COMPETITIVENESS OF U.S. AQUACULTURE WITHIN THE CURRENT U.S. REGULATORY FRAMEWORK

Increased attention has been paid in recent years to both positive and negative effects of increasing numbers of regulations on businesses in the United States. The decline in U.S. aquaculture has been attributed in part to increasing volumes of imports and high feed prices. However, there is increasing concern that the U.S. regulatory environment, as compared to that of international competitors, may also have contributed to this decline. More than 1,300 laws apply to U.S. aquaculture and even though the majority has been issued by individual states and apply only to specific types of aquaculture businesses in that state, the cumulative regulatory burden has increased over time. Major compliance categories include: 1) environmental management; 2) food safety; 3) legal and labor standards; 4) interstate transport of aquatic products; 5) fish health; and 6) culture of commercially harvested species. A substantial portion of the regulatory burden is the managerial and labor time spent on compliance in addition to the direct cost increases. The streamlined one-stop process adopted in Norway appears to have allowed growth of aquaculture within a comprehensive regulatory framework, yet the lack of such a streamlined approach in the United States appears to have contributed to the decline of existing industries and to serve as a deterrent to investment in newly emerging technologies. Favorable regulatory environments in countries that export to the U.S. contrast sharply with the increasingly inefficient, cumbersome and/or restrictive U.S. environment. Such disparities have created competitive disadvantages for U.S. producers. Attention is needed by policy makers to search for streamlining mechanisms and by the scientific community to address the growing competitive disadvantage to U.S. aquaculture to respond to increased global demand for farmed seafood.     

U.S. seafood consumption

U.S. seafood consumption has changed dramatically in recent decades and has become increasingly dominated by the consumption of a limited number of species that are primarily imported and predominantly sourced from aquaculture. In getting to this point, the United States has been, and still is, at the forefront of some of the most important trends in global seafood markets. Hence, discussing the factors influencing U.S. seafood consumption patterns is an interesting and informative endeavor and will most likely also have strong predictive power for the continued development of seafood markets in the United States. In this article, we will discuss the transitions in the U.S. seafood market, primarily focusing on the period from 1990 to the present, highlighting the main factors that facilitated this development. This article provides an overview of U.S. landings, aquaculture production, exports, and imports and also explores contributing trends in global export and import markets. This will be followed by a discussion of U.S. per capita consumption patterns and an examination of the consolidation of species consumed over time. Finally, implications for future trends in seafood consumption and production are discussed.     

Regulatory costs on U.S. salmonid farms

The economic effects of the implementation of regulations on aquaculture farms in the United States, while of concern, are not well understood. A national survey was conducted of salmonid (trout and salmon) farms in 17 states of the United States to measure on‐farm regulatory costs and to identify which regulations were the most costly to this industry segment. The response rate was 63%, with a coverage rate of 94.5% of the U.S. production of salmonids. The regulatory system resulted in increased national on‐farm costs of $16.1 million/year, lost markets with a sales value of $7.1 million/year, lost production of $5.3 million/year, and thwarted expansion attempts estimated at $40.1 million/year. Mean farm regulatory costs were $150,506/farm annually, or $2.71/kg; lost markets with annual sales values of $66,274/farm; annual lost production of $49,064/farm; and an annual value of thwarted expansion attempts estimated at $375,459/farm. Smaller‐scale farms were affected to a disproportionately greater negative extent than larger‐scale farms. Per‐farm regulatory costs were, on average, greater for foodfish producers than for producers selling to recreational markets, but per‐kg regulatory costs were greater for those selling to recreational compared to foodfish markets. Regulatory costs constituted 12% of total production and marketing costs on U.S. salmonid farms. The greatest regulatory costs were found to be effluent discharge regulations. The majority of regulatory costs were fixed costs, but regulatory barriers to expansion precluded compensatory adjustments to the business in spite of growing demand for salmonid products. Results of this study show that the on‐farm regulatory cost burden is substantial and has negatively affected the U.S. salmonid industry's ability to respond to strong demand for U.S. farm‐raised salmonid products. Results also suggest that the regulatory system has contributed to the decline in the number of U.S. salmonid farms. While regulations will necessarily have some degree of cost to farms, the magnitude of the on‐farm regulatory cost burden on U.S. salmonid farms calls for concerted efforts to identify and implement innovative regulatory monitoring and compliance frameworks that reduce the on‐farm regulatory cost burden.     

SURVEY OF ETHNIC LIVE SEAFOOD MARKET OPERATORS IN THE NORTHEASTERN USA

From February through August of 2006, a team of two researchers visited 130 ethnic live seafood markets in the northeastern USA that sell live seafood. Operators of 27% of these locations completed a survey asking basic information about their businesses with respect to live seafood. This study provides interesting baseline information on these markets directly from market managers and operators. The markets surveyed have been in business for median of nine years. Sixty-three percent receive more than one live fish shipment per week. Fifty-five percent of markets sell over 227 kg of live seafood per month. Asians are the predominant clientele in most of these locations. Most market operators stated they prefer freshness and quality over price and availability. About the same number of markets identified strong sales during the winter months as those that indicated constant live seafood sales. Live tilapia and hybrid striped bass are the two most common products. Sixty-two percent of market operators view the live seafood section as very important to overall sales in their store and roughly one-quarter of those surveyed are considering expansion.     

THE RUSSIAN SEAFOOD REVOLUTION: SHIFTING CONSUMPTION TOWARDS AQUACULTURE PRODUCTS

A food consumption revolution is taking place in Russia. After decades of severe constraints on food consumption options under the communist regime Russian consumers are now adopting new food products—including seafood products – at a high pace. Since Russian consumers have previously had very limited seafood consumption choices, the market can be seen as an interesting laboratory for investigating consumer responses to products that have previously not been available. Among imported seafood products are both wild and farmed species. Furthermore, Russian imports include both traditional species such as herring, and ‘new’ species such as pangasius. We analyze market integration among seafood products using Russian monthly import prices from 2002 to 2007 on several products, such as herring, salmonids and pangasius. We find that pangasius compete in the white fish segment, and is a price leader. In the salmonids market, farmed salmon trout appears to be the price leader, both in the fresh and frozen market segment.     

A COMPARISON OF THE ECONOMIC PERFORMANCE OF OFFSHORE AND INSHORE AQUACULTURE PRODUCTION SYSTEMS IN KOREA

The economic performance of the current inshore rock bream aquaculture industry conducted in Yeosu, Korea was compared with a pilot commercial scale offshore aquaculture farm in Jeju, Korea. Data was collected from 12 inshore farms and two production cycles of the offshore farm for use in Monte Carlo simulations run over a ten year time horizon. Net present value was compared for the inshore farms and two survival rate scenarios for the offshore farm. The offshore farm is expected to have a higher survival rate if it can withstand tsunamis and avoid pollution, disease and red tide impacts that are prevalent inshore. When the offshore farm was modeled with its observed higher survival rate, its average net present value ($1,016,483) significantly outperformed the inshore farms average net present value ($182,153). In the second scenario, the offshore farm survival rate was lowered based on performance data from the inshore farms. Not surprisingly, given the higher investment costs, the offshore farm performed poorly in terms of average net present value ($-137,142) compared to the inshore farms when it no longer had the advantage of high survival rates.     

Price Volatility in Seafood Markets: Farmed vs. Wild Fish

Price volatility has an important impact on seafood markets and the aquaculture industry. This article investigates price volatility regimes along three dimensions; technology, species and product form. We identify regimes using the Iterated Cumulative Sum of Squares (ICSS), which allow us to compare the volatility found in aquaculture products, as well as comparing against fish-meal and soybeans. The results help identify the level of price risk found within the aquaculture industry across species and products. In addition, we differentiate between technologies comparing wild-caught fish with aquaculture products. The results also help us consider the relative riskiness of aquaculture compared to other industries. The results indicate that in aggregate, price volatility for aquacultured products is substantially lower than for wild. However, this varies substantially between species.     

THE EFFECTS OF EXPORT PRICES ON THE DEMAND AND SUPPLY FOR FISH IN THE PHILIPPINES

ABSTRACT

This paper describes the effects of changes in export prices on Philippine fish demand, supply, prices and trade. The analysis uses a multi-commodity-model of the fisheries sector that is based on the AsiaFish model. The results indicate that higher export prices lead to higher output and exports for the fisheries sector. However, such changes also cause a decline in the domestic consumption of fish.     

Generating information for aquaculture development: The art and science of economic policy modelling

Abstract

The rapid growth of aquaculture and concerns about economic and ecological ‘sustainability’ have focused attention on industry externalities. Developing institutions which ‘sustain’ aquaculture will require skills in the ‘art and science’ of public policy modelling. Analysis of existing approaches demonstrates that no single modelling paradigm is ‘best’ for all aquaculture policy situations. Modelling approaches other than cost‐benefit including multiobjective analysis may be more appropriate if the objective of the modeller is to improve the effectiveness of the policy process itself. A review of the relatively small but growing literature on aquaculture policy models reveals a wide range of issues and approaches. In general, economic models have focused on the single objective of maximizing efficiency; in contrast, models used in actual aquacultural policy and planning focus on controlling environmental pollution. The findings suggest that economic models have not yet played a significant role in aquacultural policy development. This raises concerns that myopic views of ‘sustainability’ will result in institutions which do not promote socially efficient aquacultural industry growth.     

MODELING THE IMPACT OF GOVERNMENT REGULATIONS ON THE PERFORMANCE OF RESERVOIR AQUACULTURE IN VIETNAM 1

This study was motivated by the need to estimate the quantitative impacts of current regulatory constraints on the economic performance of reservoir aquaculture in Vietnam. Using survey data and a specially adapted bioeconomic model, we show that performance of reservoir aquaculture varies widely. The three performance criteria were fish yields, net production revenue and income generated for the local population. Results suggest that current policies regarding extension effort on fingerling survival rates and on feeding strategies, as well as regulations involving taxation of cooperatives and authorities collecting leasing fees, do constrain the economic potential of reservoir aquaculture. The forgone production revenues limit the potential for aquaculture to alleviate local poverty. This study is a first step in identifying those government regulations that have a critical role in the development of reservoir aquaculture in Vietnam.     

ORIGINS MATTER: (NO) MARKET INTEGRATION BETWEEN CULTURED AND WILD GILTHEAD SEA BREAM IN THE SPANISH SEAFOOD MARKET

Interactions between fisheries and aquaculture have become a major issue that is still insufficiently studied. Therefore, the objective of this article is to test whether the cultured and wild gilthead sea bream in the Spanish seafood markets are integrated. By using the Johansen methodology, cointegration of the price series of farmed and wild gilthead sea bream was tested. In contrast to previous studies, our econometric results show that wild and the farmed gilthead sea bream form two heterogeneous products in the Spanish market. These new results question the generalization currently accepted by the scientific literature that farmed and wild fish are substitutes when they belong to the same species. The binomial product-market, along with some specific features of the Spanish market, such as the negative perceptions of aquaculture by some significant groups of consumers, appeared to have a great explanatory power for justifying these different results.     

DETERMINING THE IMPACT OF CRAWFISH IMPORTS ON U.S. DOMESTIC PRICES

The study identifies the linkage between imports and the domestic price of crawfish. The results show a simultaneous increase in imports and domestic prices of crawfish while showing a negative relationship between domestic landings and price. Each model shows that there is a seasonality effect on the domestic price of crawfish. The study also shows that increases in the domestic supplies of shrimp, tilapia, and clams generated increases in the domestic crawfish price, while increases in imported and domestic supplies of beef and imported supplies of pork decreased the domestic crawfish price.     

Economic assessment of commercial-scale Edwardsiella ictaluri vaccine trials in U.S. catfish industry

Abstract

Enteric Septicemia of Catfish (ESC) is a ruinous bacterial disease affecting the U.S. catfish industry. Previous attempts to develop ESC vaccines have failed to achieve industry acceptance, largely attributed to difficulties in delivering the vaccine to immunocompetent fish. Recently, a live attenuated ESC vaccine has been developed, coupled with a mechanized platform designed to accurately deliver measured doses of vaccine with feed. This delivery scheme for vaccine-feed admixture has shown tremendous promise under controlled research settings. This study evaluated the economic effects of on-going commercial-vaccination trials on catfish fingerling operations in Mississippi. Commercial-vaccination trials for both channel and hybrid catfish demonstrated significant improvement in survival, growth, feed consumption, feed conversion and gross yield. At a realistic vaccination cost of $750/ha, the net economic benefits to channel and hybrid catfish fingerling-production phases were $3199 and $6145/ha, respectively. Whole-farm models showed additional profit ranging from $71,758 to $133,887/400-ha on farms that integrate fingerling production to their production strategies due to appropriation of more of the otherwise incumbent fingerling production acreage into foodfish production. Commercial adoption of the oral-vaccination platform would greatly enhance profitability while laying the foundation for development and delivery of polyvalent vaccines against other catfish diseases.     

AN EXPLORATORY PERFORMANCE ASSESSMENT OF SHRIMP EXPORTERS FOR THE U.S. MARKET

This paper develops a systematic approach for the assessment of export performance and applies it to evaluate the major shrimp exporters for the U.S. market during the period from 1991 to 2007. Export performance is evaluated from two perspectives: (1) an individual exporter's competitiveness in a specific shrimp product in terms of comparative advantage, and (2) an individual exporter's overall competitiveness in the U.S. market in terms of specialization.     

HAWAII IMPORTATION PERMITS AND SPECIES IN THE ENVIRONMENT

Hawaii's aquaculture industry is driven by the introduction and production of exotic species. At issue is the establishment of exotic species in the environment. The number of import permits issued can represent the potential for exotics to establish in the environment. More than half of the permits issued annually by the Plant Quarantine Branch are multiple entry-permits related to live marine food and ornamental organisms. Single entry-permits amount to about 150 permits per year for more ornamental than food organisms. Known listings of exotic species in the environment can indicate trends and potential species establishment. Since the 1960s, the numbers of exotic species established in the environment has matched those released by the State prior to 1960 for forage or game purposes. The majority of species released is probably owing to hobby-related activity and not that of the aquaculture industry. The ornamental sector of the industry is not sufficiently developed and production by Hawaii aquaculture farms is exported.     

INLAND AQUACULTURE IN INDIA: PAST TREND,PRESENT STATUS AND FUTURE PROSPECTS

ABSTRACT

In India, inland aquaculture has emerged as a fast-growing enterprise and a viable alternative to the declining capture fisheries. The present paper is an attempt to assess Indian inland aquaculture with respect to its resource base, output trends, systems and activities, yield gaps, adoption and impact on aquaculturists, economics, returns to inputs, investment needs, and future prospects. The paper is largely based on existing literature and observations made as part of an ICAR-WorldFish demand supply project. Indian aquaculture is primarily limited to inland sector and carp-oriented; for that reason, this activity received special attention. Freshwater aquaculture observed tremendous growth in the past 15 years, but immense scope still exists for horizontal expansion and increases in productivity (vertical expansion). This is evidenced by the fact that the average farm fish yield is only one-third of that achieved in farm trials. The difference was mainly due to much higher input use in on-farm trials. Most of the aquaculturists were practicing extensive aquaculture, but aquaculturists with semi-intensive operations benefited most from adoption of technology. The benefit:cost ratios for different systems of aquaculture varied between 1.22 to 1.86. The return to capital was much higher than the return to labor, due to the low labor input. The semi-intensive aquaculture system would receive the greatest return from projected macrolevel investments, followed by extensive and intensive systems. Dedicated efforts are needed to meet the demand for quality fish seed and feed in order to achieve the desired 45% increase in area and greater than 50% increase in productivity. Based on the observations, activities designed to foster inland aquacultural development in India are recommended.     

THE ECONOMICS OF AQUACULTURE INSURANCE: AN OVERVIEW OF THE U.S. PILOT INSURANCE PROGRAM FOR CULTIVATED CLAMS

One important issue affecting the continued growth and success of the aquaculture industry is risk management. Aquaculture producers face a number of production risks (e.g., weather, disease) that substantially affect their output quantity and quality. Crop insurance is one important potential mechanism for managing these risks, but aquaculture has historically had limited insurance availability in the United States, in part because of unique challenges associated with implementing crop insurance programs in aquatic settings. The Cultivated Clam Pilot Insurance Program, which began in 2000 in four Atlantic Coast states, is the first United States, federal crop insurance program for aquaculture. This program experienced relatively high loss ratios in the early years of the program, but substantial modifications beginning with the 2004 crop year resulted in a significant improvement in actuarial performance. Experiences with clam insurance can provide insight into the potential development and application of insurance programs for other aquaculture products.     

BIOECONOMICS OF CAPTURE-BASED AQUACULTURE OF COD (GADUS MORHUA)

This study formulates and parameterizes a bioeconomic model of capture-based aquaculture (CBA) of cod (Gadus morhua). The model is solved for the optimal harvest pattern and calculates economic profit and net present value for a model farm. The biological sub-model incorporates knowledge from interviews with existing farmers, research trials and existing cod aquaculture literature. Economic components are obtained from interviews and sales statistics from exporters. A farm of the modeled scale is likely to influence market prices, hence sales prices were estimated assuming a supply response based on the price elasticity. Taking into account the opportunity cost of selling the fish directly, NPV is found to be marginally positive. Sensitivity analysis revealed that profitability is sensitive to changes in several parameters. Hence, further research is valuable and care should be taken when considering investments in cod CBA.     

COMPARATIVE ADVANTAGES OF THE U.S. FARM-RAISED CATFISH INDUSTRY: A CROSS-REGIONAL ANALYSIS

Policy analysis matrices are developed and used to derive domestic resource cost coefficients for different catfish farm production regions in the United States. The results show that U.S. catfish producers were losing their comparative advantage positions during the study period considered. An import tariff improves the industry's comparative advantage position, but may not increase its market profitability. Higher efficiency in feed usage, and higher market prices paid to producers through promotional efforts are essential to the U.S. catfish industry.     

CHINA'S ACCESSION TO THE WTO AND ITS IMPLICATIONS FOR THE FISHERY AND AQUACULTURE SECTOR

ABSTRACT

This paper reviews recent developments in China's fishery and aquaculture sectors, as well as the policies affecting rural households in general and fisheries households in particular. It explores how China's policies may change as a result of the nation joining the World Trade Organization (WTO) in December 2001 and the likely impacts of these changes on China's fishery and aquaculture sector. It was found that the domestic fish markets are gradually integrating, suggesting that fish price shifts in one area will affect prices in most parts of the country. It was also found that, compared with the prices of other agricultural commodities, the domestic prices of most aquatic products are well below world prices. This suggests that exports of aquatic products would be able to expand now that the nation has joined the WTO and that fishers would gain from this move.