2. RESULTS: GLOBAL FORECASTS AND NATIONAL PLANS

2.1 Global forecasts

Global fisheries production reached 130.2 million tonnes in 2001, having doubled over the last thirty years (FAOSTAT, 2004). However, this expansion largely reflects the growth of aquaculture. While output from capture fisheries grew at annual average rate of 1.2 percent, output from aquaculture (excluding aquatic plants) grew at a rate of 9.1 percent. The latter is a faster rate not only than capture fisheries, but other animal food producing systems such as terrestrial farmed meat (FAO, 2003). Excluding aquatic plants, aquaculture output in 1970 accounted for 3.9 percent of total fisheries production, by 2001 that proportion had grown to 29 percent (FAOSTAT, 2004). By 2002, aquaculture output, excluding plants, reached 39.8 million tonnes compared with 2.6 million tonnes in 1970 (FishStat Plus, 2004).

Much of this aquaculture expansion has been due to China whose reported output growth far exceeded the global average. During the period 1980 to 2000, its 15.5 percent annual average growth rate of output was more than twice that of the rest of the world. Thus, from 28 percent of world aquaculture output in the 1980s, China’s share rose to half in 1990 and more than two-thirds by 2000. China’s exceptional expansion in absolute tonnage therefore distorts the global aquaculture scene. If it is excluded, world aquaculture output growth during the last twenty years was more moderate with declining rates of expansion (6.8 percent, 6.7 percent and 5.4 percent annual growth rates for the periods 1970 - 1980, 1980 - 1990 and 1990 - 2000 respectively) (FAO, 2003). The rate of expansion has also slowed down by decades, which is contrary to the scenario when China is included. This difference in growth rates is reflected in increases in annual output: with China, the 1990s saw an average annual increase of more than two million tons in global aquaculture output. Without China, the annual increase was less than half a million. To take account of China’s impact, and reported statistical concerns, Table 2 shows global production and average annual growth rates, both with and without China.

Table 2: Global aquaculture production (excluding aquatic plants)

Data are three year averages centered on 1970, 1980, 1990 and 2000. Growth rates are compounded using three year averages as end points.
Source: calculated from FishStat Plus, 2004.

2.1.1 Future global aquaculture production

Forecasts of global demand for fishery products suggest that aquaculture output will have to continue increasing. Reduction fish accounts for approximately a third of output from the fisheries and capture fisheries provide more than 60 million tonnes of food fish, up from approximately 45 million tons in the early 1970s. However, most capture fisheries are at or near their limit of close to 100 million tons. Even if output were to continue to grow (at 0.7 percent annually), they will be incapable of meeting the projected demand for food fish.

Table 3: Projections of food fish demand (million tonnes)

¹ Assumes an "ecological collapse" of capture fisheries.

² Assumes technological advances in aquaculture.

³ Assumes a growth of output of food fish from capture fisheries of 0.7 percent per year to the forecast date.

⁴ From 2000; (35.6 million tonnes, three-year average of aquaculture output).

⁵ Assumes zero growth in food fish from capture fisheries after 2001.

Sources: Calculated from Delgado et al., 2003 (hereafter referred to as "IFPRI" - International Food Policy Research Institute); Wijkström, 2003; Ye, 1999.

Table 3 demonstrates this with three global forecasts for food fish demand. Two forecasts made by Wijkström (2003) and Ye (1999) assume constant fish prices. Their projections of the world fish consumption are based on demand variables (population growth and per capita consumption) and exclude real and relative prices. Global consumption of fish as food has doubled since 1973 (from 45 million tonnes to over 90 million tonnes) due to population growth and increases in per capita consumption (from 12 kg/year to 16 kg/year). One forecast by Ye assumes that even if per capita consumption of food fish remained at its 1995 - 1996 level of 15.6 kg per person, population growth would generate a demand for food fish (126.5 million tonnes) that would exceed the 99.4 million tonnes available in 2001.

Demand for food (and food fish) is primarily determined by four variables: demography, living standards, urbanization and price. World population growth rates have declined to 1.4 percent a year but regions such as sub-Saharan Africa continue to have high rates, with a possible population close to one billion by 2020. This population growth alone will increase demand, even if per capita consumption of fish were to remain at its low rate of 6.7 kg per year in the region. Countries such as China and India have slower population growth rates, but they have rising real per capita incomes. Income elasticity of demand for fish is higher in poorer countries, so income-induced demand, combined with urbanization, will increase demand for food fish there. Income and development variables appear to be the most important determinants of food fish demand, with population growth accounting for the remaining 40 percent (Ye, 1999).

Prices are an integral part of the International Food Policy Research Institute (IFPRI) model, which disaggregates food fish into two categories (high value and low value fish) according to their markets and price elasticities. On the supply side, the baseline forecast assumes that global output of food fish from capture fisheries will continue to grow at an annual rate of 0.7 percent. Prices can be estimated using an equilibrium model and these in turn will affect consumer demand and aquaculture supply. The baseline forecast predicts an increase in the real price of both high-value and low-value food fish by 2020 as well as an increase in its relative price (compared to substitutes). This increase has a dampening effect on demand in two ways. Firstly, given price elasticity of demand for fish (- 0.8 to - 1.5), the increase in real price will reduce the quantity demanded. Secondly, the increase in relative price, with positive cross-elasticity coefficients (at least for poultry), will produce substitution towards cheaper alternatives. This was corroborated by a recent FAO study, which compared scenarios of projected demand and supply based on constant and equilibrated relative prices and illustrated the dampening effect of a price rise on global demand for fish and fisheries products (FAO, 2004). This study found that with a price rise of 3 and 3.2 percent, world demand for fish (for both food and non-food uses) would result in a decline of 2.5 percent from expected quantities demanded in 2010, and 2.68 percent in 2015 respectively. Nonetheless, global per capita consumption of fish in IFPRI’s baseline model is projected to continue rising (to 17.1 kg/year).

Per capita consumption of fish is critical to demand estimates. This is demonstrated by Ye’s forecasts to 2030. For this time horizon, a 44 percent increase in per capita consumption would more than double total demand for food fish. Although fish has become more important in people’s diet, reflected in the 15.3 percent contribution of fish in total animal protein in 2001, there is a potential for declining marginal utility and consumer saturation as incomes rise (Wijkström, 2003). This is apparent in Ye’s model’s results, which show that at constant prices, increases in per capita consumption are less than historic rates. Similarly, under the IFPRI baseline scenario where real prices of food fish are forecast to increase by 15 percent and prices relative to other animal substitutes by 20 percent, per capita fish consumption is forecast to grow at a slower rate to 2020 (0.4 percent) than over the 1985 - 1997 period (1.7 percent). Further, under the extreme scenario of a negative growth of production all capture fisheries commodities, including fishmeal and fish oil^[3], the effect on reduction fisheries and prices (fish meal prices more than double and food fish prices increase by 35 to 70 percent) would be such that per capita consumption in 2020 would be lower than in 2001 (Table 3).

The rise in real price of fish however does provide an incentive for aquaculture, with its supply elasticity coefficient higher than that of capture fisheries. If higher prices spur technological innovations and needed investment, IFPRI suggests that aquaculture could expand faster than the baseline with a possible output of 69.5 million tonnes by 2020, representing an average annual growth rate of 3.2 percent.

To determine the implications of these three forecasts for aquaculture production, two scenarios are assumed. In the first, output of food fish from capture fisheries is assumed to increase at the same rate (0.7 percent) as the IFPRI baseline model until the forecast dates ("growing fisheries" scenario, Table 3). This increase is lower than historical rates but may still be optimistic (particularly past 2020). Under this assumption, food fish quantities derived from capture fisheries are deducted from the projected demand (column 4), and the residual is the amount required from aquaculture (column 5). As can be seen, all forecasts require a higher aquaculture output than the 2001 total of 37.9 million tonnes. If food fish from the capture fisheries does not increase at the rate projected, the demand gap to be filled by aquaculture will be higher than shown. This is illustrated in the second scenario labeled "stagnating fisheries" because it assumes that the production of food fish from capture fisheries does not increase beyond 2001. This is a plausible assumption given that capture production, excluding anchovies, has remained fairly stable since 1995 (Vannuccini, 2003) and is projected to stagnate (FAO, 2002). Consequently, increased excess demand must be met by aquaculture, and this increase is shown in column 7 (compared with column 5), with a corresponding higher growth rate from aquaculture (column 8). For example, in the Wijkström 2050 forecast, stagnation of landed quantities from the capture sector would leave an excess demand of 209.5 million tonnes, rather than 177.9 million tonnes in the case of the growing fisheries scenario, to be met by aquaculture. It should be noted however that columns 7 and 8 over-state the required output from aquaculture because the price effect, caused by the stagnation of capture fisheries after 2001, is not accounted for. Because of own-price and cross-price elasticities, this price increase would have a dampening effect on demand for food fish and column 4 would show lower figures.

When required growth rates in quantities required from aquaculture (column 8, Table 3) are compared with the historical growth rates in output (Table 2), the three forecasts seem plausible: given their assumptions, they indicate slower rates of expansion in aquaculture output than has occurred in the past. In Table 2, the highest required annual growth rate in aquaculture output (5.3 percent) is below the actual rates achieved since 1970, whether China is included or not. However, there are warning signs that the required expansion rates may not be achieved. Without China, the rate of expansion has been slowing to a growth rate not much higher than the Wijkström required rate (column 8, Table 3) and China itself is forecast to experience rates of growth far below those of the 1990s (Wang, 2001). In addition, environmental and social constraints to continued expansion will become more binding. This has already become apparent in Europe and North America where opposition to aquaculture has grown.

The comparison of the three global forecasts and their implications for future supply requirements from aquaculture leads to nuanced conclusions with regard to their plausibility as much will depend upon the growth of Chinese aquaculture outputs. If China’s rate of expansion continues at the rate of the 1990s, the required increases in quantities will be met, but maintaining such a rate may not be feasible (China’s growth rate has been forecast to decline to 2 percent per year). Similarly, China is important when analyzing absolute tonnage (column 9). As Table 2 showed, average tonnage per year has been increasing for the last decades with or without China. Including it, absolute tonnage increased by more than a million tonnes per year on average over the period 1970 - 2000, and by more than two million tonnes a year over the period 1990 - 2000. Without it, tonnage increases have accelerated but were considerably smaller. If China’s growth rate declines as anticipated, higher tonnage estimates will not be met. During 2001 - 2002 (the last years for which data are available), China’s output increased by 6.6 percent, but global aquaculture production increased by just two million tonnes. This would suggest that most estimated requirements from aquaculture to meet demand projections (column 8) would not be met.

2.1.2 Regional perspectives

To determine whether countries can achieve global forecasts, aquaculture strategies, plans and related information from the major aquaculture producing regions was analyzed. In 2001, Asia produced more than 33 million tonnes of aquaculture products (excluding aquatic plants), representing 88.5 percent of world output. Moreover, its output since 1990 (using three-year averages), has been increasing at more than 11 percent per year, which is higher than the global growth rate shown in Table 2. Europe, in 2001, produced 3.4 percent of global output. Its largest producer is Norway, who has ambitious plans for expansion. However, the future of aquaculture production amongst members of the pre-2004 European Union is less promising as growth rates are projected to fall. Latin America and the Caribbean (LAC) have experienced a rapid expansion of its aquaculture output which grew at an annual rate of 15.5 percent during the 1990s. Total output remains small compared to Asia, representing only 2.9 percent of global aquaculture output (excluding aquatic plants) in 2001, although its share of global value was higher at 7 percent. Only four countries in Africa represent 92 percent of the continent’s total aquaculture output: Egypt, Nigeria, Madagascar and Ghana. During the 1990s African aquaculture output expanded rapidly, and by 2000, it was about five times larger than a decade earlier. Yet, Africa’s contribution to global aquaculture production remains small at 1.2 percent in 2001 (aquatic plants excluded), and the activity has not yet reached the momentum expected.

These regions are forecast to experience continued expansion, as shown in Table 4. According to the baseline and the highest IFPRI forecasts, Asia (excluding West Asia) will continue to produce the bulk of aquaculture output by 2020 (approximately 85 percent in both scenarios).

Table 4: Regional actual (2001) and forecasts of food fish from aquaculture for 2020

¹ Annual average growth rate 2001-2020; ² IFPRI, 2003; ³ Wurmann, 2003; ⁴ The fifteen countries of the European Union in April 2004; ⁵ Failler, 2003; ⁶ by 2010, Gopakumar 2003; ⁷ by 2005, Gopakumar et al., 1999.

Source: calculated from Failler, 2003, Gopakumar, 2003; Gopakumar et al., 1999; IFPRI, 2003; Wurmann, 2003.

Africa

No quantified aquaculture production targets were available for African countries, Egypt being an exception - albeit not from a government source.

In the region, per capita consumption of food fish has stagnated at a low 8 kg a year over the last three decades and IFPRI’s forecasts to 2020 suggest that only under the most favourable circumstances (i.e. rapid global aquaculture expansion) will it increase. This has clear implications for food security because of the importance of fish as a source of animal protein in some African countries (Ye, 1999). However, driven by a desire to maintain (if not increase) per capita fish consumption, a population that could increase by 50 percent to 1.2 billion by 2020 and accelerated urbanisation, demand for fish food is projected to more than double in both North Africa and sub-Sahara Africa by 2030 (Ye, 1999).

To meet this growing demand, many African countries are giving aquaculture a high priority on their development agendas. Egypt’s output grew at an annual rate of 17.3 percent during 1990 - 2000 which is higher than the global average shown in Table 2. Recent growth has slowed down, but output in 2002 (376 296 tonnes) was still about 10 percent higher than in 2001. Aquaculture has been promoted as a source of food security and the goal is to increase per capita fish consumption to 14 kg per year by 2017 (El Gamal, 2002). It is also promoted for its contribution to the balance of payments. With its large trade deficit, Egypt perceives aquaculture as a means of import substitution and as a sector for generating exports income (El-Gayar, 2003) but the development of its exports of farmed sea bass and sea bream to Europe has been hampered by lack of conformity to hygiene requirements.

In this context, the sustainability of the rapid Egyptian expansion appears uncertain. Egypt’s principal species is now tilapia, which accounts for almost half of the total output, but domestic prices have fallen (in nominal terms) because of large increases in supply. This has created a disincentive to producers. With water shortages, conflicts over resource use, and dwindling prices for bream, bass and tilapia, expected growth of output at historic rates appears over-ambitious.

In spite of Egypt’s constraints, forecasts for aquaculture expansion in Africa generally are high, as shown for sub-Sahara Africa in Table 4. With its resource base of land and water, potential for expansion exists. Moreover, population growth and urbanization offer a strong domestic market in addition to the continent export potential. However, given its transport disadvantage, exports will focus either on high-value species or on value-added products. Some commercial farms have already successfully negotiated the transition from small-scale to market-oriented, large-scale production. In Zimbabwe, for example, one farm already exports tilapia fillets to Europe, generating approximately US$5 million a year. It not only generates foreign exchange, but employs more than 350 people and applies advanced technology for processing. South Africa’s main aquaculture species (by value) is abalone which is exported to Asia for US$35 per kg. The first commercial harvest only began in 1998, but by 2003, output was 500 tonnes, with planned 800 tonnes in water for harvest by 2008. South Africa is so committed to aquaculture, and particularly mariculture, that it has developed an aquaculture park to expedite investment by foreign investors (Trade and Investment South Africa, 2002). Madagascar has attracted foreign investors for shrimp cultivation. Its annual aquaculture growth rate during 1992 - 2001 was 19 percent, a rate higher than the global average. Increases in shrimp output have more than offset declines in carp production. At the moment in third position in Africa in terms of aquaculture tonnage, Madagascar may surpass Nigeria (the continent’s second largest producer) by 2010 if present growth rates are maintained.

However, as with Egypt, there are constraints to rapid expansion. Input costs are high, particularly feed costs, and the cost of credit still constrains the development of the activity. However, main constraints are linked to countries’ instability and poor governance. If aquaculture is to expand at the forecast rate, it must be commercially-oriented, and thus requires environments conducive to investment. In addition, policy and political stability are of prime concern to African entrepreneurs (World Economic Forum, 2001). If the emphasis of NEPAD (New Economic Partnership for Africa’s Development) on governance can mitigate some of the economic and political constraints, this should encourage capital investment (both domestic and foreign) into aquaculture in sub-Saharan Africa.

Asia

India, Bangladesh, Indonesia, the Philippines, Thailand and Viet Nam have quantified projections and these countries are amongst the top twelve producers in the world. Together, they accounted for 13.8 percent of world aquaculture output (excluding aquatic plants) in 2002 (Fishstat Plus, 2004). Comparing their forecasts with actual historical expansion allows us to gain insights into their aquaculture ambitions (Table 5).

Table 5: Historical and forecast aquaculture output in Asia (excluding aquatic plants)

Data are three-year averages centered on 1980, 1990 and 2000. Annual growth rates are compounded using three-year averages as end points.

Sources: calculated from FishStat Plus, 2004. Forecast growth rates for Bangladesh, Indonesia, Philippines, Thailand and Viet Nam: national aquaculture development plans; for China: calculated from Wang, 2001; for India: Gopakumar, 2003 (period 2001 - 2010), Gopakumar et al., 1999 (period 2000 - 2005 - for freshwater aquaculture).

China

Aquaculture output has been increasing rapidly, as shown in Table 2, and its share of total production reached 60 percent in 2000. By 2005, output is projected to reach 29.9 million tonnes representing 65 percent of the total Chinese fish production (Hishamunda and Subasinghe, 2003). Forecasts for 2010 are for total fishery production rather than aquaculture, but the former is projected to grow at a rate of 2.2 percent between 2000 and 2010 when total fisheries output will be 51 million tonnes (Wang, 2001). To estimate the contribution of aquaculture, its share in the total fish output was assumed to reach 70 percent by 2010, which would give an output of 35.5 million tonnes. This represents a 3.7 percent rate of growth from 2000 to 2010.

The IFPRI baseline model had projected a Chinese growth rate of 2.6 percent in food fish from aquaculture for the period 1997 - 2020. However, output since 1997 has grown more rapidly. Recent data showed a 6.6 percent increase in 2002 compared to 2001. Thus, meeting IFPRI’s baseline growth rate target of 1.6 percent, or the higher target of 2.8 percent by 2020, appears within easy reach. However, although two-thirds of available paddy fields are under-utilized and yields from reservoirs and fish ponds could increase, constraints to the steady growth of the sector are anticipated (Wang, 2001). For example, concerns over the environment have curtailed expansion of intensive coastal aquaculture (Hishamunda and Subasinghe, 2003). Moreover, while aquaculture expansion in China has been actively promoted by the government as a means of providing food security, earning foreign exchange and generating employment, water shortages may constrain future growth (Hishamunda and Subasinghe, 2003). Consequently, to take into account potential growth constraints in the longer term simulation to 2020 and beyond, the growth rate has been reduced to an annual 2 percent.

India

As the world’s second largest aquaculture producer, India is critical to regional and global forecasts. IFPRI forecasts (Table 4) suggest that its output could double by 2020. The higher forecast suggests an output almost three times that of 2001, with output increasing by an average of 200 000 tonnes a year. The growth rates required to meet these targets are lower than past rates shown in Table 5.

Two more optimistic forecasts, from the government-sponsored Indian Council of Agricultural Research and the Central Institute of Freshwater Aquaculture, are also shown in Table 5. According to their forecasts, production of farmed shrimp and fish, including from freshwater systems, could double by 2010 (Gopakumar, 2003; Gopakumar et al., 1999) with both the expansion of areas under cultivation and increases in yields (respectively +50 and +45 percent for freshwater aquaculture). With limitations in the use of coast lines for intensive shrimp farming, only one fifth of the coastal area available for shrimp culture has been developed, and suitable areas, in particular in West Bengal remain available for exploitation. Inland saline water bodies also have the potential to support shrimp and Cichlids culture and increases in productivity are possible through the introduction of fish cage culture in reservoirs. Inland production (of carp) constitutes the bulk of Indian aquaculture and yields have increased tenfold with the application of modern technology. On the demand side, it is expected that higher incomes and urbanization are expected to increase per capita consumption, which, in conjunction with population growth, would create a domestic market to absorb increased supply. While the bulk of production is carp, catfish and freshwater prawn production are increasingly adopted as semi-intensive systems by farmers. Cultured freshwater pearls, along with non-conventional species such as ornamental fish, protein-rich algae and bio-fertilizers, are a new commodities contributing to the diversification of the sector and are potential high income earners.

The plan for freshwater aquaculture development carefully reviews the implications of achieving its targets in terms of necessary natural resources, fish seed and feed, finances, extension, post-harvest infrastructures and specificities (strengths and weaknesses) of each State, but, set against past production trends, forecasts appear unlikely to be realized. As Table 5 shows, despite absolute increases in output, growth rates over the last two decades have declined sharply. Moreover, during the 1990s, the annual average increase in output was under 100 000 tonnes, half the yearly amount needed to meet the higher IFPRI forecast to 2020. Recent data (FishStat Plus, 2004) confirm the slower growth: production figures for 2002 indicated an output that was barely higher than that of 1999, with an annual average increase in output under 20 000 tonnes for the period 1999 - 2001, whereas the meeting of the lower IFPRI forecast would require annual increases of approximately 116 000 tonnes.

South Asia (excluding India)

Bangladesh accounted for 94 percent of 2001 output from South Asia (India excluded). Its plan incorporates aquaculture within total fisheries production and forecasts aquaculture output mostly on supply factors (Department of Fisheries, 1999). Aquaculture expansion is projected to come almost equally from increased yields and from expanded area, and to account for almost half of total fisheries production by 2020. A notable feature of the Bangladesh plan is its evaluation of past plans and achievements. All previous seven five-year plans overestimated fisheries outputs, yet the gap has been narrowing. Within current fisheries projections (Table 5), aquaculture output is projected to continue growing, at a rate below historic rates which would nonetheless allow production to almost double by 2020. Recent data suggests that the target output will be met, if not surpassed: since the inception of the plan, output has grown at a rate approaching 10 percent. If Bangladesh meets its target of 1.3 million tonnes in 2020, it alone would have exceeded the baseline forecast for South Asia (excluding India) shown in Table 4.

South-East Asia

Indonesia has an ambitious aquaculture development plan that forecasts a doubling of output over the period 2003 - 2009 (Ministry of Marine Affairs and Fisheries, 2003). Thus, total output is foreseen to reach 2.3 million tonnes in 2009. The sector is viewed as a source of economic growth and foreign exchange, with export earnings projected to increase nine-fold and reach almost seven billion dollars. In addition, per capita consumption of fish is projected to increase by almost a third to 32.3 kg per capita per year. The main source of expansion will be mariculture where, by 2009, almost half of the total output will originate from. Output from ponds and net cages is also projected to increase. However, the realism of these projections is questionable when compared to historical trends. Not only were export earnings from aquaculture in 2003 little changed since 1999, but the projected rate of expansion (11.1 percent) is much higher than earlier periods. 2002 data indicate that output grew only by 5.8 percent between 2001 and 2002.

The Philippines plan to produce 663 000 tonnes of farmed fish by 2004, which would require a much faster expansion rate than those experienced in the recent past. The plan recognizes the technical constraints the industry is facing (e.g. low productivity). It also states the need for an ecologically-friendly sector. However, output only reached 443 319 tonnes in 2002, which was a mere 2.0 percent increase over 2001 (although 12.5 percent more than 2000), compromising the likelihood of reaching the 2004 target.

The forecast by Thailand, on the other hand, appears to be an underestimate. The 1996 plan forecasted an output of 704 349 tonnes by 2010; this figure was surpassed in 2000. The main reason for the larger than expected expansion was shrimp output, Thailand’s principal species, which grew by 30 percent during 1996 - 2000. Freshwater output in general also expanded sharply, with catfish production exceeding the 2010 forecast the same year. However, since 2000, shrimp output has declined, reflected by an 11 percent drop in output between 2000 and 2002. Notwithstanding, the actual annual growth rates for the period 1996 - 2002 remains at 2.6 percent, higher than the one forecasted (1.7 percent).

The Viet Nam Fisheries Plan recognizes aquaculture as a key sector to provide food security, earn foreign exchange and offer rapid financial rewards (Jacobsen, 2004). The potential for expansion exists with some 300 000 hectares of unexploited water and current low productivity. The Plan forecasts an output of 1.2 million tonnes by 2005 and 2 million by 2010. As Table 5 shows however, Viet Nam’s growth rate of aquaculture output has been declining, and this forecast requires a higher rate of growth than occurred in the 1990s. More recent data indicate an even still slower rate of expansion: the period 2000 - 2002 saw minimal growth (FishStat Plus, 2004). Meeting its 2010 target would require a growth rate of 10 percent for the period 2002 - 2010 and this may not be easily achievable.

The four countries of South East Asia for which quantified plans were available are the major producers in this region, accounting for 89 percent of that region’s total. Conclusions from these plans are mixed as Thailand appears likely to exceed its target, whereas the other three may not. The latter countries have ambitious targets requiring rates of growth that would reverse recent declining rates, which raises doubt over the probability of them reaching these targets. The Philippines and Viet Nam combined have experienced slow growth since 1999, and Thailand has actually experienced negative growth. The exception is Indonesia, although it is questionable whether its aquaculture sector will expand sufficiently to meet its targets. A projection of the four countries actual growth rates since 1999, weighted by their 2002 share of world output, would give an output of approximately six million tons for South-East Asia by 2020, a figure which nonetheless remains above IFPRI’s baseline forecast (Table 4).

Europe

The IFPRI forecast for the 15 members of the European Union pre-2004 is for a growth rate approximating that of global output. This appears optimistic. As Tables 2 and 6 show, output from the European Union members grew historically at a rate below the global growth rate during both the 1980s and 1990s (even when China was excluded from global calculations). Moreover, recent data reinforce scepticism about the IFPRI forecast. All major producers among the 15, except salmon producers (Great Britain and Norway), have experienced actual declines in output.

The largest decline was in Denmark, which produced 23 percent less in 2002 than in 2001, although Spain and Italy had declines of more than 15 percent. The decline in France’s output was small, but its 2002 total output was actually less than 1989. Norway, Great Britain and Ireland had positive growth in output, yet smaller than the global increase experienced in 2002 (5.3 percent) in the case of the latter two.

Table 6: Historical and forecast aquaculture output in europe (excluding aquatic plants).

Data are three year averages centered on 1980, 1990 and 2000. Annual growth rates are compounded using three year averages as end points.

¹ Failler, 2003; ² The forecasts are exclusively salmon and trout, but include capture (Royal Norwegian Society of Sciences and Letters, 2003).

Source: calculated from FishStat Plus, 2004.

Two species (salmon and trout) account for approximately 80 percent of European aquaculture output (Failler, 2003). Norway is by far the largest producer of farmed Atlantic salmon both within Europe and globally, although Chile produces more Pacific salmon and trout. As Table 6 shows, Norway’s output growth has been higher than the world average, even including China. Chile has managed to maintain its competitive position by research and technological advances, and the forecast in Table 8 assumes that it will continue. Norwegian figures shown in Table 6 are limited to salmonid production only and the country has ambitious plans to expand other species such as cod and mussel (The Royal Norwegian Society of Sciences and Letters, 2003). However, these plans recognize the environmental constraints linked to the uncontrolled growth of the sector.

While the IFPRI forecast for the 15 members of the European Union pre-2004 is unlikely to be realized, Norwegian forecasts appear plausible given historic growth rates. Norway is also committed to its aquaculture sector as a means of maintaining isolated communities. By 2020, even if the IFPRI projection were realized, Norway’s output (of salmonids only) would exceed that of the 15 pre-2004 EU member countries.

The Latin America and Caribbean Region

Overall, the 36 countries of the Latin America and Caribbean (LAC) region have shown a remarkable dynamism, culturing more than 80 species and exhibiting an average annual growth rate in output well above the global increase. The region’s share of global aquaculture value rose to 7.1 percent in 2001, worth almost four billion dollars, reflecting that the species cultivated in LAC tend to be high value. In fact, the unit value of output from the LAC (particularly from Central America) is among the highest in the world. The two dominant aquaculture producers in LAC are Chile and Brazil. Together they account for 70 percent of aquaculture output (excluding aquatic plants) in the region. Both have ambitious fisheries development plans, although in the case of Brazil not specific to aquaculture. The rapid expansion of aquaculture output in both countries is shown in Table 7.

Table 7: Aquaculture output (excluding aquatic plants) in tonnes in LAC 1989 - 2002

Source: FAO FishStat Plus, 2004. LAC countries are listed in Appendix 2.

LAC appears to be the region with the highest aquaculture potential, because of its favourable climate, freshwater resources and available coastline. Brazil alone has 8 500 km of coastline and 12 percent of the world’s freshwater reserves. It has the largest mangrove forests in the world, and even without depleting them, has abandoned salt flats available for shrimp farming. The abandoned flats are ten times larger than the area currently under shrimp cultivation (Nunes and Suresh, 2001). With this identified potential, Brazil in its plan claims to be "the last great frontier of aquaculture in the world" (Secretaria Especial de Aquicultura e Pesca, 2003, p. 9).

Regarding markets, some countries such as Brazil and Mexico have the population base, income growth and urbanisation necessary to support a viable domestic market; others such as Costa Rica and Honduras can take advantage of their proximity to the US and the presence of favourable trading agreements, to export to North America. Even distance to markets can be overcome if high transport costs are offset by low production costs. Chile, because of lower production costs, is able to compete successfully against North American farmers in the US market for fresh Atlantic salmon.

In addition to natural resources and access to markets, aquaculture potential is enhanced by governments’ commitment to the sector. Not only can aquaculture generate employment and incomes, it also generates foreign exchange, and this has been the strongest motivator behind government support (Hernández-Rodríguez et al., 2001). Governments in Central America have specifically targeted exports of non-traditional products (such as shrimp) for selective promotional incentives (Stanley, 2003). In addition to generating foreign exchange from exports, aquaculture offers the means to save foreign exchange by import substitution. Brazil’s intention to expand its production of tilapia is prompted by saving the foreign exchange cost of fish imported from Argentina and Uruguay (Ministerio da Agricultura e do Abastecimento, 2000).

Foreign exchange will continue to be a motivation behind the expansion of aquaculture in LAC, which has the potential to become an even more significant producer in the future. Table 4 showed IFPRI’s forecast for the region. It anticipated continued expansion for LAC but at a much slower pace. The baseline scenario foresees a growth rate lower than the global average. Even the highest forecast suggests that by 2020 LAC’s output will fail to double. This appears to be an underestimation of LAC’s aquaculture potential. As Table 7 shows, output more than quadrupled over the last decade.

An examination of the contents of the plans for the two principal producers in LAC further suggests that the IFPRI forecasts are underestimates. Given their commitment to the sector, governments in both countries have ambitious plans for continued growth. Brazil is planning to increase its fisheries output by 50 percent by 2006 (Secretaria Especial de Aquicultura e Pesca, 2003). With a declining trend in its capture fisheries since the 1980s, this increase must come mostly from aquaculture. Tilapia production alone is projected to increase tenfold (to 420 000 tonnes by 2010) (Ministerio da Agricultura e do Abastecimento, 2000). Chile, in addition to developing new species for aquaculture, is planning to double its salmonid production between 2002 and 2013, in line with its estimates that global output of farmed salmon will double (to 2.5 million tonnes) by that date (Subsecretaria de Pesca, 2003).

This is however a conservative forecast in comparison to Wurmann’s (2003) projection that aquaculture output from LAC could increase from its 2001 output of 1.1 million tonnes to 5.2 million in 2010 and 24.8 million tonnes in 2020. This latter quantity would equal two-thirds of the 2001 world aquaculture output, and is more than ten times IFPRI’s highest projection for the region in 2020. The 18 percent average annual growth rate required to achieve this level of output is significantly higher than the 14.9 percent average annual growth experienced over the 1990 - 2000 decade. Yet, while high, the predicted output appears feasible. Brazil and Chile each had aquaculture output growth rates that exceeded 18 percent between 1990 - 2000, with annual average rates of 24 and 29 percent respectively (Table 8).

Table 8: Historical and forecast aquaculture output (excluding aquatic plants) in Chile and Brazil

Data are three year averages centered on 1980, 1990 and 2000. Annual growth rates are compounded using three year averages as end points.

¹ Estimated from the contents of Brazilian documents anticipating a decline in growth rates over 2003 - 2006, yet a 25.3 percent annual increase in tilapia production over the period 2003 - 2010.

² Concerns salmonid production only.

Source: calculated from FishStat Plus, 2004 and national aquaculture development plans.

The two dominant species: carp and salmon

Fish is an important source of animal protein in Asia and parts of Africa; it also contains the micronutrients critical for women and children. Because of this, affordable fish such as carp, which is the principal cultivated species globally, is critical to food security. In 2002, carp production represented 43 percent of the world aquaculture tonnage (aquatic plants excluded), with Asia, and in particular China, being its main producer (78 percent) (FishStat Plus, 2004). On the supply side, carp production is expected to continue its expansion as Egypt, India and Bangladesh have explicitly indicated their intention to increase their output through intensification of pond culture, and China suggested it through its support to rice-fish farming. On the demand side, this species was classified in the "low value fish" category by IFPRI, with the developing world its main consumer. With most of the Cyprinid production consumed domestically, and an anticipated slow down in the consumption of low-value fish products as a consequence of diversification in diets and increased purchasing power, new markets will have to be found in locations where either consumer tastes are acquired and/or capacity to pay exists (Delgado et al., 2003). Carp, however, was not considered by China and India as a strategic species for export in this country, despite foreseen increases in demand in South Asia and sub-Saharan Africa, in particular in the latter where it is unlikely to be met by increases in production (Delgado et al., 2003; Hishamunda and Subasinghe, 2003). European tastes are not used to carp - this trend is not expected to change with a 0.1 percent growth in consumption in low-value fishes to 2020 indicated by IFPRI, whereas Chinese and Indian cuisines can accommodate well the bony structure of the species (SCP, 2002). In India, although annual fish expenditure was lowest amongst the poor and the very poor, most of the amount spent went on Catla and Rohu, indicating that increased production and improved access to fish, in particular carps, would benefit the poor (Bhatta, 2001). This contrasts with Bangladesh where Indian Major Carps (Rohu, Catla and Mrigal) fetched higher prices and consequently, were bought by higher income groups (Alam, 2002), revealing that market situations are not uniform across, even within, regions. Future demand for carps is thus likely to be constrained to specific geographical areas, mainly in developing countries, where affordability is key to maintaining or developing market segments, but may not satisfy foreign exchange earnings. By contrast, the versatility of tilapia may prove more useful in targeting developed country markets.

A threat to the forecasted expansion plans of LAC is the future profitability of salmon farming. In 2001, salmonids were the principal species cultivated in LAC, accounting for almost half the region’s tonnage and value. This was due almost exclusively to Chile. The Chilean plan assumes nominal prices of salmon of US$3 - 4 a kilo, somewhat higher than 2001 prices. However, Norway (and Canada) also plan to expand salmon production. The most conservative Norwegian forecasts anticipate a doubling of Norwegian salmonid output by 2020, but the majority foresee an increase considerably higher. This will put pressure on prices. The Chilean plan does recognize the need for new markets, with a particular interest in China and Brazil, where increasing incomes and urbanisation are creating a new demand for high-value species. However, it is questionable whether increases in demand will be sufficient to maintain prices. Average costs have fallen appreciably due to selective breeding but the most rapid gains may have already been made. This could put pressure on profit margins (Aerni, 2001) and in turn affect incentives to continue investing in the industry.

Conclusion

Compared national ambitions, independent projections for China and Latin America appear low, whereas those for South East Asia and Europe of the 15 members pre-2004 appear overestimations. China is clearly critical to regional (and global) production: whilst historic growth rates cannot be maintained, an estimated annual output growth of at least 2 percent until 2020 is plausible. Similarly, aquaculture plans for the two principal producers in Latin America, Brazil and Chile, suggest that IFPRI’s projections are underestimates. Governments in both countries plan to promote the sector and, as has been demonstrated in China, this is a key factor in successful aquaculture expansion (Hishamunda and Subasinghe, 2003). Expansion by China and Latin America would be sufficient to offset the slower than anticipated expansion in South East Asia and European Union countries.

2.2 National projections

An indication of the contents and realism of national projections was given in the previous section. A summary of the contents of national plans used in the analysis (quantified targets, assumptions and requirements, and principal threats or difficulties to overcome) is presented in Appendix 1. The full list of documents used is provided in Appendix 2.

2.2.1 The "sum" of national production targets - comparison between global and national forecasts

Based on the information extracted from national documents on foreseen annual growth rates and production targets for the sector, individual country projections were "standardized" for the years 2010, 2020 and 2030 to sum up projected quantities for these years. Calculations are provided in Table 9. When available, details of production forecasts by system or species are provided.

Based on the eleven country plan projections, Table 9 indicates that the average annual growth rates for the aquaculture sector will be, for the period 2010 - 2030 (adjusted figure for 2030):

- with China’s growth assumed at 3.5 percent per annum: 4.8 percent.
- with China’s growth assumed at 2 percent per annum: 4.5 percent.

Recalculated for the period 2002-2015 (using FAO production figures for 2002 and applying each country’s forecasted growth rate to the year 2015), average annual growth rates obtained are:

- with China’s growth assumed at 3.5 percent per annum: 5 percent.
- with China’s growth assumed at 2 percent per annum: 4.1 percent.

The above two figures averaging 4.55 percent, this rate is consistent with the figure of 4.5 percent for the sector’s growth advanced by FAO (2004).

A second step was to compare the sum of national production targets with projected requirements from aquaculture in 2010, 2020 and 2030, which were given in Table 3.

Two scenarios were envisaged:

1. Assuming that output world from capture fisheries continues to grow at an annual rate of 0.7 percent per year (IFPRI’s assumption) - Figures from column 5, Table 3 (IFPRI and Ye’s high estimates). This scenario was labelled as "optimistic".

2. Assuming a zero growth from capture fisheries from year 2001 onwards - Figures from column 7, Table 3 (IFPRI and Ye’s high estimates), which can be considered as a baseline or "stagnating fisheries" scenario.

In each case, two growth rates were envisaged for China (3.5 percent and 2 percent per annum). In addition, a first projection was done with annual average growth rates assumed constant to the year 2030. In a second calculation, national growth rates were reduced by 40 percent to calculate output for the period 2020 - 2030, to reflect the likelihood of pursued global output growth, yet at declining rates (see footnote [2] in Table 9).

Table 9: Individual aquaculture projection forecasts from country plans and readjusted to 2010, 2020 and 2030

¹ Using initial year of plan as baseline. ² Reduced by 40 percent. ³ Calculated on the assumption that aquaculture production would represent 75 percent of total fish production. ⁴ Estimated from the contents of Brazilian development plan. 2006 figure was calculated using this growth rate.

Source: national aquaculture development plans.

Table 10: Comparison of the sum of national aquaculture production forecasts with quantities required from aquaculture to fulfil demand for fish (Table 3) in 2010, 2020 and 2030. Quantities are expressed in ‘000 tonnes

¹ Projected aquaculture quantities for the years 2010, 2020 and 2030 are the sum of national projections, obtained for each country studied by applying their forecast annual growth rates linearly to their current aquaculture output to the year 2030^[4].

² 2030 adjusted: national annual growth rates (taken from individual country plans) were reduced by 40 percent over the period 2020 - 2030 to account for declining growth rates over time.

Source: calculated from national documents and Table 3.

Table 10 presents the results obtained. Overall, they indicate that, based upon the assumptions made and the country data available, there should be no shortage of fish in the two forthcoming decades.

Under both the "optimistic" and "stagnating fisheries" scenarios, and with China maintaining a growth rate of 3.5 percent, the projected aquaculture production from the countries studied would largely meet the quantities required by the sector (139 and 115 percent respectively) in 2020. Although only 88 percent of the requirements would be met in 2010 under the "stagnating fisheries" scenario, this figure accounts for only eleven countries production. It is expected however that upcoming producers, for whom projections were not yet available, would contribute to the filling of this gap. However, under the same scenario, and in the case of Chinese aquaculture experiencing a slower growth rate, food fish requirements from aquaculture would only be met at 82 percent. Using the adjusted - and more realistic - annual growth rates for the period 2020 to 2030, aquaculture may just provide the quantities of fish required in 2030, in particular under Simulation 2 (97 percent of the requirements met). This highlights the continued dependence on China to supply the bulk of production. However, if Brazil and Chile achieve their aquaculture production plans, they will increasingly weigh on the world aquaculture scene, in particular if the growth of their "younger" aquaculture sectors declines in the long term at a slower rate than in other regions, e.g. China and other Asian countries where the industry will have, by then, reached its maturity (Figure 1).

Figure 1: Contribution of countries studied to aquaculture output forecasted in 2010, 2020 and 2030, based on national aquaculture development plans (with adjusted growth rates for the period 2020 - 2030

2.2.2 Constraints to growth

Despite these encouraging results, it is wise to remain cautious as there may be limits to the expected growth of the sector. On the demand side, worldwide compliance with HACCP (Hazard Analysis Critical Control Point) standards and traceability regulations is going to be crucial to reduce potential aquaculture hazards (e.g. common post-harvest hazards, environmental contamination, contamination of fish feeds, misuse of veterinary drugs, occurrence of parasites) and enhance product quality and consumer confidence (Josupeit and Franz, 2004). Post-harvest losses are also to be curbed in the interest of optimization of output use and food security (Hongskul, 1999). On the production side, constraints to overcome are simultaneously technical and social in nature.

Disease

Disease is one of the most significant constraints to aquaculture production and trade and has increased the vulnerability of the shrimp sub-sector in particular (de Silva, 2001). In the 1990s, disease threatened shrimp production in Ecuador, which, by 2001 as Table 4 showed, had only half the output of the mid 1990s. Although many microbial and viral infections are not considered to be a direct threat to human health, they negatively impact upon product marketability and consumer confidence (Subasinghe, Bontad-Reantaso and McGladdery, 2001). The translocation of pathogens through the increase in movement and trade in live aquatic species and aquatic products triggered by the internationalisation of markets has accelerated the spread of diseases (ibid.). The implementation of international codes of practice and their strict protocols necessary to minimise risks of disease transmission, may, in the short-term, have slow-down effects on global production and push prices up.

Social opposition

Social problems and opposition to the aquaculture have already been experienced in the case of salmon producing countries such as Chile where salmon farming created some social dislocation and marginalization of the poor which, in turn, led to resistance to salmon farming and even deliberate destruction of cages (Barrett, Caniggia and Read, 2002). In Canada, salmon fish farms have been increasingly seen as a threat to the Aboriginal Right to fish and Indigenous People’s groups have been lobbying the Canadian government to oppose the development of any new fish farm and maintain its moratorium on ocean net cage farming (Union of B.C. Indian Chiefs, 2004; Georgia Strait Alliance, 2002). Cases of opposition to shrimp farming have been well publicised around the world, mainly due to its attributed impacts on mangrove destruction. In India, opposition to the activity culminated in December 1996 with the Supreme Court decision to ban shrimp culture within Coastal Regulation Zones (Aquaculture Authority, 2002). Ethical questions over the large differential between the very low wages received by farmers and the price of the commodity on international markets were raised in the case of red seaweed farming in Tanzania (Bryceson, 2002).

Macro-economic context, political instability and administrative burdens

Handicaps to continued, even accelerated, expansion may include macro-economic variables affecting predominantly developing countries such inflation and exchange rate instability impacting on fish prices and international trade, as well as to policy and regulatory uncertainties (Wurmann, 2003 with reference to LAC). Political stability and continuous commitment to the development of aquaculture will be crucial to maintain the momentum gained by some producing countries and trigger initiatives amongst up-coming producers. Finally, modifying legal and regulatory frameworks to alleviate procedural and administrative constraints and define access regimes, whilst emphasizing good management practices, will be another challenge to overcome in order to stimulate the development of the sector (Gilbert, 2002; Sandoval, 2002, e.g. of Chile).

Fishmeal availability

This issue remains much debated. Concerns over shortages in fish feed, or the "fishmeal trap" (Wijkström and New, 1989), are not new, but have been increasingly reported as one of the main future warning to the sustained growth of the sector (e.g. Naylor et al., 2000,) and have contributed to the bad press received by aquaculture industry (e.g. The Guardian, 18 February 2003; Tuominen and Esmark, 2003). In 2000, it was estimated that aquaculture was the highest consumer of the world fishmeal (35 percent), compared to 29 percent for pigs, 24 percent for poultry and 12 percent other uses, mainly the pet industry (FAO, 2004). Fluctuations in the catch of the Peruvian anchovy, which is the main component of fishmeal, have led to periodic price increases, although the switch to soymeal and other vegetable-based feeds by the poultry and pig industries buffered the variations (FAO, 2004). However, the stability of the price ratio between soymeal and fishmeal should not be taken for granted as exemplified during the last El Nino event which led to the soaring of fishmeal prices in comparison to those of soya (ibid.). Given the price inelasticity of fish meal (Crowder, 1990) and the current lack of suitable substitutes to fish protein and oils, the forecasted, yet gradual, increase in the real price of fish feed will be a challenge to all shrimp and salmon farmers (New and Wijkström, 2002) in the future, if they expand output as planned.

Yet, only 37 percent of the total aquaculture production in 2001 was fed on formulated fishmeal (A. Tacon, personal communication). Although this share is likely to increase with intensified aquaculture production and reliance on commercial aquafeeds to enhance the growth of reared carp, tilapia and catfish (New and Wijkström, 2002), on-going research shows that progress has been made in the finding of substitutes with similar properties as marine oil in the diets for carnivorous species (Opsahl-Ferstad et al., 2003 with the example of genetic modifications of rapeseed to become suitable as fish feed; Hardy, 2000, regarding the use of enzymes supplements to increase the nutritional value of alternate (vegetable-based) feed ingredients), in an attempt to turn fish "vegetarian" (Powell, 2003). These developments could complement the use of discards from the marine capture fishery to maintain the supply of fish feed to the farming activity (New and Csavas, 1995).