A news release from Wert Berater
Aquaculture in Australia Industry Outlook
The Aquaculture industry in Australia is expected to expand as the importance of sustainable fishing practices becomes a critical factor in replenishing Australia's fish stocks. Over the five years through 2017-18, the industry is also expected to benefit from the ongoing rise in disposable incomes and health consciousness among consumers. This will support demand and profitability for the industry given that seafood is often sold at a high price compared with substitutes such as poultry and other meats.
Moreover, the marginal depreciation of the Australian dollar over the five-year period is expected to boost industry performance by enabling operators to expand export markets, thereby increasing revenue. The only real threat to the good fortunes over the period is a forecast rise in fuel costs, which could depress profitability. Over the five years through 2017-18, these factors combined are expected to contribute to annualised industry revenue growth of 3.1%, to reach $1.28 billion. This is forecast to include a 3.1% rise in 2013-14 to reach $1.14 billion.
Sustainability and consumption
The importance of sustainable fishing practices will become even more critical over the next five years as global and domestic consumption continues to increase but global fisheries remain at depleted levels. This will lead to substantial growth opportunities for the Aquaculture industry in Australia and the world given the industry's ability to maintain supply to meet demand more reliably than ocean fishing.
Global demand for seafood is expected to increase by 2.0% per annum over the next five years, based on studies undertaken by the United Nations' Food and Agriculture Organisation and International Food Policy Research Institute. The increase will be due to population and economic growth, mainly in developing countries. Fish is considered a luxury good in many countries, so demand will increase alongside growing incomes.
Domestic demand for seafood is expected to increase due to population growth, income growth and the trend towards healthy eating. The global supply of fish will be limited by stagnating wild catches and a slow rate of growth in aquaculture production, resulting in price increases. Moreover, as Australia's ocean fishing catch continues to decline, the Aquaculture industry will expand to supplement any shortfall.
The industry is still growing despite being in a mature life cycle phase, and developments in technology to support husbandry practices, such as the spawning of fish in captivity, will enable increased efficiency, production and quality. Clean Seas is hoping to establish Australia's first onshore southern bluefin tuna hatchery. The development of farms growing such highly prized fish will significantly add to industry revenue.
Opportunities and risks
As global seafood demand increases, so will opportunities for the industry to expand export markets to increase revenue. Moreover, Australian aquaculture exports will become more competitive on the global market thanks to the forecast 2.8% per annum depreciation in the Australian dollar over the five years through 2017-18. This will enable operators to capitalise on Australia's strong reputation on the world market for producing high-quality seafood under strict quality assurance conditions. As such, exports are forecast to increase at an annualised 6.3% over the five years through 2017-18 to total $416.2 million and 32.5% of industry revenue.
However, the industry will continue to face competition from downstream imports. Successfully competing against these imports will largely determine the industry's profitability. Seafood imports are expected to increase in price, reflecting world supply and demand dynamics. In addition, a key import source for the industry, China, is expected to become a net importer of seafood, which may ease import competition. Over the five-year period, imports are expected to increase at an annualised 0.9% to reach $56.6 million in 2017-18.
Wert-Berater, Inc. expects industry profitability to increase over the five years through 2017-18, given a forecast annualised increase of 2.8% in seafood prices at the retail level. However, this will be offset to some extent by increases in fuel costs given the forecast 3.1% per annum increase in global crude oil prices over the period. Moreover, wage pressures are expected to grow as competition for labour increases due to the boom in the Mining division. Wages are forecast to grow by an annualised 4.2% to reach $224.7 million.
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