Understanding the Seafood Market – Building the Market for Gulf Seafood James L. Anderson Director, Institute for Sustainable Food Systems Professor, Food and Resource Economics University of Florida

“What about aquaculture?” “Well, it’s not sustainable.” The Problem Conversation heard in reaction to President Zoellick’s interest in the World Bank investing in productive oceans Place: Elevator between 5th and 1st floors, World Bank, Washington DC Time: February 2011 “Why would the Bank invest in oceans. It doesn’t make sense. All the fisheries are already depleted” “What about aquaculture?” “Well, it’s not sustainable.” That sums up the problem

The Great Opportunity

More Food Needed (Traditional Agriculture Only) 9 Billion by 2050 60% More Food Needed (Traditional Agriculture Only) Alexandratos, N. and J. Bruinsma. 2012. World agriculture towards 2030/2050: the 2012 revision. ESA Working paper No. 12-03. Rome, FAO. Source: NIC Report (2013); FAOSTAT; U.S. Census Bureau

Food Production Problem? Source: FAOSTAT, WHO

Demand for Fish and Meat

FISH: PORTION OF ANIMAL PROTEIN INTAKE Nearly 50% in many African countries 63% in Cambodia 55% in Indonesia 56% in Bangladesh 7% in US 21 % in China China’s per capita consumption of seafood 1981: 5.2 kg/capita/year 2011: 33.1 kg/capita/year Seafood supply: China and US, 1961-2011 Source: FAO (2016a)

What is the role of Capture Fisheries? Fresh 12 (7%) marine 81 (50%) aqua 70 (43%) Source: FAO FishStat (2013); Fish to 2030 (2013)

Have Marine Capture Fisheries Reached Their Maximum Potential? WORLD MARINE CAPTURE HARVEST in 2013: 81 MT Freshwater Capture (12 MMT in 2013) Maximum Additional Harvest from Sustainable Marine Capture Fisheries Sunken Billions Revisited (World Bank/Arnason) & EDF Study (Costello etal): Max Sustainable Marine Harvest – World at MSY: 100-105 MMT (20% +/-) Max Incl. Freshwater Capture (12 MMT in 2013) 112-117 MMT This Requires Major Reforms in Fisheries around the World Especially in Developing Countries… DIFFICULT NOTE: Enhancement aquaculture could be used as a lever to encourage change Sources: Sunken Billions Revisited (Forthcoming); Potential for Global Fish Recovery (Forthcoming) (https://www.edf.org/sites/default/files/content/upside-model-report-summary.pdf) Fish to 2030 (2013); WRI (2015)

Future Production Growth must come from Aquaculture MSY is for marine fisheries but no distinction was made between inland and marine fisheries in the Fish to 2030 Sources: FAO FishStat (2013); Fish to 2030 (2013) Sunken Billions Revisited (Forthcoming); Potential for Global Fish Recovery (Forthcoming)

Fish for direct human consumption I Figured I would have both the food fish and the total production graphs in there and you can choose what you want to do. The different forecasts vary in terms of the type of fish and the sources they are after. I’m not sure which is the best to ‘anchor’ the story too Source: FAO FishStat (2013)

Fish to 2030 S. Msangi, IFPRI M. Kobayashi, World Bank M. Batka, IFPRI S. Vannuccini, FAO M. Dey, Univ. of Arkansas J. L. Anderson, Univ. of Florida

Aquaculture Supply Growth (1000 MT)

Aquaculture Supply Growth: Regions More than 100% increase between 2010-2030 India Latin America and Caribbean Southeast Asia 50-100% increase between 2010-2030 South Asia (excl. India) Middle East and North Africa Sub-Saharan Africa Less than 50% increase between 2010-2030 Everywhere else

Consumption Growth: Regions More than 50% increase from 2010 to 2030 South Asia (excl. India) 30-50% increase from 2010 to 2030 India Southeast Asia North America Middle East and North Africa China Sub-Saharan Africa (per capita down about 20%) Decline from 2010 to 2030 Japan

Fish to 2030 2030 (Model Projection) Aquaculture will produce about 2/3 of food fish China will consume nearly 40% of seafood Production of tilapia, shrimp, will double from 2010 to 2030 Aquaculture will grow fastest in India, Latin America, and Southeast Asia S. Msangi, IFPRI M. Kobayashi, World Bank M. Batka, IFPRI S. Vannuccini, FAO M. Dey, Univ. of Arkansas J. L. Anderson, Univ. of Florida

With all this growth what is happening in the US market?

Does anyone remember this report? It identified great potential for US marine aquaculture and a path forward…but… 25 years later the US is still just starting!

TWO PATHS It has been clear for decades that the growth in seafood supply will come mostly from aquaculture. TWO PATHS FOR THE US: 1) Source new supply from farmed imports (mostly from developing countries) 2) Source new supply from a growing US aquaculture industry So far the US has chosen #1

Now it is approaching $15 billion When Marine Aquaculture: Opportunities for Growth was written in 1992 – the seafood trade deficit was about $2.2 billion Now it is approaching $15 billion Source: NMFS (2016) Fisheries of the US, 2014

Source: FAO FishStat (2013)

Risks of Dependence on Imports from Developing Countries Environment Management/Pollution Standards Disease Management – Antibiotic Use Lack of Transparency Food Security Potential Labor Exploitation Fraud – origin, species, adulteration Quality Control Political Uncertainty Nonnative Species Introduction

Per Capita Red Meat, Poultry, and Fish and Shellfish Consumption From “RM-P-F per Capita Consumption” file. Source: USDA (2015)

U.S. Per Capita Seafood Consumption: More Aquaculture - Fewer Species 1987 Tuna 3.51 Shrimp 2.29 Cod 1.68 Pollock 0.88 Flatfish 0.73 Clams 0.66 Catfish 0.60 Salmon 0.44 Crab 0.33 Scallops Other 4.76 Total 16.21 2015 Shrimp 4 Salmon 2.88 Canned tuna 2.2 Tilapia 1.38 Pangasius & Catfish 1.26 Pollock 0.97 Cod 0.66 Crab 0.56 Clams 0.33 Others 1.32 Total 15.5 % Change 75% 555% -37% >1000% 110% 10% -64% 70% -50% -82% -4% 56% 76% 71% 91% Source: NFI (1990, 2016)

Average US Intake per Week Compared to the US Dietary Recommended Intake Source: U.S.D.H.&H.S. and U.S.D.A. 2015 – 2020 Dietary Guidelines for Americans. 8th Ed. Dec. 2015. Table 2-6. http://health.gov/dietaryguidelines/2015/guidelines/chapter-2/a-closer-look-at-current-intakes-and-recommended-shifts/

Growing the Market and Product Innovation Stable or Declining Cost Consistently Available Consistent Quality Meet Consumer Demands- Commodity and Niche

Long Term Commodity Price Trends

Sources: USDA, Urner Barry (2016), NMFS

Salmon

Technology & Trade Alaska – Bristol Bay Norway

Atlantic Salmon Production Real US import price fresh fillet Source: Ragnar Tveteras, GOAL 2016 Sources: FAO, Kontali, NSC/Eurostat (prices). Note: Prices until 2015 are annual averages. Price in 2016 is January-July average. GOAL 07 Fish Production Estimates & Trends - Ragnar Tveteras 32

The Aquaculture Sector Creates New Markets Salmon Farmers created new markets outside the US West Coast New Products – Pin-Bone-Out Salmon Fillet Moved Salmon into Sushi/Sashimi Farmed Salmon created new markets premium wild salmon

Wild Salmon Think wine

Farmed Salmon Wild Shrimp Source: http://www.seafoodwatch.org/

Tilapia Market Very rapid growth Competition for flatfish, snapper and other whitefish Fillets – Market innovation Many environmental NGOs are positive about tilapia Increase globalization Wal-Mart Photo: J.L. Anderson

Global Tilapia Aquaculture Production US import prices frozen fillet Source: Ragnar Tveteras, GOAL 2016 Sources: FAO: 1990-2014. Miscellaneous sources: 2015-2018. NMFS: Prices US import frozen fillet. Note: Prices are annual averages, except for 2015(January-July average)

Shrimp

World Production of Shrimp Capture Fisheries & Aquaculture 54% 52% 53% 51% Aquaculture accounted for 54% of world shrimp supplies in 2014. 49% 28% 26% Sources: FAO (2016); GOAL (2014, 2016). Notes: M. rosenbergii is not included. China includes freshwater production of P. vannamei.

Down 12% between 2011-13, Up 17% between 2013-16 U.S. Shrimp Imports Down 12% between 2011-13, Up 17% between 2013-16 Imports from Thailand declined sharply (by 68%) between 2010 and 2014, with a slight recovery taking place in 2015 (from 65 to 74 thousand tons). India and Indonesia have become the top exporters to the U.S. market, accounting for 44% of imports in 2016. Source: USDC/NMFS (2016) * Estimate

U.S. Landings of Wild-Caught Shrimp ~2% global shrimp harvest ~3.5% global farmed shrimp harvest ~10% US shrimp supply Thousand MT Source: USDC/NMFS (2016)

Trends in U.S. Shrimp Import Prices Real prices increased sharply during 2013 but returned to previous levels in 2014 and early 2015. Real prices have remained stable over the last 12 months. Source: USDC/NMFS (2016).

Reframe Aquaculture Compare with Other Animal Proteins Footprint – Environment Efficient Resource Use Low Waste Cost/Value Nutrition Traceability Reliable and Consistent Sources: Marine Harvest Industry Handbook (2015); NMFS; Flachowsky (2002); SRAC Publication No. 282 (2009); FAO Fisheries and Aquaculture Technical Paper 554 (2010)

Feed Conversion Ratio Sources: Marine Harvest Industry Handbook (2015); NMFS; Flachowsky (2002); SRAC Publication No. 282 (2009); FAO Fisheries and Aquaculture Technical Paper 554 (2010)

Source: World Resources Report: Creating a Sustainable Food Future (WRI 2014)

Water Use Efficiency NEED AT LEAST ONE MORE FISH SPECIES Source: Marine Harvest Industry Handbook (2015); Wu, Bazer, and Cross (2014); Boyd et al (2007)

Nutrient Emissions Source: Flachowsky (2002); Hall, Delaporte, Phillips, Beveridge, and O’Keefe (2011)

Demand An increasing and wealthier global population requires more seafood … at least more high-quality, value-added seafood… not necessarily more volume International trade is growing Much of the trade flow is from developing countries to developed countries - food security, sustainability issues Consumers tastes and preferences are changing Aquaculture is creating new markets Few species will dominate – opportunity for niches

Build Markets - Reframe the Message Get the Story Right – Aquaculture is the future Get credible facts Focus on production efficiency of resource use compared to other animal protein Demand responsible production Trust, transparency, and safety are essential Nutrition that tastes good and good for the planet Work with the environmental community, chefs and celebrities Work with the fishing industry to develop markets

Thank You James.anderson@ufl.edu http://isfs.institute.ifas.ufl.edu Photo: J.L. Anderson