The growth of global aquaculture - Fishy business

Agribusiness Bulletin 

The Agribusiness Bulletin focuses on national and local industry, as well as cross-industry insights and trends. This includes some of the drivers we expect to shape the future of the industry and potential challenges that may arise.

Fishy business

In recent decades world population growth has well and truly out-paced any material change in the area of agricultural land. Yield and productivity gains conceived during the Green Revolution have seen us through until now, but will they do so as population levels continue to rise? Perhaps not. So we must look to food production methods with lower land-use intensity, such as commercial aquaculture.

Global growth

The sermon on the challenges that the world will face feeding our population is one well preached, although the concern is well founded. Since the middle of the twentieth century the percentage of land used for agriculture has essentially stayed constant while population has more than doubled¹. Gains in agricultural productivity have resulted in a level of production, which if distributed according to need across the globe, could maintain the global populace. But as marginal gains become more difficult the opportunity presented by our liquid assets becomes more appealing.

Fig. 1 Population, global farm land and yield comparison (Index)²

This can be seen through the global aquaculture production figures. Since the 1980s, when growth rates allowing an economic return were achieved, world aquaculture production has increased from 7% of global fisheries to over 40%³. Not only does the emerging macro scenario make aquaculture attractive but there are intrinsic characteristics that differentiate it from more traditional agricultural production.

Fig. 2 Global fisheries production 1980-2022 (historic and forecast)⁴

A key factor is the feed conversion ratio (kilos of feed required for a 1kg increase in weight). Whilst typical intensive poultry and swine production systems have feed conversion ratios of between 1:1.5 and 1:3, certain species of fish can be as low as 1:1. To put this in another way, 100kg of feed would produce around 33kg and 66kg of chicken or pork or around 100kg of rainbow trout. The efficiency of feed conversion into protein is twice as high for commercial aquaculture as land-based protein production systems.

Two obvious benefits arise:

1. More efficient utilisation of feedstock so more protein can be produced from a given amount of feedstock
2. Lower input costs per kilogram of protein produced.

Fig. 3 Feed conversion ratio comparisons⁵

Australian aquaculture 

Aquaculture in Australia has a long history, with evidence suggesting Aboriginal populations ‘farmed’ eels, crayfish and yabbies centuries ago. The commercial Sydney rock oyster industry began in the early 1800s⁶. However, significant industry growth only commenced in the 1980s with production increased to a value of $1.1billion 2012. 

Fig. 4 Australian fisheries production (2011-2012) (dollar value)⁷

What role will Australian aquaculture play in the future?

The answer is probably that of more traditional agricultural produce… but with a twist. It’s been often written about but Australia’s proximity to a growing Asian middle class underlines the opportunity. This, coupled with a reputation of safety and quality, are the themes upon which successful exporters of Australian fisheries products will play. But we must be careful not to apply a carbon copy of the approach taken with livestock or grains. Compared to the leading producers by volume, Australia is at a significant cost disadvantage; more stringent environmental compliance requirements along with higher transport and input costs (particularly labour) makes it difficult to compete with seafood from lower cost producing nations in both domestic and global markets .

A competitive response by Australian aquaculture is therefore to focus on the products that have:

• Sufficient margin to offset higher production / transport costs
• Consumer demand for best quality in taste and production methods
• Taste difference, provenance
• Or brand value that can be exploited, and for which consumers are willing to pay a little more.

High value items such as abalone, which is considered a delicacy in East Asian countries and commands export prices in excess of $100 per kilogram, could be one such opportunity.

The profile of Australia’s fish exports already reflects a focus on higher value produce, mainly abalone, rock lobster and tuna. Our imports tend to be lower value products. Salmonoid species are an interesting exception; high domestic production and low export values can be largely attributed to quarantine restrictions on fresh salmon imports.

Fig. 5 2011-2012 Australian edible fisheries trade (wind caught and aquaculture, dollar value) 

This is not to suggest that Australia’s aquaculture production will consolidate to exist exclusively as tuna, abalone and salmon (if import restrictions remain), there will always be the possibility for niche plays or opportunity for lower margin products.

But Australia will only be able to be a world leader in production of species that command a high margin to compensate for the higher cost environment, and this margin will be driven by Asian consumers demand and perception.

Author: Daniel Kierath

References

1. Agricultural Land area: World Bank, http://data.worldbank.org/indicator/AG.LND.ARBL.ZS,
Cereal Yields: World Bank http://data.worldbank.org/indicator/AG.YLD.CREL.KG, World Population: UN, http://esa.un.org/unpd/ppp/

2. FISHERIES - OECD-FAO Agricultural Outlook 2014-2023, Economic analysis of supply and demand for food up to 2030 – Special focus on fish and fishery products FAO Fisheries and Aquaculture Circular No. 1089, http://stats.oecd.org/index.aspx?queryid=58653

3. Agricultural Land area: World Bank, http://data.worldbank.org/indicator/AG.LND.ARBL.ZS,
Cereal Yields: World Bank http://data.worldbank.org/indicator/AG.YLD.CREL.KG, World Population: UN, http://esa.un.org/unpd/ppp/

4. OECD-FAO Agricultural Outlook 2014-2023 : FISHERIES - OECD-FAO Agricultural Outlook 2014-2023, http://stats.oecd.org/index.aspx?queryid=58653

5. Poultry: UK Dept. for Environment, Food & Rural Affairs Indicator 7: Poultry sector
Pork: Australian Pork: Australian Pig Annual 2011-2012
Fish: FAO Cultured Aquatic Species Information Programme, Oncorhynchus mykiss
Icons from: http://www.freepik.com and http://www.flaticon.com. www.flaticon.com is licensed under http://creativecommons.org/licenses/by/3.0 Creative Commons BY 3.0

6. FAO National Aquaculture Sector Overview: Australia http://www.fao.org/fishery/countrysector/naso_australia/en

7. Australian Government Dept. Agriculture: Australian fisheries statistics 2012