Global aquaculture - the challenges of blue growth

Transcription

1 Global aquaculture - the challenges of blue growth Ragnar Tveterås Gothenburg, 14. April 2015

2 Egyptian fish farmer A fascina?ng sector with great diversity: Fish farmers

3 A fascina?ng sector with great diversity: Fish farmers Egyptian fish farmer Vietnamese fish farmer

4 A fascina?ng sector with great diversity: Fish farmers Egyptian fish farmer Vietnamese fish farmer Chinese fish farmer

5 A fascina?ng sector with great diversity: Fish farmers Egyptian fish farmer Vietnamese fish farmer Chinese fish farmer Fish farmers from Papua Ny Guinea

6 A fascina?ng sector with great diversity: Fish farmers Vietnamese fish farmer Egyptian fish farmer Fish farmers from Papua Ny Guinea Norwegian fish farmer Chinese fish farmer

7 A fascina?ng sector with great diversity: Fish farmers Vietnamese fish farmer Egyptian fish farmer Fish farmers from Papua Ny Guinea Chinese fish farmer Norwegian fish farmer Cypriotic fish farmer

8 A fascina?ng sector with great diversity: Fish farmers Vietnamese fish farmer Egyptian fish farmer Fish farmers from Papua Ny Guinea Norwegian fish farmer Chinese fish farmer Cypriotic fish farmer = SELF-MADE SHIPPING BILLIONAIRE AND TAX PLANNER FROM NORWAY, NOW LARGEST OWNER OF MARINE HARVEST (TURNOVER 2 BILLION EUROS)

9 A fascina?ng sector with great diversity: Produc?on technology Earth ponds, tilapia

10 A fascina?ng sector with great diversity: Produc?on technology Combination tilapia and rice in Bangladesh

11 A fascina?ng sector with great diversity: Produc?on technology Tilapia sea cages in Indonesia

12 A fascina?ng sector with great diversity: Produc?on technology Manual feeding of tilapia

13 A fascina?ng sector with great diversity: Produc?on technology Norwegian salmon farm with automated feeding Production of 4000 MT and 4 man-years. With ex farm price of 30 NOK/kg, and 8 NOK/EUR exchange rate, sales are 3.75 mill. EUR per man-year. Typical wage is EUR per man-year.

14 A fascina?ng sector with great diversity: Consumer products Boiled Burger Carpaccio Salmon taco Grilled Salad with smoked salmon Sushi Salmon spread Smoked salmon on biscuit

15 Fisheries vs aquaculture Higher degree of control Primary production Processing and distribution Professional buyers Consumers

16 Fisheries vs aquaculture Processing and logis?cs based on same competencies and technologies Primary production Processing and distribution Professional buyers Consumers

17 Fisheries vs aquaculture Professional buyers are conerned about the ability of seafood suppliers to sa?sfy requirements in a number of areas Primary production Processing and distribution Professional buyers Consumers

18 Fisheries vs aquaculture Consumers tend to not differen?ate between wild and farmed fish: Concerned about taste, convenience, healthiness and price Primary production Processing and distribution Professional buyers Consumers

19 Expecta?ons of a blue revolu?on providing growth Since 1990 the industry has been growing at an average compound rate of around 10% a year. It is probably the world's fastest growing form of food produc?on. (By comparison, farmed meat produc?on grew by 2.8%.).Some people believe that, by 2030, aquaculture will supply most of the fish people eat. The Economist, 7 th August, Aquaculture's promise is that, within the next three decades, it could produce most of the world's marine produce. At the same?me it could help to alleviate poverty and food shortages in some of the world's poorest countries. And if it is done well, it could help to safeguard marine resources for future genera?ons. That, surely, is something to nurture. The Economist, 7 th August, 2003.

20 Challenges related to externali?es and ins?tu?ons Foreword by Árni M. Mathiesen, Assistant Director- General, FAO Fisheries and Aquaculture Department in the FAO report The state of World fisheries and aquaculture 2012 FAO report The state of World fisheries and aquaculture 2012, page 25.

21 High growth expecta?ons High ambi?ons for the growth of global protein supply from aquaculture Different policies in place by na?onal and regional governments to facilitate growth But how has global growth rates developed over 2me?

22 Global aquaculture produc?on Million tonnes Others Finfish Crustaceans Molluscs Aqua?c plants

23 Global aquaculture produc?on: Declining growth rates? % growth Crustaceans Finfish Total Data source: FAO Fishstat database

24 Global aquaculture produc?on: Declining growth rates % growth Produc?on growth: : 129% : 148% : 87% Crustaceans Finfish Total Data source: FAO Fishstat database

25 More recent development: Produc2on of selected finfish species Kilde: Kontali and Global Aquaculture Alliance 25

26 Asia is the giant. Produc?on of finfish and crustaceans Million tonnes Oceania Europe Asia North America La?n America Africa

27 Asia has around 90% of aquaculture produc?on of finfish and crustaceans % of global produc2on 100,0 90,0 80,0 70,0 60,0 50,0 40,0 30,0 20,0 10,0 Africa La?n America North America Asia Europe Oceania 0,

28 with Europe and North America loosing market share over?me % of global produc2on 12,0 10,0 8,0 6,0 4,0 2,0 North America From 2.5% share in 1970 to 0.8% in 2010 Europe From 9.2% share in 1970 to 4.5% in 2010 Africa La?n America North America Europe 0,

29 Let s now move down to a more disaggregated sector level and examine growth pagerns

30 The story about global aquaculture is NOT the story about the tree that grew into space Production volume Year

31 The story about global aquaculture is NOT the story about the tree that grew into space Production volume Production volume Year Year

32 but ohen a story about STAGNATION Production volume Year

33 and DECLINE Production volume Year

34 and even DEATH Production volume Death Year

35 For many sectors produc?on in 2010 was significantly lower than the historic maximum Historiic maximum produc2on (MT) Produc2on in 2010 (MT) Blue line: Production 2010 = Historic maximum production

36 Produc2on 2010 / Historical Max. Produc2on 1,00 0,90 0,80 0,70 0,60 0,50 0,40 0,30 0,20 0,10 0,00 Europe the worst performer Produc?on in 2010 versus historical maximum 0,62 0,73 0,66 0,52 produc?on 0,62 0,62 0,73 0,54 0,67 0,88

37 Growth and decline of aquaculture sectors Produc2on (MT) Roho labeo, India Mrigal carp, India Atlan?c salmon, Chile Giant?ger prawn, Thailand Flathead grey mullet, Egypt Fleshy prawn, China Milkfish, Taiwan Province of China

38 Growth and decline of aquaculture sectors 500 Produc2on index (2010=100) Mrigal carp, India Atlan?c salmon, Chile Fleshy prawn, China Common carp, Russian Federa?on Giant?ger prawn, Philippines Mozambique?lapia, Indonesia

39 Why do we see these growth pagerns in aquaculture sectors? Which factors influence growth at different stages?

40 The role of produc?vity

41 General sources of produc?vity Technological progress New innova?ons growth: The menu Adop?on of more produc?ve technologies (investments) Learning about produc?on processes/organiza?on From own experiences From others experiences Exploita?on of scale economies Internal External Externali?es to produc?on Regula?on which affect produc?vity

42 Some sources of produc?vity growth from previous menu Prod.cost (EUR/Kg) Old cost frontier Technology adoption (investment) Learning Exploit scale economies Technological innovations External scale economies New cost frontier Production in firm

43 Produc?on and produc?vity growth In most cases sustained produc?on growth has to be accompanied by produc?vity growth In aquaculture significant produc?vity growth will usually be due to innova?ons Innova?ons in aquaculture tend to allow for more sustainable growth In some periods produc?on can also increase without produc?vity growth because increased market demand lead to higher prices There is a risk that such growth may be less sustainable (e.g. Chile)

44 Norwegian export price and produc?on cost for salmon (2010=1) NOK/kg Price Cost Production tonn

45 Norwegian export price and produc?on cost for salmon (2010=1) NOK/kg Price Cost Production tonn

46 Norwegian export price and produc?on cost for salmon (2010=1) NOK/kg Price Cost Production tonn

47 Norwegian export price and produc?on cost for salmon (2010=1) NOK/kg Price Cost Production tonn Productivity growth leads to lower costs which in competitive markets again lead to lower prices 0

48 Tilapia development of price and produc?on Kilde: FAO og Global Aquaculture Alliance

49 Pangasius development of price and produc?on Source: Kontali and Global Aquaculture Alliance

50 Source: Kontali and Norges Sjømatråd Sea bass and Sea bream development of price and produc?on in the Medigeranean

51 Example of produc?vity driven stagna?on? US capish Production (Metric tonnes) Production Catfish, USA Real price of live catfish Real price of live catfish (USD per kg) 2, , ,5 0 0

52 Underlying factors which influence produc?vity and growth in aquaculture Externali2es within aquaculture, par?cularly related to disease and fish health Externali2es to other sectors and users Ability to exploit internal and external returns to scale Ability to innovate in several areas

53 Externali?es from aquaculture = farm Organic emission Genetic pollution wild fish Aquaculture Diseases Habitat loss Chemicals Other sectors & users Externali?es influence produc?vity and produc?on (1) directly through diseases etc., and (2) indirectly through public regula?ons etc. mo?vated by externali?es

54 Disease externali?es Arguably larger nega?ve animal disease externali?es than in agricultural livestock produc?on Have on several occasions created huge produc?on losses due to mortality Some sectors have never recovered aher disease outbreaks See the next three examples

55 Shrimp produc?on, The Philippines ,000 tonnes Source: FAO

56 Shrimp produc?on, Taiwan 1,000 tonnes Source: FAO

57 Salmon produc?on, Chile 1,000 tonnes Source: FAO, Kontali

58 Salmon aquaculture same technology, but different regula?ons mo?vated by externali?es Norway Chile Produc2on in MT UK, Canada and USA Regulations too strict? UK Canada USA Chile regulations too lax?

59 Agglomera?on economies - Localized external returns to scale in aquaculture Thicker markets New markets for highly specialized inputs From monopoly/oligopoly to compe??ve markets for some inputs Knowledge spillovers Labor migra?on across firms Different arenas where firms meet Increasing capacity for innova?on and sustained produc?vity growth (Tveteras, 2002; Tveteras & Bagese, 2006)

60 External returns to scale: Effect on individual firm s produc?on cost Level of externalities Marginal cost (MC) MC 1 MC 2 E 2 E 1 Y 1 Y 2 Industry size Y Production volume

61 Aquaculture sector size characteris?cs in 2010 Production in sector (A) Production in all sectors in country (B) Production in other sectors in country (B- A) World World regions: Africa Asia Europe Latin America North America Oceania Developing vs developed countries: Developed Developing China Norway

62 The size distribu?on of 443 aquaculture sectors in EU27 in Over 400 aquaculture sectors in Europe have a production which is less than a single typical salmon farm Produc2on in tonnes Denmark- European perch Denmark- Atlan?c salmon Austria- Bighead carp Latvia- Tilapias nei Greece- Common sole Lithuania- Wels(=Som) capish Bulgaria- Northern pike Montenegro- European eel Austria- Cyprinids nei Belgium- Freshwater fishes nei Albania- Grass carp(=white amur) Italy- Porgies, seabreams nei Switzerland- Sea trout Greece- Marine fishes nei Bosnia and Herzegovina- Rainbow Norway- Sea trout Romania- Wels(=Som) capish Italy- Brook trout Albania- Silver carp Poland- Nile?lapia Estonia- Rainbow trout France- Atlan?c salmon Moldova, Republic of- Bighead Montenegro- Rainbow trout Czech Republic- Freshwater fishes Bulgaria- Bighead carp Croa?a- Rainbow trout Sweden- Chars nei Iceland- Arc?c char Russian Federa?on- Atlan?c Poland- Common carp Norway- Atlan?c salmon 0

63 Innova?on as growth driver Innova?ons have generally increased produc?vity and sustainability in aquaculture and thus contributed to growth Examples: Feed and feeding equipment innova?ons: Lower local organic emissions, lower inclusion of fish oil and fishmeal Vaccine innova?ons: Reduced use of an?bio?cs Gene?c innova?ons (breeding): More efficient conversion of feed and increased disease resistance Fish cage innova?ons: Reduced risk of escape

64 Growth has to be based on innova?ons For example, 2-3?mes increase in open cage salmon aquaculture produc?on from current level is not sustainable with current technologies Innova?ons required in many areas Feed, fish disease, salmon lice, salmon escape, etc. Imply that R&D policy and other policies that facilitate or impede innova?ons will play a crucial role

65 Innova?on and R&D R&D is cri?cal for many future radical innova?ons that are required to ensure growth Market failures in R&D, par?cularly low degree of appropriability of R&D benefits by private firms is a huge challenge A combina?on of private and public funding is therefore necessary

66 Which factors influence produc?on growth? An econometric analysis accoun?ng for some factors

67 Test hypotheses on the effects on aquaculture sector growth rates of Internal scale of sector External scale of aquaculture in country (external returns to scale?) Age of sector (learning effects?) Time increasing or declining growth rate?

68 Econometric model specifica?ons Varia?ons of the following growth model: lny it lny it- 1 = α i D i + β dy1 (lny it- 1 lny it- 2 ) + β dy2 (lny it- 2 lny it- 3 ) + β y1 lny it- 1 + β y12 (lny it- 1 ) 2 + β e1 lne it- 1 + β e12 (lne it- 1 ) 2 + β a age + β aa age 2 + β t t + β g t 2, i = aquaculture sector subscript (defined by species and produc?on country), t = year, Y = produc?on volume in metric tonnes, E = produc?on volume in other aquaculture sectors in same country in metric tonnes. In some specifica?ons?me trend variable is replaced by year dummy variables. Various specifica?ons of sector- specific effects (homogeneous, random, fixed). Robust standard errors. Unweighted and weighted models (using produc?on volume as weight).

69 Growth model: Wald tests of elas?ci?es evaluated at sample mean Variable Coef. Std. Err. t P- value lprod lprod_other age t Random sector effects model. N=34480.

70 Summary of econometric findings Internal scale of sector: Significantly nega?ve effect nega?ve externali?es dominate? External scale of other aquaculture in country: Tend to be posi?ve effects posi?ve agglomera?on effects? Age of sector (learning): Ambiguous effect Time: Growth rate tend to decline over?me aher having controlled for other factors

71 Conclusions Aquaculture is a sector with significant externali?es A sector (including government) has to innovate to mi?gate externali?es as it grows There are probably external returns that can be exploited in aquaculture

72 Conclusions Global aquaculture is growing at a slower rate, and North America and Europe is growing even slower North American and European countries have small individual sectors and small aquaculture in total May benefit from more specializa?on into fewer species? R&D driven innova?ons External returns to scale

73 Time for serious rethinking? Aquaculture is heading towards biological manufacturing It needs to agract some of the brightest people both in the industry and R&D Scale will be important at several levels