US Midwest drought drives up costs and concerns

By Maureen Aylward

With the drought in the US Midwest continuing, we asked our Zintro experts about the repercussions and impacts for the agricultural economy in the US and globally as food prices rise.

As the worst drought in recent history sweeps across the US, its seismic impacts are reflected in soaring prices of corn and soybean in the past few weeks not only domestically but across the globe as well, says Raghavan Sampathkuma, an expert in agribusiness and agrimarketing. “As one of the major players in global agricultural production and trade, the US has greater and far-reaching impact in three fronts: food, feed and fuel,” he says.

Sampathkuma says that as other parts of the globe, including Europe and the Black Sea region, are experiencing tormenting weather patterns affecting wheat yields, it would not be surprising to see the world witnessing another crisis similar to 2008 that caused social and political unrest in many countries. “Lower global estimates of production and trade of wheat is bound to affect the world’s poorest as most of them depend on food aid. As the US is one of the major contributors to the global food aid, it would become increasingly difficult for it to balance its commitments,” he says. “The triple A’s of food (availability, affordability and accessibility) are important for all, but extremely critical for the economically weakest sections. Food security for two-thirds of the world’s population living in the developing world will become the biggest worry for those governments forcing them to take knee-jerk policy reactions such as export bans that may further distort the global trade.”

As the drought causes a significant reduction in yield and production of corn and soybean, the key inputs for animal feed, it pushes up food prices including meat and dairy products worldwide, notes Sampathkuma. “As this troubles the consumers, it equally affects the profitability of the industry. The worst affected will be the countries that are heavily dependent on US corn. In South East Asia, Vietnam imports over a million and a half tons of corn and any increase in the prices of US corn will impact the country’s livestock sector that is growing at about 9 percent annually. China’s insatiable appetite fuelled by its growing meat consumption will only worsen the crisis as it is another major importer of US corn,” he explains.

In regions like India, the fast growing animal protein sector will be facing a huge challenge to optimize their feed costs as domestic corn prices have risen by at least 15 percent in tandem with the prices in the US, says Sampathkuma. “Soybean prices also reflect similar upward trends in the domestic markets. Being highly-sensitive to feed costs, the livestock sector will be forced to substitute cheaper grains in place of corn causing prices of ingredients such as sorghum and other coarse cereals to rise. This may prompt the Indian government to announce a blanket ban on food exports including corn to stabilize the domestic prices,” he says.

Rising corn prices are sure to push up demand for other feed stocks for producing ethanol and will cause a surge in their prices. “The intense competition between food and fuel will result in global grain prices reaching a new high and trigger interest among the speculative investors who are waiting to jump in and cash in on the crisis. However, learning from the food crisis in 2008, the world could handle the crisis-like situation better,” he says.

Donald Nordeng, an expert in risk and sustainability, says there are several impacts:

1. Immediate and future price increases for commodities: corn, soybeans. “The model for this is the ethanol debacle. Drought in Australia, Brazil, Canada or China will radically affect food prices,” Nordeng says.

2. China is now a major importer as is Indonesia. “These economies are expanding and are larger than they were in 2007 with a bigger impact on prices than in 2007,” he says.

3. India’s inability to boost grain production. “While China and India are seen as mainly rice producing countries, in fact many areas in both rely on wheat for their staple. Wheat areas are gradually being eroded by heat in the US and will impact production,” Nordeng explains.

What do you think?

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Heirloom varieties of endangered fruits and vegetables make a comeback

By Maureen Aylward

The drive behind growing many heirloom varieties of fruits and vegetables being grown in small backyard gardens and large CSAs is to save endangered fruits and vegetables from going away forever. We asked Zintro experts to tell us about their favorite non-GMO seeds or seed sources and comment on the heirloom trend among foodies and chefs.

Darrel Suderman, a food and beverage technical consultant, says that heirloom plants like vegetables, herbs, ancient grains, and microgreens are becoming the latest trend in the food industry. “Combine heirloom genetics with organic farming practices and you end up with the next powerful menu marketing tool in a restaurant near you,” says Suderman. “According the reputable Living Seed Company, the National Seed Company retained hundreds of seed varieties in 10 major groups 100 years ago; now only a couple hundred seeds are retained. But, that’s about to change as seed companies expand the availability of heirloom plan seeds.”

Suderman says that currently 75% of the global seed market is governed by 10 companies. These companies follow a business model that conserves the genetic diversity, historic preservation, bio-diversity, and soil enrichment. Some common characteristic terms include heirloom varieties and seeds, open pollination, rare seeds, seed saving techniques, ancient grains, and hybrids.

“Heirloom traditionally means that the seed variety has been bred for its desirable traits, superior taste and vigor, that is passed down from generation to generation,” explains Suderman. “But where do hybrids fit in if they do not provide a fertile seed from the parent plant? First, they must be destabilized. Stabilized or de-hybridization can take eight generations of growing it out until the plant variety is completely stabilized. The well known Early Girl tomato is an example of stabilization, but it is still sold as a hybrid.”

Open pollination is also a core term in heirloom discussion, says Suderman. “Open pollinated plan varieties are non-hybrids and originate from two open pollinated parents that will create an offspring similar to the parent plant with desired characteristics,” he says.

The Living Seed Company as well as Baker Creek Seed and Gurney’s are some of the largest heirloom seed companies. “Other companies like the Seed Saver Exchange represent another category of heirloom seed management and distribution. These companies and trade organizations tend to group heirloom seeds into four categories: family heirlooms, commercial heirlooms, created heirlooms, and mystery heirlooms,” says Suderman.

Rodrigo I Bermudez Grave de Peralta, an agribusiness consultant, says he has been fascinated with vegetables and their shapes colors flavors since he was a child growing up in south east Asia. “I would just drop seed into the soil just so see what would come out,” he remembers. He has worked in organic and conventional vegetable production on a large commercial scale and is currently a papaya farmer in Southern Mexico.

It’s important to de Peralta that people have begun to appreciate vegetables and older varieties for new tastes, colors, and textures normally found in natural food stores. “However, it is important to know that many heirloom varieties never existed in the wild and for the most part were hybrids and actively bred for their characteristics 40, 60, or even 100 years ago when the first seed companies and breeders began crop genetics,” says de Peralta. “Some are true selected varieties that great grandfathers or grandmothers identified and nurtured and passed along to the next generation, but more often than not a genetic mapping would show that certain varieties can be traced to a company or breeder of recent origin.”

de Peralta says a great deal of the wonderful flavors from heirloom vegetables is because the food does not have to travel much farther than your garden to your kitchen and can be picked at maximum ripeness. “This is when you get all the flavaniods, alkaloids, acids, and sugars are at perfection,” he says. “But often the same varieties do little for the local farmer who cannot pack more than a few items to a basket because he or she does not have the ability to make a trip into the city market.”

Farmers are increasingly becoming more productive as well as conscientious of consumers, says de Peralta, but many are faced with a harvest of quickly diminishing returns. They must choose to sell what their buyers want, a product that has legs, or products that can be stored at a premature stage to ripen so the farmer can continue to sell it.

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Food manufacturing and food safety

By Maureen Aylward

Food safely is a concern to us all. And, food manufacturing processes and safety issues are nearly constantly in the news. We asked our Zintro experts to provide insight on the innovations, trends, and issues that are taking hold in food manufacturing and food safety currently.

Denis M’Gee, an expert agribusiness and animal nutrition, thinks that one of the big issues facing the food manufacturing sector is the increasing globalization of the supply chain and the associated issue of ensuring food safety compliance from an extended network of global suppliers. He cites the recent bacterial outbreak in Europe as an example of how a breakdown in food safety in the early parts of the supply chain took days to trace.

“Despite numerous attempts by international organizations, there is still no single global food safety certification system. ISO 22000:2005 was a commencement, but it is not seen as complete or finalized,” M’Gee points out. “The more recently launched FSSC 22000, which combines the principles of ISO 22000 and the GMP requirements of PAS 220, is a closer step towards a global food safety system. FSSC 22000 has been recognized by the Global Food Safety Initiative and other schemes including SQF and BRI.”

However, M’Gee says that there is still the issue of global acceptance of one single international standard and the bigger issue of how to achieve global compliance in both developed and developing nations.

Shari Portnoy, a food labeling and food safety expert, says that food safety trends in restaurants and institutional foodservice organizations show that these sectors are taking food safety seriously. “One trend that I have noticed is that these organizations are cooking less on premises. Many items are now coming in par-cooked, frozen, or already cooked to decrease possibility of food borne illness. The less food handling in house, the less chance there is of contamination,” Portnoy says.

FlanyakScientific52, a food consultant, says that innovations can take on a number of different faces from new products to product improvements to marketing strategies. “I have seen a decrease in new products because of the economic situation, yet a forceful movement to placate the household’s of the world. The struggle between what’s good for you and what’s bad for you continues,” he says. “A series of examples are the high fructose corn syrup versus sugar situation and the decrease in salt content in many foods. Fiber increases have moved to the forefront for a number of health reasons. Food safety, however, is one major issue since the recent E-coli outbreaks in Germany. One problem in the US is that the FDA is being provided with little funding to take on such as large task.”

Scott Sanders, a food scientist, says that the Global Food Safety Initiative (GFSI) has planted deep roots, and the British Retail Consortium (BRC) and Safe Quality Food (SQF) audit schemes are clear winners. “Time will tell whether there will be any measurable increase in food safety as a result. GFSI auditors are not generally known to be experts in inspecting on a physical basis for existing potential food safety hazards. Rather, they usually tend to look at current and historical records,” says Sanders. “You will not see GFSI inspectors open equipment or climb on silos for inspection. Manufacturing operations would be missing a large piece of the puzzle in ignoring these aspects as a part of their program. Unfortunately, many seem to be.”

Sanders says that although natural has no official definition in the legal food realm, companies continue to develop natural foods. “They tend to avoid ingredients that consumers regard as preservatives or chemicals or artificial, and also tend to avoid high fructose corn syrup (HFCS),” he says. “There is a big fight right now going on between the sugar folks and the HCFS folks. The HFCS folks advertise that their product is as natural as sugar.”

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What effect will ending ethanol subsidies have?

By Maureen Aylward

With the US Senate taking aim at ending ethanol subsidies, change may be ahead for the ethanol industry. Will ending these subsidies have an effect of the industry? How does the possibility of this action affect global markets? Our Zintro experts help to answer these questions.

R. Santhanam, an expert in biofuels from waste, agrees that ending the ethanol subsidies will remove the bottom line from the ethanol industry based on the US Midwest Corn Belt. And, it may open the door for a new generation of biofuels. “It is possible to manufacture second generation biofuels called cellulosic ethanol. The key issues are the cost of manufacturing, process efficiency, energy, material balance, and overall cleanliness of the process, which should not add to pollution,” says Santhanam. “One such process developed in India has yielded 300 liters of anhydrous fuel grade ethanol from one metric ton of biomass wastes like rice and wheat straws. These technologies require no subsides.”

Amarjit Bakshi, president and CEO of Refining Hydrocarbon Technologies LLC, says that it has been debated for a long time to end subsidies. “This is expected due to the US debt,” says Bakshi. “Stopping the subsidies may have some effect on corn prices as corn investors, ADM, and others, such as oil companies, will think twice before investing in ethanol from corn plants.” He says that this action may slow expansion of new plants, possibly putting less pressure on corn. The US government is still funding research in cellulose to ethanol and algae to biofuels, says Bakshi, so this area will continue to see growth until the major problems in this sector experience progress.

Greg Benz, an expert in fluid agitation for bio/pharma and biofuels, says that unsubsidized ethanol can compete with petroleum on an equal energy basis at a petroleum price of $80/bbl. “The trend of petroleum pricing may be two steps up, one step back, but crude prices are not going to go below $80/bbl except for brief intervals, and the long-term trend will be to stay above $100/bbl,” says Benz.

Dr. Rossano Gerald, DBA, an expert in supply chain management, cites a recent Wall Street Journal article that says most ethanol lobbyists are against tax incentives that do not help the industry increase market shares by allowing a buildup of infrastructure, such as refineries and gas stations where products can be sold.

In addition, Gerald points out that even if the current ethanol’s tax credit was not in place, ethanol would still provide a profit margin close to .31 cents per gallon. “Most marketing research analysts have predicted that the world’s ethanol fuel demand is expected to increase up to 20 billion gallons by 2012,” says Gerald. “These economic factors are driving the demand for ethanol fuel, which include: soaring oil prices, tax incentives, improved technology that lowers production costs, and national energy security concerns. I believe that ending the US ethanol tax incentive will affect the global market because the above mentioned economic factors are influenced by geopolitical policies that are hard to predict.”

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The demand for minerals

By  Maureen Aylward

We turned to our Zintro experts to find out about how the demand for minerals is changing the face of the mining industry.

Nirmalendu Bandyopadhyay, an independent consulting engineer, says that global demands for minerals like iron ore, coal, limestone, dolomite, bauxite, galena, azurite and cuprite, nickel, chromium, and manganese ores are skyrocketing due to increasing requirements in steel, power, aluminum, zinc, copper, cement, and base metal industries. “Two highly populated countries, such as India and China, have over one billion people, and they are having sustained growth in annual GDP in the region of 8 to 12 percent. This puts a huge demand on these metals,” says Bandyopadhyay.

As a result, new plants are being set up where these minerals and finished products are consumed. “The per capita steel consumption in India has reached around 50 kg in 2009, up from 11 kg in 2005,” he cites. “The Compound Annual Growth Rate (CAGR) in the steel sector in India is around 15 percent and increasing. In China, the figures stand at 250 kg per capita and 25 percent in CAGR.”

Bandyopadhyay says that rapid industrialization in developing countries has jacked up the requirements for power, hence the need for coal and other fossil fuels. Strict regulations on greenhouse gas emission from these industries, under the Kyoto Protocol, are compelling industries to set up environmental control systems that require the use of plants and machinery where metals are used.

“The contribution of agriculture towards GDP growth is considerable for all countries the world over. This is to feed the increasing population, especially in the developing countries. The demands for steel and other metals for agricultural machinery, pumps , pipes, and storage silos are resulting in an increase in the minerals requirement in the agriculture industries,” says Bandyopadhyay. “Thus, the upswing in the demands for minerals will continue in the years ahead as these are directly linked to the GDP growth of every country.”

Another area where the demands for minerals like bentonite, barites, and oleo chemicals are increasing is in the oil and gas industries, which are expanding to meet the requirements for conventional energy resources.

Bandyopadhyay points out that the nuclear power industry is experiencing a downward spiral due to high initial capital cost, requirements of highly skilled and trained operating personnel, supply of fuels by limited countries, and the extremely strict regulations. “Consequently, mostly developed countries have nuclear plants, but they are switching over to conventional and renewable energy resources. The demands for radioactive minerals like uranium, thorium, and monazite is falling and will continue until new, safe technology makes nuclear power plants attractive,” says Bandyopadhyay.

Daniel Alamanda Phil, an expert in the cement and minerals processing industry, says that the demand for minerals and mining is increasing. “As nanotechnology has arrived at the application stage, I find that many materials are being absorbed. Most of the waste material is converted to active and presentable forms,” says Phil. “More precise and selective mining uses high value techniques, mapping, beneficiary processes, radio navigation of vehicles and equipment, and 3-D models. However, there are some drawbacks, such as depletion of mines, political interventions due to ethnic, ecological, and environmental issues.”

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Global food prices are rising. Zintro experts explain.

By  Maureen Aylward

Oxfam reports that global food prices are accelerating, a trend that will continue to add to the global food crisis. Oxfam predicts that climate change will be a contributor. Zintro experts provide their explanations for what they think is behind the rise in global food prices and if there are ways to secure the global food supply.

Marketlinks, a Mexican company that provides fresh produce to Europe, says the reasons behind global food price increases are climate change and fuel prices. “Changes in weather conditions are affecting production sites and markets,” she says. “Production sites are suffering from flooding and drought. Plagues and diseases are an increasing threat. Floods spread diseases in plants and animals. Droughts cause cattle to die and losses in harvest areas globally.”

Marketlinks says that financial and material losses for climate events imply extraordinary costs for farmers and industries; time of recovery and reduction of supply are also consequences.

Oil and gas prices increases have hit the food prices hard, says Marketlinks. “Agrochemicals are a product made from crude oil (fungicides, pesticides, herbicides). If oil prices increase, agrochemicals prices increase,” she says. Logistics, distribution, and transportation of food products around the globe have been affected by oil and gas prices. Transport prices have increased to levels that strap small farmers so they do not reach the market and may loose their harvest. “These circumstances have contributed to the bankruptcy of small farmers around the globe, affecting local distribution and supply of food products in the long term,” says Marketlinks.

sivaNPD, a food technologist, says that climate change has always been a factor for agricultural production: sometimes a good harvest, sometimes a poor harvest. He cites global market dynamics related to the politics of food. “We saw this recently when Russia suffered wheat production issues due to crop diseases,” he says. “This impacted global supply and increased in prices.”

sivaNPD says that while India has its share of food-related internal problems, such as lack of sufficient infrastructure for storage, hoarding, corruption in distribution, inefficient food grain management resulting in rot, and infestation these factors did not contribute to global food prices rising. “India does not depend on exports or imports of food grains. We have a problem of surplus, and we are unable to manage the produce,” he says. “Interestingly, when a food price increase happens, emerging economies are blamed for consumption. Food produced by emerging economies is consumed within those countries.”

Alexander Bryukhanov, a market research analyst, says that a combination of two strong trends is behind the rise of global food prices: population increase and agricultural productivity in developing countries has slowed. “Population keeps growing at unprecedented rates. Food consumption varies from country to country. And in the developed world, the population consumes tons of food per person and throws a large share of produce to waste,” he says.

In the developing world, production has slowed and this adding to food price increases. “Agricultural productivity in developed countries has slowed. In the 20th century, continuous introduction of irrigation, agricultural machines, fertilizers, genetically modified crops, new breeds of livestock and so on, helped to increase yield and productivity. Today, many of these growth accelerators have reached their limits,” says Bryukhanov. “And, agriculture in developing countries is behind modern technology; therefore, its productivity less.”

Stanley Dyrkacz, a food industry executive, thinks that the changes are driven by choices, not circumstances. “The diversion of corn towards ethanol production has had a huge impact on food prices,” he says. “The competition for land between people and farming is expanding, and with global populations exploding it becomes complicated.”

Christina Bays, a food service broker, says that climate changes and the reduction of small regional farms are two factors contributing to global food prices. The manipulation of commodity pricing in the stock markets is another. “I believe the way of the future should be reverting corporate farms back to smaller regional farms,” she says. “Neighborhood farms and cooperatives that grow what an area needs will help to reduce pollution from trucking or shipping. Local areas could create solar and water collecting abilities with smaller local farms to reverse negative impact on farms from pollution.”

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Impact investing is gaining traction and believers

By Maureen Aylward

One of the fastest growing asset classes in institutional investing is impact investing. We asked our Zintro experts to tell us what they see as the real potential of impact investing.

Gordon Upton, an expert with 30 years experience in corporate and project finance, impact investment, and venture and capital markets, says that the challenge facing impact investment right now, despite growth in the supply of impact investment capital and the increased demand for it, is that there is only a trickle of capital flowing from investors to actual projects. “Established financial services providers generally believe that all capital should either be invested to maximize profits, with little or no regard for social or environmental effects, or simply donated to charity to maximize social or environmental returns. These beliefs do not serve impact investors,” says Upton.

Upton points out that the absence of effective market mechanisms, such as market clearinghouses, rating agencies, and syndication facilities seriously hamper investment. “On the supply side, high sourcing costs and lack of information, especially on social returns, leave potential impact investors wary of entering the field,” he says. “On the demand side, fragmentation of investment supply together with the inability to syndicate start-up and expansion finance opportunities, sets off an inefficient capital sourcing process that stifles the launch and expansion of new projects.”

The opportunity is to build a system that will allow impact investment to flow into broader areas of public interest, such as agriculture, provision for basic services, energy, housing, and healthcare in emerging markets. This will enable the impact investment movement to expand opportunities and ensure the shared benefits of globalization. “Impact investment can create and maximize value by blending corporate social responsibility, social enterprise, social investing, strategic and effective philanthropy, and sustainable development while addressing the cross-cutting issues of capital, performance metrics, leadership, organizational development, public policy, and tax and regulatory questions,” explains Upton.

Bulankov, a financial advisor and planner in investment and asset management, says certain investment strategies that were once the exclusive prerogative of select ultra-high-net-worth families and institutions are now making their way to Main Street. “Nowadays, most any investor with as little as $5,000 can establish a philanthropic fund through a donor- advised vehicle, invest in a socially responsible way, or provide micro-loans through the internet,” he says. For those not content with purely philanthropic pursuits, impact investing is the next logical step in this evolution.

“Voting with your wallet is taking a whole new, quite literal meaning,” Bulankov says. “It is only logical that an area that allows investors to align their values and desires for good with their desires for gain is one of the fastest growing areas.” He believes that impact investing gives the investor an avenue to lobby and further the cause that the investor deems worthy by putting money behind that cause, knowing that the full investment due diligence and analysis has been performed and there is no need to sacrifice gain to do good. “In my opinion, this is a very strong driving force behind impact investing, a force that may propel the industry to grow tenfold over the next decade,” Bulankov predicts.

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There is a lot going on in aquaculture

By Maureen Aylward

We have found that Zintro has many experts who are interested in aquaculture and want to share their expertise; after all it is a new and growing field that has its challenges and opportunities. We asked our aquaculture experts about what they think are the critical issues facing the aquaculture industry today and the top solutions that are surfacing to tackle these issues. Here is what they had to say.

Stephen Newman, PhD, a well-known global expert in aquaculture, thinks that aquaculture is the last wave in the shift from hunting to an agricultural paradigm. “It is a complex practice involving hundreds of species in many different ecosystems,” says Newman. “Whether land, ocean or lake, pond, open or closed system, there are many challenges that must be overcome for aquaculture to be sustainable and ensure that humanity will reap the rewards of this source of high quality nutrients”.

Newman defines aquaculture as the cultivation of plants and animals in water, and it has been growing at a phenomenal rate for decades. It has not been without its detractors, and the path upward has not been a consistent process with different species showing significant variability. “While the overall trend is towards increased production, several factors are impacting this progress,” says Newman. He says that there are three primary issues.

  • The first is sustainability. “What this means is a source of considerable debate, but simply put, it means that the practices of today must not diminish the ability of the industry to flourish and meet an ever increasing demand in the future,” says Newman. “Practices that allow environmental damage to occur or diseases to proliferate are not consistent with long-term economic viability and are not sustainable. While there are organizations developing standards that link certification with sustainability, the truth is that what is occurring in the field is not truly sustainable.”
  • The second issue is that some non-governmental organizations (NGOs) criticize aquacultural practices by making generalizations about specific sectors and apply them to the industry as a whole. “In some instances NGOs advise buyers, and buyers may develop unrealistic expectations about the nature of the process and end products,” says Newman.
  • The third issue is disease control. “There is no sustainability without disease control, and when standards fail to adequately deal with these issues, aquaculture practices are not sustainable,” says Newman

Newman says that the solutions to these issues are linked.

Disease management programs: “Certification programs, best aquaculture practices, general accounting procedures, codes of conduct, and so on must take into account the impact of disease and actively require proactive disease management programs that consider all of the elements needed to ensure that disease is not going to impact operations,” says Newman. “China,Vietnam, andIndonesia are currently experiencing serious disease problems, even on certified farms, because of inadequate disease management programs.Thailand, on the other hand, through government programs and a concerted effort on the part of some major players in the industry, is successfully dealing with disease problems.”

Proactive disease management programs are programs must address the underlying causes of disease, not just what is fashionable or immediately relevant. “The best example of this is that companies that routinely stress animals as a common element of cultural practices experience lower survival rates and poorer overall productivity because of it,” points out Newman. “Yet, these companies fail to take the steps needed to improve culture conditions because of cost and the failure of companies that demand certified product to pay more for certified products.”

Disease is normal in any intensive agricultural process and considerable effort must go into proactively managing disease. “When and if the consumer is willing to pay a modest premium for seafood that meets the desired criteria, it will be easier for many aquaculturists to justify the costs of disease prevention programs,” says Newman.

NGOs should focus on real issues: Newman says that Some NGOs that criticize the aquaculture industry claim that the worst case scenarios represent the norm. “Many NGOs still stick to non-issues, such as the use of fish meal and oil in feeds, and try to link this to overfishing and other issues that the facts just do not support,” he says. “Some NGOs are beginning to move toward moderation and perhaps may eventually see that they have a common goal with the producers.”

Certification programs need input: “Most certification programs are flexible enough to evolve with time, provided the proper input is there,” says Newman. “Widespread understanding of the critical role that exportation of seafood plays in many government economies is needed and this will result in tighter regulatory controls that could eventually lead to true sustainability practices.”

Patrick Wood, an expert in the seafood and aquaculture industry, says that aquaculture is a relatively new endeavor in the Western hemisphere. “Getting the right risk-free species that are market successful is important,” he points out. “Salmon, shrimp (vannamei), and tilapia are now domesticated, which helps lessen dependence on external factors and creates a basis for further enhancements.”

Wood says that the major critical issues are the same for any other growth industry: money. In addition, he recognizes the following other issues:

  • Access to funding for capital expenditure, operational costs, trade finance, and seed (larvae) and feed;
  • Suitable species for aquaculture and genetic developments;
  • Disease management;
  • Routes to market; and
  • Innovation and application of new technologies.

Wood says that some potential solutions include the consolidation of businesses to develop the industry and addressing the needs of financing specific to the industry. “Market demand is happening with explosion of Southeast Asia’s middle class that has purchasing power, which includes eating seafood,” says Wood. “Prices are rising and fisheries cannot supply shortfall and capital needs to flow into the industry.”

Bill Manci, a consultant that specializes in aquaculture and fish farming projects, says that most of the fish and seafood that we directly consume today is now produced at aquaculture facilities. “Aquaculture faces some important challenges, but the most pressing are the cost of feeds, the ability to manage disease, and the availability of water and land for aquaculture production and expansion,” he says. “Aquaculture is how the majority of our fish will be produced in the future, saving wild populations from overexploitation.”

Manci points out that in many cases, feeds are the most expensive cost component in aquaculture, primarily because of raw materials costs, such as fish meal and fish oil. “Governments and private scientists are developing alternatives to fish meal and fish oil at lower cost and preparing them in facilities that are more biosecure than could ever be expected from the wild populations of fish used to produce these products,” says Manci.

Manci says that rather than fighting disease episodes with antibiotics, which can linger and potentially harm people and the environment, aquaculture managers are using probiotics (i.e., beneficial bacteria), vaccines, and benign compounds that stimulate fish immune systems. “Probiotics crowd out disease-causing organisms and promote good health. Vaccines prevent infection and immunostimulants allow fish to manage their own health,” Manci says.

“As water and land become scarcer and more valuable, aquaculturists have taken steps to make facilities smaller and more efficient,” explains Manci. “Re-circulating aquaculture systems grow fish at high densities and require less space and water to operate. Fish are reared in tanks and in water that is used, filtered to remove wastes and replenish oxygen, and then reused by the fish. In some cases, the wastewater from these systems is directed into greenhouses for the production of flavorful lettuce, tomatoes, and vegetables and flowers. This process called aquaponics is very popular and facilitates production in compact facilities near major markets, producing locally grown food.”

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