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F. Asche et al.
for existing producers to increase production and for new producers to enter the
industry, because it is profitable. Substantial increases in the production of species
such as salmon and shrimp, but also tilapia, sea bass, etc., have led to large reductions
in price. The speed with which price reductions follow the increased production
depends on market growth and the extent to which the species in question can win
market shares in existing markets rather than having to create new markets.
Typically, prices will decrease faster in isolated markets, whether they are domestic
or export-oriented. This is the case also for other species and for developing countries, like tilapia in Egypt, as well as developed countries, like sea bass and sea
bream in southern Europe.
With this structure, the only way for companies to survive and remain profitable
in the face of decreasing prices is to reduce production costs through productivity
growth. The fact that shrimp and other species continue to be farmed in increasing
volumes despite reduced prices is evidence that they follow the same pattern as
salmon, even though the specific elements contributing to the productivity growth
can differ. For species, such as turbot, where the productivity growth is less rapid,
the production increase is also substantially smaller.
For large-volume species such as salmon and shrimp, production takes place in
different regions of the world. Relative productivity development (including the
negative effects of diseases, trade issues and environmental costs) will determine where
production takes place, both between and within regions. In the future, we are likely
to see this kind of competition appear also between species; such inter-species
competition already exists to some extent between small whitefish species such as
tilapia and catfish and similar species in the same market segments. Hence,
although technical progress is likely to contribute to an increase in the global aquaculture production, the production of specific countries, regions or species may be
reduced if they are not competitive.
Cost considerations are likely to limit the number of high volume species. If one
looks at the world’s meat production very few aquaculture species are likely to be
of high volume. However, for these high-volume species there will certainly be quality
variations, giving some producers a higher margin even though the price movements are determined in the larger market. Moreover, there will certainly be a
number of niche species that are produced in relatively low volumes (which still
may be counted in tens of thousands of tonnes), that will target the most valuable
market segments where variation and uniqueness gives a higher price. In temperate
high cost regions like Europe, such species are likely to be the most important.
It is impossible to say which regions will be the leading producers in anything
but a short run perspective, as this will depend on which species that take the lead
and which environment they prefer. China is currently the world’s largest aquaculture producer. However, China and South-East Asia’s leading role is likely to
diminish in a longer term, as economic progress will make land and labour more
expensive. Cost considerations will also indicate that Africa and South America are
the regions where one is most likely to see the largest growth.
This development is an opportunity as well as a challenge for many developing
countries. Increased substitution gives more opportunities to gain market access
F. Asche et al.
for existing producers to increase production and for new producers to enter the
industry, because it is profitable. Substantial increases in the production of species
such as salmon and shrimp, but also tilapia, sea bass, etc., have led to large reductions
in price. The speed with which price reductions follow the increased production
depends on market growth and the extent to which the species in question can win
market shares in existing markets rather than having to create new markets.
Typically, prices will decrease faster in isolated markets, whether they are domestic
or export-oriented. This is the case also for other species and for developing countries, like tilapia in Egypt, as well as developed countries, like sea bass and sea
bream in southern Europe.
With this structure, the only way for companies to survive and remain profitable
in the face of decreasing prices is to reduce production costs through productivity
growth. The fact that shrimp and other species continue to be farmed in increasing
volumes despite reduced prices is evidence that they follow the same pattern as
salmon, even though the specific elements contributing to the productivity growth
can differ. For species, such as turbot, where the productivity growth is less rapid,
the production increase is also substantially smaller.
For large-volume species such as salmon and shrimp, production takes place in
different regions of the world. Relative productivity development (including the
negative effects of diseases, trade issues and environmental costs) will determine where
production takes place, both between and within regions. In the future, we are likely
to see this kind of competition appear also between species; such inter-species
competition already exists to some extent between small whitefish species such as
tilapia and catfish and similar species in the same market segments. Hence,
although technical progress is likely to contribute to an increase in the global aquaculture production, the production of specific countries, regions or species may be
reduced if they are not competitive.
Cost considerations are likely to limit the number of high volume species. If one
looks at the world’s meat production very few aquaculture species are likely to be
of high volume. However, for these high-volume species there will certainly be quality
variations, giving some producers a higher margin even though the price movements are determined in the larger market. Moreover, there will certainly be a
number of niche species that are produced in relatively low volumes (which still
may be counted in tens of thousands of tonnes), that will target the most valuable
market segments where variation and uniqueness gives a higher price. In temperate
high cost regions like Europe, such species are likely to be the most important.
It is impossible to say which regions will be the leading producers in anything
but a short run perspective, as this will depend on which species that take the lead
and which environment they prefer. China is currently the world’s largest aquaculture producer. However, China and South-East Asia’s leading role is likely to
diminish in a longer term, as economic progress will make land and labour more
expensive. Cost considerations will also indicate that Africa and South America are
the regions where one is most likely to see the largest growth.
This development is an opportunity as well as a challenge for many developing
countries. Increased substitution gives more opportunities to gain market access