06/10/2007 - Investors salivating over the poor man's fish

Tilapia production for export could grow without affecting the volumes produced for domestic consumption. (Photo: T. Engoe)

WEEKEND FEATURE: Investors salivating over the poor man's fish

WORLDWIDE
Friday, October 05, 2007, 23:50 (GMT + 9)


Tilapia has been considered a species mainly for poor farmers in the third world for a very long time. The members of the American Tilapia Association, which have long understood the importance of the resource, are eyeing its potential on the world market while recently the management of the world's largest salmon farming company, Marine Harvest has told the market that they are looking for new species to farm, and tilapia was mentioned as one of the species being considered.

Cheap to produce

The problem with the tilapia trade is the low price it commands, but many seem to forget that the production cost is also very low. Where salmon needs fishmeal and fish oil to grow on, tilapia is a vegetarian with feed costing just a fraction of the cost of salmon feed. If fact, too high fat content in tilapia feed will have a negative effect on the taste and texture.

Tilapia is an herbivore feeding on algae and even bacteria growing in water. Some farmers that are not producing for export are fertilizing the tilapia ponds with excrement from pigs or poultry. The excrement increases the growth of algae, and the algae is then eaten by the tilapia. In this way the fish also solve an environmental problem in many rural areas.


Tilapia is an herbivore feeding on algae and even bacteria in water. (Photo: T. Engoe )


Salmon is reported to have disease problems worldwide. Millions of dollars are spent on antibiotics, vaccines, and veterinarians. Tilapia meanwhile is not fussy. It will accept periods with very low water quality, and it is nearly free of any diseases. This is also the main reason for why China, the world's largest producer of tilapia have had no problem with their tilapia export. There is rarely any need to feed the fish with antibiotics or any chemicals.

More than 2 million tonnes

Last year was 2,350,000 tonnes of tilapia produced worldwide. Only carp is farmed in larger volumes, but no other farmed fish species has been creating more jobs and values in third world countries than tilapia.

In 2000 was tilapia the 11th most popular seafood in United States, with tuna, shrimp, pollock, salmon, catfish, cod, clams, crabs, flatfish, and scallops all ranked higher in consumption and popularity.

In 2001 it overtook the position of scallops, while in 2002 it had surpassed flatfish, and continued swimming upwards in the ranking. In 2003 it left clams behind, in 2004 did it make it leaped passed crab and cod. Finally, in 2006 it became more popular than catfish and is now the fifth most popular seafood in US where it retails for close to USD 20 per kilo for whole fish. In Europe the fish is increasing fast in popularity, and is now a regular species in most large fish displays in United Kingdom. Tilapia is penetrating market after market at a steady pace.

Investors moving into tilapia

Tilapia is mainly farmed in labour intensive economies at a low cost, where it is cheap to fillet and add value to products. In Thailand the mighty CP Group has contracted farmers all over the country, and have set up feed mills for fish feed in Thailand and a number of other Asian countries.

The Norwegian life science company Genomar AS is a leader in genetic selection of tilapia. They have branches in Philippines, China, and a number of other countries. Tilapia is on the verge of going from being a fish consumed by the economically impoverished to a fish being eyed by large corporations and investors.

AquaChile has invested in tilapia farms in Panama through the subsidiary Aquacorporacion Internacional in Cost Rica. The new planned farm will more than triple the Panamanian production of 5,500 tonnes of tilapia.

India – the next giant

The next and probable giant in tilapia may well be India. Large areas of the country have climatic conditions that are ideal for tilapia farming. Indian shrimp farmers dealing with white spot disease also have the possibility of converting to tilapia. No large investments are needed to convert a shrimp pond to a tilapia pond.


No large investments are needed to convert a shrimp pond to a tilapia pond. (Photo: T. Engoe )


Only a small share is exported

Most of the global tilapia production is consumed be the local population in the areas where it is farmed, but as investors are showing interest in the fish, more processing facilities are being built. Farms are modified and farming techniques are improved. The production of tilapia could grow very much without influencing the volume of tilapia available for local consumption.

For now, China is the world's largest exporter of tilapia. They doubled their export from 90,356 tonnes in 2004 to 181,831 tonnes last year. Still, less than 25 per cent of the Chinese tilapia production is exported.

China: Export of tilapia, product weight


Destination
2004 tonnes
2005 tonnes
2006 tonnes

United States
62,860
80,853
104,668

Mexico
15,884
16,343
32,894

Russian Federation
19
22
5,530

Israel
678
1,287
3,694

Germany
-
673
1,740

Hong Kong
1,016
842
1,702

Belgium
-
1,124
1,371

Puerto Rica
515
852
1,292

Dominican Republic
117
493
1,019

Canada
1,096
1,103
992

Others
8,171
9,266
26,929

Total
90,356
112,858
181,831



Source: Eurofish

United States to import 180,000 tonnes

This year tilapia import s to the US reached 47,600 tonnes during the first quarter. The main increase was in the import of frozen fillets, which increased from 14,200 tonnes first quarter 2006 to 25,100 this year.

The total import to US reached 158,300 tonnes last year and there is no reason to believe the increase will let up, as tilapia is both competitive in price and has a quality that is appreciated by American consumers. China and Indonesia are the largest sources of frozen tilapia fillets imported to US, with Thailand being the third largest source. China is also dominating the source of frozen whole tilapia, with Taiwan the second largest source. The UN Food and Agriculture Organisation has estimated US imports to reach 180,000 tonnes for this year.

From whole fish to value added products

What is more interesting than just total volumes imported or exported, is the change in presentation. In 2004 China exported 7,964 tonnes of tilapia characterised in export statistics as “preserved tilapia.” According to Eurofish this is considered value added tilapia, such as breaded tilapia fillets and tilapia fillets with the addition of lemon, pimento, herbs, or other spices. Last year 98,862 tonnes of the Chinese exports were “preserved tilapia”. The export of frozen whole tilapia increased from 43,840 tonnes to 46,901 tonnes from 2004 to 2006. Tilapia is becoming an important raw material for Chinese processors, not just a commodity.


Tilapia is becoming an important raw material for Chinese processors. (Photo: AARM)


Great potential in many countries

The development seen in China, on a different scale, can be replicated in many countries around the world. Brazil, Burma, India, and many African countries have large freshwater resources suitable for tilapia farming. They are now waiting for the investors who in addition to money have knowledge about processing and marketing. Marine Harvest has made their intentions public. AquaChile has already begun tilapia growing in ponds. Many will follow.

By Terje Engoe
www.fis.com