AQUACULTURE OUTLOOK March 05, 1999
March 1999, ERS-LDP-AQS-09
Approved by the World Agricultural Outlook Board

AQUACULTURE OUTLOOK, is published twice a year by the Economic Research Service, U.S. Department of Agriculture, Washington, DC 20036-5831. Subscriptions to the printed version of this report are available from the  ERS-NASS order desk. Call toll-free, 1-800-999-6779 and ask for stock # ERS-LDP-AQS-09, $24/year. ERS-NASS accepts MasterCard and Visa.

Higher Domestic Production and Imports To Boost Consumption
Over the last 5 years, the consumption of farm-raised catfish, tilapia, salmon and shrimp has increased significantly. While these species have experienced the most significant increases, consumption of other farm-raised species has also risen. This basic change in the source of the U.S. seafood supply is expected to continue in the foreseeable future. With increasingly stringent catch limitations - such as those lowering the allowable landings of some major commercial fish species in the New England area - domestic wild harvest is not expected to significantly expand in the near future. In 1997, the latest data available, per capita seafood consumption in the United States was estimated at 14.6 pounds, down 0.2 pound from the previous year and down 1.6 pounds from its peak of 16.2 pounds in 1987. However, as per capita consumption of seafood in the United States has been declining, the consumption of farm-raised seafood has been increasing.

Many of the major economic and supply trends that affected the U.S. aquaculture industry and seafood imports and exports in general in 1998 are expected to continue in 1999. In the domestic market, large supplies of pork and chicken are expected to keep downward pressure on overall meat prices and the prices for competing products, such as seafood. This, however, is countered by a forecast for a strong domestic economy and low overall unemployment in the United States. These factors are expected to translate into increased away-from-home eating, an extremely important outlet for most seafood products. The U.S. dollar is expected to remain strong because of continued global economic problems, a factor that will encourage higher imports of seafood products and reduce export opportunities. Finally, some aquaculture producers, notably catfish farmers, are expected to continue benefiting from low feed costs brought on by weak prices for corn and soybeans.

Catfish Production Expected Higher in 1999
Grower sales of catfish to processors in 1999 are expected to reach 595-605 million pounds, up 5 to 7 percent from the previous year. Growers are expected to increase production as a result of two straight years of strong farm level prices and feed costs that are expected to remain low. Prices to catfish farmers declined in the second half of 1998. But with grower supplies of food-size fish, little changed from the previous year, and because processor inventories of finished product were down 9 percent at the start of 1999, grower prices are expected to tighten during the first quarter of 1999. Sales to processors in January were 49 million pounds, up 4 percent from the previous year. Prices paid by farmers in January were 70 cents a pound, up 1 cent from January 1998. In 1998, catfish sales by growers to processors totaled 564.4 million pounds, 8 percent higher than in 1997.

Overall Farm Prices Expected To Be Steady in 1999
Although per capita seafood consumption in the United States has been flat or declining for the last decade, the catfish industry has continued expanding sales at a pace well beyond the population growth rate. Per capita catfish consumption has increased, and catfish consumption as a percentage of total seafood consumption has grown. Consumption is expected to increase in 1999 because of the strong domestic economy. Farm prices are expected to strengthen quickly in the first quarter as processors rapidly move through the inventory of available market-size fish. Prices are expected to soften, however, in the second quarter of 1999, once the Lenten season ends and the large inventory of stockers begins to reach market size. A shortfall of food-size fish caused prices paid to farmers to jump from 69 to 79 cents a pound during the first four months of 1998, but prices gradually declined and ended the year at 70 cents a pound, similar to the end of 1997. With little change in farmer and processor inventories, the catfish industry started 1999 in almost the same position as the start of 1998.

Growers Increase Pond Acreage
Growers reported that as of January 1, 1999, they anticipated that 175,220 acres of ponds would be used during the first-half of 1999, up 2 percent from the revised estimate of the acreage used in 1998. Most of this increase is attributed to a 5-percent increase in acreage in Mississippi. Farmers also reported they would be renovating or building an additional 10,000 acres of ponds in the first half of 1999, an increase seen as a delayed response to the relatively steady farm prices and low feed costs over the last 2 years. The number of growers was also up, with Mississippi experiencing a surprisingly strong 27-percent increase in farms.

Food-size and Fingerling Inventories Down Slightly, Stockers Up
At the beginning of 1999, growers reported that their inventories of large and medium food-size fish had declined in terms of numbers of fish. This was partially countered by a marginal increase in the number of small food-size fish in inventory. The total inventory of small food-size fish has been relatively constant for the last 3 years, but inventories reported by Mississippi growers have risen for the last 3 years. In total, the 248 million food-size fish reported in grower inventories would be expected to supply processors for only about 5 months if used at the rate seen in 1998. Thus, the relatively tight supply of food-size fish is expected to exert some upward pressure on prices during the first 3 to 4 months of 1999. Farm prices during this period also will be influenced by weather-related disruptions to harvesting and any change in the rate of off-flavor occurrences.

The inventory numbers for stockers, those fish from .06 to .75 pounds, were estimated at the beginning of 1999 at 660 million, up 9 percent from the previous year. Although a strong increase from 1998, this inventory level is still 27 percent below the 755 million reported at the start of 1997. The time period at which these stockers reach market size will be important in determining both whether growers experience hikes in prices like those of 1998 and how long higher prices can be maintained.

The reported inventory of fingerlings - fish weighing less than 0.06 pound - was down 2 percent from 1998, but inventories in the four major States nearly matched the previous year at 921 million fish. These fish will be the chief source of food-size fish supply during the second half of 1999. Because fingerling levels are expected to remain constant, the decline in prices may not be as severe in the second half of 1999 as it was in 1998.

Broodstock inventory levels also were similar to those of the previous year, so egg and fingerling production during the first half of 1999 is expected to be roughly similar to 1998.

Farm Sales Increase 10 Percent in 1998
Catfish farmers reported that total sales in 1998 reached $469 million, 10 percent higher than the revised figure of $427 million for 1997. Revenues from the sale of food-size fish, stockers, and fingerlings were all higher. The increase in food -size fish and fingerlings occurred because of both a higher quantity of fish sold and price increases. Food-size fish sales totaled just under 600 million pounds, up 5 percent from 1997, and averaged 74 cents a pound, up 4 percent. Grower sales to processing plants totaled 564 million pounds and the remaining 35 million were sold either directly to retailers or consumers.

Fingerling sales increased 31 percent to $20 million, as the volume rose 29 percent and prices increased slightly. Most of the increase is attributed to higher sales by Mississippi growers.