How Region-Marketing contributes to the Profitability of Carp Farms

Region-marketing aims to boost touristic attractiveness and should indirectly support carp farmers in the strained economic situation for carp aquaculture. Notwithstanding, it is unknown, how the region-marketing effects carp farms’ economics.

17 Stakeholders were interviewed to explore the essence of these region-marketing concepts. According to the typical farm approach of agri benchmark Fish, focus groups of carp farmers have informed our sample of representative farms. The representative farm models enabled to compare the costs and profitability of different carp enterprises. Further, the farm models helped to explore the potential impacts and efficacy of region-marketing initiatives introduced in recent years. Raw data were computed using the agri benchmark Fish simulation abFishCALC, which performs a range of economic efficiency analyses, with particular emphasis on cost calculations.

The greater the disparity between market return and total costs, the more profitable a farm is. In all cases, our study farms were able to cover their cash costs, with the larger Polish farms PL-FCP-90 and PL-FCP-190 most profitable from a short-term. In the medium-term however, the Aischgrund typical small farm DE-FCP-5 is not profitable enough to cover its depreciations, having no capital for investments beyond its daily business costs. Without a storage possibility, DE-FCP-5 did not participate in the positive carp price development in 2016 and 2017.

Even the German good practice farm DE-FCP-20 operates at the limit of economic viability in long-terms. If public payments of 0.10 €/kg LW would not be considered, the situation for DE-FCP-20 would be harsh. A similar picture emerged with the typical Polish farm PL-FCP-190. Further PL-FCP-190 does not maximize its respective production potential managing the farm only semi-intensive, which leads to a non-optimal relation of declining costs per kg LW. PL-FCP-190 focuses on wholesale distribution, where profit margin had been reduce caused by a weak Polish Zloty in 2016 in particular (currency effect).

Only the diversified and intensive managed Polish farm PL-FCP-90 can be seen as significant profitable benefiting from higher carp prices for varied sale channels, but wholesaling and declining costs per kg LW carp optimizing its stocking management. Anyway, opportunities to lower fixed costs and depreciation by upscaling are limited by available pond area. In both regions there is an urgent need to increase the price of carp significantly.

Protected Geographical Indication framed by Region-marketing

In the Aischgrund, the association Karpfenland Aischgrund e.V. promotes the region and its links with carp farming [Schuster 2016], while Partnerstwo dla Doliny Baryczy (Barycz Valley Partnership) performs a similar role for the Barycz Valley [Ozga 2016]. Both associations are closely related to Fishery Local Action Groups (FLAG). The FLAGs have implemented diverse measures of region-marketing like new carp products, network of carp offering restaurants, carp museums, tourist offices, carp events (e.g. election of a carp princess), school teaching, carp pond guides since the 2000s.

While the majority of region-marketing initiatives are hardly to measure in case of their direct impact towards carp farms economics, the 2012 introduced PGI label lead directly to higher prices in the Aischgrund, wholesaler have been willing to pay for certified ‘Aischgründer Carp’. In 2006, the ‘Milicki Carp from Lower Silesia’ label was developed and included at the List of Traditional Products by the Polish Ministry of Agriculture and Rural Development. In contrast and according to interviewed Polish stakeholders, there is no price effect of the label ‘Milicki Carp’. This seems to be caused by the fact, that the produced carp is distributed to the national market first of all and not regionally.

The results of this field study suggest that stakeholders in both regions have a firm grasp of the challenges facing carp farming and a good understanding of how to meet them. Although the Aischgrund and the Barycz Valley differ in the structure and history of their carp farming, they share a focus on traditional grow-out farming and the problem that fresh carp is hardly a profitable product on its own. Carp farmers in both regions struggle with increased costs and low wholesale margins. Changing consumer preferences, price competition, imbalances at the value chain, low levels of innovation, lack of farm successors, high fish losses to predation, diseases, shortage of water and rural de-population are forcing farmers to seek new business strategies.

But the options are limited to specialization, vertical integration, diversification or upscaling. Large farms in Poland have specialized their production, allowing them to benefit from scale effects. They mainly address the Polish national market and can reduce costs by intensifying production like PL-FCP-190. For medium farms in both regions (DE-FCP-20 and PL-FCP-90), diversifying and vertical integration by closing carp production cycles is the best option, leading to lower fingerling costs, making operations less vulnerable to diseases and offering the opportunity to sell fish for re-stocking as well as consumption via different sale channels.

Remuneration of ecological and cultural functions

A central lesson learned studying the carp case is that remunerating producers for the multi-functional services they provide, like the PGI does, would certainly increase their profitability while at the same time help in achieving other environmental and social goals (carp farming as cultural heritage). But the price effects of PGI are limited to particular markets like the Aischgrund, where a local demand and an shared identity as carp region has been established.

To maintain carp farming in central Europe more measures are needed. Such measures would well suited to the 2^nd pillar of the Common Agricultural Policy (CAP), which rewards services and revitalization of villages in rural areas, includes payments linked to Natura 2000 and the Water Framework Directive and payments for areas facing natural or other specific constraints. More, it is the view of the industry that reformed public funding programs should include compensation payments for fish losses through predation. Such payments are already applicated in some German federal states [SMUL 2019], but a European strategy is missing.

A further private transfer payment could incorporate a visitors carp tax, whereby a small extra payment for each tourist overnight stay goes towards maintaining the iconic carp landscape and heritage of areas like Barycz Valley or Aischgrund, where visitors come to enjoy the carp pond landscape. The latter could be an extension of the PGI regional carp label which is already proving effective region-marketing tool in local restaurants in the Aischgrund.