Heard the one about the £250,000 fish?

I was browsing some back copies of the Guardian today, and came across a good example of markets in action. Last week a tuna fish fetched over 32 million yen at an auction in Tokyo.

According to the Guardian:

Changing tastes in Japan

A bluefin tuna fetched a record 32.49m yen (£254,000) today at the first auction of the year at Tsukiji market in Tokyo, but the fish’s growing popularity across Asia has raised fears it will soon be fished into commercial extinction.

The 342kg tuna easily beat the previous record, set exactly 10 years ago when a 202kg fish fetched 20.2m yen.

Market officials are accustomed to seeing prices rise during the new year auction at Tsukiji, the world’s biggest fish market, but today’s winning bid was unexpected.

The joint bid reflects the growing popularity of bluefin tuna in other parts of Asia, particularly China, and adds to concerns that surging demand means its days could be numbered.

“The custom of eating raw fish is spreading throughout the world, so that it’s no longer an era where Japan is consuming all of the limited supply of tuna,” an auction manager said.

Whales, however, are no longer so popular. At refrigerated stores across the country, thousands of whalemeat remains unsold.
The Japanese Dolphin and Whale Society said the country’s whalemeat stockpile exceeded 6,000 tonnes last August, a record high.

It has been claimed that substandard freezing methods on whaling ships, combines with the high price of the meat, have led to the decline in popularity, and the days when whalemeat formed a regular part of school lunches are long gone.

Depletion of fish stocks

But tuna’s popularity, where 600,000 tonnes is eaten annually – mainly as raw sushi or sashimi – shows no sign of abating.

Japan consumes about 80% of Pacific and Atlantic bluefin tuna, and has been accused of stifling international attempts to dramatically reduce fishing quotas or ban the trade altogether.

In November, the International Commission for the Conservation of Atlantic Tunas (ICCAT) agreed to cut the bluefin catch quota in the Mediterranean and eastern Atlantic from 13,500 to 12,900 tonnes, a reduction that fell well short of demands by conservation groups.

In a report released last year, the WWF warned that if fishing continued at current rates, the Atlantic bluefin would be “functionally extinct” in three years.

After the ICCAT meeting, Oliver Knowles, Greenpeace oceans campaigner, said “the word ‘conservation’ should be removed from ICCAT’s name”.

The tuna auctioned today’s was caught using the longline method off the coast of Toi in Hokkaido, Japan’s northernmost prefecture.

In previous years, bluefin fetching the highest bids have been caught using the more sustainable pole-and-line method in Oma on the northern tip of Japan’s main island, Honshu.

Possible questions applying market and market failure knowledge

Using at least one supply and demand diagram and the information in the article, explain why tuna prices in Japan have risen so high.

According to the article, “the country’s whalemeat stockpile exceeded 6,000 tonnes last year, a record high.” With the help of a supply and demand diagram, explain why such surpluses occur in the market for whalemeat.

Using the article and your economics knowledge, assess the case for and against government intervention for reducing the rate of fish stock depletion.