HARVESTING THE COASTAL SECTOR? THE POTENTIAL FUTURE OF

AQUACULTURE FOR SOUTH AFRICA’S MARITIME ECONOMY:

Jack Dyer*, December 2015

ABSTRACT

On a planet overflowing with more than seven billion people, how to survive the ecological constraints of

finite resources and human accelerated, climate change has become one of the most significant challenges

of this Age. Globally, the future of agriculture, of food security, the, economy and environment is

increasingly seen, in turning to the one frontier that is perceived to be yet not so exhaustively exploited and

examined… the ocean… As with many other countries, South Africa’s future development and survival is

increasingly considered to rely on the prospects of the maritime economy. In 2014, President Zuma

launched Operation Phakisa – the growth of Southern Africa’s economic future through its ‘blue’ maritime

economy. Yet the majority of the oceans’ wild fisheries are estimated by the United Nations Food and

Agricultural Organisation (2014) to have either been overexploited and overfished or reached a stagnant

plateau. This proposed review seeks to illuminate the prospects of South Africa’s stakeholders in turning

towards harvesting this coastal and inland maritime resources sector – especially aquaculture, and its

potential developmental consequences for the future of the South African economy. It provides a

hypothetical overview of existing and historic aquaculture developments, a literature review of past

successes and failures domestically and internationally, various economic, social, ecological and other

costs, benefits, risks and opportunities for aquaculture in South Africa, as possible implications to further

guide policy makers and other key aquaculture supply chain, stakeholders committed to Operation Phakisa.

* BSc (Honours) Economics With Econometrics, University of Kent, Canterbury, UK

Master of Commerce (Maritime Studies), University of KwaZulu-Natal, Durban South Africa

Currently undertaking a PHD in Maritime and Logistics Management, Australia Maritime College, University of Tasmania.

Corresponding Email Address: jad38@kent.ac.uk

DisclaimerThe following report represents only interim conclusions from the perspective of this maritime economist and all intellectual

copyright under the 1968 Copyright Act, remains with this author who exerts the moral right of authorship over this paper.

Permission to cite/utilise may be offered only through the above email address.

TABLE OF CONTENTS

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Page

ABSTRACT…………………………………………………………………………………………………………….1

TABLE OF CONTENTS………………………………………………………………………………………………2

LIST OF TABLES AND FIGURES……………………………………………………...…………………...……….3

CHAPTER 1: INTRODUCTION AND BACKGROUND…………………………………………………………….4

CHAPTER 2: LITERATURE REVIEW.……………………………………………………..………………………..6

2.1: Defining Aquaculture: Its Characteristics And Production Process…………………………………..……..6

2.2: Aquaculture Industry Stakeholder Requirements…………………………………………….….……………9

2.3: Historical Successes………………………………………………………………………………….…………

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2.4: Historical Failures………………………………………………………………………………………..………

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CHAPTER 3 THE PROSPECTS OF AQUACULTURE FOR SOUTH AFRICA’S FUTURE…….……………17

3.1: History…………………………………………………………………………………………………………….17

3.2: The Present State of Global and South African Aquaculture………………………………….……………18

3.3: Advantages of Aquaculture………………………………………….…………………………………………22

3.4: Disadvantages of Aquaculture…………………………………………………………………………………29

3.5: Risks………………………………………………………………………………………………………………32

3.6:

Opportunities……………………………………………………………………………………………………..36

CHAPTER 4: THE FUTURE? INTERIM CONCLUSIONS………………………………………………………41

4.1: How to Ensure A Successful Aquaculture Industry………………………………………………………….41

4.2: Harvesting the Coastal Sector? Aquaculture and South Africa……………………………………………44

REFERENCES……………………………………………………………………………………………………….46

LIST OF TABLES AND FIGURES

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PageTABLES:Table I: Aggregated Aquaculture Industry Stakeholder Requirements…………………………………………10

FIGURES:Figure I: Hypothetical Aquaculture Production Process:………………………………….………….……………8

Figure II: A Simple Commercial Aquaculture Supply Chain............................................................................9

Figure III: Global Aquaculture Production 1980-2012...................................................................................19

Figure IV: South African Aquaculture Production 1980-2012.......................................................................19

Figure V: South African Fish Processing Industry Sector Market Share 2014..............................................21

Figure VI: FAO Projected Global Fish Consumption: 1970-2030.................................................................23

Figure VII: South Africa Fisheries Exports and Imports 2003-2012..............................................................25

Figure VIII: Comparing Resource Input Costs For Protein Sources.............................................................27

Figure IX: Operation Phakisa Aquaculture Project Opportunities.................................................................36

CHAPTER I: INTRODUCTION AND BACKGROUND

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Why does the Maritime Economy matter? With over 2600 kilometres of ocean coastline and an Exclusive

Economic Zone exceeding 1,500,000 square kilometres of ocean, the South African coastline is second

only to the Somalian coast in terms of geographical significance and perceived resource potential.

Geopolitically, the Cape of Good Hope ranks along with Cape Horn, the Suez and Panama Canals as

among the most significant maritime trade routes in the world. Durban Harbour ranks in terms of actual and

potential containerised cargo throughput as the most significant harbour not only in Africa but the Southern

Hemisphere. Dyer (2015) investigated the potential economic contributions of an upgraded and second

Durban port –maritime logistics corridor and in a second paper identified the potential of investing in

maritime education to secure the maritime future of the African continent. As a nation, South Africa has

historically relied upon its mineral resources, agricultural expertise, tourism potential, self-sufficient

autarchy, financial sector and entrepreneurial, corporate capitalism ventures abroad to position itself as the

most significant economy in Africa for over 160 years. Traditionally though, South Africa’s fisheries and

maritime resources have been poached by others, rather than regarded as a source of potential

investment. As South Africans, as African’s the coastal sector is not traditionally viewed as the solution to

our agricultural or other economic problems.

However, both the 2012 National Aquaculture Strategic Framework and Operation Phakisa announced by

President Jacob Zuma in Durban, October 2014 recently identified the potential of the “blue” maritime

economy for South Africa – particularly for the rapid emergence of aquaculture, devoting R500,000,000

towards an Aquaculture Development Fund and 24 pioneer projects. Its aim is to establish 1000,000 jobs in

the maritime sector by 2033 – including aquaculture, seeking to increase GDP revenue from a current

R500,000,000 to R1.4,000,000,000 by 2019. It is identified as an industry of the future in South Africa’s

2013 Industrial Action Policy Plan and R850,000,000 Aquaculture Development and Enhancement

Programme (Moolman 2013). The African Union echoed this vision 8 months earlier with the 2050 AIM

(Africa Integrated Maritime) Strategy, seeking to independently establish a future African maritime

economy. The maritime centred city of Durban and province of KwaZulu-Natal’s Planning Commission in

2013 introduced the development of an Integrated Maritime Industrial Strategy for KwaZulu-Natal.

This paper proposes to assess how feasible can these objectives be? Is aquaculture the solution, given its

popularity as a potential solution across Asia, Europe, North America and even Tasmania? How can South

Africa establish a successful aquaculture industry capable of being globally competitive, commercially

viable and environmentally sustainable? What are the stakeholder requirements, what are the risks, what

are the costs of investing in aquaculture? Although there have been a few papers devoted to South African

aquaculture; this research reappraises its prospects considering Operation Phakisa and lessons identified

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from abroad. It seeks to evaluate potential historic successes and failures globally and in South Africa,

along with the requirements necessary for stakeholders to ensure a successful, sustainable aquaculture

sector. With government and other stakeholders emphasising a surge of potential interest in harvesting the

coastal sector for resources in Operation Phakisa; it also essential to consider economic viability, social

concerns, the questions of climate change and sustainability. It therefore provides an overview of

aquaculture prospects, proposed and currently established in South Africa, summarising and analysing

potential successes, failures, risks and opportunities relating to aquaculture. This paper aims to consider if

it really does possess potential for South Africa and throughout Africa, as favoured across an increasing

number of world countries as an envisioned solution to scarce resources and a significantly expanding

human population growth rate…

CHAPTER 2 LITERATURE REVIEW

2.1: Defining Aquaculture: Its Characteristics and Production Process

This chapter’s purpose is to provide a review of existing aquaculture related literature sources; to establish

a theoretical framework through defining characteristics, processes (2.1) and stakeholder requirements

(2.2) involved in current aquaculture globally. Defining aquaculture, in addition to identifying factors which

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enabled the success (2.3) and failures (2.4) of previous African and other continent aquaculture industry

projects, aims to further assist potential state policy makers and other aquaculture supply chain,

stakeholders to potentially establish a prospective aquaculture industry that thrives in South Africa. This

paper considers that in order to distinguish between aquaculture and other industry sectors in South Africa,

in addition to ascertaining the extent to which prioritising aquaculture in South Africa represents a practical

future for its maritime economic sector, it is essential to define aquaculture, its characteristics and

stakeholder requirements. This will assist to ascertain whether the proposed geographical locations of

projects; project and policy design satisfies those requirements. Based on sources including Hinrichsen

(2009), Partnership of African Fisheries (2011) and Whitmarsh and Seijo (2011), this thesis defines

aquaculture as ‘the conscious propagation, improvement, trade or participation in controlled or selected aquatic environments (including coastal, ocean or inland) for any legitimate purpose across a maritime supply chain, within a nation’s economic sovereignty zone’. It is also more

popularly referred to as ‘fish farming.’

As an agricultural economic activity, aquaculture differs from captive fisheries, which primarily depend on

natural resources to determine economic supply and in requiring an artificial (human managed or

mechanical interaction), rather than relying completely on a natural biological growth process. The location

of aquaculture differs between ocean coasts/bays; inland freshwater natural waterways or artificial human

ponds, dams and tanks which can be situated at any location. Other aquaculture characteristics include

variations between intensive, semi-intensive and extensive production processes (Partnership for African

Fisheries 2011), relating to the aquatic species’ population density and combination of resource inputs used

e.g. labour intensive, capital intensive, technology intensive etc. Extensive farm production is more

traditional in Africa, particularly among subsistence smallholder farmers using earthen, plastic, concrete or

other lined surface ponds with minimal feed, technology imports, creating lower productivity and output than

intensive methods. Unlike intensive production, which depends on added nutrients/drugs; extensive

methods are conditional upon physical environment and climate risks. Aquaculture industries can

differentiate between saline and freshwater species (Hinrichsen 2009), frozen, tinned, versus fresh produce

with different purposes, types and values. Examples include high value finfish, low value bulk fish;

mariculture (seafood; seaweed and plants); ornamental pets, mariculture; crustaceans; fish feed

fingerlings/fish oil products; pharmaceuticals and toothpaste. Additionally, production methods can

alternate between monoculture of a single species and polyculture, where conditional on the species,

climate and stocking density/nutrient sources, can be more productive with 2 or more species (Whitmarsh

and Seijo 2011).

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Existing aquaculture industries can be divided into diverse production methods including a circulating

system cage culture, rafts; aquaponics, aquaculture ranching, tank and brackish water/marine pond

aquaculture, (Guy, McIlgorm and Waterman 2014; South African Department of Agriculture, Forestry and

Fisheries 2011). Enterprises can differ in scale of production outputs, employments and revenue turnovers

between small, medium and large. Circulation systems are climate protected tanks based on recycling and

minimising water consumption. Aquaponics recycles water through crops and maritime species growing

together. Cage culture includes maritime species in a source of stored water via floating net pens with

considerable risks to water quality and oxygen concentration levels. Cages are cheaper to construct with

minimal infrastructure costs and more flexible to moving location/controlling populations but are generally

conditional upon existing water sources. Ranching involves breeding younger species and releasing them

to grow larger in the wild e.g. salmon. Pond based aquaculture is more natural with cheaper inputs but

more exposed to security, predator and physical risks, conditional on soil quality; availability of water and

sun, size and species.

To establish an aquaculture industry, regardless of the production process above; requires a number of

certain physical characteristics; depending upon the level of envisioned production scale, natural, financial;

time; technical knowledge, labour and other potential resources available. These characteristics include a

number of fixed and variable project costs. Rouhani and Britz (2007) and Rural Fisheries Programme

Department of Ichthyology and Fisheries Science Rhodes University, (2010) outline some through manuals

for rural aquaculture. Fixed project costs possibly include the physical land, construction materials,

buildings with moorings and walkways, initial technology, equipment, transport, fuel, records, stationary,

postage and capital costs relating to establishing the production costs above including any permits and

other official, legal regulatory compliance costs. Equipment may include freezers, sorting tables, tools,

aerators, harvesting, storage, monitoring, evaluation and pumps. Variable costs are conditional upon the

resources mentioned including wages and skills training costs, conversion to species and extension costs,

costs of initial fingerling, feeding stock, nutrients, packaging, chemicals/drugs to preserve health, those

relating to water, electricity; insurance; security, storage and safety along with marketing, research and

development costs. Additional costs potentially include asset depreciation, construction, demolition, repair

and maintenance and occasional possible replacement, depending on care by workers. Partnership of

African Fisheries (2011) suggest a number of stages that an emergent, prospective stakeholder wishing to

invest in aquaculture needs to consider including designing a project, choosing a species; formally

registering legally, applying for funding or a loan, selecting a site; ensuring land use, water, electricity and

other land use planning/ approval and an environmental impact assessment/marketing feasibility study prior

to preparing the actual site. A hypothetical aquaculture production, process is summarised in Figure I and a

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potential international aquaculture commodity supply chain with various stakeholders is presented in Figure

II

Figure I: Hypothetical Aquaculture Production Process

INPUTS (Stock including hatcheries/Feed// supplies Information, Communication; Skills –Education; Labour, Capital, Technology)

PRODUCER/Production Processes (pond, ranch, tank, aquaponics and cage), fertilising/monitoring

OUTPUTS –species maturing and fish husbandry cultivation and harvesting stages, packaging

STORAGE, PROCESSING/Value adding;

MARKETING, TRANSPORT and distribution even potential customs and exports.

RETAIL CONSUMER

Figure II: A Simple Commercial Aquaculture Supply Chain

Import/Export/Transhipment/Transit

Resource Extractor/Producer Value adding/beneficiation Port Port authority/customs/state

Customer Consumer Retail/ Wholesale Transport and Distribution Shipping

Banking/Insurance Marketing/Publicity

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2.2: Aquaculture Industry Stakeholder Requirements

To establish a potential aquaculture industry in South Africa this review recommends that existing and

prospective aquaculture industry stakeholders including members of professional representative

associations are consulted across Figure II’s proposed supply chain from producer to consumer. To avoid

under or over-utilisation costs, aquaculture production facilities and intermodal connections need to exist to

the extent demanded by these stakeholders. Aquaculture therefore needs to satisfy the following Table 1

stakeholder requirements identified from literature sources including Rouhani and Britz (2007), Rural

Fisheries Programme Department of Ichthyology and Fisheries Science Rhodes University (2010) and Guy,

McIlgorm and Waterman (2014). It is therefore essential to provide sufficient qualities and quantities of

labour, equipment, management, capital, technology, infrastructure and services to satisfy market demand

with supply to adequately provide a consistent, adequate, profitable and productive service capable of

allowing for fluctuations in growth, existing capacity and future projected growth. It needs to be

commercially viable at sufficient economies of scale, able to recover fixed and variable costs without

external funding. Potential projects also need to satisfy security concerns against hypothetical

environmental, public health and other risks identified in Chapter 3. Stakeholders also need to ensure

appropriate environments, water supply, land use/property rights and climate, market and transport access

along with crime and perceptions by neighbours – to reduce potential complaints and associated costs

including the possible suspension/loss of business, fines and other expensive measures that impede

business.

Table I: Aggregated Aquaculture Industry Stakeholder RequirementsExpectations of an Aquaculture Industry Producer Commercial/Community ExpectationsProvide sufficient information AvailabilityTo Consistently update information Promptness/swiftness of services/infrastructureSecurity Allocative/Productive EfficiencyCost Competitive Functions are modernized as much as possibleProductive/Efficient – swift and accurate processing Direct service/transport connections existReliable/frequent functions of sufficient quality Productive, trained labour responsive to needsSatisfying unusual requests – altering schedules/ flexible to changing circumstances

Sufficient Capacity existsEfficient – utilises capacity/economies of scale

Sufficient quantity of functions exist Commercially profitable

It satisfies marginal caller requirements Equitable in satisfying the user pays principleIt avoids delays/strikes etc Minimises negative externality/congestion costs

South Africa has produced a number of guidelines in preparing to convince its populace who has not

traditionally favoured this source of agricultural employment, unlike other African/Asian countries,

summarising the benefits and costs of various species. One significant factor is the choice of species

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based on criteria including nutrition, health, biology; market, profitability; quality; breeding, taste and more

significantly, its adaptability to aquaculture; which can determine costs, profits and risks. An efficacious

aquaculture industry site, in South Africa could incorporate the following successful case

study identified characteristics Rouhani and Britz (2007), Rural Fisheries Programme Department of

Ichthyology and Fisheries Science Rhodes University (2010) and Guy, McIlgorm and Waterman (2014).

Efficient and Modernised Infrastructure/Services/Equipment as identified in 2.1. This includes

reliable electricity, water sourcing, effluent discharging and waste disposal such that surrounding

land/soil, water sources; coastal habitats nor inputs are contaminated. Equipment includes

chemical fertilisers such as lime fish feeds or nutrients/drugs to aid the nutritional and health

requirements of specimens. Certain technology can provide advantages e.g. aerators can improve

species oxygen requirements but require sustainable reliable electricity, (uncertain given Eskom’s

past record).

• Rail/Road/Port Transport Connections to the economic hinterland – reliable, accurate, swift and

efficient.

• Tracking/Security at all stages to mitigate hazards, especially risks identified in Chapter 3.

• Labelling requirements/trademarks/legal permits

• Information –Advanced Warning System/Communication with Customs, Customers, Port Users

and other supply chain stakeholders to be able to adjust to unforeseen delays etc at minimal cost

• If appropriate, IT modernisation to secure records/improve monitoring.

• Cost-effective and efficient amid inter-port competitiveness; that is equitable –not violating the

user-pays principle.

• Profitable or at least recovers costs, with close market/trade route proximity

• Environmentally Sustainable to condense ecological, social; traffic, noise, light and other potential

externality costs.

2.3: Historical Successes

This research paper provides a literature review summary of historical aquaculture projects that succeeded

with certain factors that contributed to their potential success. It proposes that if South Africa as a country is

to consider improving the prospects of aquaculture as an emergent economic sector as part of Operation

Phakisa; it could reduce potential costs in learning from other case studies that triumphed both locally and

internationally. Frankic and Hershner (2003) cited a number of factors that contributed to the growth of

aquaculture in Asia, Europe, the USA and Australia as more rapid during the 1990’s than any other

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agricultural enterprise including; increasing developed country environmental awareness by the

international Marine Stewardship Council/others and commercial demand by consumers concerned about

depleted wild fisheries provided that it is environmentally sustainable, along with improvements in research

and technology. A 5000 year tradition of aquaculture exists in China and Southeast Asia including prawns

in Thailand and basa/catfish in Vietnam, as a source of food protein, security and part of cultural tradition,

providing a stable market for a considerable population. Japan even overcame high land barriers and

property values to prioritise offshore aquaculture, including artificial reefs. Improved integrated coastal zone

and community management systems, related legislation increased monitoring and permit regulations of

wild fisheries further aided world potential growth up to 2015 (Nobre et. al. 2010; Makhubele 2011;

Morokolo 2013). Toufique and Belton (2014) point out that Bangladesh aquaculture has exhibited modest

gains for consumers in lowering the price of protein, increasing food security and increasing fish

consumption, incomes, employment and economic activity modestly in rural areas –providing some form of

food/income to over 70% of the population.

Hobday et al. (2014) further indicated the global growth of ranching at 9% over 2004-2014, but notes that

output remains more stable than for wild fisheries which highly depend on the uncertainty of climate change

projections. Aquaculture also flourishes in Tasmania as a practical measure to improve quality/taste,

reduce poaching and disease and other advantages summarised in Chapter 3, especially to ensure a

reliable set of produce for value adding and export promotion including abalone and various salmon

projects. For Africa, Rothuis, Dejen and van Duijn (2012) provide a flourishing inland quactyre, aquaculture

project around 100 stakeholders for Ethiopia, despite incurring similar water constraints and more arid

climate as South Africa. Consumer market demand is stabilised by high religious/cultural demand. Berg,

Michelsen and Troell (1996) provide a successful tilapia farming case study in Zimbabwe’s Lake Kariba,

despite significant shortages to capital; formal functioning economy, transport, marketing and any

government support. This project succeeded as it minimised ecological inputs for smallholders, using semi-

intensive rather than intensive production methods and appropriate updated training as with other African

projects. It required consistent social, economic, environmental and technological monitoring to ensure its

self-sufficiency without government aid. Praslin, the Seychelles managed prospering black pearl oyster

farming according to Partnership for African Fisheries (2011) who also noted that giant clams were able to

survive under artificial conditions of aquaculture being better protected than wild equivalents.

Nobre et al. (2010) present an economically flourishing case study of a combined South African abalone

and seaweed producing farm in the Western Cape that produced up to 240 tons per year utilising

integrated multi-tropic aquaculture. Indirectly, the farm produces income of a few million rand per year,

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directly supporting sustainable employment from the local economically deprived, coastal communities of

Blompark, Groeneweldskerma and Masakhane. It provides a successful example in favour of aquaculture

polyculture, having tested abalone monoculture but discovering that polyculture of abalone and ulva

seaweed can have unexpected environmental benefits including lowering natural kelp exploitation by an

average 2.2 to 6.6 hectares per year; lower greenhouse gas emissions of 290 to 350 tons of CO2 emissions

per year and 3.7-5 tons of nitrogen per year, improving local nutrients, when compared to equivalent

monoculture/wild fishery harvesting. Economically, it remained profitable at 1.5-3 million US dollars in

profits per year.

Lapere (2010) considered an effective aquaponics system with solids capture and disposal, biofiltration,

engineering design, stock management and business plan for four tilapia farm case studies in South

Africa’s Western Cape Garden Route as a Master of Engineering thesis. The author also emphasised the

advantages of polyculture over monoculture -of dual purpose –vegetables and fish farming utilising a

recirculating system of clean fish water while nutrients excreted fertilised plant growth reusing scarce water.

Polyculture also aims to reduce market cyclical fluctuations and crop uncertainty, with sustainable

employment potential. However, the study points out potential risks for aquaculture including limited

existing commercial demand in South Africa and limited historic experience –most aquaculture businesses

have not survived with few long-term businesses 10 years or more. Yet it indicates growing reputational

advantages for South African abalone and seaweed abroad/ renewed interest from South African

consumers so that South Africa represented the third largest abalone producer globally, despite it being

highly restricted in domestic retail and distribution for consumers; few permits granted and few aquaculture

facilities producing it.

2.4: Historic Failures

Whilst potential factors that promoted successful aquaculture enterprises can be identified and evaluated in

a number of research studies; this report considers that if aquaculture is to assist rural poverty reduction;

sustainable economic and environmental development, it needs to minimise adverse externality costs and

consider examples of failed projects locally and internationally. This will further assist the South African

government aquaculture initiative ‘Operation Phakisa’s initial pilot 24 projects and any additional

public/private sector initiatives across a commercial aquaculture supply chain process, to avoid past

failures, especially given South Africa’s own previous attempts before 1994. Reasons for past failures of

projects include a lack of resources including technology, skilled labour, capital and fish oil/feed/

fingerlings, a lack of funding, a lack of, inadequate or insufficient training and education, business and

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entrepreneurship, micro-scale marketing, a failure to reduce poaching/ promote exports; poor water quality;

a failure to discourage wild fisheries simultaneously, to develop an integrated aquaculture framework and

even to ensure a reliable consistent supply of feed. From 1985 -1995, Frankic and Hershner (2003)

estimated 36 million tons of wild fish created just 7.2 million tons of shrimp.

Although aquaculture in Europe employs over 80,000 people producing 1,350,000,000 tonnes in 2014 and

worth over 4 billion euro’s; Lane, Hough and Bostock (2014) consider aquaculture to have stagnated as an

industry in Europe facing significant climate, technical, funding/other challenges. Despite significant

government subsidies, research and marketing assistance; aquaculture managed only an average 0.5%

economic growth from 2004-2014 (compared to 7% globally over the decade). Given the high relative

average per capita incomes; aquaculture as a commodity with limited demand growth prospects among

more commodity inelastic consumers. The research source identified significant ecological, externality

costs to aquaculture, conditional upon the type of electrical input use; the source of seed and feed, labour,

water, to infrastructure, coastal erosions and habitats, incomes and diseases. Gehring (2012) cites the

externality costs of farmed salmon in Scotland, with adverse effects for wild species, from ranching,

escapes; effluent waste; parasitic, viral and other contagious diseases affecting wild species numbers and

recreational fishing. Farmed salmon has grown in popularity from its perceived health/ consumer taste

benefits influencing higher prices and demand, but disturbing wild salmon ecosystems through aquaculture

pollution; disturbed habitats and migration routes; has lead the study to propose a penalty tax and permit

system to regulate aquaculture; to enforce the polluter pays principle.

In contrast, Australian aquaculture grew an average annual 13% during 1990-2004. Although Guy,

McIlgorm and Waterman (2014) indicate the value of New South Wales prawn and mulloway aquaculture to

promoting local economic activity and food security rural coastal and inland areas; it highlights the

significant risks presented by cheap Asian competitive exports who can produce high volumes to attain

economies of scale with significantly lower production costs, especially labour. It warns of the implications

of failure if foreign imports from China, India, Thailand and Vietnam including tiger prawns are

simultaneously permitted in threatening local jobs, tax revenue, income and savings. Imports also are

projected to create higher environmental greenhouse gases per production unit cost, compared to local

production. The authors also indicate that aquaculture can only flourish if it is combined with ensuring a

low cost competitive feed price establishing sufficient inputs/outputs to ensure profitable economies of

scale along with stimulating domestic market consumer demand. Australia has therefore prioritised higher

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value products particularly native species for which it can provide a higher comparative advantage but

needs to avoid the market risks of relying on a single dominant species.

AusAid and Trade and Industrial Policy Strategies (TIPS), 2008, note the failure of certain government

sponsored African shellfish mariculture aquaculture projects in Angola, Liberia, Mozambique, Nigeria,

Ghana, Kenya and Tanzania, which were not supported by the private sector, lacked thorough

environmental impact assessments and controls or sufficient marketing, legal, bureaucratic and skills

developmental support. Bryceson, Kautsky and Ronnback (2004) provide an example of tiger prawn

production in Bagamoyo, in Tanzania which did manage to produce 7000 tons per year, earn considerable

foreign exchange; aided those in rural poverty and promoted rural development and conservation

management. In providing an alternative source of rural economic activity; it helps to discourage the

significant pressures on existing cities from rapidly increasing urbanisation. The source considers various

economic, community and environmental implications of failed African aquaculture projects with risks of

eutrophication, to public health and biodiversity from escaping species, and the waste –it takes 2-5

kilograms of wild fish biomass to produce 1 kilogram of captive, carnivorous fish. However, Tanzanian

aquaculture failed for a number of reasons with benefits environmentally to seaweed production but

significant environmental costs threatening Rufiji mangrove delta. There are also high barriers to entry, with

existing markets dominated by a few large existing firms, discouraging medium and smallholder

aquaculture enterprises in addition to land tenure uncertainty and local corruption.

Partnership of African Fisheries (2011) note significant constraints to African aquaculture, which has

significant adverse effects to over 33000 hectares of ecologically vital mangrove ecosystems in

Mozambique, without proper environmental impact assessments. The source identified problems in East

African aquaculture projects for seaweed (despite high daily growth rates of 4-12%), which suffered from

heavy pollutants/weak legal enforcement and inspection systems producing significant parasitic and

infectious diseases contaminating products. It identifies another significant constraint to African aquaculture

is that, although manure can fertilise, most specialized fish feed has to be imported outside Africa, with

generally high-priced agriculture feed as the only local alternative with significantly fluctuating supplies, with

only one mainstream commercial producer in Africa –that in South Africa. Tunisia for example imports 95%

of its fish meal requirements –primarily from Spain. A commercial market opportunity therefore exists to be

exploited given potential growth envisioned by South Africa in chapter 3.

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In South Africa, Scholl (2006) identified the ecological failure of introducing foreign salmon into Gansbaai

ranching, with significant volumes of biological (disposal of unconsumed fish feed), antibiotic, pesticide,

organic and chemical pollution overfishing, parasites along with specific salmon/human diseases and

potential consequences for the local ecosystem including shellfish and crustaceans; if not sustainably

managed. Nelson Mandela Bay Tourism (2014) objected to a proposed Algoa Bay sea-based aquaculture

zone as having adverse effects on existing property values and coastal tourism, including visual and noise

impacts, existing watersports, recreational fishing, beach access and leisure along with adverse health and

environmental externality cost consequences. Other constraints that restrict aquaculture in South Africa

include few appropriate sites given limited water supplies and coastal bays, with high potential

environmental externality costs including habitat loss; alternative land use and monoculture. This research

paper advocates polyculture over monoculture allowing species biodiversity, contributing to higher potential

output and preserving the local ecosystem as much as possible, as in China for 4000 years to minimise

negative externality costs and maximise stakeholder economic, environmental, social welfare.

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CHAPTER 3 THE PROSPECTS OF AQUACULTURE FOR SOUTH AFRICA’S FUTURE –

3.1: History

Historically, South Africa’s attempts at economic autarchy extended to the aquaculture sector with thirteen

state hatcheries from the 1960’s, compared to three at present, extending to other successful projects in

the private sector. Ever since the state endorsed Jonkershoek, (Stellenbosch) and Pirrie Hatcheries

(Eastern Cape) introduced inputs for game fishing, trout and other game fisheries have a long history in

private sector dams for game and recreational/luxury fishing but also commercially since eggs were first

imported in 1896 (Rouhani and Britz 2007). For example, commercial tilapia was introduced to feed bass in

1959 but failed economically with a pilot farm employing 2 staff introduced in 2008. Integrated pond

centred, polyculture combining tilapia, carp and catfish projects. The Knysna Oyster Company started

farming in 1948. However, with inefficient production, marketing and clear legislation along with access to

Namibian and South African fishing stocks, limited coordinated policies, devoted research and specific

support, the aquaculture sector rapidly declined with trade liberalisation in the 1990’s (Shipton and Britz

2007).

Despite considerable market demand, with the arrival of trawlers primarily from Asia and noted rise in

poaching despite the introduction of a permit system, supplies of wild fisheries rapidly declined with SASSI

declaring many formerly commercially available species, seriously endangered or at high risk of extinction

(orange or red). Few private sector aquaculture projects managed to survive, aquaculture not previously

considered a major government priority until Operation Phakisa. Although certain sources remain for

private sector game fishing such as Dullstroom in Mpumalanga and the Natal Midlands; even the Natal

Midlands suffered commercially with perceptions towards trout and other species were considered ‘alien

invaders,’ displacing endemic species. However; trout, bass, tilapia and other species had little noticeable

threats to local biodiversity, gradually disappearing from supermarkets and restaurants, many sources now

being imported which could be locally produced via aquaculture. South African restaurants commonly serve

dorado as a main linefish imported from South America, when previously so much choice was available.

16

Between 1994 and prior to Operation Phakisa, various South African government agencies endorsed

several aquaculture projects including those summarised below, several still exist/supported though

significantly underutilised compared to former capacity, which could be modernised. Remaining

government aquaculture facilities in various stages of operational capacity include the Western Cape

Elsenberg Institute of Animal Production, Rustenburg Wine Farm, Ceres Agricultural Enterprise, the Cape

Olive and Worcester Projects. The Eastern Cape possess the Umtata and Pirie Hatcheries, facilities at

Rhodes University and Tsolo College of Agriculture and rural aquaculture projects. The Kwa-ZuluNatal

Amatakhulu Hatchery failed from a lack of operating capital, limited skilled labour lacking technical

education and inexperienced local authority management and the province has the Makatini Research

Centre, the Mpontshini Primary School and Mboza Aquaculture Projects. The Limpopo Province had the

Turfloop Breeding Station, Dzindli Fish Project and Tompi Seleka College of Agriculture. Other citied

issues, further summarised as potential risks and disadvantages (Rouhani and Britz 2007) for project

failures in South African aquaculture include a lack of experience; insufficient records; low prices; limited

markets, scarce availability of water sources and political decisions to no longer produce exotic fish such as

trout, despite market potential responsible for the closure of all four government hatcheries in KwaZulu-

Natal.

3.2: The Present State of Global and South African Aquaculture

Aside from reviewing the historical examples of aquaculture globally and in South Africa; this paper

considers that it is imperative to evaluate whether aquaculture does represent a new sustainabe future for

the nation, through reviewing the present state of global and South African aquaculture. Total world

aquaculture production volumes increased from 41,908,847 tonnes in 2004 to 70,189,130 tonnes in 2013,

with a value increase of $59.9 billion to $150.3 billion by the World Food and Agricultural Organisation as in

Figure III. By 2015, just over 195 aquaculture farms exist throughout South Africa. South Africa’s

aquacultural production increased from 2819 tons in 2000 to 5999 tons by 2012, (0.00003424% of the

world’s total production) in Figure IV, compared to equivalent marine wild catch fisheries of 663,195 to

715,320 tons respectively. However, in 2013 it decreased to 4010 tons out of a total 416,520 tonnes

produced. South Africa produced 14,583 tons of aquatic plants, only 2000 tons derived from aquaculture

(Beveridge 2013). South African aquaculture products exported and for domestic production include

abalone, seaweed, shrimps, West Cape Rock Lobster, trout, tilapia and others but not tuna, sardines,

pilchards, dorado, kingklip and other popular products. The South African Department of Agriculture,

Forestries and Fisheries (DAFF) estimate aquaculture could sustain a minimum of 140-210,000 jobs by

2033 and an annual R4-6 billion in GDP. However, in 2012, aquaculture was estimated by Morokolo (2013)

17

to only employ 1607 compared to wild fisheries which employed approximately 30,000 directly (many

subsistence farmers without alternative income sources), supporting around 100,000 indirectly (DAFF

2014).

Figure III: Global Aquaculture Production 1980-2012.

Figure IV: South African Aquaculture Production 1980-2012.

Source: FAO FishStat, 2013.

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The World Food and Agricultural Organisation (2014) project significant economic industry growth

prospects for seafood and other aquaculture products. Its 222 fish model predicts that in 7 years, based on

projected high per capita fish consumption from 20.7 kg per year to 22.4 kg per year, high population

growth and limited land areas to expand land based agricultural alternatives; world aquacultural production

will expand from 66,000,000 tons to a projected 85-99,000,000 as wild fisheries start precipitously declining

from a peak of 95,000,000 tons downwards. However demand estimates for aquaculture depend

significantly on fish per capita consumption, fish prices, export and input cost per unit; employment and

economic activity, inflation, production and consumption along with climate change, pollution, overfishing

and human damage to aquatic environments. Statistics South Africa in its 2015 Environmental Economic

Accounts Compendium National Accounts record a continued historic decline in hake, West Coast Rock

Lobster, Cape horse mackerel and other wild species. Despite potential demand in certain sector as a

staple for the poor and higher value luxuries for the higher income levels, South African wild fisheries have

been considerably depleted –the fate of many species consigned as endangered or nearly extinct.

Southern African central aquaculture representative stakeholder associations include the Aquaculture

Association of South Africa, The Abalone Farmer’s Association of South Africa, the Marine Finfish Farmers

Association of South Africa and, the Mpumalanga Trout Forum, the Western Cape Trout Association, the

World Aquatic Vetinary Medical Associations and the Marine Farmers’ Association of Namibia. These

associations provide support, research, technical advice, training, feed source, contacts; information and

education, technology and equipment sourcing along with marketing support. South African fish processing

industries include over 355 stakeholders, of which the top 6 have a cumulative 2014 market share of 45%

(Figure V), being more competitive than mining, the financial, retail and other South African oligopoly

sectors. Current South African aquaculture industry concerns noted by stakeholders in World Wildlife Fund

(2011) and a 2014 DAFF report include over-regulation and high compliance/long processing time costs;

issues in accessing formal finance (especially from the private sector), limited existing market, limited

trained and equipped labour, limited research and development. South Africa’s existing aquaculture market

has experienced limited market demand, demonstrates a need for quality supplier feed, high barrier to entry

costs; underdeveloped rural infrastructure and issues over wild fisheries from foreign competitors.

Figure V: South African Fish Processing Industry Sector Market Share 2014.

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Currently those who wish to establish freshwater rather than marine aquaculture related businesses in

South Africa experience significant administrative and legal compliance barriers. South Africa currently

operates on a permit based licencing system. Apart from the National Aquaculture Policy framework; they

need to consider the appropriate diverse legislation of the South African Treasury, Department of

Agriculture, Forestry and Fisheries, Department of Economic Development, Department of Water Affairs,

Department of Environmental Affairs and Tourism, Department of Rural Affairs, Department of Higher

Education and Training, Department of Public Enterprises along with Operation Phakisa in the Treasury,

plus equivalent provincial government legislation across several departments and local municipality bylaws,

with significant legal compliance costs, risks and uncertainty. Overview of government legislation would

need legally enforceable property rights/ promote technology transfer and research development from

successful case studies abroad/ customs. However, South Africa has sought to facilitate the reduction of

these legal barriers through a coordinated 2013 South African National Policy Framework

A. To encourage an integrated and holistic approach to aquaculture development in South Africa, which

promotes participation, intergovernmental co-ordination and partnerships;

B. To promote the responsible and sustainable development of globally competitive aquaculture in South

Africa by identifying current constraints, and by proposing action aimed at creating an enabling environment

for effectively addressing those constraints;

C. To facilitate and support the optimal growth of the aquaculture sector to ensure that aquaculture contributes

to economic growth, food security and job creation in the country.

D. To promote on-site research, demonstrations and practitioner-to practitioner advice to increase social and

economic benefits from aquaculture.

E. To promote private sector participation through access arrangements to areas specifically designated for

aquaculture and through the provision or facilitation of the necessary support services;

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F. To co-operate, where necessary, in the promotion of inland and marine ranching and stock enhancement;

G. To promote investment in research and technological development that ensures industry growth,

diversification, competitiveness and sustainable development;

H. To monitor and regulate the introduction of exotic or biologically transformed species to aquatic eco-

systems;

I. To establish norms and standards (including regulations) and guidelines for environmental impact

assessments

J. To monitor diseases and control the spread of diseases relevant to feral and cultured species

K. To promote sustainable aquaculture development from a social, economic and environmental perspective.

This includes the provision of advisory services to cater for needs such as statutory aid to participants.

L. To facilitate the integration of previously disadvantaged individuals, communities and demographic entities

into the aquaculture development process

M. To establish an effective and efficient extension service that supports aquaculture development;

N. To ensure compliance and establish an aquacultural inspectorate to support enforcement of the legal

framework.

3.3: Advantages of Aquaculture

There are a considerable number of advantages to aquaculture that have contributed to the emergence of

aquaculture as one of the fastest consistently growing economic sectors over the past 3 decades. Globally,

Lem, Bjorndal and Lappo (2014), for the World Food and Agricultural Organisation “Fish to 2030” project an

annual average, world fish consumption growth from 12 to 15,000,000 tons of fish between 1970-1990 (1%

per year), to an estimated 185,000,000 by 2030 (Figure VI). Global population is expected to add to this

consumer demand from just over 7 billion in 2030 to over 9 billion by 2050 (Delgado et al. 2003). There are

significant advantages to countries such as South Africa, to invest in aquaculture as a sustainable future for

agriculture and over wild fisheries. Whitmarsh and Seijo (2011) consider various economic advantages for

a country to establish an aquaculture industry to lower consumer prices/production costs compared to wild

fisheries; facilitating local trade, incomes, economic development; employment; training and work

experience, saving and investment. It reduces environmental and market failure externality costs.

Aquaculture also has the potential to improve food security and satisfy emerging market demand against a

significantly expanding global population, if increasing supply does not lower prices. Morrow (2014) in

revising US legal governance of the aquaculture industry, estimated in 2012, the market potential to

domestic aquaculture which produced $1.3 billion in revenue against US seafood market consumption

worth $82.6 billion. Morrow highlighted its economic potential, benefits to nutrition where quality, quantity,

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safety, variety and production process can be regulated and efficaciously monitored/conserved compared

to wild fisheries along with potentially improving skills and training of localised labour.

Figure VI: FAO Projected Global Fish Consumption: 1970-2030

Lem, Bjorndal and Lappo (2014)

Aquaculture has certain economic arguments over wild fishery and agricultural alternatives when

considering its development in South Africa; as increasingly finite and scarce resources, physical climate

change and arid land serve as future constraints to supporting billions of human beings, at historic Western

consumption levels. James and Slaski (2009) among others argue for significant market potential in

establishing a reliable supply of aquaculture related seafood, cosmetics, seaweed, pharmaceuticals, fish oil

and fishmeal to deal with a projected 8.6 billion people by 2033. This chapter considers that aquaculture

could potentially aid supply chain stakeholders with greater consistency, quality; reasonable size and

comparative price/product supply stability from economies of scale/ greater enforcement protection in

contrast to overfished wild sectors. However, currently a limited market exists for aquaculture, so

consumers would need an awareness campaign to initially favour aquaculture. Foreign vessels also need

to be dissuaded with taxes/fines, restrictive access; signed permits and other fiscal disincentives

simultaneously to discourage foreign imports being dumped on domestic markets to destroy the fledgling

aquaculture industry.

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Other economic opportunities that could arise with Operation Phakisa’s development of the aquaculture

sector include projected economic activity based on several market possibilities and associated high

projected economic demand (DAFF 2014) including import substitution of staples such as sardines, tuna

and pilchards for the poor, conserving foreign revenue, improving the balance of payments and promoting

export/ exchange rate competitiveness. Aquaculture farming of molluscs e.g. oysters, clams, scallops and

seaweed requires no additional feed, being cost-effective (Nash 1995). Another possibility includes

producing higher value/luxury game species such as salmon/trout to endorse seafood consumption among

to emerging middle classes/affluent for higher value products. This market patronises local restaurant, bar,

retail and accommodation franchises. Exporting products to the African continent as a market traditionally

ignored by competing aquaculture in Europe, Asia and Oceania, as well as abroad, exists as another

commercial opportunity for an emerging aquaculture industry in South Africa.

Currently, South Africa lacks product variety with limited existing consumer sovereignty choice despite

reasonable local and Asian demand for trout, other luxury fish and abalone all worth a minimal $25-$50 per

kg (Moolman 2013) based on price, taste size, colour and production cost. Allowing aquaculture would

discourage poaching of wild stocks from lower prices and increased supply. The third economic possibility

is to export those indigenous species upon which South Africa has a unique comparative advantage from

aquaculture stock such as kabeljou, abalone, yellowtail and kingklip, whilst simultaneously allowing

overwhelmingly depleted wild stocks to recover. Schelling (2014) considers the success of the Mozambique

aquaculture sector in specialising in ornamental aquarium fish –commercial/pets; seaweed and other

plants/seafood/ fish. Additionally, South Africa has a history of game and recreational fishing –angling using

hatcheries as in the Natal Midlands and Dullstroom Mpumalanga, which more private estates could focus

on aquaculture dams if ecologically managed to promote South Africa as a competitive sport tourism

destination. Recreational fisheries were worth R3 billion to South Africa in 2011 (WWF).

Figure VII: South Africa Fisheries Exports and Imports 2003-2012.

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Morokolo 2012.

Economic activity associated with aquaculture includes potential increases in employment and income –

especially among the historically deprived rural inland and coastal communities; increasing income

diversification; local associated production and consumption across the South African economy (although

this might be partially offset against potential increases in cheap imports. Lem, Bjorndal and Lappho (2014)

emphasise how aquaculture could potentially facilitate poverty reduction –especially in Africa by increasing

rural development and improving consumer sovereignty through improving increased product quality,

variety and lower prices. Aquaculture therefore could expand trade and investment potential; both domestic

and foreign in small, medium and large-scale enterprises. It could potentially expand exports (Figure VI),

increasing foreign exchange; improving product market competitiveness for products which have sufficient

economies of scale in production along with hypothetical product value adding/beneficiation but also

contributing to government tax revenue to offset initial project expenses. However, these economic

advantages are conditional upon sustainable economic growth, amidst a world recovering 7 years later

from a global financial crisis; high potential risks of projected climate change and needs to be managed

skilfully, technically feasible and environmentally sustainable.

Another perceived advantage contributing to the increasing popularity of aquaculture globally is its potential

to aid in poverty reduction and rural development, as an alternative to subsistence agriculture and

unemployment. Aquaculture requires minimal land. Lawson (1994) demonstrated how the Ivory Coast

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managed commercial successes for smallholders on 0.1 hectare lots with small ponds/tanks to aid

subsistence farmers/rural dwellers. AusAid and Trade and Industrial Policy Strategies (TIPS) (2008)

consider aquaculture as labour intensive, requires minimal capital/technology and being less susceptible to

seasonal/climatic/commodity market fluctuations than agriculture and crop failure, stabilizing revenue for

the poor; is appropriate for smallholders in sub Saharan African markets. These can potentially improve

long term economic and environmental prospects if cultivation is properly maintained, risks managed and

ecologically sustained. Once established, there are few fixed costs. South Africa can be cost competitive on

labour, provided it is reliable and has no strikes/other disruptions as with the mining, industrial and other

sectors. The main cost is that if fish feed which can be produced domestically via agriculture with joint use

of fertilisers from farming to reuse swine/cattle waste and through aquaponics, it can be integrated with rice

and other crop production to reuse water and reduce the need for inorganic fertilisers (Burbridge 2001).

The 2014-2019 US National Strategic Plan for Federal Aquaculture Research (Morrow 2014) presents an

alternative perspective of why nations are considering the perceived advantages of developing aquaculture,

for South Africa to succeed in establishing aquaculture: ‘A globally competitive, technologically appropriate, and diverse aquaculture sector in the United States, that meets increasing demand for seafood and products that are affordable and meet high standards for safety, quality and environmental stewardship with maximum opportunity for profitability and economic growth.

This paper considers that there are a number of significant environmental advantages to pursuing a

sustainable aquaculture sector in South Africa. These include pressures on existing captive fisheries

globally and in South Africa, with its historic legacy of overfishing and the tragedy of the commons/free rider

problem, where unprotected, society undervalued maritime resources are raped and pillaged. Developing

regulated aquaculture, provided that it is not situated in ecologically sensitive environments/ecosystems

could potentially assist in improving marine sustainability. This might allow species the chance to recover,

by restricting wild fisheries combined with increasing more marine coastal preserves/allowing existing water

and other ecosystem resources to recover, developing local source for feed and banning drag fishing.

Aquatic biodiversity can remain preserved by resupplying from other vulnerable sources (Frankic and

Hershner 2003). This would simultaneously simulate a demand for responsible, sustainably managed

aquaculture including habitat conservation, integrated coastal zone management. WWF (2011) estimate

over 8 million tonnes of unconsumed bycatch and fingerlings are wasted –not even those wasted in the

retail/ tourism sectors and over 300,000 sea birds die annually, plus significant damage occurring from

blasting coral reefs, old fishing tackle litter, rusting vessels/ equipment and facilities could be averted

25

through aquaculture. Through Figure VII the source indicates how a product such as salmon in using less

arable land, less irrigation water, producing less nitrogen and agricultural chemical waste than beef, pork

and chicken land agriculture competitors; these products can offer a more potentially environmentally

sustainable future.

Figure VIII: Comparing Resource Input Costs For Protein Sources.

WWF (2011).

Aquaculture also has potential research advantages to contribute to knowledge in aquaculture; ecology,

health, nutrition; maritime; climate change to specialise in indigenous species; expand technology and

experience. Aquaculture’s potential to improve skills/education along with environmental awareness

(Mathieu 2015; Lavrilleux, Mikolasek and Leschen 2011). Specific skills and training that aquaculture could

potentially provide include asset fixing, repair, maintenance, construction, nutrition, aquatic/human and

environmental health, promote rural soil, water, afforestation, conservation, water/resource/ecological

conservation, plus general management, marketing and business skills. This can provide a source of

recurrent employment for unskilled labour with little mechanisation or formal education required for many

projects and production/processing stages. Another potential advantage towards South African

aquaculture includes tourism for rural tours of projects/cafes including minibuses to convey people from

26

urban centres, combined with other rural visits as a tourism tour opportunity. Commercial aquaculture

products for sale could be sold retail as gifts such as pearls and jewellery from oysters, chutneys/spreads

e.g. Peck’s Anchovette–The social advantages of developing aquaculture could include potential crime

and poverty reduction for those employed and those economically dependent but also lower food prices for

consumers. Moolman (2013) considers no issues with strikes and only limited traffic congestion Projected

economic demand and other advantages however do not consider climate change or any other

risks/disadvantages outlined in further sections.

There are also certain general health advantages globally and for South Africans in favouring the

development of aquaculture, especially if it is supported by significant government marketing and health

awareness campaigns to endorse local product consumption. Fish is a traditional, economical staple

source of protein for the poor, as an essential budgetary item, especially as land-based meat alternatives

continue to increase in price. It also provides a source of subsistence –literal food security to those

involved. It has potential chances to improve nutrition in rural areas, especially for those inland/rural

communities at considerable distances from the Indian/Atlantic Ocean to have fresh food. Fish based

products, also contains essential omega three acids, magnesium, vitamins A and D plus iodine and

phosphates (Frankic and Hershner 2003). Additional nutritional benefits extend to food seaweed including

Japanese kelp, nori, wakame and green laver. It has the potential to aid with obesity compared to livestock

and red meat alternatives, whilst improving public health more than ocean based wild fisheries, which in

addition to being overpoached, are far more susceptible to risks of methylmercury and dioxin toxins,

influencing coronary diseases Beveridge et al. (2013).Therefore, potential already exists in South Africa, for

aquaculture in sardines, pilchards and tuna if sustainable economically and environmentally, reducing

imports, as historic staples for the poor. Environmentally, socially and from a food security perspective, this

paper considers there may be an emerging need for greater food sustainability and autarchy –reduce

climate change emissions rather than importing food from abroad –considered impossible given ecological

limits by UN FAO among others to source it from the oceans –harvesting the wild coastal/maritime sector

3.4: Disadvantages of Aquaculture Whilst there are a number of advantages to South Africa pursuing aquaculture, any objective appraisal in

considering its potential feasibility for the future of South Africa’s maritime based economy, could consider

significant disadvantages presented by developing aquaculture. The most significant recorded by existing

research includes the environmental externality costs of establishing domestic aquaculture, that is coastal

based/marine. South Africa has very few estuaries, lakes, suitable bays and only 3 lagoons –all of which

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are of significant environmental/ economic/ tourism existing significance, which could be potentially

disrupted by cultivating aquaculture. There are few naturally protected, appropriate bays for cage

aquaculture –preserve coasts/ biodiversity –species etc and few natural rivers and lakes inland. Any

proposed aquaculture project would need a substantial environmental impact assessment process to

evaluate potential avoidance of the environmental costs to local ecosystems, biodiversity of other animal

and plant species, effluent, chemical emissions, soil pollution, water contamination; habitat loss and other

significant externality costs.

Environmentally; there is threat to adjacent ecosystems, spreading globally from invasive species –

especially escapes; utilising less non-renewable energy and potentially less damage than harvesting the

coastal maritime sector. Environments would also have to avoid coastal erosion/opportunity costs of land

clearance mangrove destruction and unsustainable development for aquaculture. However, aquaculture

could potentially work if restricted to private sector water sources or where that water source is compatible

and renewable for the water pressure exerted upon it. South Africa is already experiencing significant

water shortage pressures with many alternative competing uses–which aquaculture could further stress –

perhaps recycling via aquaponics using seaweed and fish, and if aquaculture projects were equipped with

rainwater harvesting tanks to minimise water consumption and costs. Increased exposure to

industrialisation for industrial/ inland aquaculture products, is less healthy, compared to oceans –increased

acid rains/industrial developments presents health and safety risks with the use of brackish water (Tisdel

1995) The product quality/health improves if away from heavily eco sensitive/industrialised areas to

minimise hazard risks. Aquaculture also potentially threatens local subsistence fishing. Another potential

health disadvantage to aquaculture includes reduced water quantity/quality with increased nitrates and

oxygen concentration/salinity and plant eutrophication. There is a need to recycle and ensure proper waste

disposal including sludge from ponds, discarded ropes, chemicals and tank apparatus, to further promote

the environmental sustainability of aquaculture.

Naylor et al. (2000) cites other potential environmental problems of past and failed aquaculture products

including the escape of hundreds of thousands of salmon from ranching/cage aquaculture. Cage

aquaculture presents the risk of chemical, phosphate and water contamination with reduced oxygen unless

chemicals are properly disposed of. However, it argues in favour of genetic modification and control of

species which this paper in considering potential health, safety, environmental and other externality costs

does not propose. The sourcing of wild fish to obtain oil/ feed for aquaculture presents high significant

costs, with a high bycatch rate unless it can be produced without depleting natural sources. Aquaculture is

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highly wasteful –it takes 400 g shrimp per kg of shrimp produced in Thai ponds and 5 kg of feed to produce

a 1 kg salmon (Frankic and Hershner 2003). Aquacultural conversion and feed sourcing can also threaten

the healthy thriving of aquatic ecosystems, damage coral reefs, seagrass beds and lead to mangrove

destruction to establish suitable sites. The lack of durability of tanks and net cages need frequent

maintenance as well, to prevent litter and decay. Aquaculture’s success also depends on neighbours –who

socially may complain due to possible visual, smell, noise and light pollution impacts (Seijo and Whitmarsh

2011). The UK DEFRA even considered biofuels made from algal bloom production but have not

considered the environmental and economic impacts of offshore drilling on aquatic ecosystems. (James

and Slaski, 2009)

One of the most significant economic opportunity costs with aquaculture, is the cost of failure –if the project

does not succeed, there are high costs associated with abandoned projects including ecological

rehabilitation and to remove infrastructure, reducing alternative possibilities. A potential economic

disadvantage to aquaculture is that, although it may increase economic activity, this potentially has to be

offset against potential losses of employment/economic activity in conventional fishing that might occur

from lower prices/increased competitiveness. However, aquaculture is considered more sustainable than

wild fisheries, given projected risks of climate change, coastal erosion and pollution. The World Bank

(2014), DAFF (2014) along with Lem, Bjorndal and Lappho (2014) consider that the high existing growth

and capacity of aquaculture may lead to high existing capacity and already low costs per unit/low prices

including fish produced as low as $1.50 per kg Vietnam for low value bulk items such a tuna, which may

make new entry into foreign markets, difficult for South Africa to effectively compete in. Additionally,

developed countries in Europe, Asia, Oceania and North America have low demand –especially for low

value products (and trade barriers to high value products).

Domestically, aquaculture has a long history of failure for various economic and other reasons in South

Africa –not a cultural staple for higher value products. The World Bank (2014) estimate South Africans to

consume 7.6 kg per capita per year compared to 11 for Sub-Saharan Africa, 22.9 for North America, 27.1

for Europe and 32.6 kg for China. Therefore, for South Africa there may be a considerable risk on the rate

of return on investment; long time lag until initial production is established and becomes commercially

profitable, with a high opportunity cost to alternative investments especially for bulk items with low profit

margins. Any potential economic success for South African aquaculture faces considerable constraints to

compete internationally. Market access internationally possesses significant barriers to competitive entry

with trade subsidies, customs barriers and initial fixed costs from existing firms, significant foreign

29

competition and expertise. Existing permits take up to 28 months to obtain. Additionally, in 2008, AusAid

and TIPS identified only one quality aquaculture feed producer, based in South Africa with a monopoly of

input control across 15 SADC Countries. However, feed represents on average the highest proportion of

production input costs according to (DAFF 2014). Therefore, inputs and production equipment are sourced

and fabricated locally; there are further high import costs to consider. South Africa’s aquaculture industry

incurs the issue of absolute cost advantage with a high initial fixed cost but potentially low cost per unit

once established based on economies of scale; and access to key inputs ––fish, other seafood and plants

required for species biodiversity and initial harvest/stocking. Economically, xenophobia discouraged

marketing of trout and other formerly successful products –as ‘foreign’ in South Africa as another

disadvantaged from a marketing perspective. Limited labour appropriate skills and technology also exist as

another constraint to be internationally competitive compared to Asia. At present; low rural infrastructure

and development remote from markets/transport routes –with three universities and no vocational training

colleges specialising in aquaculture in South Africa, limits opportunities.

Public Health disadvantages to aquaculture include drugs used to control fish species including artificial

hormones for tilapia. Others involve invasive species, eutrophication; water source contamination from

effluent and eutrophication, chemical pollution from non-biodegradable products/ food poisoning risk if inexpertly managed, possible health risks from poor sanitation/hygiene arrangements –perhaps affecting

the quality and health value of fish. These might necessitate improved health and environmental issues if

the project fails. Biological risks of aquaculture include potential infectious, viral, fungal, and parasitic

(nematodes/ mites fish diseases to wild stocks with issues of immunity/resistance–mutations/ genetic

inbreeding and stock control/contamination. There is also a need for safety, public health and biological

reasons to prevent overcrowding and issues of species escaping affecting other aquatic ecosystems and

species –unless insulated to avoid hybrids of species/genetic mutation. Socially, the lack of coastal

aesthetic aspects of aquaculture infrastructure if coastal based not inland could reduce tourism,

recreational enjoyment and reduce local property prices –the coastal landscape being highly valued in

South Africa. Depending on the location of proposed aquaculture it might also affect recreational and other

forms of fishing and watersports.

3.5: Risks

If South Africa is to consider implementing aquaculture as the future of its maritime based economy in

Operation Phakisa, this report forecasts significant risks that could potentially influence the comparative

success or failure of aquaculture, that need to be managed. The most significant factor that will influence

30

whether or not aquaculture will succeed in producing the previous mentioned advantages is the risk of

external factors such as climate and climate change. Li et al. (2014) for China considers that climate

change implications for wild fisheries may actually provide greater justification for aquaculture in reducing

pressures on wild populations, given ever increasing human populations and demand for increasingly finite

and scarce natural ecosystem resources of Earth and with the potential via ranching to augment threatened

wild species. However, existing marine based aquaculture might actually accelerate the risks to existing

ecosystems where feed depends on capture from wild fisheries. Climate change also has potential

economic impact costs to affect markets with risks to physical infrastructure, populations, market demand

and market supply, affecting aquaculture and wild fisheries production costs, prices, quality and quantity as

Li (et al. 2014) model empirically in a hypothetical dataset for China.

Holbrook and Johnson (2014) consider equivalent climate change risks threaten Australian wild fisheries

through modifying aquatic ecosystems from changes to nutrients and other inputs but fail to identify how

this reduces competition for aquaculture as a potentially more sustainable alternative source. Depending on

existing equipment, harvesting processes and vessels, captive fisheries will incur considerable adjustment

costs, in adapting to climate change risks. It considers that supply chain stakeholders will have to become

more mobile and flexible in procuring seafood. The Intergovernmental Panel on Climate Change in their

2015 report project significant gradual climate change disruption risks for wild and captive aquaculture

operations which will accelerate existing climate related risks; including increases in global sea level rise,

air, land and sea surface temperature and change in precipitation, wind velocity, wind direction, currents,

humidity, wave energy, sedimentation and currents. Projected changes in the frequency, duration and

intensity of sudden climate change related natural disasters including droughts, landslides and storms are

also projected to increase the risk to South Africa’s highly vulnerable coastlines, as further factors of

uncertainty affecting the qualities, distributions, quantities, types and habitats of aquatic ecosystem plant,

coral and animal species. Aquacultural producers may experience a competitive advantage in having

greater capacity to control climate –climate change related disruption effects, including exposure to sun/

recirculating and conserving water etc.

Aside from projected uncertainty associated with climate change; the most significant risk for aquaculture

includes the risks associated with the unknown fate of existing wild fisheries. This affects aquaculture’s

commercial success as a source of inputs, where fingerlings and fish oil/ fish feed become unsustainably

extracted from seriously depleting global stocks –unless these inputs can be autonomously developed by

the aquaculture sector, which this report advises as a more cost and environmentally sustainable

31

alternative. The fate of existing wild fisheries -cost also influences aquaculture as its main commercial

market competitor –the more uncertain the fate of market supply/ higher projected market demand for

maritime resources; the higher the price (Naylor et al. 2000). Lem, Bjorndal and Lappho (2014) project that

without aquaculture and based on the centuries exploitation of Pacific, Indian, Atlantic Ocean and

Mediterranean aquatic resources; wild fisheries will become rapidly depleted –as species become extinct.

The source forecasts by 2035, the 27 EU countries alone will require an additional 3.7 million tonnes of

entire seafood products based on a consumption of 1.5 meals per person per week, over existing demand

–which will have to come from aquaculture if it is not to completely destroy the few fish populations

remaining and complete poaching of wild stocks.

For South Africa, significant commercial risks are involved, given the historic failure of commercial

aquaculture. To succeed, the government would need to persuade existing seafood/fish/aquatic resource-

based supply chain stakeholders to convert to aquaculture in production and processing/ procurement over

artificially cheap imports and preserving existing wild fisheries to prevent a decline. The question to

consider is whether existing sources are prepared to agree. Existing companies’ e.g. major supermarkets,

Lucky Star, I and J plus other brands and food retail franchises such as Ocean Basket, Skippers,

Fishaway’s’, Cape Town Fish Market and John Dory’s for South Africa and across Southern Africa would

need to be persuaded to support aquaculture as an infant industry project in South Africa to ensure a ready

market and influence consistent standards, providing sustainable domestic production. This could be

effective if South Africa were to exploit its former ‘Proudly South African’ marketing campaign to encourage

domestic consumption and consumer loyalty of the value and products of South Africa, whilst also

encouraging autarchy or import substitution for brands. However, a significant market risk is the lack of

cultural and religious tradition over seafood consumption; unlike other parts of Africa or Roman Catholics

globally; it is not an indigenous South African (tribal and Afrikaner) based staple, as in the United Kingdom,

parts of Europe, Asia and the Pacific.

Based on cultural reticence, reducing the prospects for a stable market demand in South Africa; South

African aquacultural production needs to be resilient and flexible, to possible changes in seasonal demand/

influence South Africa fish culture –with a substantial aquaculture risk of underconsumption/overproduction.

Aquaculture, like other agricultural products, experiences many significant market fluctuations, complicating

inventory control including competitive practises. Other economic risks occur from less predictable changes

in domestic and foreign international activity –foreign markets, fluctuating currency exchange rates and

business cycles. Unlike other crops which survive for a longer period of time, aquaculture products

32

experience a high risk of perishability within days; unless properly processed/stored/transported/

distributed. If South Africa were to consider effective risk management for aquaculture, perhaps more

customer stakeholders might favour aquaculture, with advantages of ensuring reliability; security; safety

and consistency as advantages over wild fisheries to discourage wild poachers/ trawlers etc

Other projected risks that might potentially affect the achievement of 21st century South African aquaculture

include a reasonable probability of crime, unreliable electricity from Eskom and water quality filtering in

addition to a reliable source of water from aging municipal infrastructure. However as wild fisheries and

poaching becomes less profitable, the probability of poaching should decrease. Schelling (2014), for the

Mozambique aquaculture sector, identifies that South Africa also experiences competitive risks from more

experienced African aquaculture industry stakeholders –commercial competition –along with those such as

Mozambique turning towards it as a potential source of economic opportunity. Legally and from a policy

risk, although the South African government has publicly proclaimed its devotion to Operation Phakisa and

the growth of aquaculture, there is also the slight political risk, that the opportunities identified in section 3.6

remain subject to continuous, consistent support by government its voters and private sector funding and

training. Benkenstein (2014) emphasizes that developing aquaculture in a nation presents certain legal

compliance risks with the financial and other expenses necessary to ensure that aquaculture is properly

established in the legal system with inspectors to ensure compliance/minimise health/ environmental and

other potential externality costs with adequate enforcement resources. Therefore to minimise legal

compliance risks and uncertainty, the South African government would benefit highly through familiarity

with aquaculture policy framework/ legislation and associated enforcement costs of reducing issues

concerned with wild fisheries including poaching/other legal breaches

As South Africa currently possesses a shortage of skilled aquacultural industry labour and technocrats, a

significant risk towards the future of aquaculture, is that of the current lack of training and subsequent need

for such training to assist South Africa. This need for training would be assisted through modernising

agricultural extension services with updated knowledge and funding access; including basic artisanal

maintenance but also maritime engineering for more complex projects such as salmon farming. Lavrilleux,

Mikolasek and Leschen (2011) emphasise the need-for a proposed agricultural extension service to train in

productivity/ efficiency; resource conservation; eco literacy; fish biology, climate; nutrition, aquaculture risk

management/ business opportunities/ marketing, records; communication and business skills. These

become even more essential to ensure equity, environmental and economic externality costs are minimised

from previously disadvantaged communities/individuals for the rural piloted projects outlined in section 3.6.

33

Aquaculture supply chain stakeholders would benefit from improving resource management, to provide

mutual information and cooperation for information, communication and emergency response, minimise

adverse externality costs. Existing and future new local universities such as the University of the Northern

Cape/Mpumalanga and vocational FET (further educational training college could offer more courses and

develop research on aquaculture skills development, research and technology for example in

aquaculture/aquatic health/nutrition. Finally, there remains a significant risk to potential funders of

aquaculture. As with any potential investment decision for scarce fiscal resources, uncertainty remains over

whether governments would get a rate of return on their investment as a reasonable risk of bankruptcy

exists given a lack of past experience/other factors. Government funding would be initially necessary as

microcredit and formal capital for aquaculture, is historically ignored by South Africa’s big four banks –yet

this represents a significant long-term opportunity cost of public taxpayer revenue

3.6: Opportunities

Although developing aquaculture in South Africa presents certain risks; the South African government and

other key aquaculture supply chain participants are committed to invest in a number of potential

aquaculture project opportunities summarised in Figure IX below up to 2033.

Figure IX: Operation Phakisa Aquaculture Project Opportunities.

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Hinrichsen (2009) summarises existing aquaculture efforts that might be potentially invested in South

Africa’s Eastern Cape province. The South African government recognising this, has extended the value of

particular species for pilot projects to target commercial production. The prospects for high quality,

nutritious, safe abalone, kob, trout, tilapia, Mediterranean mussel, Pacific oyster, seaweed, African catfish

and ornamental carp/goldfish, are considered to emphasise the diversity of species which South Africa

could consider supporting and extending if seeking to ensure a commercially profitable and environmentally

sustainable future for aquaculture. Amosu et al. (2013) provides an example of the green Ulva seaweed as

a prospering commercial opportunity in South Africa, producing 2015 mega tons compared to 7602 mega

tons of wild seaweed reaping, for food, for biofuel and as a source of nutrients nourishing the internationally

competitive abalone industry. Significant potential exists as over 93.8% of seaweed global production;

unlike seafood derives from aquaculture, of which South Africa also produces an insignificant fraction of the

global total. Commercial potential exists in pharmaceuticals, cosmetics, aquarium sources and food from

seaweed (most notably sushi, rice crackers and dried snacks) and kelp aquaculture with potential health

benefits from over 90 minerals/antioxidants. For these aquaculture industries, South Africa would

experience a competitive export comparative advantage with limited foreign competition primarily from

Africa’s leading aquaculture producers Madagascar, Tanzania, Namibia and Mozambique, provided it can

resolve potential risks and disadvantages.

The 24 projects identified in Figure VIII aim to employ up to 15000 jobs as first stage of growth, worth R3

billion and 20,000 tons to provide examples of successful prototypes to encourage local and foreign

investment for domestic production. R100 million is proposed to establish 570 jobs initially, conditional on

land, water and infrastructure access EIA assessment approval. By 2019, mussels and oysters are

expected to contribute an additional 5063 tons to exports and R120 million each year in direct local

economic activity. Various commercial opportunities have been identified for South African aquaculture,

depending on the initial success of the above projects. Examples include high and low value, fish fillets

mariculture and seaweed/ kelp/plant production. Products can be fresh, frozen, smoked, salted, tinned, in

preserves –such as spreads, sauces and chutneys, pickled, sushi, or part of value-added ready meals.

Currently mussels from New Zealand, Indian prawns, squid and linefish from South America and Vietnam,

can produce salmon, trout, bass and tilapia locally not from abroad. South Africa also has potential to

export significant quantities of fish meal lacking African competitors and the fact that farmers of carnivorous

fish species far more price inelastic to provide a market for fishmeal, yet currently it is too expensive to be

commercially competitive –lacking sufficient marketing or fiscal support. Other aquaculture possibilities

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include ornamental aquarium and pet production; transport and logistics, packaging, providers of fish feed,

fish oil, fish equipment, repairs, construction, tanks and other apparatus and agricultural fertiliser.

Morokolo (2012) identified a Department of Science and Technology prototype trout farming project, for 35

smallholder farmers producing 6-8 tons annually and R 6,500,000 in annual revenue. The Hondeklip Bay

Abalone Project reuses the abandoned Oceana Lobster processing facility for 100,000 abalone, with 15

permanent and 85 part time jobs established. A yellowtail prototype ranching project was also provisionally

initiated in the Western Cape.Feike Natural Resource Management Advisors, (2008) considers potential

aquaculture prospects based on a lack of alternative natural resources and loss of 2000 jobs with other

economic opportunities when De Beers diamond mine is decommissioned in Namaqualand, Western Cape.

It cites suitable climate and tidal conditions for abalone, oysters, mussels and kob, favourable potential

demand and supply apart from uncertainty over granted land concessions. This proposal may affect wild

aquatic ecosystems of the Namaqua Marine Protected area and affected seabirds, in addition to other

potential externality costs and benefits.

As certain individuals in Africa become more affluent; there may be greater potential for an ecologically

sustainable ornamental fish market for the aquarium trade in luxury homes, restaurants; hotels, offices and

other areas, – even medical waiting rooms as for developed countries. Tlusty (2001) notes the

unsustainability where most ornamental sourcing globally depends on capturing fish from the wild. As

perhaps evoked in the entertainment fiction Disney film “Finding Nemo” but also environmentally and

economically; this can disrupt aquatic ecosystems. Provided that market research feasibility studies and

environmental impact assessments are conducted, this represents another niche in which aquaculture

might have an advantage although this does reduce potential economic opportunities to pursuing wild

fisheries. Apart from African markets South Africa might also be able to export to demand in Western

Europe, Japan, Southeast Asia and Australia, if located near an international airport/main seaport/efficient

intermodal transport system, given the perishability of species. Another advantage (if protected from

predators) includes ornamental species are cultivated in ponds/ tanks that avoid risks of ranching to public

water sources. As South Africa’s species become more endangered with a higher probability of extinction;

aquaculture could also consider species threatened in wild to ensure species survival and rehabilitation in

private/ community managed rivers/ dams/ aquaculture facilities where it does not adversely affect and

complements local aquatic ecosystems for indigenous species, including abalone –legally for sale in

Tasmania,

36

Significant funding opportunities are being provided by various sources to those seeking to invest in

potential aquaculture in South Africa. DAF (2014) identifies the Agro Industry Fund, Jobs Fund and Rural

Community Fund all as potential loans for those seeking a minimal R1000,000 as capital and maximum

R40,000,000 under the South African Department of Trade and Industry Aquaculture Enhancement and

Development Programme. SMDEP Grants under the Aquaculture Development Fund provide up to

R500,000 for small and medium sized potential aquaculture supply chain participants as with up to 8%

compound interest rate. AGRI-BEE, Black Business Supplier Development Programme, the Cooperatives

Incentives Scheme, Innovation Fund, the Innovation Fund for Technology Enhancement and Incubation

Support Programme present others. The Western Cape Growth Fund, Trade and Investment KwaZulu-

Natal and Eastern Cape Development Corporation are provincial government funding sources that have

also indicated a potential interest in cultivating local aquaculture. Community funding schemes related to

pilot aquaculture developments in South Africa include the Isivande Women’s Fund and Masiszane

Women’s Enterprise Fund. Many of these funding sources are conditional upon plans showing sufficient

economies of scale and business preparation that they are commercially viable being profitable and cost

recovering but could also be amended to show their technical feasibility and environmental/ resource

sustainability as well as sufficient market potential exists.

However, to develop aquaculture in South Africa the four main private sector banks –ABSA, First National

Bank, Nedbank and Standard Bank would need to recognise consider the risks and opportunities that it

presents; to develop private sector specific credit schemes to satisfy aquaculture customer requirements,

rather than principally relying on government funding. South African funding would need to support each

part of the aquaculture supply chain developed in sections 2.1/2.2 to be potentially successful from

production to value adding/processing to transport, logistics and distribution, marketing, commercial and

export promotion along with grants to support training, research, technology transfer and development,

information and environmental sustainability. It would also need to develop insurance including 3 rd party for

potential aquaculture risks. South Africa’s tax and customs legislation could also be reformed further to

promote the development of aquaculture in South Africa.

37

CHAPTER 4: THE FUTURE? INTERIM CONCLUSIONS:

4.1: How to Ensure A Successful Aquaculture Industry

This report considers that there are many factors to evaluate in ensuring that South Africa develops a

successful aquaculture industry. Initially it would benefit South Africa to consider a completely accurate

estimation of the existing status of wild fisheries and maritime resources through a coastal/oceanographic

survey; to emphasise the extent to which aquaculture production is necessary. It would equally determine

the degree to which local aquaculture can source inputs such as fish oil/ fishmeal or/ need to produce

species to aid the recovery of wild stocks that are endangered or at significant risk of becoming extinct.

WWF in 2011 noted the collapse in the 1990’s of many South African species including shad, rock cod,

silver and dusky kob, seventy four, roman, white steenbas and red stumpnose, formerly sold in many

restaurants as linefish catch of the day, now virtually never served. This would validate the need for

integrated coastal-ocean zone management and protection measures including increased sanctuaries.

Preserving/ reducing wild fisheries supplies, further aids local aquaculture marketing prospects. Therefore

to conduct an efficient aquaculture programme in South Africa, similar monitoring and evaluation could be

conducted for freshwater sources, which consider existing usage and degree of suitability for aquaculture –

which does not conflict with natural existing ecosystems. Any potential host site for aquaculture would

benefit from a full environmental impact assessment; market feasibility study - cost-benefit, demand –

supply analysis –pre and post event impact, compatible with demand, supply, quality, cost and price; to

ensure the most appropriate location of each proposed aquaculture development, its ecosystem/community

impact, profitability and productivity.

Appropriate funding would need to be secured, sufficient adequate skills development and training granted

and resources allocated/ including a method of enforcement/ administration of justice to ensure compliance

with local and international legislation. Other African aquaculture projects have failed from a lack of

relevant, modernised technology transfer, a lack of information; high coastal property values; limited

research, technology, skilled labour, gifted parts and weak extension services (Lavrilleux, Mikolasek and

Leschen 2011). Therefore SA needs to consider producing aquaculture experts, extension workers, food

and aquacultural engineering, technicians and artisans to improve its aquaculture marketing, business,

training, information and technology capacity to improve rural education and skills in the challenge to

transform rural conventional farmers into fish farmers. One potential solution is to provide more vocational

courses/ support to further education and training colleges, to reduce pressure on the few existing

38

universities and facilities with aquaculture courses. It needs to provide continuous support to both pilot

projects and fund recipients to ensure that aquaculture can become a self-sufficient, self-supporting sector

of the South African economy. New stakeholders could learn from existing projects in considering well

organised hatcheries of commercial sector –help South Africa can potentially ensure its success through

improving supply chain stakeholder awareness of the possibilities of aquaculture if responsibly inspected,

maintained and cultivated over wild fisheries, as consumers but also as participant producers/processors

etc, through product import substitution, export promotion and through concentrating on unusual species

not encountered abroad.

To ensure a successful aquaculture industry to the future of South Africa, it is essential to consider whether

the potential project is capable of being commercially viable. Is it competitive in Africa, Asia, Europe,

perhaps the USA? If a project can after a short-term time period (1-5 years), sufficient to recover costs but

is also profitable; than it is worth extending its initial support as an infant industry –otherwise it becomes too

expensive in terms of opportunity cost of foregone taxpayer revenue squandered. However, to ensure a

prosperous aquaculture sector, aquaculture production needs to satisfy allocative efficiency –or consumer

expectations as the products/ types etc most desired by consumers are those produced and productive

efficiency or goods are produce with the fewest possible resources. Commercial success not only depends

on marketing but also the extent population growth, currency relative performance against other exchange

rates; level of economic activity, inflation and employment –across other economic sectors.

Without trade protectionism barriers for an infant industry i.e. import tariffs or export subsidies, quotas, tax

concessions etc, export and local marketing support; and sufficient enforcement against poaching/ ensuring

trade barriers against dumping/cheap imports – South Africa’s emergent aquaculture industry, will lose to

foreign competitiveness. It is essential that aquaculture continues to satisfy stakeholder requirements (2.2)

to retain competitiveness and is continuously feasible. It is therefore necessary to comply with specific,

relevant legislation for any potential country with which an aquaculture maritime supply stakeholder wishes

to export. For example, for the European Union, aquaculture exports must apply the following EU

Standards –HACCAP Principles –Hazard Analysis Critical Control Points that the South African Bureau of

Standards can legally authorise and affirm compliance. This could be applied to domestic aquaculture

production for any potential hazard risks that may occur to ensure health and safety of aquacultural

production simultaneously preventing eutrophication, bilharzia/ malaria and other risks.

I: To identify/analyse hazards

II: Identification of critical control points monitored to avoid the occurrence of hazards

39

III: Laying down values for critical hazard limits which must be observed

IV: Introduction of a surveillance system for regular monitoring and observation of critical control points

V: Laying down corrective methods which should be undertaken when at a critical control point

VI: Laying down of methods to ensure verification of HACCAP Principles.

VII: Setting up a system for the effective management of the documents relating to the HACCAP Principle

process, data collection/processing

To ensure the optimal and efficient utilisation of existing funding, information, legal, skills development and

training and other resources made available under Operation Phakisa; the government could broadcast

them more openly. Stakeholders including the public electorate, would benefit through educational

awareness of the potential opportunities, risks and costs presented by aquaculture plus sufficient funding to

freely determine for themselves whether or not investing and supporting aquaculture can benefit South

Africa or not To ensure a successful aquaculture industry in conclusion, new stakeholders would benefit

from increased cooperation, support and partnership by existing professional organisations. South African

aquaculture stakeholders would benefit from the need to cooperate across an integrated supply chain

system. Sharing information, pooling storage, marketing, transport and other services to minimise costs, in

identifying successes and failures as conditional aspect by government of funding to enable South Africa

and Africa to acquire an indication of aquaculture practises to ensure it can attain its objectives, particularly

given climate change disruption risk uncertainty. DAFF (2014) and professional associations stated that

stakeholders desired more cost-effective solutions to concerns –on fish nutrition; aquaculture biology,

health, production techniques, technology, business and economic management. Finally this paper

considers that it is most essential to consider the environment and climate, to ensuring the physical survival

to risk exposure for aquaculture including querying: ‘Is this aquaculture project environmentally sustainable

on the precautionary and polluter pays principle? How does it respond to changes in natural environment?

Ultimately, to ensure successful aquaculture in South Africa will be considerably influenced by establishing:

How vulnerable are aquaculture supply chains in SA/Africa to potential disruption risks including climate

change? Can they adapt to enhance resilience and survive?

4.2: Harvesting the Coastal Sector? Aquaculture and South Africa

In conclusion, the African Union’s 2050 AIMS Strategy as well as South Africa’s Operation Phakisa

proposes that the future of Africa exists in exploiting the possibilities of the maritime sector; especially

through aquaculture. The strategy aims to ‘foster increased wealth creation from Africa’s oceans and seas

40

through creating a thriving blue economy in a secure and environmentally sustainable manner.’ Chapter 3

outlined a summary of the present state of South African aquaculture. Currently only approximately 200

aquaculture farms, supporting 1607 employed exist. South Africa’s aquacultural production increased from

2819 tons in 2000 to 5999 tons by 2012, 0.00003424% of the world’s total production, compared to

equivalent marine wild catch fisheries of 663,195 to 715,320 tons respectively. Those launching Operation

Phakisa including the South African Presidency and Department of Agriculture, Forestries and Fisheries

proclaim that aquaculture could sustain a minimum of 140-210,000 jobs by 2033, producing up to 90,000

tons and an annual R4-6 billion in GDP. Research by the University of Tasmania, as a leading maritime

university specialising in aquaculture estimated that if responsibly managed, 2.3 billion people could be fed

primarily by aquaculture as a source of main protein by 2050. This serves in addition to the value of being

able to survive for longer, the more humanity is able to resist complete exploitation of existing land, coastal

and ocean ecosystems/ resources; for the future.

This interim report was inspired in response to Operation Phakisa and the need for more research in this

emergent sector of aquaculture. It initially identified potential implications of developing aquaculture to the

future of South Africa’s maritime economy through defining aquaculture. The aquaculture production

process and stakeholder requirements for any aquaculture enterprise to develop include. This paper

considers that if South Africa is to invest it could learn from the advantages and experiences of other

successful projects in Chapter 2 including Australia, Asia, Tanzania and other parts of Africa, along with

seeking to avoid the disadvantages and failures of projects such as shellfish mariculture in many African

countries and Australian prawn farming that failed to compete with cheap Asian imports. Historically South

African aquaculture has failed, as Chapter 2 and 3 emphasise through specific examples including foreign

salmon farming in Gansbaai, Natal Midlands game fishing; due to a number of factors including sporadic

government support; xenophobia and lack of cultural consumption; a lack of African fishmeal, pillaging of

wild fisheries/ cheap imports and other factors. Chapter 3 presented an overview of world aquacultural

production; that has consistently grown in excess of average annual GDP over the past three decades and,

in a number of countries but not South Africa which has declined, remaining at 1% of African continental

aquaculture production –unlike many other African economic sectors, which aside from oil; South Africa

generally ranks among the top 1-5 producers; presenting a number of unexploited opportunities.

Certain economic, agrarian, environmental, social, educational, health, food security, tourism and research

advantages exist to establishing aquaculture in South Africa summarised in chapter 3.3. In considering

potential disadvantages of aquaculture, the most significant ones for South Africa included environmental

41

such as a lack of suitable environmental locations, water shortages and possible environmental externality

costs including pollution; skilled labour shortages and economically/ culturally a history of past failures in

aquaculture. Other potential economic, environmental, biological, public health; foreign competition, legal,

administrative and other barriers to entry as disadvantages to aquaculture, were also evaluated that South

Africa’s projected investments will need to minimise and overcome. Risks were identified for aquaculture in

section 3.5 that need to be considered when considering aquaculture as the potential future of Operation

Phakisa. As previously stated, the most significant are the uncertain risks presented by climate and climate

change; the status of wild fishery stocks, domestic and foreign economic activity; the level of publicity,

training, education and skills development being resolved. There is a need for business/ entrepreneurial

skills –especially if piloted among rural/ historically economically disadvantaged, Other risks include a lack

of current private sector funding/ insurance; only one fishmeal producer in Africa, potential political-policy

risks; lack of consumer loyalty and reputation, lack of cultural-religious affiliation to climate change,

unreliable electricity and water; possible crime and safety along with the Perishability –of produce unless

properly processed/ stored/ transported/ distributed

Finally in section 3.6, The South African government have demonstrated a willingness to invest in

aquaculture in providing an Aquaculture Development Fund, through 24 pilot projects, through a

specialised research directorate; through legislative reform and bureaucratic reform reducing aquaculture

applications from 890 to 240 days… Apart from a revised Aquaculture legislative framework, there is also a

proposed Aquaculture Value Chain Roundtable (Morokolo 2012) proposing to integrate aquaculture supply

chains stakeholders. To succeed the 24 pilot projects and other future developments need to avoid adverse

social, environmental/other externality cost/ maximise consumer welfare. Need for local sourcing of inputs/

sustainable value adding local economic activity and integrates with existing land management use and

existing infrastructure, transport services and utilities.

Conditional on demand, perhaps existing government hatcheries could actually be supported; target variety

of species including indigenous threatened in the wild for ranching/ higher value fish. Darwall et al. (2011)

identified species that are potentially vulnerable to extinction in Africa, aquaculture might even be able to

ranch them domestically and release into in the wild –minimise human damage to overfishing, maritime

pollution and risks presented by climate change provided aquaculture outputs are ecologically sustainable

and risks minimised for scarce natural resources. Provided that South Africa can learn from past mistakes

and successes; can acquire the advantages, will reducing the potential disadvantages, minimising risks yet

capitalising on opportunities identified in this report, Operation Phakisa may succeed for South African

42

aquaculture where it has previously failed. This could be further enhanced, provided public, private,

community organisations and market consumers, domestically and internationally continuously finance,

monitor, support and enforce environmentally sustainable, technically feasible and commercially viable

aquaculture, across its supply chain, aquaculture can potentially represent a new future for South Africa’s

maritime economy.

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