Price goes up to sky high.
Tilapia, the fish known worldwide, has been on quite a journey in the market. While it’s usually a stable choice, the past year has been tough on tilapia. Prices have been steadily declining, leaving many farmers in a tough spot.
But tilapia prices have finally started to rise as of July, 2023. Over the past two months, the cost per 500 grams has gone up by nearly 1.2 yuan. The craziest prices hit a peak at 1 yuan per 500 grams recently. Due to a shortage of raw fish, the cost of processing plants has increased, adding an extra 20-30 yuan to process one piece of tilapia.
Two graphs of the tilapia raw material price trends these years
What’s causing this surge in tilapia prices?
For the past year, tilapia prices have been on a downward spiral, while farming costs have remained high. To make matters worse, feed prices have been going up by 30-40% and the quality of feed caused feeding one fish more than 40 kilograms from 30 kilograms, leading to substantial losses for most tilapia farmers. Climate change and extreme rainstorms have reduced the success rate of tilapia farming. These have made many farmers lose faith in the industry, and some have decided to call it quits or switch to other types of farming. This crisis, which began in the first half of this year, is now resulting in higher prices due to limited availability.
In the key tilapia farming areas like Zhuhai, Maoming, and Yangjiang, the number of young fish invested in farms in 2022 will be around 50% lower than the previous year. This means that tilapia production this year is expected to be about 50% less than last year. At present, there aren’t many adult tilapia fish ponds available, making up only 20% of the ponds in the primary production areas of Guangdong and Hainan. The existing supplies at processing plants have mostly run out, so they need to purchase a lot of raw fish to meet new orders. The scarcity of raw materials has led to fierce competition among factories and even in the market, resulting in a situation where the demand for tilapia exceeds the supply, and prices continue to rise.
Based on the current breeding situation, will the price of tilapia be maintained next year?
In essence, the market fluctuation cycle is still the main driving force. Tilapia is currently in a market cycle where supply exceeds demand, so the price is up.
There is a shortage of overwintering tilapia this year, and there will be no significant increase in breeding volume in the short term. For processing plants, they need to maintain the normal production of the factory, but they will not make large inventories when raw material prices are high. Orders are generally completed in February, and the amount of stocks in ponds will not be particularly large by then. Therefore, it is expected that tilapia prices will remain stable until May or June next year, and it is difficult to see a significant decline.
However, the supply of spring seedlings will be relatively abundant in February and March. Judging from the breeding cycle, the supply of raw materials is relatively sufficient in July and August, and prices will fall to a certain extent in the second half of the year.
After the price increase in August of this year, how do you feel about the market?
September to January of the following year are the traditional peak seasons for tilapia consumption. Especially the United States, which is a traditional big consumer of tilapia. In 2019, China’s total tilapia exports accounted for about 69% of the United States’ tilapia imports. However, this year, China’s total exports may only account for 50-60% of the U.S. market. But combined with the increase in export orders in the second half of the year, pushed tilapia prices up and remained high. Due to the shortage of raw materials, the market is still in a state of relatively short supply, and the current price is relatively high.
Tilapia ranks fourth in the U.S. per capita seafood consumption rankings. However, in the past two years, we have also felt the market pressure brought by pangasius and other white-fleshed fish. How do we view the respective market positioning of these two fish?
Objectively speaking, pangasius and tilapia are both low-priced and high-quality proteins. They have a certain degree of market overlap, which also brings competition. When the price of tilapia rises to a certain level, some customers will indeed switch to pangasius.
However, tilapia has relatively high protein content and low fat content and has formed a stable consumer group around the world. Unlike pangasius, it is difficult for pangasius to open up the Middle East market because Muslims do not eat phosphorus-free fish, while tilapia is very popular in the Middle East. As a result, tilapia is largely exempt from dietary restrictions around the world.
Judging from the actual sales data, tilapia sales are showing a steady upward trend around the world, especially in the African market.
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