Challenges and opportunities with aquaculture growth

This special issue of Aquaculture Economics and Management features five articles based on contributions to the International Association of Aquaculture Economics and Management (IAAEM) sponsored section on economics and marketing at the Aquaculture America conference in New Orleans, Louisiana, March 7–11, 2019. The IAAEM sessions had 47 presentations spanning two full days. The range of topics was wide, but a major theme this year was the challenges and opportunities of continued growth in aquaculture, including growth in international trade and associated global seafood competition, as well as challenges with disease and environmental externalities of production growth. Aquaculture production is expected to continue to grow, and the presentations this year highlighted some of the several challenges and opportunities this brings.

Expanding international trade and competition with domestic seafood sectors is a natural consequence of aquaculture production being primarily a developing nation activity, while developed nations such as the U.S. and European countries are primary importing and consumption regions (Anderson, Asche, & Garlock, 2018; Shamshak, Anderson, Asche, Garlock and Love, 2019). However, growing demand and limited fisheries capacity to supply seafood provide incentives for aquaculture production also in developed countries (Asche & Smith, 2018; Anderson, Asche, & Garlock, 2019; Kumar, Engle, & Tucker, 2018). Unfortunately, domestic wild fish interests, environmental NGOs, and other stakeholders often resist such developments (Knapp & Rubino, 2016). The first paper in this issue, Garlock, Nguyen, Anderson, and Musumba (2020) investigates the market potential of new farmed finfish species from the Gulf of Mexico. They find that it is more likely that domestic Gulf farmed fish will substitute for imports than for domestic wild-caught fish. Evidence suggests U.S. wholesale buyers value domestic fish over imported fish more than its specific production source. This is also related to a recent trend where the origin is more important than production technology (Kecinski, Messer, Knapp, & Shirazi, 2017).

Compared to aquaculture production of Gulf of Mexico finfish species, catfish has been a major domestic U.S. aquaculture species for decades (Kumar & Engle, 2016; Dey, Surathkal, Chen, & Engle, 2017; Guillen et al., 2019). However, the domestic U.S. catfish industry has not been immune to growth in seafood imports and competition. Surathkal and Day (2020) investigate the price determination of catfish at the processor and farm level conditional on the level of import competition (as measured by import share). They document that greater import competition has made domestic catfish prices more responsive to shocks in each other and to shocks in themselves. This highlights the importance of growing trade competition for domestic industries, suggesting significant impacts on how domestic prices respond to market shocks depending on whether import competition is present or not.

The remaining three papers in this special issue relate to issues in Norwegian salmon aquaculture. Norwegian salmon aquaculture continues to be at the forefront of production and supply-chain developments. Rocha-Aponte (2020) follows a tradition of productivity analysis in Norwegian salmon aquaculture together with other recent papers such as Rocha-Aponte and Tveterås (2019) and Roll (2019). The article breaks down sources of total factor productivity dispersion on technical inefficiency and firm-specific demand heterogeneity. He finds that demand heterogeneity has more impact on productivity variance than distortions generated from inefficiencies and misallocations. This is important as it highlights the importance of demand and market side heterogeneity, not just production technology, on differences in aquaculture firm outcomes.

The importance of the market for aquaculture was the topic of several presentations this year that investigated patterns of global aquaculture trade. Gaasland, Straume, and Vårdal (2020) investigate at trade performance and regional agglomeration in Norwegian aquaculture production at the firm level. This article is part of an emergent literature on aquaculture trade using highly disaggregated trade data (Straume, 2017; Asche, Cojocaru, Gaasland, & Straume, 2018; Oglend & Straume, 2019; Wang, Tran, Wilson, Chan, & Dao, 2019; Xie & Zhang, 2017; Zhang & Tveteras, 2019). Gaasland et al. (2020) find that aquaculture firms that operate in regional clusters obtain higher export prices and ship more frequently and in smaller bulks, indicating that industry clusters are present also downstream from the production level that has been the attention of previous research (Tveteras, 2002; Asche, Roll, & Tveteras, 2016; Tveteras & Battese, 2006). This points to firms in regional clusters being served by more efficient supply chains, which is important for perishable seafood products.

An ever-relevant issue with aquaculture growth is its environmental sustainability, and how the sector itself works to address such issues. In contrast to fisheries where social and economic sustainability is also important topics (Asche, Garlock, et al., 2018), the main focus for aquaculture has been on environmental sustainability (Roheim, Bush, Asche, Sanchirico, & Uchida, 2018; Anderson et al., 2019).¹ There are some recent exceptions such as Ceballos, Dresdner-Cid, and Quiroga-Suazo (2018) and Filipski and Belton (2018), and the final paper of this special issue, Nygård (2020) contributes to this literature. An important element with respect to economic sustainability is to what degree the sector is rewarded for efforts to improve sustainability by the market. Nygård (2020) investigates whether different sustainability initiatives in the Norwegian salmon farming companies have had impact on company value. Like ecolabels, private efforts to improve on a socially important issue are more effective when rewarded by the market.² The article finds that that company reporting that reveals sustainability efforts is positively associated with a market value of the company.

Notes

Notes

1 However, there is a significant literature showing how environmental shocks impact prices and costs, as discussed e.g. in Asche, Oglend, and Kleppe (2017), Asche, Misund, and Oglend (2019), Dahl and Oglend (2014), and Quezada and Dresdner (2017).

2 There is a large literature on seafood ecolabels, but with most of the attention on wild fish (Roheim et al., 2018; Tlusty et al., 2019). However, ecolabels for farmed fish are found to counteract the negative perception often associated with aquaculture (Bronnmann & Asche, 2017), and Alfnes, Chen, and Rickertsen et al. (2018) reports that as many as 48 labels are available for farmed salmon.