October 9, 2017
State of Aquaculture 2017: Deceleration, uncertainty and new frontiers
Mature Asian regions are leveling out and frontier regions are expanding up amid uncertainty: Annual long-term growth forecasts ranging from 3% to 5%+ are currently being put forward.
By Eric J. BROOKS
An eFeedLink Hot Topic
While undergoing a long-term deceleration, aquaculture continues to grow faster than any other agribusiness protein line. According to UN FAO statistics, world aquaculture output of aquatic animals (plants not included) totaled 76.6 million tonnes in 2015 with a value of US$157.9 billion, rising 4% from 2014's 73.3 million tonnes.
Due to serious post-2015 animal performance issues in the crustacean and salmonid lines, output has probably risen no faster than 4% annually over the last two years, with 2017 world output probably totaling 82 to 83 million tonnes. That is significantly lower than the 5.9% annual expansion that occurred from 2001 through 2015, or the 10%+ growth taken for granted in the 1980s and1990s.
Led by top producers China (which accounts for 61% of world output), India (6.6%), Indonesia (5.8%), Vietnam (4.6%), Bangladesh (2.7%), Norway (1.8%), Egypt (1.6%), Chile (1.3%), Myanmar (1.3%) and Thailand (1.3%), 35 of the world's nearly 200 countries farmed more fish than they caught from the ocean.
Moreover, world seafood consumption per capita exceeded 20kg for the first time, with approximately half of consumption supplied by farmed species. While wild catch still amounted to approximately 94 million tonnes, approximately 20% of this amount was not for human consumption but used in feed or for industrial purposes. Hence, at 10.4kg in 2015 (and 11kg this year), farmed seafood consumption per capita has inched ahead of that of wild catch's 10kg share.
Even so, there is considerable variation within that 20kg+ average of world consumption: Led by Chinese and Indonesian per capita consumption in excess of 35kg, Asia produced on average 15.5kg of seafood per capita. Australia and New Zealand grew approximately 6.5kg of seafood per person. Europe and the Americas each derived just under 4kg of aquaculture-grown seafood per capita, while Africa only grew 1.8kg per person.
Not only is there great variation between major regions but also within every region: Because of Egypt's vast tilapia sector, north Africa farms over 5kg of seafood per capita while the rest of the continent makes do with less than 1kg.
Northern Europe's extensive salmonid production gives it 17kg of per capita aquaculture production, more than four times higher than Europe's overall per capita output. Southern Europe's whitefish industry pushes its per capita seafood production to 4kg while the rest of Europe produces 1kg per person.
In China, extensive cultivation of carps, whitefish and crustaceans gives northern Asia 29kg of farmed seafood produced per person. Indeed, China and Indonesia's per capita farmed seafood output of 35kg+ per person is only rivaled by Ecuador's 31kg, with 29.5kg of this sum accounted for by shrimp. Southeast Asia's much smaller landmass is ideal for raising shrimp and catfish varieties, putting its per capita farmed seafood production at 17kg, on par with South America. –But outside of China dominated northeast Asia and maritime Southeast Asia, the rest of that continent has per capita aquaculture production of 1kg to 5kg.
While production intensity varies greatly by region, aquaculture's superior feed efficiency is a universal constant: Approximately 66% or 50.7 million tonnes of farmed fish grown were feed-dependent species such as salmon, sea bass, shrimp or various white fish varieties. Requiring a FAO estimated 47.7 million tonnes of feed, they make aquaculture by far the most feed efficient food line.
Production and consumption disparities notwithstanding, Asia dominates aquaculture like no other protein line, accounting for 89% of world output. Growing at a 6% rate over the last fifteen years, Asia sets the pace for world aquaculture trends –but Asia's growth has decelerated of late.
Depending on the Asian country, one finds the industry in both dynamic and mature states across Asia. China's vast but mature slow growing output, production problems in Thailand, Vietnam and Indonesia are counterbalanced by exceptionally rapid South Asian aquaculture expansion in India and Bangladesh.
Dynamic growth also keynotes aquaculture in less developed Asian nations such as Vietnam and Myanmar. The latter has overtaken Thailand in farmed seafood production, though the latter continues to enjoy far more value-added and a strong world market presence.
This is not to say that such rapid frontier growth rates can be sustained: It is anybody's guess if India or Ecuador can achieve the maximum stocking densities achieved in China and Thailand –and which have not been achievable since. If they fail to do so in the face of growing demand, that would probably boost returns high enough to justify investing in frontier African or Latin American areas.
Going forward, rapid growth in the lesser developed parts of ASEAN and the Indian subcontinent will keep Asia's share of world aquaculture production above 85% into the late 2020s, with the continent's output expanding 6% annually from 2001 through 2015. Enjoying the largest stretches of untapped, warm water coastline, Africa showed the most rapid growth, expanding at a 10.4% annual rate in the 15 years up to and including 2015.
Africa however, saw its 2015 growth decelerate to 2.3%. At approximately 1.8 million tonnes, continental Africa's 3.6% share of global aquaculture is less than Norway's annual salmon output. Until policymakers make it as easy and attractive to invest in Africa as it is in India, Southeast Asia or Latin America, it will be keynoted more by growth potential than by new investments. The latter would include processing facilities and cold storage supply chains, which are lacking in many African regions with aquaculture potential.
Powered by 10%+ aquaculture growth in countries such as Costa Rica and Ecuador, farmed seafood production expanded at a 5.7% annual rate in the Americas from 2001 through 2015, with most growth occurring south of the United States. Enjoying almost as many untapped water resources as Africa and with considerable scope for boosting Latin American stocking densities, South America will overtake Asia's declining growth rate in the ten years to 2025. By comparison, the fifteen-year aquaculture growth rate was 2.5% in Europe and 2.9% in Australia and New Zealand.
Species-wise, finfish accounted for approximately 68% of output. Along with carp, whitefish species such as tilapia, pangasius and sea bream dominated finfish output and that of fish farming in general. Salmon, while only accounting for 3% of output but stood out among finfish for making up over a tenth of overall aquaculture production by value.
Mollusc species such as oysters, snails, octopus and cuttlefish have seen their share of overall output fall from nearly a third in 2000 to 21% today. They were pushed aside by the rapid growth of crustacean lines including crabs, lobsters and especially shrimp. Crustacean's share of aquaculture production has doubled from 5% in 2000 to over 10% today.
Among shellfish, shrimp formerly stood out as of the most rapidly expanding of cultivated species: Along with salmon, shrimp spearheaded aquaculture's expansion in both volume and value terms –and they are jointly responsible for the past decade's growth slowdown too.
Going forward, no one expects world aquaculture to resume expanding at the 10%+ rates of the late 20th century, let alone the slower 5% to 6% pace in the years after 2000. The UN FAO officially projects that in the ten years to 2025, aquaculture production will rise a mere 3% annually, totaling 102 million tonnes by that year.
On the other hand, in the FAO's April 2017 aquaculture newsletter, Mohammed R. Hassan, the UN FAO aquaculture officer for feed and nutrition, opines that aquaculture output will need to total 99.6 million tonnes by 2020. That implies growth can recover to 5.4% annually in the five years leading up to 2020. –That would also imply the that world aquaculture will have the growth momentum to continue expanding at a far faster pace of near 4% in the five years leading to 2025.
No doubt Hassan's more optimistic personal forecast assumes that salmon and shrimp farming will overcome their current challenges. They would need to continuously set new all-time production highs by aggressively recovering at near 10% annual rates from current depressed output levels for at least three or four years.
The difference between Hassan's more optimistic projection and the UN FAO's official estimate leads to an output difference of 15 to 20 million tonnes by 2025. What are we to believe? Optimistic 4% to 5% growth forecasts into the next decade, or more conservative 3% projections? Our attached chart assumes a moderate 4% growth path. The final growth outcome depends on three crucial issues.
First, how does the industry manage the animal performance impact of fishmeal's transition from dominant feed ingredient to a strategic trace input? Everyone from aqua farming executives to animal welfare NGOs seeks fishmeal-free aquaculture. For most species (especially carnivorous ones), this is far from being achieved.
Second, fishmeal is merely part of a larger, emerging issue of feed quality: Mounting research implies that alongside stocking densities and pond hygiene, feed formulation changes may be playing a role in the past decade's leveling off of shrimp and salmon production.
For example, speaking at the TARS 2017 conference in Bali, Indonesia, Niels Alsted, BioMar's Business Relations and Technical Director concluded that in China (which accounts for 60% of world production), aqua feed plays a critical role in the industry's mounting underperformance: Aware that mills "water down" aqua feed, producers demand low prices. Haunted by the expectation of low prices, feed mills economize by using poor quality ingredients. Thereafter, Poor fish performance re-enforces the loss of confidence, making the whole cycle repeat itself.
At the same conference, Thailand-based Aquaculture Nutrition Consultant Thomas Wilson made clear that many shrimp disease outbreaks can be traced to changes in aqua feed input composition. Others in the industry believe that the toxic algal Red Tide that killed off so many Chilean salmon in 2016 was itself a product of decomposing feed ingredients.
Finally, research has also traced falling fishmeal inclusion rates to a 50% drop in omega 3 fat content of salmon over the last ten years, which threatens a loss of seafood's healthy reputation versus land-based meat. Can algae, krill, yeast-derived compounds or soymeal made from genetically engineered, omega 3 fat-rich beans solve this emerging issue? Time will tell.
Impacting everything from fishmeal substitution to shrimp disease outbreaks and human health benefits, feed quality will play a vital role in how rapidly some of the most profitable aquaculture lines will expand over the next decade.
Third, can the industry replicate successful aquaculture farming models such as Norwegian salmon or Mediterranean sea bream in frontier areas? Fifteen years ago, the answer would have been a brusque 'yes, of course!'.
Since then, we have learned that Norwegian salmon farming methods are not easily adapted to Chile's coastline. That fish raising paradigms and technologies created in Europe can be undermined by perverse feed quality incentives or cost-based pond management issues that bedevil Asian aquaculture. Even so, with aquaculture top-heavy in maturing Asian production, expansion into new geographic regions –and a raft of new, unforeseeable problems– are both inevitable.
From Myanmar to Africa, we now know that the opening up of frontier areas, while desired and inevitable, will bring a new mix of climate, cultural and technical challenges. We will no more be able to anticipate what they will be than we could have predicted aquaculture production problems holding back output in places as diverse as Norway, Chile, China and Thailand. Are we developing a more effective, anticipatory approach to the technical conundrums aquaculture will surely face in the 2020s? Only time will tell.
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