U.S. Aquaculture: Current Status and Future Directions

James M. Carlberg and Jon C. Van Olst

Kent SeaTech Corporation

11125 Flintkote Avenue, San Diego, California 92121

jcarlberg@kentseatech.com

Summary

The U.S. Department of Agriculture has identified aquaculture as a major growth industry in the 21^st century. Aquaculture currently has a farm gate value of over $1.0 billion, a total value to the U.S. economy of nearly $7.0 billion, and provides nearly 200,000 jobs. Due to population growth in the U.S. and throughout the world, there is an increasing need for additional seafood supplies. It is expected that the per capita consumption of seafood will increase significantly due to heightened consumer awareness of the health and nutritional benefits of including more fish in the diet, and the fact that seafood represents a good value as a source of animal protein. Most fisheries biologists agree that world's capture fisheries are approaching their maximum harvest levels and that aquaculture will be the major source of additional seafood supplies for the future.

Background

Seafood Supply and Demand. The world fisheries harvest has reached a plateau at about 90 million metric tons (mmt) in recent years for both edible and industrial products. In 1998, the commercial catch was 87.4 mmt, composed of 58 mmt of edible products and 29 mmt of industrial products. The portion of edible seafood products from capture fisheries has increased by less than 10% over the past twenty years and the supply of edible seafood from landings has essentially remained level at about 60 mmt.

Population growth and change in per capita consumption are the principal factors driving the increase in demand for seafood. The world’s population is projected to grow from 6.0 billion currently to approximately 9.5 billion by 2040. The world’s average per capita consumption of seafood is 18 kg at present, but is projected by the Food and Agriculture Organization of the United Nations (FAO) to increase to 20 kg by 2030. This magnitude of change would require nearly a doubling of the current world’s seafood supply of edible fish and shellfish, from 90 mmt (60 mmt from fisheries and 30 mmt from aquaculture) to 180 mmt, an increase of about 90 mmt by 2040.

Fisheries statistics compiled by FAO indicate that 25% of the wild stocks are over-harvested and another 30-40% are fully exploited (FAO 1999). Nevertheless, there may be some potential to increase fisheries supplies through continued resource management, use of by-catch, exploitation of underutilized species, and expanded use of plankton and krill. Some biologists estimate that with ideal management, these fisheries resources might provide an increase of 20 to 30 mmt per year, although there are concerns that increased harvest of organisms low in the aquatic food chain may adversely affect other dependent fisheries. Most of the deficit will likely be supplied by increasing world aquaculture production.

Seafood Supplies From Aquaculture. World production of edible seafood from aquaculture reached 39.4 mmt in 1998 (30.8 mmt of fish and shellfish, and 8.6 mmt of aquatic plants). The 1998 aquaculture harvest was valued at more than $52 billion ($47 billion of fish and shellfish plus $5 billion of aquatic plants) and has shown an average annual increase of about 11%. The total combined supply of all seafood products has averaged about 126.8 mmt (87.4 mmt from capture fisheries and 39.4 mmt from aquaculture). Aquaculture now contributes nearly one-third of the world’s total edible seafood supply. The value of fish and shellfish in 1998 was $47.1 billion. The value of cultured aquatic plants was $5.4 billion. Between 1989 and 1998, the world combined fisheries and aquaculture harvest increased by 15% (from 102 mmt 1989 to 117 mmt). During the same period, world aquaculture production increased by 250% (from 12 mmt to 30.8 mmt, excluding aquatic plants).

Nearly 89% of the world’s aquaculture production is supplied from nine Asian countries that produce low-value carp and seaweed for domestic consumption, and marine shrimp and mollusks for export (New 1997). Europe is the second leading aquaculture producer at about 6%, supplying high-value salmon and trout for export, and carp for domestic consumption. Central and South America produce about 2% of the world's aquaculture supplies, including large volumes of marine shrimp and salmon for export. Africa is a net importer of food and aquaculture in that region is currently focused on growing carp and tilapia for domestic consumption. Africa produces 0.6% of the world's aquaculture products and Oceania contributes 0.4%. North American contributes only 2.1% of the world’s aquaculture production, principally catfish, salmonids, and mollusks. Food fish constitute 51% of the current world aquaculture production, aquatic plants 22%, mollusks 23%, and crustaceans 4%. Over 87% of all food fish are grown in freshwater, with carp representing 46% of the entire world’s animal aquaculture production. Marine culture accounts for just 4% of world fish production, and diadromous species such as salmon amount to 9%. The forecast is for steady growth of aquaculture in Asia and new export products from developing nations in South America and Africa.

Statisticians project an additional demand for 90 mmt of edible seafood by 2040. The supplies from capture fisheries are static at present and not expected to increase significantly. Current aquaculture production of animal products averages about 30.8 mmt per year. To meet the projected demand deficit, the world aquaculture production of fish and shellfish would need to triple by 2015 and quadruple by 2040. FAO projects that aquaculture will provide 105 mmt of seafood by 2050, based on an average annual production increase of 3%. If these targets are met, the "Blue Revolution" will truly have been achieved. Much of the future increases in production is expected to come from the culture of marine fishes, including Atlantic cod, halibut, char, tuna, and turbot. An increasing portion of this growth will occur in developing nations, where aquaculture is increasing at an annual rate of 17%, while in developed nations aquaculture is increasing at a rate of only 3%.

The world food economy for animal protein has traditionally been based on capture fisheries and cattle grazing. However, as the world completes the transition from hunter/gatherer to the controlled culture of food organisms, aquaculture is projected to surpass cattle ranching (currently at 53 mmt per year) by the end of the decade.

U.S. Seafood Supplies. The U.S. supply of edible seafood products from commercial fisheries has fallen for each of the past six years. This decline has resulted principally from reduction in landings of pollock and cod. The U.S. ranks fourth in volume among the world's fishing nations, trailing China, Japan, and India. The National Marine Fisheries Service estimates that 62 fishery stocks in U.S. territorial waters are over-utilized and another 109 are fully utilized (NMFS 1998). U.S. seafood landings (edible and industrial) in 1998 were 4.4 mmt. However, the edible portion was only 3.3 mmt. The NMFS also estimates that through recovery of the stocks, edible seafood supplies could reach a maximum of 5.5 mmt in the future and that edible supplies could reach 4.1 mmt by 2025 (NMFS 1997). In 1999, the average price of seafood was up by 2%, with a wholesale value of $24.9 billion and a consumer value of $52 billion ($35.6 billion foodservice and $16.4 billion retail).

U.S. Exports of edible seafood products in 1999 were 0.9 mmt, valued at $2.8 billion. A majority of the exports were salmon, surimi, and lobsters, which were shipped principally to Japan and Canada. The imports of edible seafood products into the U.S. in 1999 were 3.5 mmt, valued at record $9.3 billion. A majority of these products were shrimp, tuna, lobster, and salmon, coming from Canada, Asia, and Mexico. Imports now represent over 50% of our seafood supply, after adjusting for exports, and have exceeded the edible supplies from the domestic catch for the first time. The seafood trade deficit has reached a record high of $6.5 billion. The total U.S. supplies of edible seafood was 4.6 mmt (3.3 mmt from landings, 0.9 mmt from net imports, and 0.4 mmt from aquaculture).

U.S. Aquaculture Production. Aquaculture production in the U.S. is ranked eighth in the world, representing just 1.4% of world production. The U.S. trailed China (67%), India, (6%), Japan (2.5%), Indonesia (2.3%), Bangladesh (1.9%), Thailand (1.9%) and Vietnam (1.7%). Results from the 1998 Census of Aquaculture conducted by the USDA National Agricultural Statistics Service indicated that U.S. aquaculture production exceeded 0.4 mmt (800 million pounds live weight, of which 300 million pounds was edible weight). U.S. production was valued at more than one billion dollars (USDA 1998). U.S. aquaculture production is increasing at an annual rate of 6% per year.

Over 71% of the U.S. production was food fish (catfish, salmon, trout, tilapia, and striped bass) valued at $692 million. The second leading production was mollusks at $89 million, followed by ornamentals ($69 million), bait fish ($37 million), and game fish ($7 million). Crustacean culture contributed only $36 million. A majority of the production occurs in the Southern Region ($637 million), followed by the West ($167 million), Northeast ($127 million), North Central ($30 million), and Tropical Region ($17 million).

A majority of the products are grown in freshwater, comprising 321,000 acres, compared to only 64,000 acres of saltwater production. The most common production method is earthen ponds (63%), followed by flow-through tanks (14%), bottom culture (7%), closed, recirculated systems (7%), and cages (4%).

There is considerable potential for development of other food fish species native to the U.S. Candidate species for expanded freshwater production include sturgeon, carp, walleye, and perch. Marine fish of increasing interest include red drum, flounder, and halibut. Expanded production of marine shrimp and mollusks in the U.S. is limited by the scarcity of suitable coastal marine production sites, although shrimp production in low salinity waters is expanding at inland freshwater pond sites in southern states (Alabama, Texas, and Arizona).

U.S. Aquaculture Production of Food Fish in 1998

(adapted from USDA NASS 1998 Census of Aquaculture)

U.S. Seafood Demand. Since most U.S. fisheries are at or near their maximum capacity, any significant increases in U.S. seafood supplies will need to come from a broad variety of sources: including use of by-catch, exploitation of underutilized species, increased imports, improved processing yields, and most importantly from the expansion of the domestic aquaculture industry.

Potential New Sources of Seafood for the U.S. (adapted from H. M. Johnson 2000)

Total US Supply 11,100 4,500 15,600

Constraints to Aquaculture Expansion in the U.S.

Availability of Production Sites. One of the largest impediments to the expansion of the aquaculture industry in the U.S. is availability of suitable production sites, i.e. adequate land and water. This is a water-dependent industry that must compete both economically with other uses of water (often public resources) and must be environmentally sound. Almost all freshwater resources already are being allocated to agriculture, industrial, and municipal uses. Marine sites are under intense scrutiny by environmental groups and there is intense competition for coastal sites with other marine-related uses (recreational, industrial, ecological, etc.). There are limited numbers of sites with adequate water resources, the required water quality, and the appropriate year-round water temperatures to support and optimize productivity. The use of coastal waters is sometimes curtailed due to navigation, aesthetics, and ecological concerns such as potential adverse effects caused by reduced water quality, increased disease, or threats to the genetic purity of native species.

Governmental Regulations and Public Policies. There is a need for a more uniform and coordinated policy to permit and regulate aquaculture operations in the U.S. Current efforts by the EPA to establish guidelines for aquaculture effluents are a good example. Due to the complex nature of the industry, it is difficult to establish technology-based standards that truly will be economically achievable for all facilities. The proposed guidelines, if adopted as regulations, admittedly could result in the elimination of 10-20% of the existing 4,000 fish farms in the U.S. Regulation by the FDA and USDA/APHIS could restrain the use of new biotechnology techniques to assist the development of this industry. Many NGO's also have tremendous influence on governmental policy and there are many misconceptions about aquaculture practices and their effects on the environment. Often marine aquaculture also is strongly opposed by the commercial fishing industry due to perceived competition.

High Costs of Production. Feed and labor are generally the two major costs involved in aquaculture. Many aquaculture production methods are labor intensive and the cost of labor per unit of production is relatively high in the U.S. This fact causes financial institutions and private investors to consider aquaculture opportunities in other countries and contributes to increased importation of foreign products and the high trade deficit. The cost of high-quality feeds containing animal protein also is relatively high and may become limiting in the near future. Nearly one-third of the world’s fish harvest is used as fish meal in animal feeds (33 mmt is rendered into 7 mmt of fish meal and 1.4 mmt of fish oil). Presently, aquaculture utilizes about 30% of the total fish meal produced. To achieve sustainability and maximize aquaculture production, plant protein must be substituted for some fish meal in diets. Also, more attention should be given to the culture of lower trophic order species, and research should be increased in the use genetics and modern molecular biology techniques to reduce feed conversion ratios. To be competitive, producers are forced to operate their production systems at near maximum performance levels, which often leads to poor water quality, less than optimal rearing conditions, and mortality due to stress related diseases. As a result, several segments of the industry have been plagued by bacterial and viral epidemics, both in the U.S. and worldwide. Improved management practices, along with expanded use of antibiotics, vaccines, and molecular diagnostics will reduce disease effects.

Difficulties Involved in Financing. Aquaculture projects often are perceived by the investment community as being high-risk ventures. Aquaculture is a capital-intensive business, frequently presenting long delays before profitability is achieved and historically there has been poor performance in some cases. Traditional banks and investment bankers are unwilling to loan funds for start-up projects, partly due to the inability to collateralize loans with salvageable assets and the high cost of obtaining crop insurance. Furthermore, most aquaculture projects are conceived by scientists who often have little background in business and finance. There are a few government loan programs (FHA, SBA, NMFS, etc.), but most are relatively small or limited to single family farms.

Competition. Aquaculture products must compete with the capture fisheries, imports, and other alternative white meats such as poultry and pork. Due to the relatively high cost of production and associated high market prices, many U.S. aquaculture products seek niche markets such as the white tablecloth restaurants and live ethnic markets. In addition, there are substantial costs for packaging and distribution of products which generally are sold fresh. The U.S. products often must compete with lower-cost foreign imports. Foreign producers have several advantages over U.S. producers, including abundant natural resources, inexpensive labor, few environmental constraints, and few governmental regulations. The strong U.S. currency and foreign exchange rates further inhibit exports of aquaculture products. Consumer food preference is extremely important in marketing seafood, and the consumer is often unfamiliar with new seafood products or reluctant to prepare them in the home.

New Opportunities

More Efficient Utilization of Natural Resources. The U.S. aquaculture industry cannot compete with foreign producers that have nearly unlimited natural resources of land and water, low labor costs, and reduced environmental and governmental regulation. Some U.S. producers have the advantage of close access to ethnic markets for the sale of live product and can achieve savings on shipping and delivery costs of fresh product to domestic markets. But to compete effectively with imports of commodity items, it is imperative that the U.S. develop technologically advanced production methods to lower overall production costs. One method of lowering overall production costs is to conserve water and lower pumping costs. Some conservation of valuable and limited water resources probably can be achieved by prolonging times between draining ponds and by treating effluent more efficiently for reuse in recirculating systems. However, in our opinion one of the most valuable methods for increasing the amount of water resources available for U.S. aquaculture, which has often been overlooked, is to integrate aquaculture uses with agricultural irrigation.

We have termed this concept Joint Aquaculture/Agriculture Water Sharing (JAWS) and have conducted research on this topic under funding from USDA and the NIST Advanced Technology Program. In their simplest form, JAWS projects place aquaculture facilities in proximity to large sources of agricultural irrigation water. The aquaculture operation pays a fee to be the first (non-consumptive) user of the water resource and performs minimal or no treatment of the aquaculture effluent before passing it along to the agricultural user. We have conducted several studies which indicated that untreated fish farm effluent can be used to grow lettuce, corn and other row crops without any adverse effects. In fact, due to the small amounts of added nitrogen in the effluent, the crop farmers are able to increase yields and save money by applying less fertilizer.

The water costs can be shared 50:50 by the two users, but even if the aquaculture operation needed to pay the full costs of the water resource, it would still be in an excellent position compared to other producers who are struggling to find any sources of water at all. This technology has application to both open-flow and semi-closed production methods. By integrating the two food production activities, the aquaculturist obtains the needed supply water and has a ready consumer for the nutrient rich effluents, avoiding environmental issues associated with direct discharge into lakes and streams. The combined use of water results in the production of two crops from the same water supply and could significantly reduce production costs for both operations.

The magnitude of the benefits derived from interfacing aquaculture and agriculture facilities are substantial. Approximately 85% of all water distributed in the western U.S. is used to irrigate fields and row crops. If this technology were practiced at just 4% of U.S. irrigated farms, aquaculture production could double, with no additional water resources required. Existing supplies of valuable irrigation water could be shared by both groups to conserve resources, reduce environmental pollution, and increase profitability.

Intensification of Pond Production Techniques. One promising new technology involves concentrating the production organisms in intensive tanks or raceways but recirculates the water through extensive algal ponds or constructed wetlands for inexpensive treatment. We also are conducting research in this area in cooperation with researchers at Clemson State University who developed the algal treatment concept, called the Partition Aquaculture System (PAS). The constructed wetlands approach is termed the Pondway concept and was developed by Kent SeaTech scientists under funding from USDA/SBIR and NIST/ATP. Both of these technologies can significantly increase production and reduce water treatment costs, lower production risks, reduce disease, and improve product quality. Although these techniques primarily are aimed at enhancement of inland freshwater production, several of the concepts can be applied to coastal marine aquaculture as well.

Offshore culture technologies. Due to strong competition and a variety of environmental concerns, marine aquaculture faces considerable problems when attempting to develop coastal production sites. Marine aquaculture in the U.S. may be facilitated if methods of utilizing submerged cages can be developed. Midwater cages anchored in deep water zones may present less environmental concerns than floating cages in shallow bays, or bottom pens where fecal matter and uneaten feed can accumulate on the ocean floor. The UN Food Agriculture Organization predicts that mariculture will account for a large share of the future growth of aquaculture worldwide. This also may be the case in the U.S. in the coming decades, as offshore culture technologies evolve.

Species Selection and Improved Husbandry Practices. There are a wide variety of endemic aquatic species in North American that are suitable for culture. Research efforts are needs to fully domesticate new but potentially important species, to close their life-cycles, and to apply modern methods of genetic selection, hybridization, and polyploidy to enhance performance. Genetic improvements could produce more efficient growth, disease resistance, lower food conversion ratio, and increased carcass yields. U.S. producers could significantly lower production costs by employing technological innovations based on modern biotechnology. The application of functional genomics could accelerate selection of positive genetic traits, enhance the immune response system and secretion of antimicrobials, and stimulate the development of molecular diagnostics and vaccines. Under funding from the Advanced Technology Program, Kent SeaTech also is addressing these important issues. The aquaculture industry will need to continue to work with ARS on functional genomics and FDC-CVM toward registration of new therapeutic agents and address concerns about transfer of antibiotic resistance. They also will need to work with USDA-ARS laboratories and APHIS on development of new vaccines.

Cost-effective Feeds and Best Management Practices. In order to improve long-term viability, the industry has a whole must face the need to decrease the amount of animal protein used in aquaculture feeds. Research is needed to find alternatives to fish meal, to reduce the total protein requirements of production organisms, and to substitute vegetable protein and oils (corn gluten and high fat soybean meal) in feeds. Under funding from the USDA/SBIR, Kent SeaTech also has conducted research to determine the optimal energy:protein ratios to be used in fish feeds.

Improvements in nutrition could yield significant results. Currently it takes five tons of anchovy to produce one ton of salmon. The current use of water to grow wheat to feed cattle is very inefficient. It requires 1,000 tons of water to produce one ton of grain, and 7 kg of grain to produce 1 kg of beef. Fish are more efficient than cattle, so that only 2 kg of grain are needed to produce 1 kg of fish. Nonetheless, additional nutrition research is needed to improve food conversion rates even further by increasing nutrient retention. It also is important to develop finishing diets to improve product taste and advancements that can assist in reducing feed waste. Best Management Practices for feeds and feeding methods must be developed that can maintain economic viability in the light of increasing environmental controls on effluent water quality standards. Some of the costs for adopting more efficient rearing practices could be recovered by increased pricing and use of eco-labeling.

Economics and Marketing. To remain competitive in domestic and foreign markets, U.S. aquaculture producers will need to develop a variety of labor-saving production techniques. The automation of cage culture in Norway has allowed growers to remain competitive with salmon produced in Chile. U.S. production of necessity will continue to be focused on larger farming operations, where greater economies of scale can be achieved. The U.S. aquaculture will continue to depend for the most part upon the existing marketing infrastructure and will distribute their products through established seafood wholesale channels. There will be a growing opportunity for partnerships with foreign producers. Related efforts are needed to expand export markets in Asia and Western Europe to try to balance our enormous seafood trade deficit. The recent advent of E-commerce and reduced trade barriers in the EU may further assist in opening world seafood markets. The sale of value-added and ready-to-serve products also will help to expand market share for U.S. producers.

Conclusions and Recommendations

1) Government agencies need to recognize aquaculture as a priority food production technology and dedicate significant funding toward research and development by both the public and private sectors.

2) The government should assist aquaculture producers by supporting the R&D tax credit, accelerated depreciation programs, SBA loans, and other financial incentives.

3) Research programs need to be coordinated and multi-disciplinary, with guidance and direct participation from industry advisory groups.

4) Given the serious lack of additional water supplies available for the expansion of aquaculture in the U.S., government officials and private industry need to work together to encourage the development of joint aquaculture/agriculture water sharing programs that will allow for increased production and profitability for both aquaculturists and land crop producers.

5) Although some funding for new species should be encouraged, the majority of research funds should be awarded in proportion to the economic impact and importance of existing species.

6) U.S. aquaculture producers must continually strive to be as technologically advanced as possible if they are to compete successfully with foreign producers. To assist them and to reduce the flow of taxpayer-funded research findings to foreign competitors, investigators should be encouraged to secure patent and licensing protections that provide economic benefit to the U.S. aquaculture industry.

References