by Carole Engle
Aquaculture businesspeople often turn their attention to new species when prices fall or other problems emerge. The white spot virus has driven many shrimp farmers to consider switching to tilapia production. The switch to any new product should be analyzed carefully before committing resources. The key to the economic feasibility of such a change is whether the shrimp farmer will be able to develop a market for tilapia that will provide a price greater than his/her costs of production.
The US market for tilapia fillets has demonstrated dramatic growth in recent years. However, the US market requires a very high-quality fillet. Most companies exporting tilapia from Central America to the US have created their own US marketing companies to handle their products. These companies have developed markets through intensive efforts to provide samples, point-of-sales information, and complete customer support. To maintain a marketing company in the US requires a substantial quantity of tilapia fillets to be upplied each week on a consistent basis. The advantage of exporting to the US is that it brings a higher price, but it also requires a large tilapia (650 g).
An alternative to exporting is to develop a domestic market in Latin America. Such a market has developed in Colombia and has contributed stability and diversity to its tilapia industry. Yet it will take a very concerted effort in most other countries to overcome the perception on the part of many consumers that tilapia is a low-quality, poor peoples food item. Wild-caught, often off-flavor, tilapia is sold in many countries, and the off-flavor contributes to tilapias poor reputation. To capture the higher prices that will be necessary to cover farm production costs, markets for larger, purged tilapia will need to be developed. The recent CRSP-funded surveys conducted in restaurants and supermarkets in Honduras and Nicaragua by University of Arkansas at Pine Bluff researchers Ivano Neira and Carole Engle seem to indicate potential for tilapia to be offered as a Catch-of-the-Day to diversify seafood menus and to provide a consistent supply of fish. [Ed. note: For more on Neira, see the Graduate Student Profile in this issue. Preliminary results of the survey will be published in the forthcoming PD/A CRSP Eighteenth Annual Technical Report.] Supermarkets prefer a smaller, 0.5-lb whole-dressed product. Both market channels require purging that involves holding tanks and adequate flow of clean, non-chlorinated water. Customer support in the form of spoint-of-sale materials, recipes, in-store samples, and promotion will be essential to assist restaurants and supermarkets to develop tilapia sales. Farm-raised tilapia must be differentiated from wild-caught fish as a consistently high-quality, taste-tested, and purged product.
Green and Engle (2000) estimated production costs to be US$1.72 kg-1 to cover total costs of 250-g tilapia that could be supplied to supermarkets. For a larger fillet for restaurants, breakeven prices were $5.37 kg-1 of fillet to cover total costs. Clearly much work needs to be done to position tilapia as a higher-valued product in many markets in Latin America.
Green, B.W. and C.R. Engle. 2000. Commercial tilapia aquaculture in Honduras. In: B.A. Costa-Pierce and J.E. Rakocy (Editors), Tilapia Aquaculture in the Americas, Vol. 2. The World Aquaculture Society, Baton Rouge, Louisiana, USA, pp. 151170.
Carole Engle is Project Leader for CRSP Marketing and Economic Analysis Research at University of Arkansas at Pine Bluff.