Salmonids will swim with the tide of rising aquaculture production

The salmonid farming sector is expected to maintain its volume share as global aquaculture production increases by 22% over the next 10 years, according to a new report.

The Agricultural Outlook 2023-2032 was published today by the Organisation for Economic Co-operation and Development (OECD) and the Food and Agriculture Organisation (FAO) of the United Nations, and provides an annual assessment of prospects for the coming decade of national, regional and global agricultural commodity markets.

The Outlook’s authors expect global fish production (capture fisheries and aquaculture) to increase to 202 million tonnes by 2032, up from 181m tonnes in the base period (2020-22).

96% from aquaculture

Nearly all (96%) of that additional growth will originate from increasing aquaculture production, which is projected to be 111m tonnes per year by 2032, an increase of 20m tonnes per year relative to the base period. By 2032, aquaculture production is projected to account for 55% of total fish production, compared with 50% in the base period.

The expected rise in aquaculture production represents a slowdown compared to the 33m tonne increase in the previous 10 years, and is influenced by policy in China, the world’s biggest fish farmer. It is expected to experience a substantial slowing of growth in farmed fish production due to regulations aimed at increasing the sustainability of the sector and targeting growth in species for domestic consumers.

Nevertheless, China will continue dominating world aquaculture production with an expected share of 56% in 2032.

Aquaculture production of all species will continue to rise, although the share of carp, the main farmed species, is expected to decline over the period, and the shares of shrimps and prawns and of freshwater and diadromous fish (excluding tilapia and salmonids) will increase. The shares of tilapia and salmonids are projected to remain broadly stable.

Prices to fall in real terms

Aquaculture prices are forecast to have nominal growth of 16% (+1.5% p.a.), and real terms declines of 9.0% (-0.5% p.a.). Growth in aquaculture prices is projected to be significantly lower than the previous decade when prices grew 41% in nominal terms and 13% in real terms. The price trend is characterised by a decline between 2022 and 2026 as prices come down from Covid-19 recovery driven highs, followed by growth from 2027 to 2032. Growth in prices is expected in both nominal and real terms in the second half of the projection period.

Fish oil prices are expected to grow by 9.2% (+1.7% p.a.) in nominal terms but to decline in real terms by 14% (-0.3% p.a.).

“This decline is in part due to the exceptionally high prices in the base period when the fish oil price grew by over 50% in 2022 compared with 2021, despite stable supplies and was caused by the very high price of vegetable oils,” the Outlook states.

“The exceptionally high prices in 2022 mean the price of fish oil in 2032 is projected to be below the 2022 price in both nominal and real terms, despite continued strong demand as a feed input for aquaculture and for human consumption.”

Fishmeal prices are expected to grow by the largest amount in nominal terms, 26% (+1.3% p.a.), and experience the smallest decline in real terms, -0.6% (-0.7% p.a.), reflecting ongoing tight supplies and strong demand bolstered by an increase in demand for fishmeal relative to other protein meals in aquaculture production.

Risks and uncertainties

The report lists challenges related to the environment, policy changes and effectiveness of governance as risks and uncertainties facing the fisheries and aquaculture sectors.

“On aquaculture, climate-driven changes in temperature, precipitation, ocean acidification, incidence and extent of hypoxia and sea level rise, availability of wild seed as well as reducing precipitation leading to increasing competition for freshwater, amongst others, are expected to have long-term impacts. The impacts of climate change will not be evenly distributed, with larger changes expected in tropical regions when compared to temperate zones.”

It adds that as governments come under increasing pressure to reduce greenhouse gas emissions from the food system and transition to net zero, the prices of key energy inputs into capture fisheries (e.g., diesel) and aquaculture (e.g., electricity) may change, altering the profitability of some activities, with impacts on the types of production.

Norway holds position

From a trade perspective, China will consolidate its leading role as the major exporter of fish for human consumption, with a share of 22% of world exports in 2032 (up from 17% in 2020-22), followed by the world’s biggest salmon farmer, Norway, and Vietnam (stable at 7% and 6%, respectively).

Future policy decisions by governments may impact projections.

“For example, while sanctions remain in place on Russia following the invasion of Ukraine, any changes to this situation are difficult to predict and may impact the expected trading relationships,” states the report.

The Fish section of the Agricultural Outlook 2023-2032 is on pages 213-223 of the 271-page document.