New Zealand's seafood exports are increasingly going to fewer markets, with 90% of lobster now sold to China, 53% of chilled fish going to Australia and 25% of molluscs and 29% of chilled fish headed for the United States.
While on the face of it those markets are growing, some at an exponential rate, the fishing, aquaculture and seafood industry's contribution to gross domestic product has plunged 16% since 2003, from $940 million (of value added) to $786 million in 2014, Westpac industry economist David Norman says.
"The fishing, aquaculture and seafood sector is experiencing falling employment, lacklustre long-term export revenue growth and increasing challenges over the politically charged issue of recreational versus commercial fishing rights.''
The vast bulk (77%) of seafood is exported, 7.7% is bought for domestic consumption, and the balance used in food and beverages.
Crustaceans, mainly lobster, and molluscs (mussels and oysters) together accounted for $625 million in exports in 2015, or 41% of all seafood export values.
Mr Norman said China was by far the most important export market, taking 32% of exports by value in 2015, up from just 3% in 2000.
"China completely dominates lobster exports, taking 91% of total export values last year ... and also takes 34% of frozen fish exports,'' Mr Norman said.
Mr Norman said the sector was faced with a multitude of issues, including tensions between commercial and recreational fishers, consolidation of quota, and industry automation and the huge capital investment required to maintain a fishing fleet.
To overcome the modest growth in seafood export value, volumes and prices had to rise, Mr Norman said.
"The opportunity to achieve higher prices lies in collectively marketing New Zealand's sustainable fisheries, to introduce new species to the market, and to steer customers away from generic whitefish frozen and fillet exports and towards fresh and chilled product,'' he said.
Mr Norman said tensions between commercial and recreational fishers would continue and probably intensify.
"The argument that the economic benefit per fish or kilogram of fish generated by recreational fishing is many times higher than that of commercial fishing is hard to rebut,'' he said.
The Government had expressed a clear interest in recreational fishing reserves, which might affect the long-term viability of some commercial operations, even if they were compensated for loss of quota, he said.
There were questions to be answered over how commercial fishers' property rights would be protected, how more recreational fishing would be monitored, and what more rights for recreational fishers could mean for the price of fish in the shop.
Proposals for reserves include the Hauraki Gulf and the Marlborough Sounds.
"Although the government has discussed compensation, the details are yet to be finalised,'' he said.
Commercial fishers are worried about the erosion of property rights and the viability of commercial fishing in areas where reserves were established; more so inshore fisheries than the deep-water fishery.
Mr Norman said industry sources questioned whether recreational fishers could be monitored to the same extent.
"There are strict quotas and monitoring of commercial fishing through the observer programme, and increased backing for cameras on vessels to ensure commercial fishers comply with the rules,'' he said.
But there was far less monitoring of recreational fishers or the 420,000 power and sail boats which could be used for recreational fishing in any given year, he said.
On consolidation and automation, Mr Norman said that too was expected to continue.
"Larger players will buy up quotas and look to consolidate operations where possible.''
The industry structure might be "hollowed out'' - dominated by large processors and small independent fishers, and there might be more joint-venture processing facilities across firms, he said.
Mr Norman said there were many barriers to entry to both aquaculture and wild-catch.
The Quota Management System (QMS) had been "largely successful'' at managing fish stocks sustainably, which had made quota ownership desirable.
"[However] the cost of purchasing fishing quotas and the resource-consent and leasing arrangements for an aquaculture venture are high,'' he said.
Deep-sea fishing vessels cost tens of millions and processing was similarly capital-intensive.
"This makes entry into the sector difficult and makes further consolidation likely.''
Technologies targeting more efficient and environmentally sound fishing were expensive and would be the domain of larger players.
"We expect to see larger players buying up more quotas, and an increasing gap between larger players and smaller independent fishers, with fewer mid-sized firms over the years to come.''
Significant investment in the fishing fleet was required, he said.
"This equates to tens or hundreds of millions of dollars of investment but many businesses are looking to see how the commercial-recreational fishing debate plays out, before making big-ticket investments.''
Increased concentration would raise the risks of exposure to a handful of key markets.
"Given the growth in lobster exports to China, and Australia's dominance in the chilled/fresh fish category, this increasing market concentration is unlikely to reverse soon,'' he said.
Seafood export growth had had been "sluggish'' for the past 15 years.
Total seafood exports by value had been relatively flat for more than a decade, due to the exchange rate and many exports having become "highly commoditised'' during that time, making them more price-sensitive.