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This blog will look at Egypt and Brazil, currently, the world’s third- and fourth-largest tilapia producers (after China and Indonesia), both of which operate in completely different contexts to each another and to sub-Saharan Africa in terms of the current status of their industries and the expansion potential: Egypt’s production may have plateaued, but Brazil could be on its way to becoming the world’s (second-) largest producer. Looking at the cases of Egypt and Brazil can therefore help us to understand the potential route to success for farmed tilapia production in sub-Saharan Africa.
Photo 1: Fisher Piscicultura’s large cages used on its cage farming site in Brazil (Photo credit: Fisher Piscicultura)
Although tilapia farming was already a centuries-old practice in Egypt, in the 1970s and 1980s, the Egyptian government began to play a crucial role in developing the tilapia sector at scale. As part of a plan to boost aquaculture production, it invested in four large tilapia hatcheries, six tilapia farms, and various fingerling collection centers. The government encouraged the private sector to get involved by providing access to land and promoting other favorable policies. More recently, the rapid increase in production has mainly been driven by the intensification of farming systems, as well as by improved availability of advanced genetic strains and quality but affordable feed. According to the Food and Agriculture Organization of the United Nations (FAO), in 2019 Egypt produced more than 1 million MT of tilapia (see Figure 1).
In Brazil, tilapia was only introduced as an aquaculture species in the late 1970s. Although initially successful, production soon stagnated due to a lack of quality fingerlings among other things. Since the mid-1990s, however, several improved tilapia strains have been imported from Asia to overcome this issue. The enhanced performance of these strains and the increased involvement of Brazil’s private sector in aquaculture have both been contributing factors to the production growth experienced since then. While earlier production was dominated by small-scale pond farming, large-scale corporate cage farming operations have started to play a role more recently as well. According to Peixe BR, Brazil’s aquaculture industry association, production reached 486,000 MT in 2020, significantly more than the 323,000 MT reported by the FAO (see Figure 1).
Figure 1: Egypt’s and Brazil’s tilapia production numbers from 2000-2019 (Source: http://www.fao.org/fishery/statistics/global-aquaculture-production/en)
In Egypt, virtually all tilapia production takes place in the Nile River delta. Pond farming accounts for 85-90% of production. While earlier it was dominated by extensive and semi-intensive systems, more intensive systems are now common. Most farmers are small- or medium-sized but entrepreneurial. Several industrial-scale vertically integrated privately and publicly owned farms complement their production. It’s unlikely that the area under pond culture can be expanded further due to the scarcity of suitable land and legal constraints around the use of irrigation water for aquaculture purposes. The same is true for cage farming, which currently accounts for 10-15% of production. Due to limited space, environmental concerns, and competition for resources with fishermen, cage farming will not expand much further. In fact, in recent years, the government has halted tilapia farming in several regions favoring agricultural crop production. The situation may worsen as water availability in the Nile delta comes under pressure from dams being constructed in Ethiopia. Therefore, further growth must come from the intensification of farming practices.
Photo 2: One of the state-owned vertically integrated aquaculture parks in Egypt. This farm produces both tilapia and shrimp and was constructed by China-based Evergreen. (Source: Google Maps)
In Brazil, tilapia farming is widespread except in the Amazon, where it’s prohibited. Pond farming still accounts for most of the production, but cage farming is expanding. In pond farming, companies such as Copacol and C-Vale—Brazil’s powerful cooperatives—provide small-scale farms with the required inputs (feed and fingerlings) and services (pond construction, licensing, and harvesting), and buy back the farmers’ fish to process and sell to the market. The cooperatives function as platforms that allow local production sectors to grow. Copacol, for example, sold around 40,000 MT of tilapia in 2020.
Cage farming developed more recently with large corporate farms such as Geneseas and Tilabras (partly owned by the former owner of Regal Springs), as well as our own portfolio company Fisher Piscicultura quickly ramping up production. Brazil has the world’s most extensive freshwater resources. Keeping in mind that cage farming has only just started to expand, there’s ample opportunity for it to grow. The government has recently eased and simplified the regulations and process for obtaining permits to use federal waters for aquaculture, and the private sector is ready—and able—to invest, meaning that Brazil’s tilapia production may well reach 1 million MT in the near future.
In some countries in sub-Saharan Africa, the availability of affordable but quality aquafeed is rapidly expanding, but in other countries it’s still limited. With feed accounting for around 60-70% of most farmers’ production costs, they face a hard time making a profit without access to affordable but quality feed. This situation is different in Egypt and Brazil, where feed is widely available, and prices are normally well below $1/kg—in sub-Saharan Africa, prices are normally well above $1/kg.
In Egypt, driven by the shift from more extensive to more intensive farming systems, the number of feed mills producing aquafeed has increased from about 5-10 feed mills at the start of this century to more than 75 producing aquafeed today. Practically every animal feed producer also has the capacity to produce aquafeed. However, only a few companies are dedicated to aquafeed entirely, and the quality of feed differs widely. The largest fully dedicated aquafeed producers are Skretting and Aller Aqua. Other international animal feed producers active in Egypt include Haide and Evergreen from China, and De Heus/Koudijs from the Netherlands. This overcapacity in terms of aquafeed production results in a highly competitive landscape in which aquafeed prices are driven down, even though most feed ingredients need to be imported.
In Brazil, feed prices are also lower than in most of sub-Saharan Africa. Brazil’s advantage is that most of the ingredients used in tilapia feed are grown locally. However, compared to Egypt, high-quality and affordable feed is less widespread and only ensured in the main farming areas. Farmers in more nascent production clusters may well pay higher prices for the same feed. Peixe BR has 16 members that produce aquafeed, but there are also other producers with some extrusion capacity. Companies such as C-Vale, Copacol, and Geneseas have invested in feed production. Other large producers include Archer Daniel Midlands (ADM), Aginutre, and Raguife, but smaller dedicated stand-alone aquafeed producers such as AquaFeed exist. Want to know more about Brazilian tilapia farmers’ access to feed, fingerlings, and finance? Check out this detailed study (available in Portuguese).
In both Egypt and Brazil, selective breeding programs have proved crucial to the success of their respective tilapia sectors. They result in, for example, improved growth rates, salinity and temperature tolerance; disease resistance; and better fillet yields. It’s therefore logical that most large farmers in sub-Saharan Africa aim to secure access to genetically improved tilapia strains.
In Egypt, since 2012 WorldFish has been running the Genetically Improved Abbassa Nile Tilapia (GIANT) selective breeding program. In its 9th generation—it’s now on its 13th—GIANT already outperformed other local strains by 12% in growth rate and 48% in profitability due to a reduction in the feed conversion ratio (FCR). GIANT is distributed to tilapia farmers and private hatcheries through a network of public broodstock multiplication centers and hatcheries. While the benefits of GIANT are optimal when hatcheries only use this strain to produce fingerlings, they often crossbreed GIANT with other strains, which means that some of its potential is lost. A lot can still be gained from using the GIANT strain (or other improved strains) only.
Brazil’s large cooperatives and farms operate well-developed hatchery facilities and breeding programs. In recent years, international genetics companies such as EW Group’s GenoMar and Benchmark’s Spring Genetics have entered the Brazilian market. EW Group entered Brazil aggressively when it acquired three major local breeding companies: Aquabel, Aqua Americas, and Aqua Porto. EW Group is now constructing a mega breeding nucleus to supply parent broodstock to its local subsidiaries and clients in Brazil, and to other countries in the region. Just to give an idea of what advanced genetics brings, most of the tilapia fingerlings in Brazil can reach 900-1,000 g within 6-8 months of cultivation; in sub-Saharan Africa, within 6 months’ time, farmers can only grow tilapia to 500 g at best.
Photo 4: A tilapia broodfish of Genomar in Brazil (Photo credit: Genomar)
In Brazil, until 2020 wholesale prices for whole round tilapia would typically fluctuate between $0.85/kg and $1.15/kg, but since mid-2019 prices have steadily increased and reached an all-time high of $1.70/kg in February 2021. Since then, prices have started to come down slightly. Frozen tilapia fillets are also selling at an all-time high of $6-7/kg. In comparison, in Egypt, retail prices for fresh whole tilapia are currently at $1.0-1.2/kg, but they would normally also be closer to the $1.5-1.7/kg price point. All of these prices are well below the $2.25-3.5/kg price point that producers in sub-Saharan Africa sell their tilapia for. But as production volume grows, it’s likely that prices will have to come down to a similar level as those seen in Egypt and Brazil.
Virtually all tilapia produced in Egypt and Brazil is domestically consumed. In Egypt, the domestic market primarily consists of whole round fish. The market in Brazil is split between fresh whole round tilapia for poorer consumers and frozen fillets for wealthier consumers. Due to consumer preferences and production economics, in Egypt farmers typically target tilapia of 250-500 g which are sold as whole round final products. In Brazil, however, farmers target 800-1,000 g fish which are sold as a whole round final product or as raw material for fillets. While in Egypt tilapia is mainly sold through informal channels to wet markets, in Brazil tilapia is more commonly sold through formal channels to wholesale and supermarkets.
Photo 5: Small Nile Perch (Lates niloticus) left, Nile Tilapia (Oreochromis niloticus) right. Luxor Souk, Egypt (Photo credit: Travel to Eat)
What also makes it interesting to compare Brazil with sub-Saharan Africa is the investments made by large producers in processing, marketing, and distribution. Contrary to Egypt where traders aggregate fish and sell it to the market, large producers in Brazil invest in processing, freezing, cold storage, and transport facilities, and deliver fish to the market themselves. In sub-Saharan Africa, investments also typically include a network of fish shops that allow the fish to be sold in areas where tilapia farming is not yet established, to separate farmed tilapia from competing products, and to maintain the quality and brand of the product until the point of sale.
We don’t aim to directly compare Egypt and Brazil with sub-Saharan Africa: sub-Saharan Africa is in a different state of development in terms of its economy, basic infrastructure, and the existence of a middle class. There are also differences that exist within the countries that form sub-Saharan Africa. Nevertheless, there are some things we observe in relation to tilapia farming in Egypt and Brazil that can help us to identify some of the crucial elements that might ultimately help tilapia farming in sub-Saharan Africa to expand. These mainly relate to the role of large-scale farms and the government as well as the presence of a competitive input market.
Looking at Brazil strengthens our belief that large-scale farms have a crucial role to play in making tilapia deliver on its promise in sub-Saharan Africa. Like in Brazil, large farms can drive short- and medium-term expansion in cage farming through scaling existing farms and developing new greenfield projects in underutilized waterbodies. Once established, besides providing jobs, large farms can ignite local tilapia industries through outgrower programs that support smaller-scale farmers with all of the required inputs and access to markets. While this is certainly the case for cage farming, it may be even more so for pond farming, which, in the long term, may well have the largest potential for growth. In sub-Saharan Africa, the private sector, and especially large farms, will play a crucial role in developing the production of small-scall fish farmers, and Brazil’s cooperatives can provide a good example of how to do this.
The situations in both Egypt and Brazil show that the availability of quality but affordable feed and advanced genetics are crucial elements to success. Luckily, the availability of feed in sub-Saharan Africa is rapidly expanding, but access to advanced genetics is still limited. Governments are crucial in establishing regulatory frameworks that allow the private sector to produce and supply affordable and quality feed, and advanced genetics. They also have a role in ensuring that expansion of the industry happens in an organized and sustainable way. Both in Egypt and Brazil, the respective governments assume this role by weighing the interests of different stakeholders and ensuring that the expansion of tilapia farming doesn’t come at the cost of others. Governments in Sub-Saharan Africa can therefore look at Egypt and Brazil for inspiration.
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