SOUTHEAST ASIA PREPARING FOR INVESTMENT IN OFFSHORE CAGE PRODUCTION

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1 SOUTHEAST ASIA PREPARING FOR INVESTMENT IN OFFSHORE CAGE PRODUCTION Lukas Manomaitis Aquaculture Program Technical Contractor/Southeast Asian Technical Director USSEC

2 WHAT IS THE U.S. SOYBEAN EXPORT COUNCIL (USSEC)? U.S. Soybean farmers in a soybean field Soy is one of the most important commodity crops worldwide and has attributes that make it ideal for aquaculture USSEC is a non-profit marketing organization for the U.S. soy industry (we do not and cannot sell soy) Funded by U.S. soybean farmers and the U.S. government, with additional funding from industry stakeholder members USSEC has worked since 1985 in aquaculture Global program with a strong regional aquaculture program in SEA since 2002 Multi-level approach to industry taking a production/value chain view to improvement (knowledge transfer)

3 SIMPLIFIED PRODUCTION CHAIN FOR AQUACULTURE

4 USSEC s interest in marine fish aquaculture and presentation discussion plan USSEC sees the marine fish industry in SEA as a large potential future user of soy products, particularly U.S. soy products A paper was submitted for this conference, please refer to this for a detailed outline of what USSEC believes the status is There are both immediate opportunities and medium to long term opportunities for those interested in industrial marine fish production in SEA Think of this presentation as a spotlight of key issues, feel free to meet with me to discuss more!

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6 ASEAN Government Targets for Aquaculture to 2020 Country Strategy and Existing Target Indonesia The largest aquaculture producer ; High double digit annual growth rates. Dramatically expanding brackish water aquaculture production areas. Malaysia Additional 120,000 tonnes of marine fish from cage aquaculture Creating 10,000 hectares of new integrated shrimp production zones. Philippines Aquaculture production increased by 1 million tonnes over 5 years. Milkfish (marine aquaculture) and Tilapia for domestic mass market. Thailand Filling the supply gap that is developing in wild capture supplies Additional 500,000 tonnes of aquaculture production per annum. Vietnam Additional 200,000 tonnes of marine fish from cage aquaculture. Additional 250,000 tonnes of brackish Shrimp Additional 700,000 tonnes in Pangasius. Source: National governments (2013 information)

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8 AQUACULTURE IS A LIVESTOCK INDUSTRY MANY OPPORTUNITIES As much as smallholders may like to farm marine fish, the future is not going to be smallholder farmers We need to take the positive lessons from other livestock operations (and good examples of marine fish production) and copy/adapt them Marine fish production, though today still quite low for medium to highvalue species, has a very bright future Aquaculture is a livestock industry, we need to develop/copy the industrial approach of livestock

9 WHAT IS OFFSHORE CAGE FARMING? Modern marine cage operation Offshore does not mean in the middle of the ocean Located far enough away from the coast to allow greater depths and currents Located close enough for land-based logistical support Should be situated in areas that have been previously identified as zoned for aquaculture Require advanced cage technology to withstand harsher conditions, though many areas in SEA actually have relatively calm waters

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11 Challenges for marine fish aquaculture in SEA: Security Short term thinking/copying the wrong models Lack of/need for better technologies: Hatcheries Health management Targeted feeds High tech production approaches Staff trained in better technology approaches Lack of capital resources/investment funds Attractions for marine fish aquaculture in SEA: Familiarity and acceptance of aquaculture as an industry Well-developed aquaculture feed production and seafood processing in most nations Sub-tropical to tropical conditions that allow year-round culture ability Long coastlines and good water quality High market value and good potential markets with increasing demand Already linked regionally and globally to international seafood markets Many possible target species

12 WHAT ABOUT SECURITY? Perhaps a bit over the top, but hard action will be needed initially (and is already happening) Maybe one of the most important questions when it comes to moving away from the protection of the nearshore how will an operation be protected? In Turkey, they had a simple answer: security systems, guns and phones Governments are going to have to help to secure the zones for offshore aquaculture

13 WHAT ABOUT TECHNOLOGY? Underwater camera and automated feeding systems The technology for offshore, industrial marine cage aquaculture production exists today, the technology is quite advanced. Many companies ready to supply SEA with what is needed The other parts of the production chain; hatcheries, nurseries, health management, logistics, etc. are fairly well understood, but need to be implemented correctly in SEA (immediate opportunities in this sector?)

14 WHAT ABOUT FEEDS? Feed barge with several silos of different feeds for different stages The basics of nutrition for marine fish feeds exist and will get better Currently farmers (and therefore feedmills too) are not willing to invest in better feeds because it is too risky USSEC is also working to improve formulation approaches by commissioning the first standardized aquaculture formulation database for use by, and training of, aquafeed formulators

15 WHAT ABOUT LABOR? Land-based logistics and large boat support of cage operations Labor is going to be an important issue to address (particularly the linkage to governments): The transition from many small farmers (AKA voters) to less farmers and more people employed in the overall industry is going to be a delicate one While there are a lot of people now working in the aquaculture industry, those that will remain in the production side will need to be selected and retrained There are many academic institutions for aquaculture, but very few currently looking at the offshore industry

16 WHAT ABOUT CAPITAL RESOURCES? Aquaculture events are attracting investors USSEC commissioned a report on this in 2013 to see the investment climate for aquaculture in SEA Key issue was restrictions by governments in some areas that prevent outside investment However, investors (international and local) are aggressively looking to expand into this industry in the near future The ASEAN Economic Community (AEC) will be a big change for everyone Governments will need to decide what whether they will make this an opportunity or treat it as a threat

17 Concluding thoughts on offshore aquaculture How will offshore aquaculture happen in SEA? Not at all, will retain primarily nearshore production? Quickly, as in Turkey, the change will be over a short time? A blended approach, with nearshore mostly phasing out with offshore developing as the primary production? Key issues to focus on: Broodstock, hatcheries and nurseries (genetics, vaccination and quantity/quality production) 20+ million quality fry minimum Growout (zoning and licensing, appropriate technology, insurance and professional staff) work with governments and good quality equipment and people Processing and marketing (identifying key species, targeting volumes that can be exported, transitioning from wet markets to processed fish) escape the domestic demand trap Sustainability and high quality (standards and/or certification)

18 Concluding thoughts on offshore aquaculture What will an industrial offshore industry offer? Higher profits More jobs Reduced risks Sustainability and quality Greater capital/more investment More consistent and greater supply of products What does SEA need to be careful about? Stopping negative thinking - less smallholder farmers does not mean a smaller industry! This will be an important aspect, particularly in discussions with governments. Critical that this process be done correctly, otherwise those that try to shortcut the development process with poor practices/equipment/planning will impact the possibility for investment for the entire industry. Investors have been hesitant about investing more in aquaculture in Asia, will need to show them it can be done better this is where an experienced integrated operator could come to SEA and spark a wholesale change in the SEA region

19 FY14 USSEC 1 st SEA OFFSHORE TOUR GROUP TO TURKEY AND NORWAY NEXT TRIP: WE ARE SEEKING A NEW LOCATION TO BRING A SEA GROUP

20 IS THIS SEA S FUTURE AQUACULTURE? REALISTICALLY IT HAS TO BE

21 A SPECIAL THANKS TO THE ORGANIZERS OF THE OFFSHORE MARICULTURE CONFERENCE AND THE STRONG SUPPORT FROM OUR MANY INDUSTRY STAKEHOLDER MEMBERS Verified Grains Thayer Seed Knewtson Soy Products

22 Learn more about USSEC and aquaculture: Contact USSEC SEA at: The Global Soy in Aquaculture program strives to promote a profitable and sustainable approach to aquaculture that specifically shows the utility and value of U.S. soy products