FEED Business Worldwide - April, 2012

 

Indonesia's promising aquaculture sector 

 

by Eric J. BROOKS

 

 

When one looks at Indonesia's feed and livestock statistics, one must put its low meat consumption of 5kg a year (and mostly chicken) into the following perspective. While it may have meat consumption per capita on par with India or parts of Africa, the average Indonesian eats 31kg of sea food per year, and this offsets much of the low meat consumption.

 

 

 

According to eFeedLink, from 2000 to 2010, no Indonesian protein line's production has risen faster than that of aquaculture. We then have a curious situation at hand. With sea food per capita consumption approximately 6.5 times higher than that of poultry, chicken consumption is growing more quickly. Yet, within the Indonesia's overall sea food protein line, the nation's aquaculture sector is growing just as quickly as its poultry industry, if not more so.

 

This because while overall fish supply jumped by a mere 28% in the years 2004 to 2008, this lower number masks a coincidence of declining wild catches and disproportionately large rise in aquaculture output.

 

Hence, Indonesian government statistics show that from 2003 to 2009, total sea food output grew from 5.7 million tonnes to 7.7 million tonnes. However, in 2003, 4.8 million tonnes or 83% of this sea food originated from wild catch, 17% from aquaculture. By 2009, government statistics show that wild catch increased by less than 2% per annum, from 4.8 million tonnes to 5.2 million tonnes.

 

On the other hand, over these same six years, aquaculture production jumped from barely a million tonnes to 1.75 million tonnes. With farmed fish production rising at a 13% annual rate, a significant development was underway.

 

eFeedLink estimates the amount of sea food Indonesians eat per capita is increasing by 2% to 3%. When added to population growth, that makes Indonesia's sea food consumption rise by about 5% to 6% per year, roughly in line with its increases in poultry consumption.

 

However, limited stocks of wild fish and the pollution-driven population reductions of some species is making it increasingly difficult to increase the supply of wild caught fish - and raising traditional fishing's production cost.

 

Hence, amid fast rising Indonesian sea food demand of 5% annual growth, the inability to expand wild catch by more than 2% per annum creates a situation where aquaculture output must expand at roughly double sea food demand's growth rate - or by near 10% per annum.

 

 

 

Shrimp is an example of a sea food line where Indonesian aquaculture is taking over from traditional fishing. According to Indonesian government figures, in 2005, shrimp farming area was estimated to be 132,800 hectares, with Penaeus monodon (P. monodon) accounting for 65% of total shrimp farming area, with Penaeus vannamei (P. vannamei) accounting for 35%. By 2011, thanks to aquaculture's rapid growth, the total area under shrimp farming cultivation more than doubled to some 300,000 hectares. Over this time, P. monodon shrimp farming area increased slightly over 60% and now accounts for about 50% of total shrimp farming area.

 

In the five years up to 2010, P. vannamei shrimp farming area rose 157% and presently accounts for 47% of shrimp cultivation area. While integrators have greatly increased their shrimp farming investments over this time, their operations are mostly located in eastern and central Java, southwest and northern Sumatra, and western Kalimantan. Nevertheless, the industry still remains mostly unconsolidated and this will induce many changes, particularly at the bottom of its supply chain.

 

 

 

Consequently, this aquaculture-driven restructuring of Indonesian sea food output is causing its aqua feed output to rise even faster than that of its poultry sector. Since the mid 2000s, aqua feed output has risen by 10% to 17% annually. The fact that aqua feed output is growing faster than aqua culture itself reflects consolidation's ongoing substitution of professionally milled, higher quality feed ingredients in place of traditional, inferior feed materials.

 

Taken together, this rapid demand growth, the need for aquaculture to supply new demand and substitute for wild catch at the same time is causing phenomenal changes across Indonesia's sea food industry. A bottom-up restructuring starting with aqua feed production and quality and ending with more value-added processing has begun and will take several decades to undertake.

 

The inevitable huge transformations, consolidations and productivity increases will be accompanied by painful adjustments, such as the driving out of smaller scale aquaculture operators, closing of lower quality aqua feed mills, and later, of dated fish processing facilities. Yet, taken together, over the next two decades, these unstoppable forces make Indonesian aquaculture one of the region's most potential laden agribusiness opportunities.