Aquaculture hot spots: China and Latin America

The Fish Site
by The Fish Site
6 November 2007, at 12:00am

By Jane Jordan, The FishSite Editor. Glitnir, the leading global supplier of financial services to the seafood industry, has released new reports on the Chinese and Latin American seafood industries. It shows these regions have huge potential on a global scale for investors and domestic business interests.

China leads in production and consumption

The latest edition of Glitnir's 2007 China Seafood Industry Report, which provides valuable insights and independent analytical thinking of the current state of the seafood industry, was published at the conference. This report, which is one of the most credible and established sources of information and analysis of the seafood sector, points out that China is the global leader of both seafood output and consumption.

"The recent strategic consulting agreement with Fu Ji Holdings and the setting up of Glitnir's representative office in Shanghai last year, demonstrate the bank's belief and confidence in the opportunities and high potential that China as a market entails. Glitnir is determined and fully committed to better serving its clients in their strategic decisions and investment plans for the Chinese seafood industry", says Larus Welding, CEO of Glitnir Bank.

The annual seafood consumption in China is currently 26 kilos per capita and is expected to increase by 40 per cent over the next decade to 36 kilos per capita.

"China by far is the largest exporter of seafood, outstripping the number 2 country more than fourfold. Currently, China represents some 35 percent of total global seafood production. It's fast growing farming competency and cost advantage , continues to attract investors to the country", says Kristján Th. Davídsson, head of Glitnir's global seafood team, adding that the vast potential of China as a fast growing seafood market is another rapidly developing attraction.

Shrimp expanding
The report further highlights the potential of shrimp as an increasingly important species. It states that last year, shrimp production in China rose by 14.7%. Given the easiness to raise and the ability to fetch a relatively quick profit thanks to the cost-effective production system, Glitnir predicts that the emphasis on the country's aquaculture industry might soon add shrimp as an important species in addition to tilapia and other species already being farmed.

The high growth in production and export of seafood products is driven by demands from both the domestic and the overseas market, which is believed to bring unprecedented growth opportunities to investors.

Latin America increasingly important to global seafood sector

Aquaculture is a growing trend across Latin America, with demand for aquaculture products expected to increase worldwide by eight percent annually. The region currently supplies around 99 percent of the total import volume and value of fresh tilapia fillets to the US.

Glitnir's new report on the Latin American seafood industry analyses the main trends and developments in the seafood sector across the continent with particular focus on Argentina, Brazil, Chile and Peru. A case study on tilapia farming in South America is also included.

It says that Latin America is an important player in the global seafood industry. Peru and Chile alone account for approximately half of the world's total fishmeal production and Chile is the world's second largest producer of farmed salmon after Norway.

This latest Latin American Seafood Industry Report is the second annual report to be published by Glitnir on the Latin American market and is the final report in a series of seven planned for 2007.

Report findings

  • The total catch of Latin American nations amounted to 17.1 million MT in 2005, (17.7% of the global catch) with Peru and Chile standing out as the main fishing nations producing 82% of the total volume.

  • In 2006 the Argentine catch increased by 24 percent over the preceding year to 1.1 million MT due mainly to a massive increase in the white fish catch, the biggest contributors being squid and argentine red shrimp.

  • Hake is the most important species in Argentina with the total catch reaching 354 thousand MT in 2006, a 2.3 percent decrease from the preceding year.

  • Peru is the world's second largest fishing nation, measured in MT, based on the 2005 world catch. A large part of that catch is low-value pelagic species.

  • Peru is the world's largest producer of fishmeal with approximately one third of global production and 41 percent of world exports in 2006.

  • Annual seafood consumption in the countries under focus is highest in Peru (20.0 kg per capita), followed by Chile (16.5 kg per capita), Argentina (6.5 kg per capita) and Brazil (6.0 kg per capita).

Aquaculture Chile is the leading aquaculture country in Latin America with a production of 698,000 MT (52% of total) at a value of US$ 3.1 billion in 2005. Growth in volume of 78% has been seen over the past five years. The US is the single largest market for Chilean Atlantic salmon, with total imports of 64,959 MT worth US$470 million in the first 8 months of 2007.

Fuelled by a drive from China for fishmeal, aquaculture production has also been growing in Peru, the world's largest producer of fishmeal. Honduras, Ecuador and El Salvador are now establishing themselves as important players in the export of fresh tilapia fillets to the US market. Mexico and Brazil lead the way in tilapia farming, producing 100,000 MT each in 2006, but their harvests are mainly for domestic use.

Imports of tilapia into the US market have increased dramatically in recent years and it is now the country's sixth most popular seafood due to its mild flavour, adaptability to various styles of preparation and a texture that differs from many other types of fish. About 96 percent of all tilapia consumed in the US is imported, and 99 percent of this comes from Latin American countries. Lower transportation costs make Latin America a competitive supplier.

Fishmeal Pelagic species make up a significant part of the Peruvian catch and are the most utilised in the Peruvian seafood industry. The single most important species is anchovy. Since 2002, only anchovy can be used in fishmeal. The use of sardines, mackerel and horse mackerel are reserved for direct human consumption.

In 2006, Peru exported 97 percent of its fishmeal and 96 percent of its fish oil production. 41 percent of its exports went to China, 16 percent to Germany and 13 percent to Japan. Demand for fishmeal particularly from China and Europe is expected to rise further in the coming years with an increasing demand for healthier food. The weak US Dollar is currently making fishmeal cheaper in both Europe and Japan, and unforeseen temporary events in China weakened demand for fishmeal in the first half of 2007, leading to lower prices. However fishmeal prices have now stabilized at US$ 830/MT FAQ FOB Peru, with a premium of USD 100-200 for prime and super prime and going forward strong demand and limited supply, will probably keep prices relatively high.

Further Reading

- For Glitnir's reports on Europe, North/South America and China click here.
- To view our previous article on the Candian Seafood Industry click here.

November 2007