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Aquaculture Outlook Report - October 2005

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Aquaculture Outlook Report - October 2005 - By U.S.D.A., Economic Research Service - This article is an extract from the October 2005: Aquaculture Outlook Report, highlighting Global Aquaculture Industry data.

Aquaculture Outlook Report - October 2005 - By U.S.D.A., Economic Research Service - This article is an extract from the October 2005: Aquaculture Outlook Report, highlighting Global Aquaculture Industry data. USDA Economic Research Service

Aquaculture Production Driving Many Seafood Markets

The domestic production of various aquaculture products and the increasing importance of farm-raised fish, shellfish, and mollusk imports point towards aquaculture production being the driving force in terms of production and pricing for a growing number of seafood markets in the coming years. Examples of this are the tremendous consumption growth seen in such diverse markets as tilapia and mussels. Tilapia supplies, be they from domestic sources or imported products, are made up almost entirely of farmed production. The growing consumption of mussels in the United States has also been satisfied primarily from increased production of farmraised products.

As most aquaculture industries have expanded, among the problems they face are over-production and declining real prices for their products. For most wild-harvest fishing industries, expansion would likely lead to problems with overfishing, essentially a reduction of their resource base, and higher product prices. Although faced with numerous obstacles, the ability of aquaculture industries to increase the efficiency of operations while avoiding the problem of overfishing means that aquacultural production is the most viable option to meet rising worldwide demand for many species.

Gulf Hurricanes

The long term impacts of Hurricanes Katrina and Rita on the coastal areas of Louisiana, Texas, Mississippi, and Alabama are not currently known. What is clear is that coastal wetlands and the infrastructure of the Gulf fishing industry (boats, docks, housing, and processing and handling facilities) have been severely damaged. In some cases it will take years for fishing industries to begin to approach their former productivity.

Inland, there is expected to be damage to crawfish ponds, alligator and catfish farms, and other aquaculture facilities. Louisiana is the largest seafood producing State outside of Alaska, and the Gulf Coast region accounts for a large percentage of total U.S. production of shrimp, oysters, and other species. The hurricane damage is expected to depress U.S. seafood harvests and further increase incentives to purchase a larger percentage of the total U.S. seafood supply from foreign sources.

Fuel Price Rise Expected To Accelerate Trade Trends

Higher worldwide fuel prices are expected to induce many producers to move away from raw product production and accelerate the movement to value-added production. With higher fuel prices raising transportation rates, both domestic and foreign producers are expected to search for ways to process their products to increase average values and lower overall weights. If this trend is noted, especially for imported products, it may lead domestic producers to direct their marketing efforts toward the fresh or whole product markets. An example is in the mollusk industry where foreign producers may look to ship more shucked products to reduce the overall weight transported and domestic producers who then may have additional opportunities in the shell-on market segment.

The current economic outlook for the United States for the remainder of 2005 and into 2006 has been clouded by the massive property and infrastructure damage along the Gulf Coast and what it will cost to rebuild those areas. Currently, the economic forecast is for relatively steady growth in gross domestic product through 2006, and after a dip in the fourth quarter of 2005, stronger growth in real per capita disposable income is forecast in 2006. Any reduction in per capita disposable income along with higher fuel prices would have a depressing effect on the foodservice sector, a critical one for the seafood industry. For producers utilizing grains in feeds, corn and soybean prices are expected to dip lower in the fourth quarter of 2005 and remain relatively stable through the first half of 2006.

Currently, beef and poultry consumption are expected to increase in 2005 and 2006, with pork consumption lower in 2005 and then steady in 2006. Retail beef prices are expected to decrease slightly towards the end of 2005 and average lower in 2006. For the poultry industry, overall prices are expected to be relatively steady in the second half of 2005 and into 2006.

Domestic Outlook: Catfish Sales Down, but Prices Rise

Catfish sales have gone down for the second consecutive year, but have been somewhat offset by higher prices. In 2005, sales by growers to processors are expected to total between 605 and 620 million pounds, down between 2 and 4 percent from 2004. Sales over the first 8 months of 2005 have been 412 million pounds, down 3.9 percent from the same period in 2004. Catfish processor sales through August 2005 have also been lower, totaling 205 million pounds, down 2.4 percent from the same period in 2004. Even though sales to and by catfish processors have been lower, the inventory of processed products continues to build. As of the end of August 2005, processor held inventories were 12.9 million pounds, about 1.1 million pounds higher than a year earlier.

Lower supplies of catfish at the grower and processor levels so far in 2005 have boosted prices. Over the first 8 months of 2005, farm prices have averaged 72 cents per pound, up 2 cents from the same period in 2004, even after a steep increase the previous year. Average processor prices have also risen over the same period, averaging $2.29 per pound, up 2 percent from 2004.

Heading into the last quarter of 2005, the catfish industry finds itself in much the same position it was last year. Grower sales to processors are lower, but farm prices have increased in response to the smaller supplies. The number of fish growers estimated they had on their farms as of July 1, 2005, showed lower levels in most categories. This is a continuation of the decline in grower inventories seen over the last several years. As a result, a smaller number of fish are expected to be available for processing during the remainder of 2005 and into 2006.


For more information view the full Aquaculture Outlook Report - October 2005 (pdf)

Source: U.S. Department of Agriculture, Economic Research Service - October 2005