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ARTICLE

Aquaculture: The Birth of an Industry

SEPTEMBER 01, 1990 by J. BRIAN PHILLIPS

Mr. Phillips is a free-lance writer based in Houston, Texas.

In recent years, growing health awareness has led to a rising demand for fish and other seafood. Despite this, American fishermen are finding it difficult to earn a living. As is often the case, the industry has become increasingly politicized.

The free market has received much of the blame for the problems facing the fishing industry, and the solutions proposed by the industry almost always involve an expansion of government controls. But the fact is, the flee-market, private-property system hasn’t been allowed to operate, and this is the real cause of the industry’s woes. The birth of a new industry—aquaculture—offers a free market alternative.

Government Policy

To understand and appreciate the rise of aquaculture, we must first have a grasp of government policy regarding fisheries and the commercial fishing industry.

Many analysts of the fishing industry summarize the industry’s problems as simply a matter of too many fishermen chasing too few fish. This is true, so far as it goes, but it fails to tell us why there are too many fishermen and too few fish.

Like the family farmer, fishermen have a long, rich history in America. Like the family farmer, fishermen have been hard hit by high interest rates and foreign competition. And, like the family farmer, fishermen have responded by demanding help from the government, which Congress has been more than willing to provide.

As in agriculture, such interventions sever the industry from market considerations, creating economic distortions. In both industries, technology has greatly increased productivity. In the fishing industry, bigger, faster boats, equipped with modern refrigeration and sophisticated electronics, allow fishermen to stay at sea longer, catch more fish per trip, and bring the catch to port already processed.

In a free market, increased productivity reduces the number of workers needed in a given industry. But in neither agriculture nor fishing have these productivity gains resulted in a proportional decrease in the number of producers. In agriculture, the result is a glut of many farm products. In the fishing industry, the result is overfishing and the depletion of fish stocks.

Like agriculture, government policies—low-interest loans, subsidies, protection from foreign competition—have encouraged production. Simultaneously, these interventions permit less efficient producers to remain in business. The result is too many fishermen.

“The Tragedy of the Commons”

The problem of overfishing illustrates what is commonly called “the tragedy of the commons.” Fisheries are public property, since nobody owns them. To the fisherman, the only way to profit from a fishery is to harvest its products. As an individual, he has little incentive or ability to preserve the resource. His conservation efforts will be offset by the counter-efforts of other fishermen. Consequently, each fisherman seeks to maximize his catch today, without regard to the impact it will have on his catch tomorrow.

Government interventions in economic affairs ultimately lead to further interventions in the future. The fishing industry is no exception. Government interventions stimulate production and lead to overfishing. In response, the government then intervenes to limit production.

The redfish, or red drum, provides an example of a typical government reaction to overfishing. Until Louisiana chef Paul Prudhomme created blackened redfish in the early 1980s, the red drum was a relatively obscure fish. But as blackened red-fish became a national craze, demand soared. Fishermen responded accordingly. In 1980, about 54,000 pounds of redfish were caught in the Gulf of Mexico. Six years later, an estimated 5.4 million pounds were caught. At the time, officials predicted that by 1990 the annual catch would exceed 20 million pounds. Fearing the extinction of the red-fish, state and Federal officials banned virtually all commercial fishing for the red drum.

The problem of overfishing is hardly limited to the redfish or the Gulf Coast. In New England, lobster, mackerel, and scallops are in short supply. And the government’s policy has been essentially the same—reduce landings of the species in question. There are many methods for achieving this, such as limiting the fishing season, issuing fewer commercial fishing licenses, and outright bans.

On one hand, the government seeks to stimulate production through subsidies and low-interest loans; on the other, it seeks to limit production through tighter restrictions on fishermen. Like the family farmer, fishermen are caught between contradictory policies.

Aquaculture

The solution to the problem of overfishing is to privatize oceanic fisheries. When resources are privately owned, the owner has an economic incentive to conserve the resource. If he depletes a renewable resource more quickly than it can be replenished, he ultimately destroys the resource and loses his investment. While privatization of fisheries faces numerous political obstacles, a new industry—aquaculture—is establishing a de facto form of privatization.

Simply defined, aquaculture is fish farming. Its history stretches back many centuries—it is believed that the Chinese engaged in fish farming as many as 4,000 years ago. Hawaiians built complex fish ponds long before the arrival of Captain Cook. In Southeast Asia, flooded rice fields have long been stocked with carp and mullet. In the United States, aquaculture has existed for many years, primarily in the South, but it wasn’t until the 1980s that it began to develop into a viable industry.

While the United States is a relative newcomer to aquaculture, the nation’s demand for seafood is fueling rapid growth in the industry. In 1982, total U.S. aquaculture production was 180,000 tons. in 1987, the harvest of catfish alone was nearly 175,000 tons, while all aquaculture products amounted to 375,000 tons. The industry’s growth promises to accelerate during the 1990s—aquaculture has become one of the hottest investments around.

In 1989, plans were announced to produce 500,000 pounds of hybrid rockfish annually at the nation’s largest indoor fish farm in Maryland. Naiad Corporation hopes to be harvesting 50 million pounds of catfish each year from its ponds near Danbury, Texas. M-K Ranches in the Florida Panhandle produces nearly one million pounds of crawfish each year. Redfish Hatchery in Mississippi expects to produce a million pounds of redfish annually. In addition, dozens of other companies are raising the above species, as well as tilapia, trout, striped bass, and freshwater shrimp.

The term “fish farming” describes the very essence of aquaculture. Traditional fishermen are hunters. They must chase their quarry and capture it. As fuel costs rise and the stock of fish declines, traditional fishing has become increasingly expensive. Aquaculturists, however, raise fish in a closed environment, just as farmers raise chickens, pigs, and other domesticated animals. In fact, aquaculture is a form of animal husbandry.

Until the development of agriculture, human beings were hunters and gatherers; their food consisted of what they could capture or find. Agriculture allowed mankind to take control of his own destiny; aquaculture promises to expand that control. “The big thing about aquaculture is that you don’t need to wait for a good catch day,” says Levy Amar, general manager of Sealantic Inc., which raises tilapia fish in Katy, Texas. “If somebody needs the product, he will get it the same day in most cases.”

Over the past 30 years, landings of ocean fish have held steady at around 57 million metric tons annually. There is a limit to the ocean’s ability to produce seafood. “Aquaculture is probably going to be the solution for the food supply in the fish market for the future,” says Amar. “I don’t think the oceans are going to produce more fish than what is being caught.”

One of the problems facing aquaculture entrepreneurs is marketing. The tilapia fish, which has been cultivated for hundreds of years in other parts of the world, is virtually unknown in the United States. “We basically have to educate people,” Amar says about the fish his company is raising. Catfish, which has long been enjoyed in the South, has only recently begun to be marketed in other parts of the country.

But marketing an unknown product isn’t the only problem facing aquaculture companies. Despite aquaculture’s long history, there is still much to be learned. For example, duplicating the natural conditions of the redfish, which range from coastal marshes to the open Gulf of Mexico, has posed numerous problems. Redfish also are very sensitive to cold weather—one Texas company lost 150,000 during a winter freeze in 1989.

Some experts said it would be impossible to raise redfish in a closed system. Yet, several Texas companies are now successfully raising redfish in indoor tanks. A Louisiana farmer is raising redfish in a salt water pond, while others grow redfish in blocked-off canals or submerged cages.

Magiculture

Aquaculture is frequently described as fish farming; mariculture is often called fish ranching. In aquaculture, fish are contained by barriers. In mariculture, fish are permitted to roam freely in the ocean.

Anadromous fish (those that spawn in fresh water but spend most of theft lives in salt water, such as salmon), are most frequently targeted for mariculture. A typical venture consists of raising salmon in a hatchery until they are of age to be set out to “pasture.” The young salmon are released into a freshwater stream and swim out to sea, where they “graze” until they have reached sexual maturity. At that time, they return to the freshwater stream to spawn. The salmon rancher then captures his “herd” and delivers them for processing.

Like aquaculture, salmon ranching is a risky business. Only 1 percent of all salmon return tospawn. However, in Japan, researchers have found that improving the health of young salmon can double that figure. Indeed, biotechnology offers one of the greatest hopes for increasing seafood production. For example, one marine biologist has developed a species of lobster that weighs a pound within 20 months, instead of the usual five to eight years.

However, mariculture faces one major obstacle-the lack of private property rights. Without clearly stated property rights, those who introduce fingerlings or improved species into the wild will have no guarantee that they will be able to catch those fish at a later time. Without such assurances, theft incentive is greatly reduced.

Fortunately, three states—Oregon, Alaska, and California—have recognized this problem and established property rights for salmon ranchers. In Alaska, once salmon reach a certain area, they become the property of the company that released them. Similar guarantees will be needed for other species if mariculture is to develop.

Impediments to Aquaculture

Traditional fishing cannot meet the world’s growing demand for seafood. The oceans have a limited ability to produce fish and other seafood. Like agriculture before it, aquaculture offers the possibility of overcoming nature’s limitations. Despite this, the aquaculture industry faces three serious obstacles: environmentalists, the government, and the industry itself.

Environmentalists have frequently lobbied for tighter restrictions on fishermen. In the early 1980s, environmentalists fought for a ban on commercial redfish landings. At the end of the decade, they demanded laws requiring turtle-excluder devices on shrimp boats. It would seem that environmentalists would welcome aquaculture, yet this is often not the case.

Some aquaculture enterprises use vast quantifies of water, a fact which concerns many environmentalists. Fish feces, fertilizers and other chemicals used in aquaculture, environmentalists argue, can pollute waterways. Additionally, fish farms often attract wild animals, such as birds and raccoons, in search of food. To protect theft property, owners often resort to shooting these animals, an action environmentalists condemn. Given the “greening” of America and the growing power of environmentalists, these objections pose a real threat to the industry.

Government, by both its action and inaction, will play a significant role in the success of the industry. Already, the agricultural departments in many states are heavily involved in regulating and/or promoting aquaculture. Controls on land and water use are so extensive in some areas that a prospective aquaculturist needs as many as 30 permits before he can begin operation.

However, government does have a legitimate role to play in aquaculture, particularly in maricul-ture. All industries depend on the recognition and protection of property rights. As the realm of man’s productive efforts expands, government’s proper role is the application of the principle of individual rights. Without this, new industries, such as mariculture, will be thwarted from the very beginning.

The most significant obstacle could be the industry itself. Many within the aquaculture industry welcome government intervention, just as farmers and fishermen have welcomed government intervention for years. Unlike beef, poultry, and pork products, seafood isn’t subject to many government inspections. As ties between the industry and government become more cozy, the industry could ask for a government inspection program that would supplant private inspections. The result would be more government control.

In the meantime, aquaculture entrepreneurs are defying the wisdom of the experts in creating a new industry. They are transforming the fisherman from a hunter to a cultivator. They are finding more efficient ways to provide food and utilize resources. If allowed to operate in a free and open market, with clearly defined, enforceable property rights, all of us will benefit.

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September 1990

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