THE RISE (AND RISE)
of the aquatic ‘chicken’
by Lian Heinhuis,
Analyst Seafood, Food
& Agribusiness Research
and Advisory, Rabobank
Netherlands and Gorjan
orldwide demand for seafood is growing and wild
catch production cannot grow at the same pace,
meaning that aquaculture is becoming key for
the supply of aquatic protein. As the farming of
fish—especially freshwater species—rapidly gains popularity around
the world, opportunities increase for both farmers and players active
in auxiliary industries.
Farmed freshwater fish species, consisting of different types of carp,
catfish and tilapia, accounted for over half of the 66 million tonnes of
fish produced in aquaculture in 2012 (see Figure 1).
Although carp is by far the largest subgroup (38 percent of total
aquaculture production), it is predominantly consumed locally around
the world. Like tilapia, pangasius has an export market and is popular
among western consumers; yet its market share is still relatively small.
Unlike the other species, tilapia has seen the greatest growth in production and widespread appeal in global markets.
Tilapia is easy to farm and feed and has a neutral flavour that
appeals to many, hence it is often compared to chicken.
Global tilapia production volumes have increased from just over
100,000 tonnes in 1980 to 4.5 million tonnes in 2012, and the industry
has an estimated total value of US$6.7 billion.1 The export market
is currently dominated by China, while the United States (US) is the
biggest importer. In the coming years, we expect China to focus more
on its domestic market, which will create opportunities for other producers to emerge and increasingly supply growing markets, including
Latin American producers are in a strong position to benefit due
to their location, access to feed and natural resources. Having already
doubled output between 2007 and 2012, the region is expected to
see further growth.
Tilapia is thriving thanks to biology and technology
The whitefish sector has seen incredible growth rates in past years.
Tilapia is one of the main drivers of this growth, with farming having
expanded to more than 80 countries and global production volumes
having grown by an average of 11 percent per year.
Tilapia is farmed in small backyard farms as well as industrial compounds managed by multinational companies. Production methods
range from simple cage systems to complex indoor recirculation facilities. Technology has played an important role in the development of
the tilapia industry, and innovations such as the sex-reversal technology
that allows farmers to grow only the faster-growing male fish have
greatly contributed to better farming practices and output.
In addition, tilapia’s biological characteristics provide further advantages to farmers worldwide: the fish is relatively resilient, has a low-cost
Global production of tilapia has increased by eleven percent
annually over the past decade, making it the world’s second most
The US is the world’s largest importer, with imports valued
at approximately US$1 billion per year, and China the leading
exporter. But rising costs and a change in government policy will
make Chinese producers less competitive over time, levelling
growth and turning producer focus more towards the domestic
This will likely create opportunities for other tilapia producers to
enter the global market.
Rabobank expects Latin America to step up its supply in the
coming decade, with production volumes projected to rise to two
million tonnes by 2025.
diet, needs little dissolved oxygen in the water and reaches marketable
The main tilapia-producing country is China, which accounts for a
third of all production (1.5 million tonnes annually).
Chinese government programmes on farming—along with support subsidies and programmes focused on advancing technology and
genetics—have resulted in a growing tilapia industry. Family-owned
farms account for the largest share of production.
Although volumes from China are larger than volumes from any
other country, profit margins have been very low, and the industry as
a whole has been making a loss.
Subsidies have created competitive prices for the Chinese product,
which is sold as frozen fillets in the US (almost half of total Chinese
However, they also pose a risk, as discontinuity could mean rising
costs. Volumes in the global tilapia industry have seen strong growth,
and—assuming no major disease outbreak or other negative event
occurs—there is potential to double output again to nine million
tonnes (live weight equivalent) by 2025 (see Figure 2).
Tilapia is America’s next top seafood item
The US is the most important market for tilapia. With import volumes of more than 228,000 tonnes (over 600,000 tonnes in live weight
equivalent), Americans consume more than other major tilapia-eating
countries such as Egypt or China (see Figure 3).
Tilapia has risen fast on the charts of seafood popularity and now
only trails salmon, shrimp and tuna as the most favoured seafood item
in the US.2
20 | INTERNATIONAL AQUAFEED | January-February 2015
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Figure 2: Strong growth in tilapia production, with more to come
While originally presented as a low-cost alternative for wild-caught
whitefish, the product is now consumed more than cod or pollock, and
it dominates the broader whitefish category (see Figure 4). As tilapia
is still priced considerably higher than chicken (on average double the
price of chicken breast fillet), it is more relevant to compare it with
other seafood products.
However, in the longer term, this can also have an impact on the
consumption of species in the broader animal protein segment—particularly on chicken—because of its similar neutral taste.
Tilapia is not as popular in Europe as in the US. With frozen tilapia
fillet imports of only 19,000 tonnes in 2013 - barely 12 percent of US
frozen fillet imports - the fish has not taken off anywhere near like it
has across the Atlantic.
Pangasius has established a much stronger position than tilapia in
Europe, with frozen fillet imports of 142,000 tonnes in 2013. This can
be explained by lower prices and tilapia producers focusing less on
this region - so far.
In the years to come, freshwater whitefish consumption will
continue to rise in the US. The focus on healthier diets will increase
demand of both tilapia and pangasius.
However, these characteristics are currently not exploited in
marketing campaigns, with low price remaining the key selling point.
European consumption growth will be more challenging, as farmed fish
production has received some very negative media attention lately.
Since 2011, the popularity of pangasius has declined somewhat, after
bad publicity surrounding alleged poor farming standards in Vietnam.
China’s position faces challenges
Asian producers - particularly China - have dominated the global
tilapia industry in the past decades. With a share of nearly 74 percent
in the US frozen fillet market and continuing growth (five percent
CAGR between 2008 and 2013), China is in a strong position.
However, there are reasons to expect the Chinese product to
become less competitive over time, including rising input costs, currency, climate, limited resources and food safety.
Input costs are driven up by rising feed and labour costs. This means
that the product will become more expensive to produce. Average
labour costs in China more than doubled in the period between 2007
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ET-249A.indd 1AQUAFEED | 21
January-February 2015 | INTERNATIONAL
6/10/14 2:49 PM
Figure 3: US imports of tilapia remain high, 2008-2013
country a difficult market to develop. Tilapia in China has the most
potential as a fillet, predominantly sold through retailers, especially in
the country’s south where people live close to the farms. The live/fresh
market is more difficult to enter, as people will first choose to purchase
The other major challenge to Chinese dominance of the farmed
whitefish export market is pangasius. Imports of Vietnamese pangasius
- at a lower price per kilogramme (about 25 percent less) - are growing
faster than those of Chinese tilapia and pangasius exports to the US
between 2008 and 2012 were much higher than tilapia volumes from
Latin America, showing increasing demand for pangasius.
Vietnam currently produces around one million tonnes of pangasius
per year, and the government is supporting the sector and has set a
goal to expand it by 20 percent, to 1.2 million tonnes in 2015.
Furthermore, there is a good possibility that other countries, such as
Indonesia and India, will start large-scale production of pangasius. The
fish is perceived to be very similar to tilapia, although its fillet colour
is much whiter. Low prices and increased marketing efforts could lead
American consumers to increasingly choose pangasius, although tilapia
still has a distinct first-mover advantage and much wider recognition
Opportunities lie in other parts of the world
Figure 4: Tilapia dominates US consumption, 2000-2012
Figure 5: US tilapia imports show the position of different
exporting countries, 2013
In past years, average retail prices of pellet feed increased from
RMB3260/tonne in 2006 to RMB4140/tonne in 2012.4
The currency will not benefit Chinese competitiveness, with the
yuan having appreciated by 24 percent since 2005, to CNY6.14 per
US$ in 2014.5
China has limited resources of fresh and clean water. Pollution is
an important problem, and there is increased competition for water
space from other agricultural and aquacultural products such as rice
Food safety issues surrounding the Chinese product have resulted
in more negative market perception in the US, allowing non-Chinese
products to be sold for US$1/pound more. If this image problem continues, Chinese frozen fillets could also become less popular.
These issues present a scenario of increasingly challenged competitiveness.
Moreover, climate is an issue as tilapia need water temperatures
of at least 27°C, and the consistent conditions found in more tropical
areas of the world do not exist in China.
As the Chinese industry now heavily relies on subsidies to produce
at low cost, changes in policy could have another negative impact.
Combined, this could result in China exporting less tilapia and being
forced to develop its domestic market. Tilapia sales in China are now
mainly concentrated in the provinces where it is produced and where
it competes with traditional food fish such as carp.
Strong regional cultural traditions in the Chinese diet make the
The challenges create room for other producers to become both
exporters and more self-sufficient.
Mexico, for instance, is now a big importer of tilapia, as it produces
70,000 tonnes, while consuming 130,000 tonnes. The remaining 60,000
tonnes are imported from China. Mexico has good production facilities and capabilities of its own, but farmers there have found it difficult
to compete with Chinese prices, which have been about 30 percent
lower than Mexican tilapia prices.6
In Africa, we can also expect further investment in fish farming
industries in order to meet local demand. Ghana is a good example
of this: the country has witnessed growth rates that have averaged
39 percent annually over the past five years. This comes from a very
low base, with production volumes of 26,000 tonnes in 2012. Local
demand has been increasing, and there are many initiatives to use
small-scale fish farming of tilapia as a way to alleviate poverty.
The key consumer and producer in Africa is Egypt, which is the
second-largest producer worldwide, with 768,000 tonnes in 2012, and
growing rapidly by 15 percent per year (based on the CAGR between
2008 and 2012).
Other Asian producers such as India, Thailand and Malaysia are also
growing (albeit from a low base) and have export potential.
Indonesia is already a sizable exporter to the US, with 11,000
tonnes of exports in 2013 (from 717,000 tonnes total production) and
the unique position of being the only Asian country that sells a highvalue product, produced at high-quality standards (see Figure 5). The
country is also home to the largest production facility of the world’s
leading tilapia-producing company, Regal Springs.
Latin America is poised to take
a bite out of the market
There are several factors putting Latin American producers in
a good position to obtain a bigger share of the international tilapia
market: the region has lower feed costs (soymeal prices in Brazil are
below prices in China, with an average difference of 11 percent since
2010); labour costs are increasingly competitive compared to China;
the region is close to the current key consumer market; the climate is
right; and both freshwater and brackish water resources are sufficient.
In 2012, Latin America produced only 453,000 tonnes of tilapia,
which makes up about 10 percent of global production. Although
this is only a fraction of Asian production, there is good potential for
growth. In recent years, the tilapia industry in Latin America has already
shown strong growth rates, doubling in size from 2007 to 2012 - and
22 | INTERNATIONAL AQUAFEED | January-February 2015
exports to the US are increasing. The Latin American tilapia product is
sold fresh in the US, for a premium price (about US$1/pound higher
To grow the industry, Latin American auxiliary businesses such as
processing, feed and logistics will need further development.
Rabobank projects Latin American tilapia volumes could rise to at
least two million tonnes by 2025, with more than half of future production in this region expected to come from Brazil. The country is already
the largest Latin American producer and is especially resource-rich.
Countries such as Mexico and Colombia are also expected to strongly
However, in some countries tilapia is facing competition from other
species, as is the case in Ecuador. Due to high prices in the shrimp
sector (due to a disease in Asia and Mexico), many Ecuadorian farmers
have left the tilapia business to pursue shrimp farming, resulting in a
decline of exports.
The tilapia industry has shown incredible growth rates. In all production regions, volumes at least doubled in the period from 2007 to
Of course, biological risks are always present in any type of farming, and climate change or disease outbreaks could seriously harm the
industry, setting back production volumes.
Nevertheless, the characteristics of the industry provide cause for
optimism. Tilapia is amongst the easiest fish to farm, and - at least to
date - no global disease outbreaks have occurred.
Moreover, tilapia requires a relatively low investment in the farm
structure. Due to low-cost feed, it has a competitive price point in
both developed and developing markets. Tilapia are resilient, they
grow fast and are increasingly popular among consumers. The current
leading consumer market in the US is far from saturated, and consumption in local markets is also expected to increase.
While China will remain a key producer in the foreseeable future,
Latin American producers like Brazil, Colombia, Ecuador and Mexico
are well positioned to produce high volumes that could supply both
domestic and international markets.
Other Asian producers such as Thailand, Indonesia, India and
Malaysia are also expected to strongly increase tilapia output in the
Although no fish-farming business is risk-free, the future for tilapia
As a source of affordable animal protein, tilapia could (continue to)
feed the masses and become a key commodity in the animal protein
market. What chicken has been for the poultry industry, tilapia can
be for aquaculture. Low-cost feed, simple farming structures and fast
growth contribute to its popularity among farmers, while its neutral
taste makes it popular among consumers - characteristics that make it
much like its terrestrial equivalent, the chicken.
The aquatic chicken industry will continue to rise, which will bring
some interesting new business opportunities for farmers, but also for
companies in secondary industries such as feed and processing.
Based on estimated whole prices at the farm level
Based on per capita consumption in 2012. Source: National Marine
Fisheries Service, 2014
3 According to a report by EY in 2012: China’s productivity imperative,
4 Presentation Grobest at Groundfish Forum 2013
5 Average exchange rate against the dollar in September for each of the
6 Source: Alfredo Aranda, Aquamar expo Veracruz 2014
January-February 2015 | INTERNATIONAL AQUAFEED | 23