Each spring brings the start of a new hatchery season in US aquaculture. The spring also brings the release of trade data by the US Census Bureau, so once again we take a look at the seafood trade deficit (where imports exceed the exports) and how these figures compare to other trade categories. This year, not only do we take a look at the seafood trade deficit, but also describe an example of how the global food market has greatly changed another U.S.-grown product, which could indicate a potential impact on domestic aquaculture production.
The 12 years of trade data we have has enabled us to employ a basic regression analysis. When we completed the analysis in 2011, we found a strong negative correlation between time period and seafood trade deficit value in US$. That equation predicted a deficit value of $10.82 billion projected value for 2012. The actual value in 2012 is a deficit of $10.96 billion, which grew slightly less than 1% to from the previous year. The regression including the actual 2012 value remains significant (P = 0.000) and the R2 is 0.934. The seafood category also maintained its rank at #17 among all deficit-contributing categories in the U.S. Census Bureau data set.
To give some perspective, the overall trade deficit of $728.9 billion, grew only 0.21% over previous year. (00190) Wine and Related Products ($7.029 billion) captured its former spot as the second largest trade deficit contributor after being displaced by (00000) Green Coffee in 2011. Surpluses in (22090) Civilian aircraft, engines, equipment, and parts exceeded the (00200) Feedstuff and Food-grains category. The (10000) crude (crude oil) deficit declined 5.81% as the deficit in (10110) Gas-natural declined 40.7% in 2012, after a 75.1% decline in 2010-2011. The numbers in parentheses are the five digit NAICS codes of these respective trade categories.
However, one large jump in a surplus caught our attention. In no food category do we see a larger increase in the trade surplus than in (00140) Nuts and preparations. The trade surplus of this category grew 27.89% since last year. This statistic brought to mind an article read earlier this year on the interest in US-grown pecans by Chinese buyers. In one example, an entire U.S. farm’s annual production of pecans was purchased by Chinese buyers in advance with 25% cash down-payments. This cash availability lured some pecan growers away from U.S. processors who began selling their pecans to Chinese buyers who either process it abroad or sell the nut whole. 20% of U.S. pecan production is now processed in China.
The pecan case shows that foreign middle-class customers with growing affluence demand health benefits (both real and perceived) from premium products. Within the small amount of promotion and marketing that U.S. aquaculture products receive, health benefits of seafood consumption are common marketing messages. In addition to the nutritional health benefits, the United States’ environmental regulatory standards for feed ingredients, aquatic animal health, water quality monitoring and transport and sanitation regulations governing the production and handling of U.S. aquaculture products exceed those of foreign countries with a rapidly growing middle class who demands these health and safety attributes. The concerns for food safety and health add another dimension to potential interest in U.S. aquaculture products that are not an aspect seen in the pecan case.
Given that pecans which topped $470 million in 2012 are a larger sector than any particular aquaculture sector, industry value would not be a barrier to foreign buyers looking to the U.S. for seafood products that meet the criteria as healthy and safe products that deliver on value. Catfish growers for example produced $341 million of product in 2012 down from a record high of about $650 million in the mid-2000s. And production of bivalve molluscan shellfish has grown from $243 million figure reported in the 2007 Census of Agriculture, and could exceed $300 million when the 2012 Census of Agriculture figures are reported in early 2014.
As noted before, there is a stark contrast between growing trade surpluses in terrestrial agricultural products, while products of aquatic origin show a perennially growing deficit. There was a wealth of research presented at the Aquaculture America conference, held this past February in Nashville. The growing surplus on the terrestrial side illustrates the tremendous capacity the United States has to grow its position as a global food provider. The limitations for the U.S to become a major aquatic agriculture producer are not rooted in the scientific or technical challenges to fish and shellfish production. The wealth of research presented at the Aquaculture America conference, which was held this past February in Nashville is a perennial exhibition of the know-how of hundreds of aquaculture scientists in US government and academic institutions. The inability of U.S. aquaculture to grow to the point where we see a change in the seafood trade deficit are instead rooted in other areas such as financial, economic and policy barriers.
Considering robust foreign cash reserves, a relatively weak dollar, declining U.S. seafood consumption, products are a result of high quality and safety infrastructure and similar cases of foreign cash flow into in U.S. agriculture sectors, it is plausible that interest by foreign buyers may be the catalyst to growth of the U.S. aquaculture industry and we may see a reversal of the current trend in the U.S. seafood trade deficit. Growth in U.S. aquaculture has long been predicted but actual production has at best remained flat. It will be interesting to see whether any foreign interest in U.S. produced seafood push the U.S. aquaculture industry beyond those non-technical barriers.
Joseph J. Myers, MS, MBA, PMP®
Aquaculture Development Specialist
Office of Aquaculture Coordination
Division of Agricultural & Natural Resources
New Jersey Department of Agriculture
PO Box 330
Trenton NJ 08625-0330
Phone: (609) 984-2502