurs in Asia - with China producing approximately 50,000 t/year (mostly farmed), Japan 35,000 t/year and Taiwan 34,000 t/year - and to a lesser extent Europe (10,000 t/year). In Taiwan the annual yield of glass eels fluctuates between 30 and 150 million glass eels, whereas the annual need of the local eel farms has been about 250 million glass eels. Significant increase of local catches is impossible as the level of glass eel exploitation in coastal Taiwan may already be about 45-75% of the natural population. The shortage thus must be made up for through importation from neighbouring countries of which Korea and China are the main suppliers of glass eels. However, due to China's rapid development of a domestic eel culture industry and thus control of its glass eel exportation, the prospect of the eel culture industry in Taiwan becomes dim. With China being the major glass eel supplier, the availability of seed eels to Taiwan now is an uncertainty. In 1987 the cost of glass eel accounted for more than 40% of the total production cost. This places eels from Taiwan in a very unfavorable situation in the international market in competing with eels from China. In 1987 the cost of glass eels in China was only about a quarter of that in Taiwan.

c. Environmental Impacts

Environmental damages caused by the development of aquaculture have further made prospects of the eel culture more clouded. Persistent drawing of large quantities of groundwater has resulted in massive land sinkage. It has been estimated that on average the extraction of 5m of groundwater can lead to 1m of land sinkage. In more serious cases the magnitude of such sinkage exceeds 2m. While much of the subsided surface can be raised back to the original level through filling, much of damage is irreversible. As a result, rice paddies are transformed into lakes and the ground floors of buildings become basements. Excessive pumping of groundwater has caused 7% of Taiwan's flatland to sink; more than 1,000 square kilometers of national lands is in a state of sinkage. The average rate of sinkage in the coastal areas is between 5 to 15 centimeters each year. When the typhoon hits the island, the costal areas are often severely flooded. Fish farmers may profit, but at an economic loss to the community as a whole. In serious cases even the fish farm has to be abandoned because of the inability to discharge waste water from the farm. However, this phenomenon not only occurs in the eel farming but also exists in every kind of acquaculture. With regard to species extinction, it is less worrying. Because eels are a mild animal and their reproduction occurs only in the sea, they will not threaten the existence of other species in the same habitat provided that the farm eels escape into the wild.





3. Related Cases:

4. Draft Author: Julian T. Wu (April, 1999)

II. Legal Clusters

5. Discourse and Status: AGReement and INPROGress

This case covers two dimensions in terms of legal matters. One is related to trade; the other involves in environment. As Taiwan eels rely largely on the Japanese market, and simultaneously, Japan regards Taiwan as its main source of eel supplier, bilateral trade in eels is important to these two nations. The World Trade Organization (WTO) regulates agricultural trade by focusing on removing subsidies from governments to avoid a distortion of the market. With better quality of eel products compared with that of other competitors, Taiwan occupies the largest portion of the Japanese eel market. Therefore, there is no need for the Taiwanese government to provide subsidies for its eel exports. Although Taiwan is not the member of the WTO and has no obligation to comply with the WTO rules, its major eel importer--Japan has the responsibility to implement the WTO agreements. Especially, Taiwan is now striving to accede to the WTO. The earlier it abides by the WTO rules, the less impact of trade liberalization it will face in the wake of Taiwan's accession to the WTO.

From the aspect of environment, eel culture has caused serious environmental problems. Lured by profits, many farmers in the coastal areas around the island have expanded into aquaculture. Aquaculturalists have dug 170,000 illegal wells and pumped excessive amounts of water resources. In addition to being used in aquaculture, groundwater is also pumped for industrial, residential, and standard aquacultural uses. Recent data shows that while 7.4 billion cubic meters of groundwater is being pumped annually, only 4 billion cubic meters is being replaced. This deficit has caused lands in many areas to subside. Overall, almost 1,190 square kilometers of Taiwan's plains, or a full 11 percent, have been affected. The average rate of subsidence in the coastal areas is between 5 and 15 centimeters each year. In November 1995, the Executive Yuan (the Cabinet) passed a land subsidence control program drawn up jointly by its Council of Agriculture and the Ministry of Economic Affairs. The program calls for US$56 million to be spent from July 1995 to June 2000 to control land sinkage.

Another issue that might arouse people's concern is the possibility of declining in number or even of envisaging extinction of eels. As eels are a fish, this case appears to be related to CITES (Convention on International Trade in Endangered Species of Wild Fauna and Flora) in a legal sense. However, CITES protects only endangered species that are declining in number because of loss of habitat and increased exploitation as human populations grow. In this case, eels obtain even more habitats created by culturists through scientific methods of farming. About 25,000 tons of wild eels and 26,000 tons of cultured eels are harvested in the world in average years. The total number of wild eels in the world remains unknown; however, if necessary, eels may increase dramatically in number by means of farmers' artificial cultivation. Consequently, there is no apprehension of extinction of eels in the foreseeable future. It turns out unnecessary to list eels as a protected species in CITES.

6. Forum and Scope: Taiwan and UNILATeral

If the Taiwanese government decides to discourage the development of aquaculture to curb further deterioration of land sinkage, the eel industry will be expected to shrink drastically. In fact, faced with keen competition from South Korea and China, Taiwan's eel exports to Japan are no longer as advantageous as before. Unlike Korea and China, Taiwan has limited lands for use. Since Taiwan is a quasi-industrialized country, economic growth is not the sole goal to pursue for national interests and people's well-beings. People's consciousness of environmental protection is growing stronger. As a result, environmental protection has increased its weight and usually plays a key role in the course of policy-making in the government.

7. Decision Breadth: 2 Taiwan and Japan

If Taiwan, based on the priority of environmental considerations, withdraws from the Japanese eel market, Taiwan will immediatedly lose economic benefits that may shorten the annual trade deficit with Japan. On the other hand, the Japanese consumers will not be able to enjoy cheap and high-quality eel products from Taiwan. Japan, however, has other sources of eel imports to supplement Taiwan's vacancy. Whether environmental protection is more important than economic development has become a hot issue in recent years.

8. Legal Standing: Law

Currently, the Taiwanese government has not enacted any strict law to regulate the development of aquaculture. The Executive Yuan passed a land subsidence control program for improvements in 1995, hoping to have a better control of land sinkage in 5 years. If it proves to be ineffective, more strict laws will be introduced and enforced in the long run.

III. Geographic Clusters

9. Geographic Locations:



Taiwan is an island off the eastern coast of Asia and lies in the Western Pacific. It is 394 km long and 144 km broad at its widest point. Taiwan is separated from the Chinese mainland by the Taiwan Strait, which is about 220km at its widest point and 130 km at its narrowest. The island is almost equidistant from Shanghai and Hong Kong.

a. Geographic Domain: Asia

b. Geographic Site: East Asia

c. Geographic Impact: Taiwan

10. Sub-National Factors: NO

There is a strong voice from environment activists in Taiwan who urge the government to take effective measures to maintain the soundness of national ecology. Moreover, the growing consciousness of environmental protection of the Taiwanese people has intensified such a voice and formed an active movement during the past years. Accordingly, the needs of environmental protection are reflected in the government's policy-making.

11. Type of Habitat: TROPical

IV. Trade Clusters

12. Type of Measure: Regulatory Standard

The adverse impact of eel trade on Taiwan is domestic problem that has not led to international concerns so far. As an export-led economy, Taiwan needs eel exports to bridge the gap of trade deficit with Japan as well as to accumulate its foreign reserves. At least now, Taiwan still maintains normal eel trade with Japan.

13. Direct v. Indirect Impacts: INDIRect

14. Relation of Trade Measure to Environmental Impact

a. Directly Related to Product: YES Eel

b. Indirectly Related to Product: NO

c. Not Related to Product: NO

d. Related to Process: YES Habitat Loss

15. Trade Product Identification: Fish

16. Economic Data:

In 1996, Taiwan produced US$3.5 billion worth of fish. Of this, 45% came from deep-sea fishing, 34% from aquaculture, 17% from offshore fishing, and 4% from coastal fishing. More than 33% of the catch was exported, with the biggest items being skipjack and eel.

17. Impact of Trade Restriction: LOW

18. Industry Sector: Food

19. Exporters and Importers: Taiwan and Japan

V. Environment Clusters

20. Environmental Problem Type:

With small fish farms, a proper community master plan for aquacultural development is often lacking and each farm is developed and operated on its own. Although fish farmers are usually industrious and enthusiastic, many are shortsighted. Eel farming may not directly cause other creatures to become extinct; however, it may have an indirect impact on the shrinkage of habitats for other creatures to survive. As countries which exploit the coastal lands largely for pond cultures' use are facing the worsening consequences, Taiwan is also suffering from the environment damages that its development of acquaculture has caused. The overexploitation of pond cultures inevitably leads to the loss of the natural habitats for other creatures. Government regulations on aquaculture and the enforcement of such regulations are inadequate. The land area under aquacultural cultivation has expanded from about 38,000 hectares before 1968 to a peak of 76,000 hectares in 1990, including 27,000 hectares of saltwater ponds and 26,000 hectares of freshwater ponds. Illegal convertion of farm lands and reserved wetlands along the coast into fish ponds, illegal excavation of fish ponds on government lands, and indiscriminate pumping of groundwater and discharge of waste water are common events. The prosperity of aquaculture is at the cost of Taiwan's ecological destruction. Taiwan is now economically capable of, is willing to, and is focusing attention on correcting these problems. Remedial measures are being considered. To prevent the continued erosion of national lands as a result of improper water pumping, the Ministry of Economic Affairs plans to set up a task force that will develop enforcement and prevention measures. On June 19, 1995, a water resources white paper that maps out a well-rounded policy on the better utilization of Taiwan's water resources was drafted. The land sinkage problem and the excessive pumping of groundwater are two important subjects addressed in this white paper. To some extent, the pattern of aquacultural progression in Taiwan provides a most educational model to help developing nations plan their development of aquaculture.

21. Name, Type, and Diversity of Species

Name: Eel (Anguilla japonica)

Type: Fish

Diversity: Thousands of species

22. Resource Impact and Effect: LOW and REGULatory

The impact on Taiwan's ecosystem as a result of land sinkage is profound and far-reaching. It directly influences the lives and fortunes of the residents living in the coastal areas of Taiwan.

23. Urgency and Lifetime: LOW and EEL lifetime (5-10 years)

Much of the environmental destruction is irrecoverable. However, if nothing is done to mend, the suituation will become even worse. Timing is extremely important in dealing with this matter.

24. Substitutes: Conservation

The problem of Taiwan's land sinkage cannot be ignored any more, for the people who live along the coast have been suffering for years from floods that typhoons bring into the coastal low-lands. Their lives and properties are severely threatened and hence complaints and discontents are rising. The only solution preventing land sinkage is to stop digging groundwater to conserve the lands. Thus, overexploitations of aquaculture should be forbidden.

VI. Other Factors

25. Culture: YES

Eels are a high-protein fishmeal. The main eel-eating areas are Europe and the Far East. In many other areas of the world where eels occur, they are not eaten because people are afraid of their snake-like appearance that causes people to lose appetites for eels. Regardless of their appearance, the flesh of eels consists of delicious sweet with only one bone down the middle. There are at least three styles of cooking:

Eels are not only delicious but also nutritious. In East Asian countries, eels are regarded as an actively energetic animal. It has been deeply rooted for centuries that many Asian people think eels may bring them strength and energy. With this traditional thinking in mind, numerous Japanese and Taiwanese, especially men, are fond of eating eels in order to energize themselves and to pursue power. Particularly, they believe that eels may help improve or increase their abilities in sex.

26. Trans-Boundary Issues: NO

27. Rights: NO

28. Relevant Literature:

Usui, Atsushi. Eel Culture Translated by Ichro Hayashi. London: Fishing News Books, 1974.

Chen, Lo-chai. Aquaculture in Taiwan. Oxford: Fishing News Books, 1990.

The Republic of China 1998 Yearbook. Taipei: Government Information Office, 1998.

Bailey, Conner, Svein Jentoft, and Peter Sinclair. eds. Aquacultural Development: Social Dimensions of an Emerging Industry. Oxford: Westview Press, 1996.

Martin, Roy E. and George J. Flick. eds. The Seafood Industry. NY: Van Nostrand Reinhold, 1990.

Hickling, Charles F. Fish Culture. London: Latimer Trend & Co Ltd Plymouth, 1971.

Ling, Shao-wen Agriculture in Southeast Asia: A Historical Overview. Seattle: University of Washington Press, 1977.

Agriculture: the Republic of China. Taipei: Council of Agriculture, 1995.

Chen, Tung-pai. Aquaculture Practices in Taiwan. Oxford: Fishing News Books, 1976.

Walker, W. W. and R. M. Overstreet. "Practical Carcinogenicity Tests with Small Fish Species."Fundamentals of Aquatic Toxicology: Effects, Environmental Fate, and Risk Assessment. G. M. Rand ed., Washington, D. C.: Taylor & Francis, 1995.

W. R. Livingston

The New Rural Industries: A handbook for Farmers and Investors

Fishing Industry

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