GLOBEFISH - Information and Analysis on World Fish Trade

Emerging producers set to increase market share at Asia’s expense

07/01/2021

The tilapia market has been relatively well equipped to weather the COVID-19 pandemic due to the species affordability and its suitability for prepared and preserved retail products. In China, however, labour issues due to pandemic restrictions and a sluggish domestic market recovery will see production drop this.

Production

Production forecasts presented at the Global Outlook for Aquaculture Leadership (GOAL) conference in October put the total farmed tilapia harvest in 2020 at around 6.9 million tonnes, approximately on par with last year. In China, the world’s largest producer of tilapia, production is expected to decline by 3 percent to 1.7 million tonnes. The combined impact of sector uncertainty relating to the (now lifted) 25 percent tariff applied to Chinese tilapia imported into the United States of America, the slowdown in processing and farming activities due to COVID-19 restrictions, and a sustained lull in domestic demand are the primary factors behind this decline. Similar declines are predicted for the other large Asian producers, including Indonesia and the Philippines, although a 12 percent increase is expected in Viet Nam. Total Asian production is expected to contract by around 1 percent to 4.55 million tonnes.

Production in the Middle East and North Africa (MENA) will continue to follow a strong upward growth trajectory in 2020, reaching 1.37 million tonnes, up from 1.32 million in 2019. Despite some reoccurring issues with disease outbreaks at farms in some Sub-Saharan producing countries, there has been substantial investment into the tilapia sector in Africa over recent years. A small proportion of production is exported to Europe but the majority is absorbed by domestic markets.

Farmed tilapia output in Latin America is expected to increase somewhat, to 946 500 tonnes in 2020, compared with 930 400 tonnes in 2019. Brazil is by far the largest producer of tilapia in Latin America, with around 70 percent of the total. Brazilian supply is anticipated to expand by 10 000 tonnes. The majority of Brazilian production is destined for the domestic market. Other producers such as Colombia and Honduras focus more on exports of fresh fillets to the United States of America.

In Honduras, authorities of the Secretariat of Agriculture and Livestock (SAG) and the Technical Commission of the Tilapia Chain forecast an increase of at least 10 percent in Honduran production of tilapia to 13 800 tonnes for 2020, compared with 12 500 tonnes last year. Honduras is one of the most important suppliers of premium fresh tilapia to the US market. In Ecuador, reports suggest that some shrimp farmers were switching to tilapia due to Chinese partial bans on imports of Ecuadorian shrimp, but this ban was lifted recently, so everybody will concentrate again on the more attractive shrimp farming. Elsewhere, the governments of El Salvador and Panama are both supporting the development of the tilapia farming sector, both for export and for the domestic markets. Local communities need to diversify their sources of income and sales of fresh tilapia present a potentially profitable opportunity.

Markets and trade

A variety of new products and marketing approaches are emerging as tilapia suppliers seek to minimize dependence on foodservice sales and adapt to the new reality which has magnified the importance of retail. Demand for pre-packed and value-added products has reportedly increased. In the United States of America, tilapia sales have been boosted by the increased necessity of home cooking. Tilapia competes strongly in this segment, not only with other seafood products, but also with other animal proteins such as pork, chicken and beef.

US imports of frozen tilapia fillet from China, the market’s most important product type by volume, remained relatively steady during the first half of 2020 despite the setbacks associated with the pandemic. There was minimal disruption in price or supply in the US market due to careful annual planning and an abundance of frozen inventories to make up for shortfalls during the most difficult months of the lockdown.

In the large Brazilian market, while foodservice demand has suffered, households increased their consumption of tilapia as a means of diversifying their protein options during COVID-19 restrictions. With the subsequent return of social activities, this consumption has persisted, contributing to a possible increase in per capita consumption in 2020. Meanwhile, a favourable exchange rate made Brazilian tilapia more competitive in the US market, and Brazilian tilapia exports were up 24 percent to USD 4.7 million in the first half of 2020.

Elsewhere in Latin America, Ecuador’s tilapia export industry is struggling following a dramatic drop in sales to the US market. Prices are down and Asian competition is negatively affecting the sector. However, Colombia and Honduras both increased exports to the United States of America, taking advantage of the tariff on Chinese tilapia earlier in the year.

Prices

Following a steep decline that began in mid-2019, wholesale tilapia prices in China picked up in the third quarter of 2020 as the market recovery gathered pace. After hovering at around CNY 7.8 (USD 1.16) for most of the year, as of week 41, prices for 500-800 g whole live tilapia (DAP, Guangdong) were at CNY 8.43 (USD 1.25) per kg, approximately on par with the same week in 2019. Chinese  export prices (FOB) for frozen fillets to the US market were down by around 9 percent in the first half of the year, to USD 3.30 per kg. In Latin America, export prices for fresh tilapia fillets have been stable year-on-year in the first 6 months of 2020, at around USD 6.17 per kg (FOB, Honduras, Colombia and Mexico combined).

Outlook

The new consumer behaviours that have emerged due to the pandemic, such as the preference for pre-packed seafood options and a revived interest in home cooking, are likely to persist for some time. Product innovations and development of home delivery services also represent permanent advances, even after the future recovery from the effects of COVID-19. This is positive for tilapia marketers, and in fact many see this as an important opportunity, particularly Latin American producers who seek to take advantage of the strained US-China trading relationship and some negative consumer perceptions of lower priced frozen Chinese product. However, despite the moderately optimistic outlook, it must be kept in mind that suppliers are nevertheless still subject to the costs and risks resulting from hikes in air freight costs, repeat lockdowns of foodservice and general economic uncertainty.

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