August 16, 2016
Is the slowdown in world aquaculture worse than official statistics indicate?
By ERIC J. BROOKS
An eFeedLink Hot Topic
- Can aquaculture output be expanding when aqua feed output falls 12% over a two-year period?
- After growing at 10%+ annual rates for decades, a series of crisis ranging from diseases to fishmeal shortages brought aquaculture's growth rate first to below 6%, and, more recently, closer to 4%
- Feed statistics imply that a much greater slowdown in global aquaculture is underway, particularly in countries that produce shrimp and salmon, which account for 1/3rd of aqua feed produced
- Shrimp producers talk of a "new normal" when growth is incremental and faces steep trade-offs between stocking densities and disease losses. Similar supply constraints are challenging salmon farming's expansion
- With official UN FAO statistics usually 2 years out of date and aquaculture trade numbers up to 3 years old, many statistics and projections are based on the extrapolated optimism of an earlier, high growth era
There is something happening in aquaculture which no one is talking about, but if it continues, it will become too obvious to deny: Once the world's fastest growing protein line, aquaculture is now disappointing growth expectations –and official statistics have yet to capture the full gravity of the sector's slowdown.
For example, at this year's The Aquaculture Roundtable Series (TARS) conference, sessions have names like, "living with disease" and speak of respecting natural production limits as, "the new normal." All fine and good –except that aquaculture was meant to free us from the resource constraints that limit wild catch fishing and livestock cultivation. Moreover, a variety of aquaculture production indicators imply that many forces are now limiting its once boundless potential.
For now, the slowdown has been too recent for many stakeholders to notice: From 1990 through 2010, aquaculture output more than quadrupled, rising at an 7.8% average rate from 13 to 59 million tonnes. After 2010 however, both unusual supply shocks and statistical oddities make for a far less certain aquaculture performance.
The fastest growth occurred from 1980 through 2010, when the industry's five year growth rates fluctuated between 11% and 13% annually. Coinciding with both the peak in world fishmeal production and a dwindling supply of frontier East Asian cultivation areas, from 1995 through 2010, the industry's average growth rate descended into the 5.9% to 6.5% range.
Thereafter, not only does the farmed sea food's production growth decelerate markedly but the exact extent of the slowdown is open to controversy. Officially, based on UN FAO statistics, Since the opening of our current decade, aquaculture conference speakers have on frequent occasions presented their own estimates of production for seafood lines such as shrimp, tilapia and salmon that fell short of official UN FAO statistics.
On one hand, this is explainable by the fact that FAO statistics are usually two years out of date and notoriously slow to be revised. This certainly impacted estimates for the production of species such as shrimp, where WSSV and EMS decimated production far more than early estimates had projection.
–On the other hand, aquaculture input statistics appear to be at odds with the notion that aquaculture is expanding anywhere near as strongly as FAO statistics imply. According to Alltech's Global Feed Survey data aqua feed output grew aggressively into the early years of our decade –but then something happened.
From 2010 through 2012, world aqua feed output expanded at annual rates ranging from 10% to 17%, which was in line with its past performance. Thereafter, Alltech's data shows world aqua feed output peaking at 40.36 million tonnes in 2013, then falling a precipitous 12.1% over two years, to 35.47 million tonnes in 2015. Instead of rising into the 7% to 9% range by 2020, aqua feed's share of world feed output declined from 4.2% in 2013 to 3.5% this year.
China accounted for 5.7 million tonnes of this 5.8 million tonne, two year fall in world aqua feed production, with output falling a whopping 24.7% or 5.7 million tonnes from 2013 through 2015: China's fall in output roughly the combined aqua feed production of Thailand, Norway, India and Indonesia.
This slowdown in China's aqua feed output is partly due to extraordinary circumstances, and also the result of maturation. On one hand, when EMS outbreaks caused the world's largest shrimp producer sees its output fall by up to 30% or 500,000 tonnes, feed production was strongly impacted, as this crustacean is one of the country's most value-added export lines.
Previously, powered by rapid Chinese aquaculture expansion, the CAGR for both aqua feed output and the supplements exceeded 10% for many decades. With China accounting for two-thirds of world aquaculture output, Alltech reports that its aqua feed output crashed 24.7%, from 23 million tonnes in 2013 to 17.3 million tonnes last year.
In China's case, there was more to the slowdown than its EMS decimated shrimp lines. Since 2012, everything from high stocking densities to the exhaustion of frontier farming areas to unusually bad growing weather has held back China's production growth of species such as molluscs and tilapia. This year, a late starting growing season ran into unusually cool weather and flooding. This will make 2016 another disappointing year for China's aquaculture sector, which accounts for approximately 60% of world output.
Alongside Chinese aquaculture's maturation, disease woes and weather troubles, EMS also caused great damage in Southeast Asian countries. From a peak of 600,000 tonnes in 2011, Thai shrimp production plunged 67%, to approximately 200,000 tonnes in 2014.
As a result, Thailand's aqua feed output is nearly a third lower than it was five years ago. What is most telling is the following: Ten years ago, many analysts predicted that by this time, Thailand's aqua feed output would be almost 3 million tonnes –not the near 1 million tonnes estimated for this year.
That creates a particularly acute situation for supplement makers that rely on the world shrimp sector: World output has been flat for five years, with top export suppliers suffering huge production declines. From 4.3 million tonnes in 2012, world shrimp production fell bottomed out 21% below this level, at 3.4 million tonnes in 2014. As a result, aqua feed supplier Skretting estimates that world shrimp feed production nosedived a proportionate 21%, from 3.9 million tonnes in 2011 to 3.1 million tonnes in 2013.
When added to China's aquaculture woes, EMS outbreaks in Thailand and Vietnam caused world aqua feed production to be 6.6 million tonnes lower in 2015 than it otherwise would have been. –But even so, adding 6.6 million tonnes still leaves 2015 world aqua feed output at approximately 41 million tonnes, less than 2.5% above its 2013 peak: It implies that at 1% annually, post-2013 world aqua feed output is growing more slowly than the output of swine feed, which is a supposedly mature livestock line.
Although Alltech speculates that slowing aqua feed production could be due to "more accurate data collection" or "more efficient fish farms", this explanation is not entirely satisfactory. In booming, immature agribusiness sectors, feed milling rises faster than protein output, not by less. Unless the statistics are in error, there must be at least one other aquaculture line whose output is falling when it was expected to rise –and there is.
While salmon's booming growth was expected to taper off to nominal incremental increases, no one anticipated the huge production. Led by estimated falls of 7% and 37% in Norway and Chile's salmon output from their respective peak levels, Undercurrent News estimate's 2016's world farmed salmon output to fall by somewhere between 5% and 9%. With Norway and Chile producing 75% to 80% of the world's salmon feed, their milling output has fallen approximately 20%, from an estimated 3.5 million tonnes in 2014 to 2.7 million tonnes this year.
Consequently, from 10% to 15% CAGRs taken for granted in previous decades, world aqua feed production only increased at a 4.5% rate in the years 2011-15 –even slower than the output of mature livestock lines like swine and poultry feed, which rose at 5% to 6% rates.
While one might argue that aquaculture has been hit by devastating diseases, so have poultry (avian flu) and swine (PEDv). Holding over half the world's swine, China's economic woes have devastated hog inventories and flattened its once booming pork production. Its food safety scandals have kept poultry production at least one-third lower than was expected –yet when measured by feed demand, despite being weighed down by a disappointing Chinese agribusiness market, these mature feed lines are faring better than aquaculture. That implies that something beyond short-term difficulties are underway.
And indeed, there are two issues dogging the industry. First, the slowdown in aquaculture's expansion is being led by the same two sectors that powered its long boom: Shrimp, which account for an Alltech estimated 22% of world aqua feed output and salmon, which makes up 11% of the total. With stakeholders from both these sectors warning that the days of rapid growth are over, aquaculture needs new species that can be grown within today's resource constraints and are capable of gaining consumer acceptance.
The second lesson is that while some industry analysts are declaring fishmeal a non-commodity, its short supply looms over the industry like a ghost. The peak and decline of Peru's anchovy catch played a large role in knocking aquaculture's growth rate below 10%, as did its endless broken price records. Whether it be krill or algae is irrelevant: Everything from shrimp to salmon requires a sustainable alternative to fishmeal.
The third implication is that yesterday's booming production centers are fully developed and face the stocking density vs. disease trade-off more intensely than ever before. Salmon and shrimp arrived at this state first because they were the first species to be farmed successfully –but their constraints point the way for all other seafood lines to decelerate –unless new frontier areas are found.
Here however, there is hope: As the final graph shows, countries which once powered world aquaculture growth are clearly needing less aqua feed than before. At the same time, aqua feed output (and presumably aquaculture production) continues to expand at a healthy 10%+ rate in the rest of the world, outside the parts of Europe, Asia and the Americas that have undergone development.
At our current level of technology, there may be no way of boosting stocking densities upwards in an open-ended manner which would allow for constant aggressive expansion in aquaculture output. It is time for aquaculture stakeholders to open up their atlases and study carefully the long coastlines of Africa and South America, many parts of which have barely been touched. More than recovering from today's disease outbreaks or new species to cultivate, global aquaculture has to find new production frontiers –and sooner or later, even official FAO production statistics will eventually point to this fact.
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