College of Agriculture & Natural Resources Department of Agricultural, Food, and Resource Economics

A new paper by Michigan State University (MSU) Department of Agricultural, Food and Resource Economics (AFRE) faculty members Thomas Reardon and Ben Belton, published in the journal Nature Sustainability, introduces the concept of sustainable commoditization, or integrating environmentally friendly practices into supply chains for mass-produced goods.  

David Zilberman, professor in the University of California-Berkley Department of Agriculture and Resource Economics, is a co-author.

The paper uses outlines of the idea of sustainable commoditization using the seafood supply chain – a process that begins with fish farming and/or fishing, and ends with retail and consumption.

The Seafood Product Cycle

Reardon, Belton and Zilberman explain that seafood, as well as other products in the supply chain, move through a product cycle, starting as an expensive seasonal niche product, then becoming a commoditized bulk product, which results in cheaper prices. These commoditized products eventually become differentiated, meaning consumers choose what products they buy based on physical qualities (size, color, etc.), sourcing, labor practices, sustainability standards and other factors.

Reardon and his co-authors discuss the product cycle for seafood, comparing practices in developed regions, like the U.S., Japan and Western Europe, to developing regions, like Africa, Latin America and parts of Asia.

In the U.S. and Europe, seafood was commoditized in the 1950s and 1960s. Frozen fish, shrimp, and products like fish sticks became common in grocery stores, and fish sandwiches became common at fast-food restaurants. Today, bulk, cheap seafood products are still in stores and fast-food chains, but many consumers are paying more attention to attributes beyond cost.

“When you go from a commoditized bulk product to a differentiated product, then you get all kinds of value added and different audiences,” Reardon said. “Producers start moving beyond only focusing on cost, and start focusing more on qualities that matter to consumers.”

Developing regions in Asia and Africa are currently in the commoditization phase, meaning seafood is becoming more widely available – and can be consumed cheaply there. These regions, particularly Asia, have also become the main supplier of seafood to the world market, including the United States.  

The boom in production of fish in these regions benefits the local populations.

“The implication is that, in that initial phase of commoditization, people get a lot more fish protein,” Reardon said. "So instead of it being relatively rare, you now get it cheap. It's good for food security because protein is widely available.”

Balancing Perspectives

Reardon said the literature on seafood and other agriculture products in developed regions and the literature in developing regions are “two ships passing in the night,” given that the they are in a different phases of the product cycle.

“Researchers in the U.S. and Europe are focused on the phase after commoditization, in particular on sustaining the supply commoditization has created,” said Reardon. “By contrast, the main concern of researchers and governments in developing regions is commoditization — they want to promote rapid growth in fisheries and aquaculture right now, so that fish protein can be cheap and widely available, similar to the initial commoditization of seafood in the U.S. in the 1950s and 1960s.”

Reardon notes that commoditization can lead to overfishing. This can often result in unsustainable fisheries – and has in the U.S. in Europe. Because of this, these regions have had to rely, in part, on imports from Asia to maintain their seafood supplies. 

“Our argument is to acknowledge both perspectives — the need for commoditization to provide affordable protein, but also the need to pursue that growth as sustainably as possible,” Reardon said. “The research on improving the efficiency of the supply chains and of production in the developing regions for fish, and other agricultural products, has to keep moving.”

Sustainable commoditization has three pillars: sustainable intensification, supply chains, and policy and regulation. Sustainable intensification involves increasing efficiency and output, and reducing externalities. The supply chains pillar includes delivering innovation, enabling inclusion and reducing costs. Policy and regulation is a mix of private and public sector actions to deliver public goods, provide protection and promote innovation.

“At its essence, the marriage of commoditization and sustainability is that everybody recognizes the importance of the commoditization occurring to get cheaper, affordable protein, but, at the same time, everybody should see that down the road, there will be a sustainability problem, and to try and combine the two actions right now,” Reardon said.

Solutions Beyond Seafood

Reardon said the concept of sustainable commoditization can be applied beyond seafood.

“There’s a fruitful interchange between researchers that are working on sustainability solutions within developed countries and in developing countries, people that are working on the yield and supply chain solutions, working together to maximize both,” he said. “It’s going to be a win-win that can be applied to fish, but also to animal production, grain production and horticulture.”

As Reardon and his co-authors continue to investigate this subject, they would like to dive deeper into the impacts on the three pillars of sustainable commoditization.

“We want to continue to work on understanding sustainable commoditization in the fish and seafood domain, as well as other horticulture and others, and how the supply chains are transforming and growing in developing regions,” he said. “We also want to understand how producers and farmers are being affected by this growth and transformation.”