AQUACULTURE OUTLOOK October 3, 1997 Approved by the World Agricultural Outlook Board ------------------------------------------------------------------------------ AQUACULTURE OUTLOOK, a supplement to Livestock, Dairy, and Poultry Monthly, is published twice a year by the Economic Research Service, U.S. Department of Agriculture, Washington, DC 20005-4788. LDP-AQS-6. Subscriptions 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. A consolidated subscription to all of the livestock, dairy, and poultry reports (34 issues/year) is also available as stock #LDP-A. ERS-NASS accepts MasterCard and Visa. ------------------------------------------------------------------------------ Catfish Production at New High Farmer sales of catfish to processors are forecast to reach 520 million pounds in 1997, 10 percent above the previous year and the first time that production will be over the half billion pound mark. In the first 8 months of 1997, catfish deliveries to processing plants totaled 355 million pounds, 12 percent higher than in the same period in 1996. This will be the third consecutive year of higher sales following a decline of approximately 20 million pounds in 1994. In 1998, production growth is expected to slow due to lower fish inventories. However, growers should benefit from stronger farm prices and further declines in feed costs. For calendar year 1998 soybean meal prices are likely to average about 25 percent lower, but corn prices are expected to average slightly higher than in 1997. At the beginning of July, growers in the four major producing States (Mississippi, Alabama, Arkansas, and Louisiana) reported holding larger inventories of broodfish and foodsize fish than a year earlier. However, the growers also reported that holdings of stocker and fingerling fish were lower than the previous year. Broodfish numbers were only slightly higher than the previous year with growth in Mississippi and Arkansas offsetting declines in Louisiana. As the catfish industry continues to expand and more specialized firms enter the industry, the role of grower-held broodstock may decline. If the advantages of using specially developed strains of catfish become apparent, more growers are likely to purchase stockers or fingerlings from these firms as opposed having their own broodfish and hatchery operations. As of July 1, 1997, grower inventories of foodsize fish were larger than the previous year in all three size classes. The total number of fish was up 8 percent, but the increases were concentrated in large and medium foodsize fish. The number of small foodsize fish was up 4 percent, but this was only half the percentage increase in inventory that occurred between 1995 and 1996. The foodsize fish held in inventory as of July 1 have already achieved market size and will represent the majority of fish going to processing plants through the end of 1997. The overall increase in foodsize fish inventory and the increased inventory of finished product held by processors are expected to allow processor sales to remain considerably above the previous year with little or no upward pressure on prices at either the farmer or wholesale levels. After steady growth over the last 4 years, the numbers of stockers and fingerlings held by growers in the four major States were down 10 and 3 percent, respectively. This downturn is expected to reduce the poundage of fish available for processing in first- and second- quarter 1998 from the poundage processed in 1997. The combination of lower poundage of foodsize fish available and a continued expansion in the economy is expected to mean higher prices for both growers and processors. The exact poundage of fish available for processing in first-half 1998 will depend on a number of factors. Total fish numbers will be affected by mortality rates for stockers and fingerlings over the next 6 months from diseases, stress from changing weather, and predation. The growth these fish attain depends on the severity of fall and winter weather, which affects feeding rates and growth. Also, the amount of fish sold to processing plants over the last 4 months of 1997 will affect the numbers of larger fish retained in ponds going into the new year. Farm Prices Down for 1997; Forecast To Strengthen in 1998 After averaging between 78 and 79 cents a pound in 1994 and 1995, farm prices for catfish dropped to 77 cents in 1996 and are expected to fall to 72 cents in 1997 as production rises and sales increase. In 1998, farm prices are forecast to rise as supplies of available foodsize fish tighten and the economy continues to expand. Any increases in catfish prices will be tempered by large supplies of pork and poultry in 1998. However, along with an increase in prices, catfish growers may also benefit from continued favorable soybean meal prices through first-half 1998. Pond Acreage Expands Slightly After increasing almost 15,000 acres between July 1995 and July 1996, the total pond acreage for the four major producing States was 164,000 in first-half 1997, up only 1 percent from the previous year. With falling farm prices in 1997, any additions to pond acreage are expected to be small. At midyear growers in the four major States indicated they had about 4,500 acres of ponds under construction, while 5,600 acres were under renovation. While lower grower prices in 1997 tempered expansion plans, the forecast higher prices in 1998 and continued low feed costs are expected to encourage further pond building in second-half 1997. Farmer Revenues Edge Higher in 1997 With deliveries of fish to processing plants in 1997 projected at around 520 million pounds and prices received by farmers likely to average close to 72 cents a pound, farm revenues for catfish are expected to reach a record high. The forecast total of about $375 million slightly surpasses the previous record of $365 million set in 1996. While farm prices have declined in 1997 compared to 1996, lower feed prices have helped boost grower returns. In previous years returns had been squeezed by rising feed costs. Processor Sales Higher Over the first 8 months of 1997, processors sold 179 million pounds of catfish products, 11 percent more than in the same period in 1996. Annual sales for 1997 are forecast to approach 260 million pounds and prices are predicted to average close to $2.25 a pound, down about 5 percent from 1996. In 1997, processor revenues are expected to reach a record $585 million as higher volume offsets lower average prices. At the end of August, processors reported holding 9.7 million pounds of finished products in inventory, 1 percent less than a year earlier. This level of inventory is expected to keep farm prices around 72 cents per pound and below a year earlier for the remainder of 1997. Even if inventories increase slightly above a year earlier, processors are not expected to have enough supply to keep farm prices from rising as supplies of foodsize fish tighten in first-half 1998. The higher processor revenues in 1997 have been due to increased sales volume as the weighted average price for fresh and frozen catfish products over the first 8 months of 1997 was $2.38 per pound, down 4 percent from the same period in 1996. The average wholesale price declined for every product category. Sales of fresh catfish products (whole, fillets, and others) were all higher in the January - August period than a year earlier. For frozen catfish products, sales of filleted and other products rose, while sales of whole catfish fell 2 percent. Sales of processed catfish products are expected to slow seasonally in the fourth quarter but remain well above a year earlier. In 1998 the growth in processor sales is expected to be smaller as grower supplies tighten and prices increase. Processor prices are expected to increase as growth in the overall economy and especially in the restaurants and food service businesses should allow processors some latitude to increase their prices as farm prices rise. Trout Sales Reach $78 Million The USDA's September trout report showed 1997 (September 1, 1996 to August 31, 1997) sales of trout products at $78 million, up $6 million from the previous year. Much of the increase can be attributed to the inclusion of Connecticut, Massachusetts, and West Virginia in the survey for the first time. Although there is no way to tell the exact amount of sales that can be attributed to these three States, their inclusion in the survey represents 48 additional producers and probably $4 million in added sales. The increase in total sales was from higher sales value of foodsize fish and stockers, as the value of fingerling and egg sales declined. A 6-percent increase in the quantity of foodsize trout sold was the sole reason behind the over $3 million increase in the value of foodsize fish sales, as the average price remained at $1.06 a pound, the same as in 1996. Idaho, North Carolina, and California, the three largest producers, all had increases in sales volume, but only North Carolina and California showed increases in the value of fish sold. Idaho's volume was up 5 percent in 1997, but the price of foodsize fish fell a nickel from 1996 to only $0.75 a pound. The value increases in North Carolina and California were complemented by higher sales in Pennsylvania and the addition of three new States to the survey. The average price for foodsize trout increased in many of the smaller producing States, offsetting the decline in Idaho. This may indicate that the demand for trout by smaller buyers has held up better than the demand from large grocery chains or food service businesses. This is likely due to continued good demand at restaurants brought on by the good economic conditions over the last year. Following a 15-percent jump in 1996, sales of stockers rose 48 percent in 1997 to $11 million. Much of the increase resulted from higher prices, as the volume of sales rose 20 percent. With sales falling in Colorado, North Carolina, and Pennsylvania, normally the top three States, the increase can be attributed to the inclusion of the three northeast States. These States likely added $3 million to the increase from 1996 to 1997. The higher sales of foodsize and stocker trout in 1997 result from strong fingerling and egg sales in 1996. However, in 1997 sales of fingerlings and eggs declined, which may signal a production slowdown in 1998. After rising strongly in 1996, the volume and value of fingerling sales dropped sharply in 1997 to below those of 1995. Exports of trout products also declined in the first half of 1997. Egg exports fell 20 percent, as lower sales to Canada were not fully offset by increased sales to Asia. Total exports of trout products (fresh or frozen) declined to $1.2 million, down about $400,000, as sales of frozen trout products to Japan declined in response to falling prices for U.S. wild harvest salmon and strong promotional efforts for farmed salmon from Chile and Norway. Tilapia Imports Increase 34 Percent In first-half 1997, tilapia imports increased 34 percent from first-half 1996. Almost all the increase came from larger shipments from Taiwan and Costa Rica. However, the value of tilapia imports rose only 21 percent to $24.6 million, as average prices fell a dime to 99 cents a pound. Average prices vary considerably among the three product categories: Whole frozen fish averaged only 64 cents a pound, while fresh fillets were $2.21, and frozen fillets were $2.05 a pound. On a liveweight equivalent basis, the United States now uses approximately 90 to 100 million pounds of tilapia per year. In first-half 1997, U.S. tilapia imports on a liveweight basis were just over 38 million pounds, up 10 million from the same period in 1996. On a calendar year basis, liveweight tilapia imports are forecast at 75 to 80 million pounds. Added to this is the 15 to 20 million pounds of tilapia produced domestically. With the average import price expected to continue to decline in the long run, the popularity of tilapia as a menu item at restaurants and as a regular offering at supermarkets is likely to increase. Over the long-term, filleted products are expected to become a larger share of total imports with countries in Central and South America supplying more. Taiwan remains the largest supplier, accounting for 77 percent of all the imports in first-half 1997. While Taiwan is the dominate supplier of frozen whole fish, it did not ship any fresh fillets to the United States, and was second to Indonesia in the frozen fillet market. Imports of whole frozen fish have grown steadily, but imports of filleted tilapia products have grown even faster. Larger future imports of filleted products would mirror what has happened for other fish species. To supply high volume food service businesses, producers have had to supply uniform filleted products. Salmon Imports Rise 12 Percent During first-half 1997, the United States imported 76 million pounds of Atlantic salmon, 12 percent more than in first-half 1996. The value of imports rose 19 percent to almost $180 million. Based on first-half imports, continued strength in the domestic economy, and a somewhat smaller domestic wild salmon harvest, Atlantic salmon imports are projected to reach 155-165 million pounds in 1997 with a value of $355-375 million. Unlike previous years, the large increase in Atlantic salmon imports has not led to declining prices. Imported Atlantic salmon averaged $2.38 a pound in first-half 1997, up about 14 cents from a year earlier. Imports of filleted salmon continue to gain market share, increasing 30 percent in first-half 1997. Atlantic salmon fillets (fresh and frozen) accounted for 29 percent of all Atlantic salmon imports, compared with 16 percent in first-half 1996. The 1997 wild harvest of salmon, while large on a historical basis, has been smaller than the recent record-setting harvests. With a smaller domestic catch, U.S. fresh salmon imports rose 6 percent and their average price went up 14 percent to $2.42. The chief beneficiary of this increase was Canada, whose fresh salmon exports to the U.S. market rose 40 percent. The Canadian share of the fresh Atlantic salmon market rose greatly as imports from Chile, Canada's major competitor, were down sharply. Although Chile remained the dominant supplier of filleted salmon products to the U.S. market, Canada again expanded its share of this market. After accounting for less than 200,000 pounds or only 1 percent of the imports of filleted Atlantic salmon in first-half 1996, Canada's shipments rose to 2.3 million in first-half 1997, or 11 percent of first-half imports. With increases in both the fresh and fillet markets in 1997, Canada was again the largest supplier of Atlantic salmon products. In first-half 1996, large increases in filleted product exports had allowed Chile to surpass Canada as the leading supplier to the United States. Quantity and Value of Shrimp Imports Up in 1997 After falling in first-half 1996, the quantity and value of shrimp imports rose 3 and 12 percent, respectively, in first-half1997 compared to a year earlier. The increases bring imports to near 1995 levels. With a strong domestic economy encouraging consumption, especially in food service establishments and restaurants, shrimp imports are expected to remain above a year earlier through the remainder of 1997 and into first-half 1998. The major factors influencing imports over the short term will be the outlook for domestic wild harvest, changes in Japanese demand in the wake of the food-based illnesses that have occurred over the last half year, and the impact of El Nino on shrimp production in South and Central America and Southeast Asia. In the past, El Nino conditions have actually helped shrimp farmers in countries like Ecuador by increasing the numbers of post larvae shrimp in nearby waters. Farmers can run their operations using post-larvae shrimp from on-shore hatcheries, but the survival and growth rates from wild post-larvae are usually better. During first-half 1997 almost all the increase in the quantity of shrimp imported came from higher imports of prepared or preserved shrimp. Frozen shrimp imports were only slightly higher and fresh shrimp imports fell more than 50 percent. Imports of prepared shrimp have increased over the last several years as exporting countries attempt to capture additional value by processing more shrimp. This is especially true in areas with extensive farming operations, where farms harvest year-round to fully use processing plants. However, as these plants are upgraded to meet stricter inspection and health standards, processors are expected to turn to further processed products to increase revenues. HACCP standards go into effect on December 18, 1997 for products exported to the United States. Over the last 2 years the value of imported prepared or preserved shrimp has risen 63 percent, with shipments from Thailand and Indonesia showing strong growth. While there are no hard data on the quantity and value of farm-raised shrimp imports, the increases in shipments from Ecuador, Thailand, and Indonesia (three of the largest farmed shrimp producers) indicate that the percentage of total shrimp imports coming from aquaculture operations is likely rising. In first-half 1997, the three countries accounted for 57 percent of the total quantity of imported shrimp and 64 percent of the total value. Crawfish Imports and Exports Up The pattern of crawfish imports (mostly frozen crawfish meat from China) in 1997 is likely to be very different from 1996. Over the first half of 1997, crawfish meat imports totaled about 590,000 pounds, up 328 percent from first-half 1996. However, in 1996 almost all the crawfish imports occurred in the second half of the year and imports for all of 1996 totaled 2.8 million pounds. In 1997, the imports are expected to follow a reverse pattern. A recent finding by the International Trade Commission that Chinese crawfish meats were being dumped on the U.S. market led to the imposition of countervailing duties on imports of crawfish meat from China, although no countervailing duties were placed on imports of whole crawfish. As a result, imports from China should be greatly reduced in the second half of 1997 and in 1998. After falling in the last 3 years, U.S. exports of whole crawfish to the Scandinavian countries rebounded somewhat in first-half 1997. Exports totaled 5.7 million pounds and were valued at $10.1 million. While this is more than double the value of exports in first-half 1996, it still is well below the $13.2 million shipped in first-half 1994. The crawfish export market is highly specialized calling for large whole crawfish to go primarily to Sweden within a 2- to 3-month period. Domestic production of crawfish (basically Louisiana) in 1996 was 44.4 million pounds liveweight, down 20 percent from the previous year. Farmed crawfish production in Louisiana came from approximately 111,300 acres of ponds. There is an additional wild harvest from swamp areas throughout the State. In 1996, the wild harvest amounted to 20 million pounds U.S. Oyster and Clam Exports Higher, Mussel and Oyster Imports Up U.S. mollusk exporters had mixed success in first-half 1997. The quantity of oyster and clam exports rose 45 and 9 percent, respectively, but exports of mussels plummeted 64 percent. While the unit price of oysters declined, the average price for exported clams increased. The quantity and value of oyster product exports to Asia have been on the increase and in first-half 1997 were more than double those of first-half 1993. After falling in 1994, clam exports have risen for the last 3 years with most of the increase going to Asian markets. Oyster and clam exports are forecast to continue to grow as demand increases for these speciality products in Asian markets. U.S. mussel exports are a fairly small market and with the growth in domestic demand, mussel exports fell to only $330,000 in first-half 1997. During the first 6 months of 1997, U.S. imports of mollusks (oysters, clams, and mussels) totaled 21.6 million pounds valued at $29.3 million, an increase in both quantity and value. Most of the volume increase came from higher imports of mussels, up 15 percent. This is the fifth consecutive year that imports of mussels have risen. Over this period the value of imports has risen from just less than $4 million in first-half 1992 to $12.3 million in 1997. The chief source of this growth in mussel imports has been Canada, especially Prince Edward Island and some of the other Maritime provinces. Oyster imports, while slightly higher in first-half 1997, have been trending downward. Over the last 4 years they have fallen 38 percent. Imported oysters have faced strong competition from domestic farmed and wild harvest production. Also, oysters are often consumed raw and have suffered from incidences of contamination. Food safety experts have cautioned people with certain health problems to avoid consuming oysters. Researchers are now looking at different methods, such as irradiation and various heat treatments, to increase the safety of oyster products. Imports of scallops also declined in the first half of 1997, mainly due to about a one-third decline in the value of imports from China. China's scallop products are mostly smaller farmed bay scallops. The Chinese bay scallop industry has increased very rapidly in the last decade, and with rising domestic incomes, more production is being used in China's own markets. Ornamental Fish Exports Rise, Imports Fall U.S. exports of ornamental fish were valued at $8.4 million in first-half 1997, up 1 percent from the same period in 1996. This is a slight reversal from the large drops of the last 2 years, but exports remain 17 percent below the $10.1 million recorded in first-half 1994. Shipments to the major markets were mixed, with increasing exports to Canada, Mexico, and Hong Kong offsetting falling exports to Japan. After rising the last 2 years, exports to the EU were basically flat with higher exports to the United Kingdom and France canceled out by lower exports to the Netherlands and Germany. With Mexico's economy continuing to gather strength, exports to there should remain strong. U.S. growers will likely face strong competition in Japan, the largest market, especially from producers in Thailand with its recently devalued currency. Imports of ornamental fish during the first 6 months of 1997 fell 8 percent to $25.9 million, well below those of the last 2 years. The lower shipments were spread over most of the major exporting countries except Thailand and Hong Kong. Exports were down from most all countries in the Western Hemisphere. In second-half 1997, imports from Thailand should remain strong as the devaluation of the baht lowers the relative cost of its products. Aquaculture Expands as Seafood Source In the 1990's, U.S. per capita seafood consumption has remained flat, stuck between 14.8 and 15.2 pounds of edible meat per year. So any growth in total domestic seafood consumption has come from increasing population. Yet during this period consumption of aquaculture products has continued to rise. All aquaculture production is not increasing at the same rate, but the trend has definitely been upward. The most prominent examples are the long term growth in the domestic catfish industry (production up 31 percent between 1990 and 1996), and the increasing production of farm-raised Atlantic salmon and tilapia. With year-round production, uniform product sizes, and long term declining real prices, as is the case for red meats and poultry, aquacultural production has the characteristics that most seafood wholesalers and retailers want. The United States has one of the world's largest fishing industries, yet if catfish were a wild harvest product, it would rank as one of the top species. Catfish production on a volume basis would rank behind only pollock, menhaden, salmon, and possibly cod. On a value basis, catfish would rank fourth behind only shrimp, salmon, and crabs. Principal contributor:Dave Harvey--DJHARVEY@Econ.Ag.GOV\202-219-0839 After Nov. 1, 1997--202-694-5177 END_OF_FILE