A decelerating, diversifying world tilapia market
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  • Chinese tilapia production capacity is mature and domestic consumption is rising
  • America's consumption is approaching saturation levels
  • New countries are becoming export bases while Europe, Middle East increasingly drive imports
Few aquaculture lines have seen their output rise faster than tilapia, whose production jumped 502% in 25 years. From an FAO estimated 830,000 tonnes in 1990, tilapia grew at an approximate 8.8% annual rate, amounting to approximately 5 million tonnes in 2015 University of Arizona aquaculture professor Kevin Fitzsimmons, this is a 6% increase over 2014's 4.72 million tonne output.

To put it another way, in 1980, world aquaculture produced slightly under 100,000 tonnes of both tilapia and catfish, but slightly over 100,000 tonnes of farmed salmon. This year however, the world will produce nearly twice as much tilapia as it does either catfish or salmon. Even though salmon production jumped by a factor of 25 over thirty-five years, tilapia's output jumped 50-fold over the same time.
Going forward, the FAO forecasts a levelling off a world tilapia output growth. After expanding at an FAO estimated 9.8% annual rate from 2003 to 2013, it expects production to amount to 7.3 million tonnes by 2030. This implies world tilapia output growth of approximately 3% over the next ten years and about 2% thereafter.
The slowdown in output expansion however, is also deceptive in another way: It reflects the fact that dominant producers, particularly China are nearing maturity. It increasingly appears that its output will level off in the 1.8 to 2.0 million tonnes range and a rising proportion of it will be accounted for by domestic consumption. With China accounting for over a third of current production, its tilapia sector's levelling off depresses average world tilapia production growth.
At the same time however, there is roughly ten countries that will see output grow very rapidly, though from relatively low levels. Meeting both domestic and export demand, this handful of Asian and Latin American countries will fuel the sector's future growth.

As is the case with many other aquaculture line, China dominates production of this species, with 2015 production of 1.75 million tonnes accounting for approximately 35% of world output. But whereas China's output increased 220% over the last 15 years, tilapia production rose even faster 518% in the rest of Asia, from slightly over an FAO estimated 340,000 tonnes in 2000 to an approximately 2.1 million tonnes this year. In all, 75% to 80% of all tilapia are grown in Asia.
But even in non-Chinese parts of Asia, we see large differences in output. At 1.2 million tonnes, Indonesia is the next most dominant producer, accounting for slightly over half of Asia's tilapia production outside of China. Moreover, longstanding producers like Thailand or Philippines, which grow slightly under 300,000 tonnes annually, are about to be overtaken by new entrants.
For example, both Vietnam and Bangladesh, produced no tilapia ten years ago. From less than 17,000 tonnes in 2009, Bangladesh's will grow at least 200,000 tonnes this year. Similarly, Vietnam went from 50,000 tonnes of output in 2008 to approximately 166,000 tonnes in 2015. Both countries look poised to equal or exceed Thailand's tilapia production within five years.
Moreover, countries in Africa, South Asia and Latin America have all either started cultivating tilapia or have plans to do so. For example, India has almost no commercial tilapia production today but there are plans to start production and could be producing several hundred thousand tonnes within five years. Similarly, from Brazil to Nicaragua, South American countries with underdeveloped tropical coastlines are either about to ramp up their production or are considering doing so.
All this is resulting in a rapid diversification of the world tilapia trade. China for example, used to supply up to 2/3 of world exports but in recent years has accounted for 45% to 50%. At this time, with China's development of tilapia producing regions approaching maturity and domestic consumption growing strongly, its share of tilapia exports is expected to continue falling over the next two decades.
As the accompanying chart shows, this new wave of exporters were supplying the world market little or no tilapia ten years ago. Although none of them exports even a hundred thousand tonnes (compared to China's near 330,000 tonnes), they are growing at rapid, near exponential rates. For example, from no exports as recently as 2010, Vietnam exported 1,600 tonnes of tilapia in 2011, 25,000 tonnes in 2014 and nearly 40,000 tonnes in 2015.
By 2020, Vietnam's directorate of fisheries expects tilapia exports to rise from US$32 million and 25,000 tonnes in 2014 and 50,000 tonnes in 2015 to a production of 200,000 tonnes and exports of 80,000 tonnes by 2020. A similar multiplication of export volumes is expected to occur in shipments from many other countries including Bangladesh, Brazil, Bangladesh, Thailand and Indonesia.
This implies that over the next decade, China's once dominant position will give way to a handful of smaller but rapidly growing producers, each with a 5% to 10% share of the world market.
Trade diversification however, is occurring among importers as it is in tilapia's export base. US tilapia consumption for example, went from almost zero in 1990 to 60,000 tonnes in 2000, 515,000 tonnes in 2010 and an FAO estimated 640,000 -with 626,000 tonnes of this amount imported. With American tilapia consumption rising ten-fold amid flat, limited domestic production, the United States played the same monolithic role in tilapia import markets that China did among exporters.
This however, is now changing. Just as China dominated trade, the US once accounted for over two-thirds of tilapia imports and still absorbs nearly half the total. However, from the rapid exponential growth of the 1990s to mid-2000s, US tilapia consumption and import has risen by only 2% or less annually since 2010.
At the same time, the EU, which only imports a fraction of the tilapia volume consumed by America, has seen a pickup in consumption growth. According to the University of Arizona's Fitzsimmons, "Europe is the next hot spot for tilapia markets.  Most Europeans are just discovering tilapia.  Their immigrant communities have been fueling growing imports for several years.  The major supermarket chains are test marketing in their club stores and hypermarkets."
As is the case in America, Europe's cold waters implies that the rising tilapia consumption will have to be met almost exclusively from imports. Fitzsimmons also cites the Middle East North Africa (MENA) region as another region of the world with a market of several hundred million consumers, and where double-digit import growth is poised to continue for a decade or more.
Due to all of these transformations, the world tilapia trade is becoming more of a real market, and less of a China-US oligopoly. The days when China would produce up to three-quarters of exports and America took in two-thirds of imports are fading. The EU and MENA are taking over from America as the primary demand driver. On the supply side, Indonesia, Vietnam, Latin America and later, the Indian subcontinent will increasingly take over from China as suppliers of tilapia imports.
Thus, while tilapia farming's overall growth is decelerating, there is over a decade of rapid supply expansion ahead in a handful of Asian and Latin American countries. They dovetail with a new generation of European and Middle Eastern consumers eager to increase their consumption of this feed-efficient protein source.

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