AQUACULTURE OUTLOOK March 07, 1996 Approved by the World Agricultural Outlook Board ----------------------------------------------------------------------------- AQUACULTURE OUTLOOK, a supplement to the Livestock, Dairy, and Poultry Monthly report, is published twice a year by the Economic Research Service, U.S. Department of Agriculture, Washington, DC 20005-4788. LDP-AQS-3. Subcriptions to the printed version of this report are available from the ERS-NASS order desk. Call, toll-free, 1-800-999-6779 and ask for stock #LDP- AQS, $15/year. A consolidated subscription to all of the livestock, dairy, and poultry reports (34 issues/year) is also available as stock #LDP-A, $66/year. ERS-NASS accepts MasterCard and Visa. ----------------------------------------------------------------------------- Catfish Production Forecast Higher in 1996 Catfish production is expected to expand 5-7 percent in 1996, based on January 1 grower inventories. After falling in 1994 for the first time in almost 20 years, live catfish deliveries to processing plants rose to 447 million pounds in 1995, up 2 percent from the previous year. After strong farm prices in 1994 and 1995, grower inventories at the beginning of 1996 are higher in almost all size categories. As of January 1, 1996, growers reported their inventories of market-sized fish at 227.7 million, an increase of 13 percent from a year earlier. The larger market inventory is expected to put downward pressure on farm prices. However, some of this price pressure will be offset by the traditionally strongest sales period of the year, usually January-April, during which the Lenten period falls. Grower-held inventories of stockers and fingerlings as of January 1, 1996, were up 13 and 15 percent, respectively, from a year earlier. Production and prices during the second half of 1996 will depend on how fast stockers and fingerlings held by growers on January 1 can be brought to market size. With farm prices still averaging around 77 cents a pound, growers have an incentive to feed fish at maximum rates. However, with higher feed prices in 1996, growers will be looking to maximize feed conversion ratios by slightly reducing the stocking rates and feeding schedules. Overall domestic economic growth in 1996 is expected to be moderate, which could help support consumer purchases of higher priced protein products. Farm Prices Lower in 1996 Farm prices for catfish over first-quarter 1996 are expected to average 2-3 cents a pound below the high levels of a year earlier, due to larger supplies and strong competition from the meat and poultry industries. Prices will continue to be pressured downward during the second quarter and into the summer months as the supply of market size fish increases. Acreage Growth Mainly in Arkansas and Mississippi The catfish industry has responded to 2 consecutive years of profitability by expanding operations and acreage in production. The January 1, 1996, survey of the catfish industry reported 1,320 operations, up 4 percent. Acreage in ponds also increased, from 158,840 acres in July 1995 to 167,280 in January 1996. This is the largest acreage ever reported by the catfish industry, up 1 percent from the previous record of 166,160 in July 1991. The largest increases in acreage were in Arkansas and Mississippi, about 4,000 additional acres each. At the beginning of 1996, growers reported they had over 9,400 acres of ponds either being renovated or under construction, 27 percent higher than a year earlier. New construction or renovation of acreage later this year will depend on grower prices and feed costs. Decreasing Broodfish Suggests Lower Production in 1997 Changes in broodfish inventories at the begining of a year tend to be more closely related to supplies in the following year, due to the lag associated with the growing time needed to bring catfish fingerlings to market size. Therefore, the increase in grower-held inventories in 1996 relates back to the increase in broodfish seen at the beginning of 1995. The decline in broodfish numbers in 1996 would suggest a smaller inventory of fish going into 1997 and lower production. Higher Farm Sales Expected in 1996 Farmer sales to processing plants in 1995 totaled 447 million pounds, up only 2 percent from the previous year. Prices received by farmers averaged 78.6 cents a pound in 1995, marginally higher than the previous record set in 1994. Farmers recorded strong gains in sales to processors during first-half 1995, but sales slowed in much of the second half. Given the strong increases in numbers of fish held in inventory at the beginning of 1996, grower sales to processors are forecast between 470 and 480 million pounds, up 5-7 percent from 1995. Most of the sales increase is expected in second-half 1996 as current stockers and fingerlings reach market size. Sales to processors in January 1996 were down 1 percent, but sales are likely to increase as the Lenten season progresses. Processor Revenues Set Record in 1995 A 5-percent increase in processor sales quantities and a small increase in average sales price to a record $2.40 a pound pushed gross processor revenues to a record $545 million in 1995, up 6 percent from the year-earlier record. In 1996, gross processor revenues are expected to decline somewhat as higher anticipated volumes are likely to be offset by lower prices. Average processor prices for all catfish products appear to have peaked in May 1995 at $2.45. Between May 1995 and January 1996 average prices have fallen 5 percent. The higher revenues in 1995 were due to higher sales and prices in both the fresh and frozen markets. In both markets, rising sales of fillets and other products offset declining sales of whole fish. Prices in the fresh and frozen markets averaged slightly higher in 1995, setting new records. Sales of "other" products, chiefly steaks, nuggets, and belly strips, were the strongest category in 1995. Sales of other products rose 6 percent in the frozen market and a large 20 percent in the fresh market. For 1996, prices are expected to be lower due to larger supplies of catfish and competing products. Tilapia Imports Continue To Grow Tilapia imports are forecast to further expand in 1996 as higher production of fillets allows tilapia to move into large food service markets. Domestic production is also forecast to grow. Domestic producers will look to the live market first, but as output expands, larger producers will have to weigh the additional capital expenses and management needed to enter and compete in the processed fish market. The value of tilapia imports in 1995 rose 33 percent to $34.1 million. The expansion in tilapia imports seen over the last 3 years continues. The increase in import value was chiefly the result of higher prices, as the quantity imported rose only 8 percent. On a liveweight basis, tilapia imports in 1995 totaled over 50 million pounds. Higher imports are expected in 1996 as U.S. prices have stayed relatively firm even with higher imports and larger world supplies. The American Tilapia Association estimated that U.S. production expanded in 1995 and additional growth is forecast for 1996. Future growth in domestic production will depend on the ability of growers and processors to lower cost enough to compete with imports. If tilapia follows the same pattern as other finfish species, larger production and declining grower prices will expand the market. However, to appeal to a wider audience, especially in the United States, processors likely will have to move to a larger variety of value-added products instead of chiefly marketing whole fish. The increases in tilapia imports were not even throughout the different categories. Imported quantities rose for frozen whole fish and fresh fillets, but fell for frozen fillets. In the frozen fillet market, even with imported quantities declining, the value increased as the average import price was up 50 percent. The frozen fillet market is relatively evenly divided between Thailand, Indonesia, and Taiwan, each of which has a 26 to 30 percent market share. U.S. Salmon Production Higher in 1995, Maine Output Up 50 Percent U.S. pen-raised salmon production rose to 34 million pounds in 1995, about 36 percent higher than the previous year. While output is expected to increase in 1996, domestic growers will continue to have their prices pressured by expanding supplies of imported farm-raised salmon and large harvests of wild salmon. After falling in 1994, when some growers withheld salmon from the market and weather problems beset the industry, Maine's Department of Marine Resources reported that production rose to 22.3 million pounds, liveweight, about 50 percent higher than in 1994. The higher production resulted from favorable growing conditions and higher production at existing sites. Production is forecast to rise in 1996 as some additional sites come into production and growers continue to become more efficient at existing locations. The Washington Salmon Growers Association reported a production of 11.2 million pounds in 1995, up 7 percent from 1994. The increase was due to higher productivity at existing sites, as Washington has not approved any new sites in a number of years. Growers in Washington expect slightly higher production in 1996 as productivity rises. In 1995, U.S. imports of Atlantic salmon continued to grow. Imports were higher in all categories, but growth in imports of fresh and frozen fillets was especially strong. Overall, Canada and Chile continue to be the dominant suppliers, but the chief supplier is different in each of the three main markets. Imports of fresh salmon (farm or nonfarmed) reached $194 million in 1995, 14 percent higher than in 1994. Canada and Chile account for approximately 97 percent of the imports in this category. In the frozen market, Norway supplied 63 percent of the imports. Imports of frozen salmon have not increased as fast as either fresh or filleted imports and were valued at $15 million. While the fresh and frozen markets increased in 1995, the real growth in salmon imports was in fillets. Salmon fillet imports in 1995 were valued at $51 million, compared with less than $1 million in 1994. Chile is the chief supplier in the fresh fillet market, valued at $39 million, accounting for over 85 percent of the product. The growth in imports of Chilean salmon fillets is due to the growing U.S. demand for fillet products, the falling real prices, and processing cost advantage. Under pressure from growing world production of farmed Atlantic salmon, the average import prices fell in 1995. Prices for fresh fish averaged only $2.43 a pound in 1995, down a nickel from 1994. Prices were almost identical for frozen fish at $2.46 a pound. However, fillets averaged only $2.63 a pound, an indication of possible further downward price pressure on imported whole fish. Fillets are normally considerably more expensive than whole fish. Farmed salmon prices are expected to be under continued downward pressure in 1996 as most growing areas are still looking to increase production. In both Norway and Chile there are efforts to diversify production with items such as halibut or steelhead trout. Growers in Norway have also cut back feeding of salmon already in net-pens to reduce what had been projected as another large jump in production for 1996. Shrimp Imports Down, Prices Up in 1995 After reaching $2.7 billion in 1994, U.S. shrimp imports fell 4 percent to $2.6 billion in 1995. The decline stems from lower quantities and only a small increase in the average price, mostly for frozen product. Prices for the different size categories of frozen shell-on moved in different directions in 1995. Prices for the larger sized shrimp generally rose while prices for the smaller sizes fell. Prices also rose for frozen peeled shrimp (up 5 percent), but an 11-percent decrease in quantity pushed the value of imported shrimp in this category down 7 percent to $868 million. In 1996, overall shrimp prices are expected to remain relatively strong. First, some growing areas are experiencing problems with post-larvae availablity or diseases. Second, rapid economic growth in China and the decline in its domestic farmed shrimp production have made China a market for shrimp from other Asian producers. Third, higher world grain prices will raise production costs. Over the last 2 years, Mexican shrimp exports to the United States have risen 28 million pounds. While Mexico has a developing shrimp farming industry, most of the increase has come from sales of wild-caught shrimp. In 1995, imports from Ecuador were also higher, while imports from the major farmed shrimp producers in Asia, Thailand, Indonesia, and the Philippines were all lower. Supplies from Asian countries are likely to remain lower in 1996 as long as China remains a strong market for shrimp imports. The impact of the Food and Drug Administration's new safety and inspection regulations on imports from developing countries in Asia is unknown. Many processors may not have the necessary capital to bring their operations into compliance with the regulations, which go into effect on December 18, 1997. Crawfish Imports Double Again The value of imported crawfish meat rose to $9.1 million in 1995, more than double the previous year. In only 2 years, crawfish meat imports have increased more than fourfold. However, after falling for the last 2 years the average landed price rose to $3.19, considerably higher than the $2.39 they had averaged in 1994. Prices rose partly due to a smaller wild harvest during the 1994/95 season. Prices have remained strong going into the 1995/96 season especially with cold weather in January reducing pond production. The prices for the remainder of the 1995/1996 season will be heavily influenced by the water levels in the Achafalaya Basin, which accounts for much of Louisiana's wild harvest. The smaller wild harvest in the 1994/95 season reduced exports to Scandinavia to $9.6 million, down 33 percent from the previous year. Many of the large crawfish needed for this market come from the wild harvest. Clam and Mussels Exports Up, Mollusk Imports Climbing The supply of mollusks in the United States, (oysters, clams, mussels, and scallops) is from farmed and wild production from both domestic production and imports. For most of the items there are no clear answers on exactly how much is farmed and how much is wild. In most cases, Canada is the main export market and also the chief source of imports. The exception to this is oyster imports, where the major supplier is South Korea. In 1995, U.S. exports of mollusks were valued at $16 million, up about $1 million from 1994. The growth came from increases in the value of mussel and clam exports. Oyster exports were down slightly from the previous year, due to lower supply, not lower demand, in the export markets. With economic growth forecast to continue in most of Asia, U.S. mollusk growers, especially farmers of Pacific oysters on the West Coast, are expecting continued increases in the export markets for their product. Mollusk imports in 1995 grew to $241 million. Over 70 percent of this value comes from scallop imports. In the scallop market, most live product is imported from Canada, while processed scallops are chiefly products of China and Japan. Both China and Japan have extensive farmed scallop industries. Other major suppliers of farmed mollusks to the United States are Canada for both mussels and oysters and New Zealand, which is a large producer of farmed mussels. Ornamental Fish Exports and Imports Higher U.S. exports of ornamental fish were valued at almost $20 million in 1995, up 5 percent from 1994, the sixth consecutive year that exports have risen. Ornamental fish exports have gone up 70 percent in value since 1990. Although sometimes overlooked due to the attention focused on the production of food products, ornamental fish are the largest aquaculture export for the United States. The largest markets for U.S. ornamental fish exports continue to be Japan, Canada, Hong Kong, Taiwan, and Mexico. The continued strength of the yen compared to the dollar has boosted exports to Japan. In 1995, exports to Japan rose 32 percent to $7.8 million. Japan accounts for 40 percent of U.S. exports. The weakness in the peso contributed to a 43-percent drop in exports to Mexico in 1995. For 1996, however, as the Mexican economy begins to stabilize, exports are expected to move back towards their pre-devaluation levels. Another large market for exports is the European Union (EU), which accounted for 15 percent of U.S. exports, or $3 million. Shipments to the EU were up in 1995 as market expansions in the U.K., Germany, and Italy more than offset declines in some other countries. Imports of ornamental fish topped $54 million in 1995, up 15 percent from 1994. Since 1990, the value of imported ornamental fish has risen 32 percent. Much of the increase came from higher shipments from traditionally large suppliers in Asia, such as Singapore, Indonesia, and the Philippines. There was also considerable growth in imports from Western Hemisphere suppliers, such as Colombia, Peru, and Brazil. Together these countries accounted for about 15 percent of the market. Principal contributor: Dave Harvey 202-219-0839 END-END-END