Global Seafood Markets in 2030: Dominated by Aquaculture, with Wild Fish

as Niche Market Products?

Frank Asche

University of Alaska at Anchorage, October 24

The world’s oceans covers 2/3 of theplanet…

…and the world’s waterways and oceans is a great underutilized resource

• Increasingly, land-based technologies are adopted to use this resource– Offshore drilling– Minerals

• Aquaculture is the “food production” arm of this development– Aquaculture is farming while fisheries is our last large

hunting industry

• Aquaculture is an old technology, but a revolution took place in the 1970s as one started to use knowledge from agro-sciences to domesticate, breed and feed fish

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50

100

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1975 1980 1985 1990 1995 2000 2005 2010 2015 2020 2025 2030 2035 2040 2045 2050

Additional demand if consumption increases at same rate as from 1975-2008

Additional demand if consumption stable at 2008 level - 17.2 kg/capita whole fish

Aquaculture production less plants (assume stable production past 2008 - 52 Mt)

Capture production less non-food (assume stable production past 2008 - 64Mt)

Global Seafood Requirements (million tonnes)Projections based on Medium popn estimates from UN ‘08 Revision - 9 billion by 2050

World needs 138 & 159 Mt by 2025 & 2050 if consumpt at 2008 level

World needs 164 & 232 Mt by 2025 & 2050 if consumpt increases

. Therefore need 74 & 95 Mt from aqua (extra 22 & 42 from 2008 prod) at 2008 consumpt & stable capture

Need 100 & 167 Mt from aqua (extra 48 & 116 from 2008 prod if consumpt increases)

Demand for seafood is expected to increase strongly

• Depending on assumptions, projected global demand for seafood is between 138 and 159 Million Tons (MT) by 2025.

• Aquaculture production would then need to be between 74 and 100 MT by 2025, an increase of 22 or 42 MT from 2008 levels

Source: Geoff Allan, Port Stephens Fisheries Intitute

My basic premise for the discussion ofhow the seafood market will develop is

that demand for food (including seafood) will increase and that the world´s

oceans and waterways are an under-utilized resource

Fisheries has traditionally been the main aquatic food production technology:

Production has peaked

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1950 1960 1970 1980 1990 2000 2010

Global fish landingsMillion tonnes

Fisheries production has peaked

• Better management can improve predictability and create more value

• There is very limited scope for known fisheries resources and thereby fisheries to increase the role of the oceans and waterways as a source of food

Growth in seafood trade

• Adjusted for inflation, trade value has increased threefold from 1976 to 2009 from 29.5 billion USD to 95.7.4 billion USD

• During the same period the volume has increased from 7.9 million tones to 32.1 million tonnes, or fourfold

• Hence, the unit value of the seafood has decreased, increasing seafood’s competitiveness as a food source

• Aquaculture

Global seafood exports

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Developed

Global seafood exports

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Developed

Real unit prices, 1976-2009

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The seafood market is changing: Whitefish

• The whitefish market is one of the largest seafood market segments– Ca 6 million tonnes if only the main wild species are

included– Ca 13 million tonnes if all species including aquaculture

are included

• From 1980 the market has changed from a regional north Atlantic market to a global market

• The size of the market and a large number of processed product forms makes it an easy market to enter for new species

New species in the whitefish market

Until 1985Cod,

haddock, saithe, etc.

1990:Alaska Pollock

Catfish

2005:Pangasius

ca 2005ca 2000

2000:New warmwater species like tilapia and Nile Perch

ca 1995ca 1990ca 1900 - 1985

1995:HakeHoki

US imports of frozen whitefish, 1990-2008(tonnes product weight)

Seafood retail is changing:Market share by value of fish retail in the UK, 1988-2003

Source: Sea Fisheries Industry Authority (SFIA)

The supply chain

• It is the total cost of a product that matter for the competitiveness of a product, and landing prices are only a part of that – Innovations in the supply chain is as important as

innovations in production

• Salmon in Europe is in a shop less then 3 days after it came out of the sea, and is freighted by truck– First species with reliable delivery of good quality

fresh fish independent of distance– Air freight (USA, Japan)– Icelandic cod– Pangasius

The value of attributes and information are increasingly important

The product is not only the physical seafood product…

…but also a set of services related to:

• Volume• Timing and frequency• Flexibility• Cost efficiency in distribution• Food safety• Harvesting technology• Ecolabel• etc.

…but also a set of services related to:

• Volume• Timing and frequency• Flexibility• Cost efficiency in distribution• Food safety• Harvesting technology• Ecolabel• etc.

• And each attribute create a new potential opportunity/challenge at the market place, in the supply chain and in the production of harvesting process

Conditions favouring increased aquaculture production

• Population growth and economic growth lead to increased aggregate demand for food

• Stagnating global catches of fish reduce the competitiveness of wild fish

• Globalization has reduced the cost of shipping products and increased trade

• The growth of retail chains favour supply chains with sufficient control to enable efficient logistics

Conditions favouring increased aquaculture production

• Population growth and economic growth lead to increased aggregate demand for food

• Stagnating global catches of fish reduce the competitiveness of wild fish

• Globalization has reduced the cost of shipping products and increased trade

• The growth of retail chains favour supply chains with sufficient control to enable efficient logistics

• To exploit these conditions, one must be competitive

Aquaculture is competitive

• Aquaculture is the result of systematic R&D and innovation in water based food production systems

• Expansion of aquaculture production is profitable because of lower production cost due to technical innovations– Productivity growth– Demand growth

• This is a necessary development if the world’s oceans and waterways are to be significant sources of food

Innovations are leading to rapid technological progress

Specialiced suppliers increase productivity with their own R&D work

Innovations increase scale – a salmon pen from 1980 and one from 2010

5 m 50 m

Improved logistics

Air freight

Truck carries chilled fish

Distribution terminals

Product innovation increase demand

Branded salmon

Pre-prepared meals

Better cuts

… but aquaculture also lead to newenvironmental challenges

• Aquaculture is also a new way of using the environment, and creates a set of environmental challenges

• Feed (the fish meal trap)– Which is a good story that does not hold

• Local externalities– Emissions– Escapes

• In principle, the control with the production process that allow systematic R&D can also be used to address environmental externalities– In practice, it depends on governance

Norwegian export price and production cost for salmon 1985-2011 (2011=1)

Norwegian export price and production cost for salmon 1985-2011 (2011=1)

Norwegian export price and production cost for salmon 1985-2011 (2011=1)

Shrimp production and real US import price (2008=1)

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35004000

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QuantityPrice

Environmental challenges can be solved:

Use of antibiotics in the Norwegian salmon farming industry

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AntibioticsSalmon production

World aquaculture production

Million tonnes

World seafood production

Million tonnes

Per capita seafood consumption, USA

00.5

11.5

22.5

33.5

44.5

5K

g/

cap

ita

ShrimpTunaSalmonPollockTilapia

Seafood is a part of the larger foodmarket

The food price crisis can be interprentedas evidence that we are not producingenough and that the potential of the

oceans are very importantIn the long run competitiveness is the

key factor for all food products(and production is of course sustainable)

Innovation is driving the food market and enable us to feed more humans:

The long run real price trends

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1914 1926 1938 1950 1962 1974 1986 1998 2010

USD

per

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hel

Real Prices Paid for Key Feed Ingredients 1914-2010 (2011 Dollars)

CornWheatSoybeans

Real U.S. broiler prices

$0.00

$0.50

$1.00

$1.50

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1947 1955 1963 1971 1979 1987 1995 2003 2011

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Annual growth rate Aquaculture vs agriculture

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1970-1979

1980-1989

1990-1999

2000-2009 Meat

Milk

Eggs

Cereals

Fruit

Vegetables

Aquaculture

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Global per capita food fish supply: Aquaculture is already as important as wild fish

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1950 1960 1970 1980 1990 2000 2010

Capture

Aquaculture

New aquaculture species are expected to dominate the whitefish market …

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Wild Aquaculture

… as they already dominate the salmonmarket

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Wild Farmed

Source: NSEC, FAO, own estimates

Conclusions

• Aquaculture production will continue to increase– Because one have just

started to adopt technology from agriculture, and there is a tremendous scope for further productivity growth

• As for all biological production processes, this creates environmental challenges– Can be solved– North-America and EU lags

behind

Conclusions

• Aquaculture will be the clearly most important seafood production technology in 2030– And the only reason why seafood

continues to be an important source for animal protein

• Fisheries is not likely to feed more people– The real issues is largely how to

protect stocks and how to maximize value

– And poor management is likely to continue to be a problem in many parts of the world

Conclusions

• But 2030 is too early to make all wild fish markets niche markets. – But one are likely to

see a segmentations into high value niche products and low price protein

Conclusions

• But 2030 is too early to make all wild fish markets niche markets. – But one are likely to

see a segmentations into high value niche products and low price protein

• Will Alaska by then start to manage the wonderful resource that its coast line constitutes?

The fishmeal trap hypothesis (Wijkstrøm, Naylor et al)

• Growth in aquaculture production increase demand for forage fish to produce feed 1. This makes aquaculture inherently unsustainable

and environmentally degrading• Requires that forage fisheries are poorly managed,

that forage fish has no substitutes, and that cost is not important for aquaculture production

2. This will eventually also put a limit on aquaculture production• Requires that aquaculture feed must contain marine

ingredients

Global aquaculture and fishmeal production

Global production bysource for fishmeal

Growth in global aquaculture production does not lead to increased use of marine ingredients

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2000 2001 2002 2003 2004 2005 2006 2007 2008

% Dietary In

clusio

n

Inclusion levels of marine ingredients in Salmonid diets

Fishmeal % 

Fish OIl% 

Inclusion levels of fish meal and oil in salmon feed

The fishmeal trap is a good story, but does

not hold up against the data

For potential consumers of small pelagics, it comes down to what you

want to eat

or maybe consume no fish at all

This fish …

…or have it converted to this one