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Australian Fisheries Outlook

by the Fish Site Editor
14 March 2011, at 12:00am

The growth in global aquaculture, particularly in the Asian region, has been a major global trend that has increased. There is competition in global markets for Australian fishers, and import competition in local markets. This report by ABARE looks at the economic outlook for Australia fisheries.

Australian fisheries medium-term outlook (major products)

The real value of Australia’s fisheries production in 2010–11 is forecast to decline by 4.5 per cent to $2.1 billion (table 3). The decline largely reflects the significant appreciation of the Australian dollar in 2010–11. Over the medium term, fisheries production and value will continue to be affected by movements in fuel prices, labour constraints and exchange rate movements, as well as management responses aimed at rebuilding stock levels.

The assumed steady depreciation of the Australian dollar over the medium term (ABARES 2011) should result in favourable price movements for fishers, particularly for the major production species, which are generally export oriented. Any reduction in the value of total production in the wild catch sector is likely to be offset to some extent by increases in the value of aquaculture production, particularly for abalone, salmonids and tuna.

The appreciation of the Australian dollar against the currencies of major trading partners in 2010–11 will most likely keep the value of Australia’s fishery product export value stable, at around $1.3 billion. Over the medium term, the assumed depreciation of the Australian dollar and expected growth in production of high-value species are likely to result in an increase in the value of fisheries exports through to 2015–16, reaching $1.9 billion in that year.

Prawns

More than half of Australia’s prawns are wild catch from northern waters off Queensland and the Northern Territory. However, aquaculture is contributing a growing share of prawn production. In 2009–10, 20 per cent of Australian prawn production was farmed. The majority of prawn aquaculture occurs in Queensland, which produced 5200 tonnes in 2009–10, with a value of $75 million.

Total prawn production is estimated to have decreased by 8 per cent in 2010–11, to 24 500 tonnes (ABARES 2011). Lower production in 2010–11 is largely a result of lower production of wild caught and aquaculture prawn production from Queensland, following floods and Tropical Cyclone Yasi in early 2011. The real value of production is also estimated to decline in 2010–11, by 6 per cent to $309 million,

In the outlook period, it is expected that wild caught prawn production will remain stable but will continue to be influenced by both biological and economic factors. External economic factors such as the price of fuel and the Australian exchange rate will influence the quantity and value of prawn production. The assumed depreciation of the Australian dollar over the medium term will improve both the domestic and export prices received for Australian prawns. It is expected that aquaculture production of prawns will continue to increase at a consistent rate through to 2015–16.

Rock lobster

Approximately two-thirds of Australia’s production of rock lobster is from Western Australia. The other two main rock lobster fisheries are located in South Australia and Tasmania, which accounted for 15 per cent and 13 per cent of total catch in 2009–10, respectively. In 2009–10, Western Australia, South Australia and Tasmania accounted for 48, 23 and 17 per cent of Australia’s gross value of rock lobster production, respectively.

In recent years, total Australian rock lobster production has dropped considerably relative to the 2003–04 peak production of approximately 19 000 tonnes. The main driving factor behind the decline in production has been a large reduction in the catch in Western Australia, where the 2010–11 catch has been capped at 5500 tonnes with the introduction of Individual Transferable Quotas (ITQs). This compares to a peak catch of 14 000 tonnes in 2003–04 in Western Australia.

Production in the medium term is expected to stabilise relative to historical changes in lobster production, with the three major lobster producing states now being managed under a system of Total Allowable Catch (TAC) and ITQs. Prices in Western Australia are expected to increase slightly with the new ITQ system, with fishers likely to be making production decisions that allow maximum prices to be achieved for their catch in a given year. Overall domestic prices are expected to increase slightly over the medium term in line with the assumed depreciation of the Australian dollar. As a result, production value is forecast to rise to $538 million in 2015–16.

The majority of the Australian rock lobster production is exported. In late 2010, action by Chinese authorities was taken to ensure all Australian lobster imports into that country are subject to established tariffs. This had an immediate negative impact on prices. However, the overall effect in annual terms is minimal, given that record high prices prevailed in the first quarter of the 2010–11 financial year. Despite price falls in October–November, prices in December 2010–11 were at levels similar to those in December 2009–10.

Total rock lobster exports are forecast to remain relatively constant because of the production limitations enforced in the major rock lobster producing states. Export prices are also expected to increase in the latter part of the outlook period, as a result of the assumed depreciation of the Australian dollar. As a result, exports are forecasted to rise to $582 million in 2015–16.

Abalone

Around 87 per cent of Australia’s abalone production has been harvested from wild catch fisheries in Tasmania, Victoria and South Australia. While the majority of abalone comes from wild catch, there has been a growing trend in the aquaculture production. The abalone aquaculture sector has grown by 20 per cent over the past five years (compared with a 10 per cent drop in wild catch production), although it still accounts for only a fraction of the total industry. It is expected that farmed abalone production will rise at a slightly faster rate to 2015–16, while farmed abalone prices remain stable.

The outbreak of an abalone virus detected in 2005 negatively affected the production growth in the wild catch sector. By 2009–10, the sector had reduced to half its 2004–05 production size. Efforts from government and industry to restore abalone health in the area have resulted in lower TAC limits, with full but very gradual recovery expected. Late in 2010, the virus was also discovered in parts of the Tasmanian wild catch sector, although it does not appear to have any negative effect on production in that state. It is estimated that Australia will produce 5400 tonnes of abalone in 2010–11 (ABARES 2011). It is expected that Australian abalone production will increase by 13 per cent over the medium term to around 6100 tonnes. This growth will continue to be driven by the strength of export demand.

Australia continues to export around 60 per cent of its abalone harvest. As a result, the GVP has been moving with the exchange rate, and has therefore been volatile. Over the medium term, it is expected that prices will recover, in line with an assumed depreciation of the Australian dollar exchange rate and support export returns, forecast to reach $228 million in 2015–16. Most abalone exports are destined for China and Hong Kong.

Tuna

Approximately three-quarters of Australia’s tuna production is exported, mostly to Japan and the United States, but increasingly to Thailand and the South Pacific. The principal tuna species in value and volume terms is southern bluefin tuna (SBT), which is caught using purse seine methods from Commonwealth waters and then fattened in farms near Port Lincoln, South Australia. Other important export species are yellowfin, bigeye and, more recently, albacore tuna, caught predominantly in the Commonwealth Eastern Tuna and Billfish Fishery (ETBF).

In 2009–10, the SBT Fishery and the ETBF accounted for 64 per cent and 29 per cent, respectively, of the total production volume of tuna. In the same year, the value of tuna production decreased by 34 per cent to $124 million. Of this, just over $100 million, or 83 per cent, of the total value of tuna production was attributable to SBT. In the same year, 16 per cent of the total value of production was produced by the ETBF. Yellowfin tuna was the prime species caught in the ETBF, accounting for 55 per cent of the total value of production in the fishery.

The 2009–10 year was the first year affected by the recent cuts in the global TAC for SBT. Farm production decreased as a result of these cuts. An estimated 17 per cent decrease in the volume of farm production between 2008–09 and 2009–10 is broadly consistent with the 18 per cent decrease in the volume of SBT wild caught for farm inputs. The production volume of the ETBF also decreased, by 14 per cent, mainly as a result of poor catch conditions.

In 2009–10, the high exchange rate affected the trade of Australian tuna products on foreign markets. From 2008–09 to 2009–10, in Australian dollar terms, the price of SBT decreased by 23 per cent and the prices of species caught in the ETBF decreased by 16 per cent. An overall decrease in tuna prices of 21 per cent was also influenced by the build up of cold store inventories in key export markets, which put downward pressure on prices.

In the longer term, world production of bluefin tuna will be constrained by international quota limits. Given the current TACs and the projected reductions in the supply of northern bluefin tuna, prices of tuna are expected to strengthen moderately over time.

Given the Australian quota cut for SBT, technological improvements in yield and longer fattening periods in aquaculture production are expected to partially compensate for the reduction in wild catch inputs. Little growth in the value of production is anticipated in Australia’s wild catch tuna sector over the next five years.

Salmonid

Salmonids remain a key species of Australian fisheries, producing 32 000 tonnes in 2009–10 and contributing 18 per cent to the total value of fisheries production. Although there is a strong upward trend, changes in salmonid production growth in Tasmania have varied from 1 per cent to more than 20 per cent a year since 2005–06.

Over 95 per cent of Australia’s salmonids production occurs in Tasmania. The remainder of salmonids production occurs in New South Wales and Victoria. In 2009–10, Tasmania produced 30 950 tonnes, while New South Wales and Victoria produced a combined total of 1000 tonnes.

The value of salmonids production rose by 6 per cent in 2009–10, by $43.3 million to $369.5 million. This increase was mainly driven by a 6 per cent increase in Tasmanian production, combined with a 6 per cent increase in the average Australian price.

Tasmanian producers sell the majority of their salmonids on the domestic market and, as such, the industry is relatively unaffected by the exchange rate. A key factor contributing to past growth has been a strong focus on marketing salmon to Australian consumers and investment in research and development.

Over the period to 2015–16, it is expected that production will rise by more than 10,000 tonnes, reflecting an anticipated production expansion of 50 per cent in the Tasmanian sector. It is also expected that Chilean salmon will return to the international market within the next five years, after disease significantly reduced production in recent years. However, given the small proportion of salmonids that are exported, this will have only a minor effect on total production in Australia.

March 2011

the Fish Site Editor