1. 1 PERSPECTIVES FOR AQUACULTURE IN THE CARIBBEAN AND LAM AND ITS GLOBAL REACH Francisco de la Torre Regional Director – Americas Region Caribbean Week of Agriculture October 9-10, 2013 Georgetown, Guyana

2. 22 GLOBAL ENVIRONMENT

3. 3 WORLD POPULATION HAS DOUBLED DURING OUR TIMES (TODAY ~7 BILLION) FAO, 2010 Commodity prices increase >130% since 2002 Population increase Expanding economies Increased standard of living

4. 4 SIZE OF THE GLOBAL ECONOMY IN 50 YEARS, 1984-2034 (2005 PPP DOLLARS) Source: Homi Kharas, The Emerging Middle Class in Developing Countries, OECD 2010.

5. 5 THE ECONOMIC CENTER OF GRAVITY HAS SHIFTED, 1980–2007 (IN BLACK) & EXTRAPOLATED (IN RED), IN THREE YEAR INTERVALS. Source: Danny Quah, “The global economy's shifting centre of gravity”, LSE 2010

6. 6 GROWING PURCHASING POWER, GROWTH IN MIDDLE CLASS: IN 2030, 66% OF THE MIDDLE CLASS WILL BE IN ASIA PACIFIC Source: Homi Kharas, The Emerging Middle Class in Developing Countries, OECD 2010. Numbers in (millions) and percentages of the global middle class

7. 7 THE MIDDLE CLASS IS THE MAIN CONSUMER OF AQUACULTURE PRODUCTS

8. 8 THE PROPORTION OF ANIMAL PROTEIN IN THE DIET INCREASES AS PER CAPITA INCOME INCREASES Source: H.H. Jensen / Marine Pollution Bulletin 53 (2006)

9. 9 NOT NECESSARILY THE PROPORTION OF FISH PROTEIN VS. TOTAL ANIMAL PROTEIN INCREASES WITH PER CAPITA INCOME INCREASES: CULTURAL ASPECTS AND NATURAL RESOURCES PLAY A ROLE Source: H.H. Jensen / Marine Pollution Bulletin 53 (2006)

10. 10

11. 11 Projected requirements of aqua products (TMT), 2025 & 2050 Source: Geoff Allan, Port Stephens Fisheries Intitute

12. 12 DEVELOP AQUACULTURE IN THE REGION ? YES

13. 13 Food security Productive diversification Alternative to fisheries Generates jobs Reduce poverty Improve competitiveness Does the region have the resources? YES WHY?

14. 14 Conversion rate 10 : 1 per trophic level Fish oil dependency app 2,5 : 1 (current feed) AQUACULTURE IS MORE EFFICIENT THAN THE ALTERNATIVES

15. 15 Sustainable development Must consider 5 component: environmental Economic Social Technology Institutional HOW?

16. 16 Avoid mistakes made in the global industry development Sustainable and efficient (ecology and productive) Application of latest technologies Creation of economically viable businesses Fix industry structural problems Create legal framework Laws Mandatory and voluntary Norms Orderly use of resources that support aquaculture Productive chain Value added AQUACULTURE PRESENTS THE GREATEST OPPORTUNITY IN THE FOOD SECTOR

17. 17 Much potential Great diversity of species (fish, mollusks, crustaceans, etc.). Significant water resources (ocean and fresh water) Technology development Production units: Based on successful commercial-size operations Sustainable technology Size to guarantee commercial viability Well paid jobs Financial planning (production volume, investment, costs, income, etc.). Integration AQUACULTURE PRESENTS THE GREATEST OPPORTUNITY IN THE FOOD SECTOR (CONT..)

18. 18 INTEGRATION OF PRODUCTIVE CHAIN Broodstock Larviculture Growout Processing Manufactured aquafeeds Nursery Technology Management Cost Risk Yields Markets Efficiency Economic return

19. 19 MARKET PERSPECTIVES Analyze present and potential markets (domestic vs. export). Innovate with value added products. Develop new distribution channels (e.g. market niches) Promote consumption Improve competitiveness in aqua products Improve nutritional quality Meet customers expectations for quality & food safety.

20. 20 TILAPIA EXPORTS FROM CHINA

21. 21 RISKS FOR PRIVATE SECTOR: FINACIAL: Working capital requirements (2 years + time to market size) BIOLOGICAL: Fish and shrimp are exposed to disease, toxins, etc. OTHER: Market – changes in consumer habits, economy Cost of ingredients/feeds Climatic changes Changes in legislation (permits, etc.) CONCLUSIONS:

22. 22 AQUACULTURE IS NOT HIGHLY CONSOLIDATED The largest protein producers have revenues above 10 billion USD per year With the exception of some salmon and a few shrimp producers, most of the aquaculture sector is populated by producers with revenues below USD 100 million Source: Rabobank, 2011

23. 23 Aquaculture Wild Catch Venture capital Equity funds Private equity Animal protein Seafood processing INVESTMENTS IN THE AQUACULTURE WILL COME FROM A DIVERSE GROUP OF INVESTORS Each investor type has different goals and requirements The aquaculture sector (and their banks) have the task of profiling themselves and educating potential investors about the opportunities in this industry

24. 24 Increased demand in Asia, will incentivize aqua development in other regions (i.e. CBB/LATAM) Investors/Investment: Long-term focus/commitment Professional investors (investment funds, development banks, etc.) and companies established in similar activities (animal protein producers/marketers, fisheries) Conscious of the fact that it is a capital intensive investment Development of business plans / growth plans Market focus CONCLUSIONS (cont..)

25. 25 Government YES : Develop stable rules and policies for the development of the industry by the private industry (long-term) Permit process simple Research and infrastructure development Work with industry to resolve critical aspects (e.g. disease, financing, etc.). Promote and monitor food safety Government NO: Subsidize production units or develop government farms that will compete with private sector Allow indiscriminate development that could destroy the environment CONCLUSIONES (cont..)

26. 26 THE AQUACULTURE OPPORTUNITY Aquaculture market is massive Rising new middle class in Asia is driving demand Aquaculture represents ~$80-100 billion market today and will continue to grow at 5-10% annually Innovation will be essential Disease management, genetic improvement, etc. Shift to sustainable aquaculture is inevitable Major shift is just beginning – commitment to sustainable food production will be a reality over the next five years

27. 27 GENERAL: Increase demand in Asia, will promote development of the industry in other regions (i.e. CBB/LAM) More attention will be needed on hatchery, production systems and disease prevention Climatic change will dramatically affect aquaculture Certification will have an important impact on the industry Nutritional requirements must be understood better and ingredients will continue to move toward plant proteins FINAL COMMENTS

28. 28 Develop comprehensive plan for development of the industry in the region Education / technology transfer Locating sources of capital and potential investors Locating institutions, people who need to get involved Aquaculture Investment Workshop POSSIBLE AREAS OF COLLABORATION?

29. 29 Headquarters located in Saint Louis, MO, USA America’s Regional Office is located in Guadalajara, Mexico Mexico, Costa Rica, Nicaragua, Guatemala, Honduras, Panama, Venezuela, Colombia, Peru, Ecuador, Chile, Dominican Republic, Trinidad & Tobago, Jamaica, Barbados, y Canada. WHERE WE ARE

30. 30 Courses/training at U.S. institutions RAPCO courses in Mexico, CAM, SAM Local and regional seminars and workshops Technical assistance on aqua feed formulation and manufacturing On-farm feeding demonstrations Buyer’s missions to the U.S. and risk management training Participation at international expos/conferences Aquaculture investment workshop PROGRAMS

31. 31 Work in cooperation with industry in the region Open discussion on industry needs/wants and match with U.S. soy industry/USSEC’s goals. Strengthening productive sector within aquaculture industry (efficiency, profitability and Sustainable) Creating demand HOW?

32. 32 Thank you.

33. 33