Forecast and View for 2022

Forecast and view for 2022

From the editor

This is AAP’s view on the direction of the industry and how we can take advantage of the situation.

1. The end of the editorial in issue Nov/ Dec 2021 mentioned ‘anticipate the rebound’ and this was also the view of Seafoodsource’s Cliff White where ‘the seafood industry is at the cusp of a renaissance’. The lockdown from 2020 encouraged consumers to cook seafood at home leading to a 35% and 25% increase in retail frozen and fresh seafood sales, respectively. When restaurants in the US re-opened in 2021, seafood came out the winner as we see shrimp imports top a million tonnes for the first time (Rabobank) and Norwegian salmon exports hit a new record. This gives the aquaculture industry a strong tailwind.

2. While shrimp production showed compensatory growth in 2021, Asia is losing out to Latin America (Latam). In 2008, Asia had 82% market share vs Latam at 13%. Fast forward to 2021, the ratio is now 63% vs 27%, said Robins McIntosh at TARS 2021, and the forecast in 2030 is for 55% vs 35%. What has Ecuador, who is leading Latam’s growth done right? Ecuador has positioned its shrimp very well with its Sustainable Shrimp Partnership program. We might say that Ecuador is a single country, but we have yet to see the marketing strategy of sustainable shrimp from any single Asian country. Crossing the one million tonnes benchmark means nothing if one must sell it at the lowest price.

3. Mainly due to disease issues, shrimp farmers in Asia are facing headwinds with rising cost of production. 2021 saw all countries raise shrimp feed prices due to increases in feed ingredient prices. If Asia is unable to improve from an average survival rate of 60%, the industry may see increases in production cost/kg from USD3.50 to USD4.00 for size 60 shrimp. Margins will be squeezed. If additional lockdowns or new SOPs reduce the buying capability of processing plants, exfarm prices will drop. The warning signs are here already.

4. Consumers are looking for seafood alternatives and the seafood retail market expansion provides a huge opportunity for Asian marine fish. This should provide the catalyst for Asian seabass (barramundi) and snappers. However, this sector lacks the economies of scale and integration and all it has to do is look at the salmon model. Asian seabass has improved in the value chain segments of farming and feed, but it still lacks in genetics, processing and marketing.

5. Both pangasius and tilapia are more dependant on the retail segment compared to the food service, so both species did not suffer as much during the lockdowns. However, the increase in feed ingredient prices has had a more profound effect on feed prices which in turn will require higher ex-farm prices, otherwise will farmers temporarily exit the business?

6. Although one does not have accurate data on seafood consumption, China can easily punch among the heavyweight markets of the US and EU in terms of seafood imports. Due to supply chain disruptions leading to a low inventory of imported seafood in China, local production of seafood has picked up to meet demand. Whether this is a temporary trend remains to be seen. The recent supply chain disruptions have highlighted again the importance of food security but on the other side of the coin, it also provides the opportunity to produce local, sell local.

7. Today’s supply chain disruptions highlight two major issues. The industry forecast is for shipping to start normalising from mid-2022. However, port congestion and clearing may take a longer time which will also have a knock-on effect on the number of containers ‘trapped’ and waiting for turn-around. Clearing seafood containers at China’s main ports has the additional hurdle of Covid-19 inspection on the packaging and the industry hopes that this will not become a norm for any other importing country.

8. Asia is still lacking when it comes to innovations in branding and marketing. With SDGs, markets are looking at carbon footprints and life-cycle assessment of seafood products. There has been talk of climate-friendly seafood, but will an Asian producing country be able to take advantage of this? Ironically, the pandemic has reset the playing field for all stakeholders in the industry but in the multispecies aquaculture industry, each species has been dealt a different set of cards. Each country should pivot according to the country – species combination of circumstances.

January/February 2022 AQUA Culture Asia Pacific