The food and agribusiness research and advisory division of the Dutch bank, in a report published this month, predicted tilapia production to jump by 10% a year, surpassing 490,000 tons by 2020.
This would make Brazil the fourth largest tilapia producer globally after China, Indonesia and Egypt.
Much of this expansion will be supported by rapidly expanding Brazilian grain production, concluded the authors.
The report said one of the main reasons for the growth trend in the tilapia sector has been associated with its low feed conversion ratio (FCR), which is around 1.4 compared to the FCR of 1.8 for poultry in Brazil according to the Brazilian Agricultural Research Corporation (EMBRAPA).
Rabobank said that locally produced tilapia can be a cost-competitive protein, with the authors noting that due to its low capital requirement and limited technology input, small and medium size farmers in Brazil can generate a 20% profit margin on rearing such a species.
The state of Paraná, in southern Brazil, is the main tilapia producer, representing around 25% of national production.
Leading international players getting involved
The authors point out that not only is the increasing sophistication of local players driving the speed of development of the industry, the arrival of leading multinationals is accelerating growth: "Nutreco, InVivo NSA, and Cargill, the three global leaders in aquatic feeds, are already present in Brazil. AquaGen, a leader in fish genetics and part of the EW Group, recently entered the Brazilian tilapia genetics industry by acquiring a local producer."
The entry of Regal Springs, the world’s largest tilapia farming company, may also help boost the sector, added the authors.
“Regal Springs is a Swiss owned, globally diversified and vertically integrated leader in tilapia aquaculture, and it has formed a JV with a local agribusiness group, Axial Holding, to create a tilapia farming operation which is expected to reach 100,000 tons over the next five years,” noted the team.
The researchers said in the medium term, the next stage of development for tilapia production in Brazil would be to enter the fresh fillet export market, while in the longer term, the report suggested Brazil might be able to compete with China in the frozen fillet market.
Globally, tilapia has emerged as the main industrially farmed freshwater aquaculture industry.
Highly traded, fairly easy to farm, sturdy with good disease resistance and requiring only a vegetable feed diet, tilapia is aquaculture’s version of poultry, according to Rabobank.
Frozen tilapia exports are dominated by China, while Indonesia and Latin American countries such as Honduras, Costa Rica, Ecuador and Colombia are successful exporters of fresh fillets. The US is the main importer.
Rabobank’s report also forecasts that annual production of tambaqui, a freshwater species native to Brazil, is projected to surpass 330,000 by 2020. Tambaqui has a higher cost of production to tilapia due to this FCR of 1.8 but the authors said it is easy to farm, is not that prone to disease and shows strong resistance to environmental changes.
The researchers suggested that lower production costs and better stocking rate can be generated through genetic improvement and by the development of specific feed for this species.
Brazilian shrimp sector: stagnation to success story?
The Rabobank report also evaluated the Brazilian shrimp sector, which stagnated for the past two decades after previously being one of the leading exporters globally, rivalling Thailand and Vietnam.
Ecuador is today Latin America’s largest shrimp producer but has only a small fraction of the land, coastal water and feed resources of Brazil, noted the report.
Factors such as diseases, floods and droughts, combined with unfavorable trade legislation like antidumping duties to the US, decimated the Brazilian shrimp industry, whereby it has only been averaging production of 50,000 tons to 70,000 tons annually over the past decade.
The authors were not overly effusive in their predictions for the future performance of the shrimp sector in the country. “After a white spot outbreak caused a decline in shrimp production in 2015, the disease has also affected the performance of the industry during 2016. Going forward, with the potential spread of the virus, the outlook for the shrimp industry in Brazil is mixed.
On the other hand, the industry operates in a huge internal market isolated from imports, by tariffs, and, more recently, biosecurity import barriers. According to the Brazilian Shrimp Farmers Association (ABCC), per capita domestic shrimp consumption is 0.55kg. Only a small shift in consumption patterns could mean rapid growth for the local shrimp industry.
Moreover, disease outbreaks in key shrimp producing regions such as Thailand, China and Mexico, along with the falling Brazilian real, have left many importers in the US, the EU, Japan and China, eager for Brazil to return as an exporter.”
The authors added that with the increasing presence of leading aquaculture companies in Brazil, they assume that innovation in genetics, feed formulas and husbandry technology will soon unlock Brazil’s potential in the high value shrimp sector.