Aquaculture White Paper No. 3
NRAC Publication No. 03-003
Aquaculture Marketing Analysis and Opportunities
in the Northeast Region
September 2003

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Table of Contents
Introduction
1
The Global Aquaculture Industry
4
The U.S. Aquaculture Industry
7
U.S. Aquaculture Imports and Exports
9
U.S. Consumer Characteristics
9
Northeast Region
15
Marketing Considerations – 4 P’s
18
Product
18
Price
19
Place (Distribution)
20
Promotion
26
Aquaculture Product Trends
27
Atlantic Salmon
27
Artic Char
32
Baitfish
32
Biotechnology
32
Catfish
34
Hybrid Striped Bass
36
Tilapia
38
Trout
40
Crawfish
41
Hard Clams
41
Mussels
43
Oysters
44
Remediation
48
Seed sales
48
Ornamental Fish and Plants
49
Market Trends
50
Opportunities
53
Questions to be Answered
53
Areas of Concern from a Marketing Perspective
54
Areas for Future Research
55
Industry Feedback
55
References
56
Appendix
60
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INTRODUCTION
Aquaculture has been labeled the Blue Revolution. It represents one of mankind’s biggest
hopes for generating affordable protein for an ever-increasing population. Much is known
about how to grow fish and shellfish. In comparison, little is known about the economics
of production and marketing. It is the purpose of this White Paper to document where the
industry stands with regard to current marketing practices and to provide insight into
what needs to be done, again from a marketing perspective, to increase the
competitiveness of the industry and the profit levels of the farmers. With the
globalization of markets, the ability to remain competitive through a variety of strategies
including niche marketing, product identification, quality standards, and new product
introductions is critical to success and survival.
Our focus will be on the marketing practices and conditions faced by growers in the
Northeast Region as defined by the U.S. Department of Agriculture. The region includes
Connecticut, Delaware, Maine, Maryland, Massachusetts, New Hampshire, New Jersey,
New York, Pennsylvania, Rhode Island, Vermont, Washington D.C., and West Virginia.
According to the 1998 census of aquaculture in the U.S., the Northeast Region contains
436 farms with total gross sales of approximately $122 million, which account for 11
percent of all U.S. aquaculture firms and 13 percent of total U.S. aquaculture sales
(NASS, 1998).
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Characteristics of the Northeast region are somewhat unique and lend themselves to
mariculture more so than freshwater aquaculture. Overall, seafood raised in marine and
brackish water accounted for 284 million pounds of U.S. aquaculture production in 1998
(FAO, 2000b). The following table summarizes the contribution that aquaculture makes
to each state within the region. Unfortunately, the Food and Agriculture Organization
projects only a one percent growth in U.S. aquaculture production over the next twenty
years.
NRAC Aquaculture Production 1998 NASS Census
State
# Farms $ Millions Avg/Farm
Rank
Connecticut
23
17.6
765,217
2
Delaware
6
n/a
n/a
n/a
Maine
65
66.6
1,024,615
1
Maryland
52
14.8
284,615
3
Massachusetts
111
5.94
53,514
7
New Hampshire
8
0.8
100,000
6
New Jersey
28
5.79
206,786
4
New York
54
1.83
33,889
8
Pennsylvania
51
7.63
149,608
5
Rhode Island
3
n/a
n/a
n/a
Vermont
8
0.16
20,000
10
Washington, D.C.
n/a
n/a
n/a
n/a
West Virginia
27
0.69
25,556
9
Total
436
121.84
279,450
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The aquaculture industry in the Northeast is comprised of mostly small to medium-sized
companies usually operated as “mom and pop” operations. There are a few large salmon
farming operations and some dominant shellfish companies.
In an effort to quantify the scale of operations, the team looked at several different
classification schemes. On a national basis, the United States Department of Agriculture
uses the following annual gross farm-gate sales classes in assigning a size category to
land-based agriculture: small-less than $19,000; part-time $20,000-$99,000; moderate
$100,000-$199,999; large $200,000-$499,999; and very large $500,000 and over. It is
interesting to note that the categories are so broad, and that there is no distinction
between gross and net sales in the USDA categories.
Some Northeast producers felt that the following categories were appropriate: small-
under $100,000; medium -$100,000-$300,000 and large-over $300,000. Depending upon
species and culture system, it was felt that a minimum gross sales of $100,000 would be
necessary for this to be a full-time occupation. In any case, in establishing any
categorization applicable to the Northeast, increased production costs including
regulation, utility, land and labor must be factored into the equation.
On a national basis, NRAC developed the following segmentation scheme: hobby-
$1,000-$24,000; small-$25,000-$99,999; medium-$100-$999,999; and large $1,000,000
or more. Under this scheme, very few operations would be considered large scale.
In the urbanized Northeast, we have estimated that a facility would have to gross at least
$100,000 to be a full time employment. For this reason, we opted to follow the USDA
categories.
The average gross sales for each state reflect the products produced by that state.
Massachusetts has the most aquaculture businesses in the region (n=111) while Maine
has the highest dollar volume of sales ($66.6 million). Maine’s largest aquaculture
product is salmon. Salmon farming produces the second most valuable ocean crop in
Maine (Boch, 2003), the first being Maine lobsters (commercially harvested).
Connecticut is the leading producer of clams and oysters on the East Coast, growing from
54,000 bushels in 1982 to 146,000 in 1992 to 290,000 in 2002 and is now a $10 million
industry with most product going to New York City and Boston (Gustin, 2003). And
many are betting that Connecticut’s shellfish industry has ample room for expansion: The
Mohegan Tribe has committed $7 million to a shellfish hatchery and aquaculture program
in Connecticut (Johnson, 2003). Not all states are reporting positive growth: The
Maryland oyster harvest was 50,000 bushels in 2002, down from 1.5 million in the
1980’s (Meyer, 2003).
Growth is feasible for the region, however it may be limited by access to adequate
mariculture environments and increased government regulation of aquaculture. In
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Massachusetts, on average, six new businesses apply each year for aquaculture access in
state waters (Daley, 2003). Because of population density and real/perceived user
conflicts, the Northeast aquaculture industry is one of the most regulated anywhere in the
world. The major marketing challenges faced by the industry include: 1) development of
cost-efficient production systems, 2) meeting foreign competition, 3) addressing negative
perceptions of farmed seafood and 4) public concerns about environmental degradation.
Unfortunately, there is very little data available on the United States aquaculture industry
and indeed on the entire seafood industry. Often, because of the small size of the
reporting sector, data is protected by confidentiality. We have tried to compile data from
a number of different sources to arrive at some projected trends especially in terms of
supply and price.
To make price projections and analyze trends, the team relied on pricing and sales
information available from Fulton Fish Market in New York, Urner Barry market reports
and United States Customs reports. The Fulton Fish Market information is based on a
voluntary reporting system and is not as complete as might be hoped. However, it is one
of the best sources of information on movement into and out of the New York
metropolitan market.
This White Paper is organized in a drill-down structure, progressing from the broader
global market for aquaculture products to the U.S. market and finally to the northeast
market. U.S. consumption and consumer characteristics are contrasted with regional
consumption and consumer characteristics. An examination of marketing factors (also
known as McCarthy’s four P’s which stand for product, price, promotion and place) for
the Northeast is offered. Opportunities for growth/expansion are identified. This includes
examining national trends in the production/consumption of finfish and shellfish to allow
estimate future demand.
In addition to a brief analysis of the food fish market, the paper also provides background
on lesser-known opportunities such as production of baitfish, ornamentals and plants and
animals for remediation. Although there is little actual data about these sectors, they may
well represent the best opportunities for aquaculturists in the region.
The Global Aquaculture Industry
Dwindling fish stocks have made aquaculture more important globally (Fabricant, 2003).
Some estimate that more than 70 percent of commercial fish stocks are fully exploited,
over-fished or collapsed (Broad and Revkin, 2003). The world commercial fish harvest
has reached a plateau of 100-120 million metric tons with about ¾’s going to human
consumption. This amount hasn’t changed much over the past five years (Schmidt, 2002).
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Top 20 World Finfish & Shellfish Species
Thousand Metric Tons
2001
Species
1994
1995
1996
1997
1998
1999
2000
2001
rank
1
Pacific Cupped Oyster (Crassostrea
2,536 2,925 2,925 2,972 3,433 3,603 3,912 4,109
gigas)
2
Grass Carp (Ctenopharyngodon
1,821 2,104 2,440 2,727 3,023 3,313 3,427 3,636
idellus)
3
Silver carp (Hypophthalmicthys
2,219 2,553 2,878 3,239 3,331 3,403 3,470 3,546
molitrix)
4
Common Carp (Cyprinus carpio)
1,536 1,816 2,036 2,208 2,401 2,616 2,703 2,849
5
Japanese Carpet Shell (Ruditapes
1,169 1,148 1,156 1,315 1,474 1,870 1,694 2,091
philippinarum)
6
Bighead Carp (Hypophthalmichthys
1,076 1,257 1,418 1,555 1,587 1,611 1.639 1.663
noblis)
7
Crucian Carp (Carassius carassius)
390
538 693 863 1,036 1,239 1,379 1,527
8
Yesso Scallop (Patinopecten
1,026 1,145 1,265 1,257 856 929 1,133 1,196
yessoensis)
9
Nile Tilapia (Oreochromis niloticus)
426 520 624 732 766 879 1,034 1,109
10
Atlantic Salmon (Salmo salar)
375 465 552 647 688 804
891 1,025
11
Rohu (Labeo rohita)
423 473 566 687 647 719
743
834
12
Catla (Catla catla)
353 396 477 579 530 591
804
669
13
Tiger Prawn (Panaeus monodon)
559 566 540 483 505 550
619
615
14
Razor Clam (Sinonovacula
253
307
343
354
415
479
553
597
constricta)
15
Mrigal (Cirrhinus mrigala)
346 390 463 516 468 520
527
589
16
Beijing Bream (Parabramis
282
336
379
435
449
476
512
541
pekinensis)
17
Rainbow Trout (Onchorhynchus
335 365 385 427 438 415
448
510
mykiss)
18
Milkfish (Chanos chanos)
346
390
463
516
468
520
527
590
19
Blue Mussel (Mytilus edulis)
329 358 408 401 502 498
461
426
20
Ark Shell (Anadara granosa)
201 252 224 199 288 332
302
346
Data Source FAO 2002
*Table does not include kelp (Laminaria japonica) 4,170, 000 metric tons
It is interesting to note the discrepancies between the estimates of worldwide production
produced by various sources, illustrative of just how difficult it is to develop accurate
forecasts of supply and demand globally.
China produces 70 percent of the world’s aquaculture products, mostly for use in China.
Exports in 2001 totaled $550 million to the U.S., $600 million to Europe and $2 billion to
Japan (Chao, 2003). She is by far the largest member of the aquaculture food chain and
only one of a handful of countries who farm/grow more seafood products than are
generated by commercial fishing.
Many of the top species aquacultured worldwide are not even available in the United
States market.
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Top Twenty Species of Finfish and Shellfish Globally By Value 2001
(1,000 USD)
Common Name
Scientific Name
Value 2001
Tiger Prawn
Panaeus monodon
$4,722
Pacific Cup Oyster
Crassostrea gigas
$3,376
Silver Carp
Hypophthalmichthys
$3,176
molitrix
Grass Carp
Ctenopharyngodon idellus
$3,054
Common carp
Cyprinus carpio
$3,000
Atlantic Salmon
Salmo salar
$2,788
Japanese Carpet Shell
Ruditapes philippinarum
$2,477
Pink Spotted Shrimp
Panaeus chinensis
$1,850
Rohu
Labeo Rohita
$1,570
Yesso Scallop
Platinopecten yessoensis
$1,555
Rainbow Trout
Oncorhynchus mykiss
$1,472
Big Head Carp
Hypophthalmichthys noblis
$1,453
Nile Tilapia
Oreochromis niloticus
$1,439
Chinese Mitten Crab
Eriocheir sinensis
$1,432
Yellowtail
Seriola quinqueradiata
$1,302
White Shrimp
Panaeus vannamei
$1,133
Milkfish
Chanos chanos
$1,126
Crucian Carp
Carassius carassius
$1,075
Eel
Anguilla rostrata
$ 889
Beijing Carp
Parabramis pekinensis
$ 662
Data Source: FAO, 2003
The rapid growth of global population and the need to provide people with affordable
sources of protein place stress on food stocks. Fish currently makes up about seven
percent of the world’s food supply (USA Today, Nov. 4 2002). Given these conditions
(dwindling fish stocks and increased population), it is no surprise that aquaculture has
grown from 3.9 percent of total world production in 1970 to 27.3 percent in 2000 (FAO,
2002). In 2000, the industry produced 36 million tons of fish and shellfish and since 1990
has been growing at an average compound rate of 10 percent per year. Aquaculture is
most likely the world’s fastest growing form of food production (Economist, 2003: p.19).
According to a recent article in The Economist (2003), aquaculture’s promise is that
within three decades it could produce most of the world’s marine products (p. 9). The
same article classifies aquaculture into good forms and bad forms: good forms include
tilapia, scallops, mussels and oysters. The good forms feed lower on the food chain
consuming plant material. Tilapia may become the next “chicken of the sea.” According
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to the article, salmon and sea bass are bad forms: they feed on fish protein, the production
of which further depletes oceanic stocks and generate pollution (Economist, 2003: p.9).
These environmental considerations are becoming increasingly more important when
positioning aquacultured products in the marketplace.
This subjective classification is based upon the perceived impact that farming a species in
a mariculture or aquaculture environment has upon the general environment. Finfish
species that feed on other fish are perceived having the most negative impact on the
surrounding environment. Great strides in open-water mariculture, in general, and salmon
farming in particular have lead to record levels of salmon being sold worldwide.
The U.S. Aquaculture Industry
Over 76 percent of all seafood consumed in the U.S. is imported according to the
National Marine Fisheries Service (NMFS) totaling nearly $10 billion in 2001. Only
Japan imports more fish (Fabricant, 2003). Almost fifty percent of the fresh and frozen
seafood consumed by Americans is farmed (Economist, 2003: p. 19). The USDA figure
is around 45 percent (Harvey, 2002) of which shrimp, Atlantic salmon and Tilapia
imports were valued at $2.7 billion. The U.S. ranks third in national consumption and
fourth in total fisheries catch in the world (NMFS, 2000).
U.S. Fish and Seafood Trade Value 1993-November 2002
(Million US Dollars)
1993
1994
1995
1996
1997
1998
1999
2000
2001
Nov. 2002
Imports $5,849
$6,645
$6,792
$6,730
$7,754
$8,173
$9,014
$10,054
$9,864
$7,036
Exports $3,077
$3,126
$3,126
$3,262
$2,713
$2,260
$2,849
$2,965
$3,195
$2,663
Data Source: NMFS
Commercial landings in the US for 2001 were 9.5 billion pounds valued at 3.2 billion
dollars, 87 percent of which were finfish (NMFS, 2002). Edible fish and shellfish
landings totaled $7.3 billion in 2001 (NMFS, 2002). U.S. demand for edible fish and
shellfish was down six percent from 2000 levels.
Recent estimates put the seafood trade deficit at nearly $10 billion (Jamir, 2002), making
it one of the largest areas of trade imbalance faced by the U.S.
The aquaculture industry in the U.S., dominated by freshwater catfish, generates about $1
billion annually (Goldburg et al., 2001). The bulk of U.S. production in freshwater
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aquaculture is located in the southeast region. Despite the extent of coastal access in the
United States, growth of marine aquaculture has been slow (Goldburg et al., 2001).
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Document Outline

• NRAC Aquaculture Production 1998 NASS Census
• The Global Aquaculture Industry
• Top Twenty Species of Finfish and Shellfish Globally By Value 2001
  • Cyprinus carpio
  • Salmo salar
  • Ruditapes philippinarum
  • Panaeus chinensis
  • Labeo Rohita
  • Platinopecten yessoensis
  • Oncorhynchus mykiss
  • Hypophthalmichthys noblis
  • Oreochromis niloticus
  • Eriocheir sinensis
  • Seriola quinqueradiata
  • Panaeus vannamei
  • Chanos chanos
  • Carassius carassius
  • Anguilla rostrata
  • Parabramis pekinensis
    • • • • • • Data Source: NMFS
  • Expenditures
    • • • • • • Data Source: USDA
• United States Annual Per Capita Consumption by Species in Pounds
• Tuna 2.90
• Pollock 1.21
  • • Northeastern Market Structure Survey
    • To gain a more complete understanding of the market dynamics operating in the Northeast aquaculture industry, the White Paper Team contacted knowledgeable individuals throughout the region. This technique provided insights into the market viewed from thr
      • • Product
• Baitfish
  • Crustaceans
  • Mollusks
    • • • Atlantic Salmon
  • World Farmed Salmon Production 2000
    • Norway
• Total 1997 Supply
  • • • • Farmed Atlantic Salmon Imports
    • Fresh Fillets
    • Fresh
• As illustrated by the chart below, both the production volume and the sales volume of salmon have been increasing over the past six years. But as discussed earlier, supply will exceed demand by 2010.
  • • • • Arctic Char
        • Baitfish
    • Biotechnology
      • • Catfish
• Product
  • • • • Hybrid Striped Bass
          • • • Hybrid Striped Bass Price Fulton Fish Market January 2002-December 2002
• Trout
• Farmed Rainbow Trout Imports
  • • • • Crawfish
        • Hard Clams
          • • • January-November 2002
• Frozen/Dried/Salted/Brined
• Subtotal
• Subtotal
• Grand Total
  • • Oysters
• New York Customs District
  • Subtotal
  • Subtotal
  • Subtotal
  • Subtotal
  • Grand Total
• Shell Oyster Prices
  • • While overall production and industry earnings have declined over the past six years, the outlook for oyster demand remains strong. Northeast producers have an opportunity to supply oysters for the entire U.S. market and to export oysters to other market
    • Remediation
    • Plants and animals for remediation and other environmental applications might be a lucrative area for Northeast growers. With growing concerns about depleted oyster stocks and need to improve water quality, oyster gardening has become popular in several
    • Shrimp
    • Ornamental Fish and Plants
    • Northeast Aquatic Ornamental Plant Industry
    • Retail Trends
    • Foodservice Trends
    • Buyer Trends
      • • APPENDIX

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