Embed Size (px)
Citation preview
Meeting the aquaculture challenge; technology development, resource use
and the environmnet
byFrank Asche
University of Stavanger
08.06.05
World production of seafood
0
50
100
150
År
1000 t
on
n
Totalt
Oppdrett
Fangst
Trade with seafood: Exports from developing countries
20
30
40
50
60
År
An
del
i %
The importers are in many ways more interesting in that more the 90% of seafood
imports is into the OECD
These markets will continue to be the most important because of their
ability to pay. And supply these markets will increase as global markets becomes more
accessible
As wealth increase, also other markets will increase in importance
Production shares, farmed fish 1999
Carps36 %Other
40 %
Oysters11 %
Salmon2 %
Tilapia3 %
Clams5 %
Scallops3 %
Although aquaculture is old, a revolution occured in the 1970s
New technologies and better feeding has led to an enormous increase in production
Increasing control with the production process, and semiintensive and intensive farming is
increasing
Aquaculure is many places becomming more like any other crop
Two potential market structures for new aquaculture species
If there is a separate market for the species in question, substantial increase in production will lead to a large decline in price
If the species wins market share in a large existing market, so that there are many substitutes, there is no price effect – it is only someone that are outcompeted
Trade conflicts
Global farmed salmon production and real Norwegian exports price (2003=1)
0
500
1000
1500
2000
81 83 85 87 89 91 93 95 97 99
2001 3
1000
to
nn
0
2
4
6
8
10
GB
P/k
g
Quantity
Price
Global farmed salmon production and real Norwegian exports price (2003=1)
0
500
1000
1500
2000
81 83 85 87 89 91 93 95 97 99
2001 3
1000
to
nn
0
2
4
6
8
10
GB
P/k
g
Quantity
Price
Sea bass
010000
20000
30000
4000050000
60000
1989
1991
1993
1995
1997
1999
2001
0
5
10
15
20
25
Quantity
Price
Sea bream
0
20000
40000
60000
80000
100000
1989
1991
1993
1995
1997
1999
2001
0
5
10
15
20
25
Quantity
Price
Fresh tilapia fillets to the US
0
5
10
15
20
251000 t
ons
0
1
2
3
4
5
6
7
US
D/k
g
Quantity
Price
Global farmed salmon production and real Norwegian exports price (2003=1)
0
500
1000
1500
2000
81 83 85 87 89 91 93 95 97 99
2001 3
1000
to
nn
0
2
4
6
8
10
GB
P/k
g
Quantity
Price
Sea bass
010000
20000
30000
4000050000
60000
1989
1991
1993
1995
1997
1999
2001
0
5
10
15
20
25
Quantity
Price
Real salmon price and Norwegian production cost
0
2
4
6
8
10
GB
P/k
gCost
Price
Productivity growth
The main reason for the increased production of salmon is the productivity growth
Market growth has further contributed to the industry growth
Salmon has this in common with other sucessfull farmed species
ProductivityProductivity can be decomposed into input factor effects and improved technical efficiency
Cost or production functions
For salmon about 60% of productivity growth is improved input factors, while about 40% is better farming practices (Tveterås)
In addition, there is supply chain innovations
Twenty years ago feed made up 25% of salmon farmers cost, and smolt about 20%. Currently feed is 55% and smolt is still 20%
For efficient chicken farmers, feed is more then 80% of the production costEfficient species are basically converters of cheap low quality inputs to more desirable outputs
Real salmon price and Norwegian production cost, 1985-2004
-2
0
2
4
6
8
10
GB
P/k
g
-1
0
1
2
3
4
5Margin
Cost
Price
Cycles
In industries where the production process takes time, responsiveness to market shocks are limited
This leads to cycles in profitability
In the salmon industry, the cycles appear to become longer as the industry grows
And it is not surprising that trade conflicts seem to be related to recessions
Production shares
0
20
40
60
80
100
Norway
Canada
UK
Chile
Uneven market growth in the EU
-30,00 %
-20,00 %
-10,00 %
0,00 %
10,00 %
20,00 %
30,00 %
1992
1994
1996
1998
2000
2002
2004
0
1
2
3
4
Market growth Price
Uneven market growth
We do know that the price responsiveness of the demand (and supply) of salmon is higher in the short run
In the long-run one can create or lose market segments
Aquaculture production will continue to increase
Control of production process leads to technological development and productivity increase
Cost reductionsBreeding
Species that does not have production processes with these characteristics, will not succeed as large volume species
As with agriculture, control with the production process and productivity improvement is necessary if one are to feed more people. Wild fisheries do not have this potential
Cost consideration will leave only a few volume species
Primarily three potential interactions between aquaculture
and fisheries
1. Market interactions
2. Interaction due to increased demand for feed
3. Local environmental issues
Impact of demand changes for a wild species
Price
Quantity
D
Impact of demand changes for a wild species
Price
Quantity
D
Impact of demand changes for a wild species
Price
Quantity
D
Impact of demand changes for a wild species
Price
Quantity
D
D’
Impact of demand changes for a wild species
Price
Quantity
D
D’
D’’
Impact of demand changes for a wild species
Price
Quantity
D
D’
Impact of demand changes for a wild species
Price
Quantity
D
Impact of demand changes for a wild species
If wild and farmed fish is substitutes, increased supply of farmed fish will reduce the price for and therefore the fishing effort after the wild species. Increase stock size, but short-term effects (Anderson, 1985).
Alaska salmon: Effort is down, but hatcheries makes the stock effect unclear
And steady supply of farmed fish can both increase and reduce demand for fish, but the main effect is likely to be a reduction in demand.
Increased demand for feed
Can lead to increased demand for fishmeal and oil, and thereby to increased fishing pressure if:
Management of reduction fisheries are poor, and
The marine inputs in the feed are unique
Unfortunately,management of many fish stocks are poor, hence it is market structure that will determine the relationship
But poor management is anyway the main culpit
Increased demand for feed
0
100
200
300
400
19
77
19
81
19
85
19
89
19
93
19
97
20
01
0
200
400
600
800
Soyameal
Fishmeal
Increased demand for feedThere is so far little evidence that fishmeal is demanded because of its unique properties, so there are no evidence of the ”fishmeal trap”. This will change if the all buyers purchase the marine inputs because of their uniqueness. Prices will then rise relatively to vegetabile inputsSo far, marine inputs are primarily used because they are cheap. Since 1997 the share of fishmeal that is going to aquaculture is not increasing anymoreAnd as it is productivity growth that has been driving aquaculture forward, increased cost of feed will limit the potential increase in demand for marine inputs from aquaculture
Increased demand for feedOnly species that are primarily fed using vegetabile inputs are commercially sustainable in the long runMost species farmed in developing countries are herbivore in nature
Salmon can be fed only on vegatible meals. Using the current commercial feed it takes about 2.5 kg wild fish to produce a kg farmed salmon. This is in contrast to 5 kg ten years ago, and 6-8 for wild fish
Will cost force salmon back to a luxury segment again in twenty years?
Local environmental issues
Impacts on juveniles. Most aquaculture starts by feeding wildcaught juveniles. Can be avoided in intensive systemsInternalisation or regulations give a Empirical Kuznets type of relationship
Degradation of habitatMining of locationsUse of antibiotics and other pollution
Aquaculture is a young industry, and problems must be discovered before they can be solved
Good management (and regulations) gives sustainable practices, but this need not be the case
Antibotics use in Norwegian salmon farming
0
100
200
300
400
19
80
19
83
19
86
19
89
19
92
19
95
19
98
0
10000
20000
30000
40000
50000
60000
Salmon
Antibiotics
Local environmental issues
Impacts on juveniles. Most aquaculture starts by feeding wildcaught juveniles. Can be avoided in intensive systemsInternalisation or regulations give a Empirical Kuznets type of relationship
Degradation of habitatMining of locationsUse of antibiotics and other pollution
Aquaculture is a young industry, and problems must be discovered before they can be solved
Good management (and regulations) gives sustainable practices, but this need not be the case
Concluding remarksThe lack of control with the production process in wild fisheries limits how much wild fish that can be landedAgriculture shows how much productivity can be increased with control of the production process
Although there are also many examples globally of extensive practices
Aquaculture is likely to be like any other crop or livestock in the future, because one has the same type of control with the production processIt will also face similar environmental challenges
Concluding remarks
Productivity growth will lead to increased production of farmed fish.
There is little doubt that aquaculture partly will meet the challenge to increase the worlds food production substantially
Cost consideration will limit the number of species that is farmed in large volumes to a handful
Concluding remarksAquaculture will limit potential price increases and possibly reduce prices for wild fish
This will lead to reduced fishing pressure
Most farmed species are likely to be primarily fed with vegetabile inputs
Still, although the fishmeal trap is not present today, the only way to ensure that increased demand for small fish does not lead to over fishing is management.
Cost considerations, will still limit such overfishing and will limit the number of species that is farmed in the future
Local environmental issues are a management problem and can be solved
