Fortunes diverge in aquaculture in H1 2024

Rabobank’s latest half-yearly outlook for global aquaculture shows that salmon producers have much to look forward to, while the outlook for shrimp farmers is more challenging.

The latest edition of Rabobank’s biannual Global Aquaculture Update, published this month and covering the first half of 2024, suggests the outlook for the sector’s two main areas of production is decidedly mixed.

On the upside is salmon, which is again forecast to be aquaculture’s most profitable segment in H1 2024.

Salmon saw very high prices in the first half of 2023 – and while Rabobank predicts this will not quite be repeated this year, still-strong pricing combined with marginally lower feed costs and lower biological costs should support strong profitability for operators.

Growth in supply of salmon will return this year but it will be modest, meaning that good demand for the fish in Europe, the US, Japan and other markets will help prop up prices.

Salmon aquaculture has long been a sector that has attracted significant private capital interest (see deals and fundraises in LatAm, the US and Asia for examples, or the battles over Australia’s listed salmon farmers as evidence). This looks set to remain an attractive sector for the foreseeable future.

On the other hand, shrimp farmers are facing a tougher year, Rabobank predicts.

While the bank expects to see a recovery in US demand for shrimp in H1 2024, demand from Europe and China is expected to be softer this year than in 2023.

China, interestingly, was the main driver of demand last year and absorbed a large part of growth in farmed shrimp supply from Ecuador.

Rabobank said much of this was speculative, as buyers expected strong demand as the country reopened after long coronavirus-induced lockdowns. This did not eventuate as expected, so while ordinary levels of demand from China should not decline, there is not expected to be speculative buying on the same scale.

All this means that lower prices seen for shrimp in the last few years are likely to persist, such that Rabobank even suggests that “the low price is becoming a new normal.”

There have been some high-profile projects in shrimp aquaculture that have experienced significant challenges in recent years, most notably in Asia with the ongoing saga over Project Sea Dragon in Australia’s Northern Territory, and lack of certainty over pricing will make progress even more challenging.

Some investors clearly see aquaculture as a potential growth sector – but even though it might appear akin to controlled environment agriculture in some respects (especially when it is conducted on land and in enclosed facilities), challenges persist and producers are still exposed to withstand global pricing fluctuations.

Decarbonization trends are also a tailwind for the sector, as we explored last year, so expect to see more activity in the space this year.