Michigan State University Extension
Ag Experiment Station Special Reports - SR509201
07/28/98
TABLE OF CONTENTS
Introduction
Description of the industry
Economic importance
United States
Production
Consumption
Decrease in commercial catch
Current trade deficit
Michigan
Production
Regional consumption deficit
Opportunity for rural development and farm
diversification
Michigan's competitive advantage
The aquaculture industry in Michigan
Production
Number and distribution of farms
Business size
Water sources
Species raised
Enterprise types
Management practices
Marketing
Input delivery
Product marketing
Emerging issues and assumptions about the 1990's
New biological knowledge
New technology
Production
Consumer
Marketing
Legislation and policy
National Aquaculture Development Act
Aquaculture drugs and therapeutants
Nutritional labeling
Seafood inspection
Wastewater discharge
Legislation and related issues in Michigan
Consumer demand
Projections to the year 2000
Current rate of growth
Assumptions
Projections
Number and size of farms
Shifts in location throughout the state
Species raised
Enterprise combinations
Production levels
Production inputs
Market coordination
High rate of growth
Assumptions
Projections
Number and size of farms
Shifts in location throughout the state
Species raised
Enterprise combinations
Production levels
Production inputs
Market coordination
Need for action and recommendations
Constraints on aquaculture development in Michigan
Lack of state recognition and support
Regulatory complexity and confusion
Environmental concerns
Lack of technical information and extension
Marketing
Game fish (planting stock)
Food fish
Fee-fishing
Recommendations
Aquaculture development plan and legislation
Aquaculture coordinator
Research and extension
Industry promotion
Differentiate Michigan products
Contaminant testing of Michigan farm-raised fish
Increase awareness of the industry in Michigan
Education on handling and preparing fish
Market coordination
Input delivery
Product markets for food fish
Conclusions
Bibliography The Status and Potential of Michigan Aquaculture
Introduction
Aquaculture, the controlled cultivation of aquatic
animals and plants, began in China around 4000 years ago.
Fishes in the carp family were first kept for pleasure,
then raised for food (Brown, 1977). In Europe, fish
farming began in the 12th century in the eastern part of
the continent, and by 1400 had moved across to England
(Hickling, 1962; Lovell, 1989). Fish culture in the United
States began in the 1800's by wealthy individuals and sport
fishing clubs to restock lakes and streams with trout.
These private hatcheries eventually led to the current
state and federal hatchery system. Commercial warmwater
fish culture began in the 1920's with the raising of
minnows for bait, and by the 1950's farmers had begun
experimenting with buffalo fish, bass and crappie (Huner
and Dupree, 1984). The commercial catfish industry, by far
the largest aquaculture industry in the United States, is
actually quite young. In 1960, there were less than 600
acres in commercial catfish production (Lee, 1979). Rapid
expansion began in the late 1970's, and by 1990 there were
162 thousand acres in production, with an additional 8,640
acres under construction (Mississippi Agricultural
Statistics Service, 1991). Today, almost everything from
leeches to alligators is raised in the United States.
In Michigan, commercial trout farming began over 60
years ago. The industry today consists primarily of small
farms, operated mainly on a part-time basis. In the past
two decades, the number of licensed aquaculture businesses
has remained relatively constant, although individual
businesses themselves have come and gone. The introduction
of businesses oriented toward food-fish production is
fairly new. A 1991 survey of Michigan aquaculture
producers showed that 30 percent of all businesses, and 62
percent of food-fish businesses, had started within the
last 5 years. The Michigan Fish Growers Association was
formed in 1987, and since that time Michigan growers have
been more active in their attempts to develop the industry.
To design policies to encourage and promote Michigan's
aquaculture industry, data is needed on both the production
and marketing of aquacultural products. However, very
little data of this type exists for either Michigan or
other states in the region. To address this shortfall, a
Michigan Agricultural Experiment Station project (State
Subject Matter Project #3804) was initiated in 1990 to
assess the economic feasibility of culturing fish species
that offer commercial potential in Michigan. This paper
presents research results that have been collected to date.
Ongoing activities include collecting non-trout production
data and creating enterprise budgets for alternative
species and production system combinations.
Description of the Industry
Economic importance
United States
Production. Aquaculture was the fastest growing
U.S. agricultural subsector from 1980 to 1990, experiencing
a 265 percent increase in production. Total farm-gate
value of all aquaculture products in 1990 was $760 million.
Last year, over 360 million pounds of catfish were sold to
processors, primarily from Mississippi, Arkansas and
Alabama. Total production of trout in 1991 (September 1990
to August 1991) was 62.1 million pounds, 70 percent of
which came from Idaho growers. The next four largest
producers were Washington, California, North Carolina and
Pennsylvania. Though statistics on other species are
incomplete, the U.S. Department of Agriculture (USDA)
estimates the 1990 production of other species as follows:
crayfish (71 million pounds), oysters (over 11 million
pounds, meat weight), salmon (8.5 to 10 million pounds),
tilapia (4 to 5 million pounds) and hybrid striped bass
(1.4 to 1.5 million pounds). Other important species for
which the USDA does not keep production statistics are
baitfish, ornamental fish and shrimp.
Consumption. American consumption of fish and
shellfish has increased from 12.5 pounds per capita in 1980
to 15.5 pounds in 1990, an increase of 24 percent. In
recent years, the low fat levels in fish and high
percentage of omega-3 fatty acids have been linked with
reduced incidence of heart disease. In addition, fish is
a high-quality protein source that also supplies essential
vitamins and minerals. Increasing concern among Americans
over food health and safety issues and rising seafood
consumption have led industry experts to predict that
annual per capita consumption will reach 20 pounds by the
year 2000 (NOAA, 1990). If this occurs, an additional one
billion pounds of edible fish and shellfish will be needed
annually.
Decrease in commercial catch. It is generally
recognized that world fishery stocks are at or nearing
maximum sustainable harvest (Broussard, 1990). Increases
in the commercial catch in recent years are attributed to
improvements in technology rather than increases in supply
(FAO, 1988). From 1982 to 1986, U.S. landings of edible
seafood ranged between 3.2 and 3.4 billion pounds, down
from over 3.6 billion pounds in 1980. Since 1986, U.S.
landings have increased dramatically to 7.3 billion pounds
in 1990. However, this rise is primarily due to harvest of
Alaska pollock, a species that, prior to 1985, was
harvested only by foreign vessels. The National Marine
Fisheries Service (NMFS) estimates the current harvest
level to be close to the maximum sustainable yield for this
species. It is projected that by the year 2015, half of
the edible fish products will come from aquaculture (Selock
and Heidinger, 1990).
Current trade deficit. The 1990 U.S. trade
deficit in edible seafood was $2.4 billion, down from $3.2
billion in 1989. This decrease was due primarily to the
increased landings of Alaska pollock. Total U.S. imports
of fish products in 1989 were valued at $9.6 billion,
second only to petroleum products for non-manufactured
goods. As population and fish consumption continue to grow
and seafood landings stabilize, the trade deficit in both
edible seafood and fish products for industrial use will
grow, unless production from aquaculture can make up the
shortfall.
Michigan
Production. Since 1988, the National
Agricultural Statistics Service (NASS) has collected
information on the number, weight, and value of trout (all
species combined) sold in 15 selected states, including
Michigan. In 1991, total trout sales in Michigan
(including 0.6 million pounds of food-size fish) were
valued at $2.4 million, a 26 percent increase from the
previous year. Since 1988, growth in sales has averaged 23
percent per year. Michigan's rank, among the 15 selected
states, for the total value of trout sold rose in the last
four years from 12th to 7th. Last year, Idaho growers sold
$34.4 million worth of trout. The next highest state was
Washington, with a value of $5.0 million. Michigan is
fourth in the nation in number of trout operations.
Although complete production figures on other species
raised in Michigan are not available, industry
representatives estimate the total value of the 1991
production, including trout, at $4.5 million.
Regional consumption deficit. Michigan, along
with other midwestern states, is a net importer of fishery
products. It is estimated that less than five percent of
the fish and seafood consumed in the North Central Region
are produced within the region.
Opportunity for rural development and farm
diversification. As an enterprise that can be added
relatively easily to any existing farm with adequate water
supplies, aquaculture offers an opportunity for farm
diversification and rural development. Though initial
fixed costs for aquaculture operations can be high, when
added to an existing farm these costs are much lower. Most
farms already have many of the necessary facilities and
equipment, such as land, storage buildings, earth-moving
equipment and often wells and farm ponds. In addition,
farmers usually have the necessary management and financial
skills to run an aquaculture enterprise. Another advantage
of adding an aquaculture enterprise to an existing farm is
that a farmer can start with a small, experimental
operation, and learn how to grow fish before making any
large investments.
Michigan's competitive advantage. Michigan fish
growers have a competitive advantage relative to other
midwestern states due to abundant water resources,
proximity to food fish markets and the presence of a large
baitfish market.
Abundance of water. With 36,350 miles of
streams and rivers and over 35,000 lakes and ponds, as well
as shoreline on four of the five Great Lakes, Michigan has
abundant aquatic resources. Additionally, several major
glacial and bedrock aquifers provide high quality water for
aquaculture operations.
Proximity to food fish markets. People
around the Great Lakes have a tradition of eating fish.
With the decline of the commercial fishing industry, a vast
potential market exists for farm-raised fish and shellfish
products. Michigan growers are in close proximity to
several Great Lakes population centers, primarily Detroit
and Chicago. The Chicago Fish House, one of the largest
seafood wholesalers and processors in the nation, has
stated that in the future they expect to depend more on
farm-raised fish.
Large baitfish market. Michigan and
surrounding states enjoy huge recreational fisheries. In
Michigan alone, almost 1.5 million anglers were licensed in
1990. While many of the baitfish used are supplied by
southern growers (primarily in Arkansas), many more are
caught from the wild. However, Michigan Department of
Natural Resources (MDNR) restrictions on wild minnow
harvest are progressively becoming stricter. Michigan
baitfish growers, therefore, have an opportunity to fill
this market niche.
The aquaculture industry in Michigan
Production
Number and distribution of farms. Michigan has
about 70 active commercial aquaculture businesses located
throughout the lower and upper peninsulas. In 1990, there
were 117 licensed game fish breeders located in 54 of
Michigan's 83 counties. All regions of the state had
aquaculture businesses. Muskegon county had the greatest
number of licensed operations at eight. As has generally
been true in recent years, about 40 percent of the licensed
businesses in 1990 were not actually in commercial
production. Because a license costs just $5, many people
obtain them "just in case." Fee-fishing operations that
don't actually produce their own fish also are required to
have this license.
Business size. For the majority of Michigan's
fish growers, their aquaculture business is a part-time
activity. More than half of the growers receive 10 percent
or less of their total family income from their aquaculture
business. Only 15 percent of growers receive over 75
percent of their total family income from aquaculture. In
1990, 76 percent of the businesses had gross revenues of
$25,000 or less, while only 6 percent grossed over $150,000
(Newman, unpublished data). About a third of Michigan
growers are engaged in other farming activities such as
large livestock, crops and non-fruit trees.
Water sources. Water sources that are used for
fish production are springs, flowing (artesian) wells, pump
wells, and streams. Most growers have more than one water
source. Total farm water supply ranges from less than 75
gallons per minute (gpm) to more than 5000 gpm. The
average is 300 to 500 gpm.
Species raised. At least 16 different species of
fish are raised in Michigan, with rainbow, brook and brown
trout, largemouth bass and bluegills the most common.
Except for a small amount of tadpoles, fish are the only
aquatic organisms cultured at this time. Around three-
fourths of all Michigan aquaculture businesses raise at
least one species of trout. Fish raised for food are the
three trout species, catfish, and yellow perch. Fish sold
through fee-fishing ponds include the three trouts, bass,
bluegills and catfish. All of the species raised in
Michigan are also sold as game fish (planting stock).
Enterprise types. A 1991 survey of Michigan fish
growers identified 10 types of aquaculture production
businesses (Newman, unpublished data). All were variations
of the following three enterprise types:
Game fish production - producing fish (planting stock)
for sale to individuals or groups for stocking private
lakes and ponds.
Food fish production - producing fish for sale to
retail stores or restaurants, or to fish wholesalers for
later resale to retail stores or restaurants.
Fee-fishing operations - producing fish for sale
through their own fee-fishing ponds. (Fee-fishing
operations that bought catchable-size fish, rather than
raising their own, were not considered to be aquaculture
production businesses.)
Management practices. Management practices vary
mainly by type of fish. The trout raised in Michigan are
grown either in ponds or raceways, with moderate to high
water exchange rates (up to 7 exchanges per hour). Other
species are generally raised in ponds with moderate to
little water exchange.
Trout. Although some growers have their own
rainbow trout brood stock (and produce their own eggs) or
buy eggs from other Michigan growers, most growers purchase
rainbow eggs from out of state. These eggs are delivered
by air freight at the eye pigmentation stage (15-20 days).
Eggs purchased from out-of-state growers can be obtained
all year. In Michigan, rainbows are spawned both in the
spring (April-May) and fall (October-November). Brook and
brown trout eggs are produced almost entirely in-state.
These species spawn only in the fall. Although most trout
growers begin with eggs, some buy fingerlings from other
growers.
Eggs are incubated primarily in Heath trays or
baskets, although some growers use jars. Incubation takes
30 to 40 days for rainbows and 40 to 60 days for browns,
depending upon the temperature. Upon hatching, the fry are
placed in small fry troughs for about 60 days, and then
moved to the growout raceways or ponds. Depending on the
operation, the fish may be transferred a number of times to
other ponds or raceways. Usually the fish are graded every
few months to keep fish of similar sizes together.
Fish growth rates are highly dependent upon water
temperature, so the time necessary for fish to reach market
size varies by location and water source. Overall, growth
rates for rainbow trout range from about 0.5 to 0.75 inches
per month. Rainbows, on average, take 18-30 months to
reach food-size (about 12 inches). Fish used for planting
stock are sold at 2 inches and larger and are ready for
market after about four months.
Both brook and brown trout grow slower than rainbow
trout. Brooks take an additional 6-12 months to reach food
size; browns take about 18 months to reach six inches and
around 3 years to reach food size.
Stocking rates used for trout in Michigan are quite
variable and rarely measured. Growers have learned over
the years the number of fish at different sizes that each
pond or raceway can hold but make few calculations.
Densities for rainbows of 7-10 lbs/ftþ and loading rates of
up to 12 lbs/gpm flow are probably common for most Michigan
growers. A few growers report that they reach density
limits before they reach loading limits. Brook and brown
trout are stocked at lower rates. For comparison, in
Idaho, where total farm water supplies range from 47,000 to
363,000 gpm, loading rates for rainbows average 15 lbs/gpm
(Brannon and Klontz, 1989). Average loading rates in North
Carolina are probably around 6 to 6.5 lbs/gpm (Hinshaw et
al., 1990).
Michigan fish growers almost invariably feed by hand,
though a few use automatic feeders in the hatchery or
growout ponds. Trout are usually fed all year, though the
daily ration is lowered during times of extreme
temperatures in both the summer and winter. At sites where
the ponds are allowed to freeze over during the winter,
feeding is discontinued when ice is present. Feeding rates
are generally calculated from feed charts given by the feed
companies, with the grower adjusting the actual amount by
observing the behavior of the fish. Records of feed
consumption are rarely kept. Though exact statewide
average Food Conversion Ratios (FCRs) are unknown, rates
of 1.5 to 1.8 are probably common. For comparison, the FCR
in Idaho averages around 1.5, and in North Carolina the FCR
probably ranges between 1.5 and 2.0 (Brannon and Klontz,
1989; Hinshaw et al., 1990).
Constant aeration is used by many of the larger
growers, and emergency aeration is used by many others.
Growers use fountain-type, vertical-pump aerators, and
blower-diffuser systems. A number of growers also use an
alarm system, consisting of an ammeter and an automatic
telephone dialer, to alert them to power outages and broken
equipment.
The two greatest causes of fish mortality in Michigan
are disease and predation. Each cause accounted for
approximately one-third of all trout lost from 1989-1991
(USDA, various years). The major disease that affects
Michigan trout is bacterial gill disease, which strikes
mainly young fish. Furunculosis (in brood stock) and
parasites can also be problematic. Predation problems,
especially by birds, vary greatly across the state. Some
growers lose up to 30 percent of their crop to predators,
while others lose less than 10 percent. Many devices are
used to scare off birds, such as flashing tape strung over
the ponds, scarecrow-type devices and noisemakers, but
their effectiveness is very limited.
Coolwater and warmwater fish. Coolwater
fish include yellow perch, walleye, northern pike, and
muskellunge; while bass, bluegill, catfish, and minnows are
considered warmwater fish. Many aspects of the culture of
these two fish groups are similar to those of trout. In
Michigan, these other species are almost invariably raised
in ponds throughout the production cycle. Although some
people are beginning to raise yellow perch in a manner
similar to that of trout, but this practice is still
uncommon. All of these species spawn in the spring.
Except for catfish, which are mainly purchased as small
fingerlings from out-of-state growers, brood stock of the
cool- and warmwater species are placed into ponds and
allowed to spawn naturally. After spawning, the brood
stock may or may not be removed to separate ponds.
Incubation and growout take place in the same ponds,
although in some operations the fish may be moved a number
of times before they are finally sold. Most growers buy
these fish as small fingerlings and grow them to a larger
size for resale.
Fish growth rates are also highly dependent upon food
availability. Growers that feed their fish a pelleted
ration achieve higher growth rates. Many cool- and
warmwater fish, however, don't adapt readily to artificial
feed. They either need to be specially trained to eat it,
or zooplankton and minnows need to be provided for forage.
A third alternative is to increase the natural food in the
pond through fertilization. There are some risks
associated with fertilizing, such as increasing the
likelihood of winterkill. This alternative usually is used
only in ponds from which the fish will be removed before
they freeze over. In other parts of the country, nursery
ponds are almost universally fertilized to increase food
organisms for the fry. This practice does not appear to be
widespread in Michigan. The practice of treating nursery
ponds to eliminate predatory insects also appears to be
almost nonexistent.
Bluegills, hybrid bluegills and catfish readily accept
pelleted feed, so most growers feed them as they do trout.
Largemouth bass will accept pellets if they have been
trained, and this is done by most of the larger growers.
Training of yellow perch to artificial feed is more
difficult, and usually only 50 to 70 percent of the perch
are trainable. Thus only a relatively small number of
growers try to train yellow perch to accept pelleted feed.
The other species of cool- and warmwater fish are fed
minnows or left to grow on natural food.
Hybrid bluegills generally reach 2-3 inches by the end
of their first growing season (around October), and 5-6
inches by the end of the second. These rates can be
increased with lower stocking densities and good
management. With good management, channel catfish bought
as 4-inch fingerlings in the spring can reach 12 inches by
fall. Largemouth bass can reach 5-6 inches by the first
fall if they have been trained to artificial feed, or
lengths of 2-3 inches on natural food. Yellow perch can
attain lengths of 5-7 inches in their first growing season
if they are eating pelleted feed, or lengths of 3-6 inches
on natural food. Walleye generally grow about one inch per
month on natural food.
Little is known about stocking rates used by
Michigan's commercial growers for production of cool- and
warmwater fish. As with trout, farmers know the number of
fish each pond can hold at certain sizes, but rarely make
actual calculations. Records of stocking densities are
kept even more rarely. To add to the difficulty, these
species of fish are almost always counted, rather than
weighed, and little is known about the length-weight
relationships of the various species in commercial culture
situations. Stocking rates vary primarily with factors
such as feed type, feeding rate and supplemental aeration.
These last factors are generally more variable with cool-
and warmwater fish than they are with trout, leading to
increased variety of stocking density combinations.
Marketing
Input delivery. The four main inputs used by Michigan fish
growers are feed, eggs, fingerlings, and labor. The
relative importance of each of the inputs varies across
individual farms and enterprise types.
Feed. Feed is the single largest purchased
input, accounting for more than 50 percent of variable
costs (Johnson, 1976). Yet, there are no commercial mills
in Michigan that manufacture fish feed. The four closest
feed mills are located in Ontario (Martin Feeds),
Pennsylvania (Zeigler Brothers), Missouri (Purina Mills)
and Minnesota (Super-Sweet Feeds). Although most of the
larger Michigan growers order directly from feed mills,
Purina feed (and to a lesser extent Super-Sweet feed) can
be bought at many feed stores throughout the state. All of
the feed mills make high quality diets for several fish
species, and in formulations and sizes suitable for all
ages (fry to brood stock).
Although there appear to be many sources of fish feed,
the supply is dominated by two firms--Martin Feeds and
Zeigler Brothers. Larger growers order directly from these
feed suppliers because there are no local mills, and
because the retail price is high at local feed stores.
Except for a few growers that purchase feed as a group,
they are at a bargaining disadvantage with the larger feed
mills.
Eggs. The source, availability and cost of fish eggs
vary considerably across species. Although rainbow trout
eggs are available both within Michigan and from
surrounding states, most growers that purchase rainbow
trout eggs get them from Washington (Troutlodge). These
eggs are certified to be free of disease, are relatively
inexpensive and are available all year. Most growers who
raise brook and brown trout produce their own eggs because
there is not a reliable, high-quality supply in the market.
Eggs of other species are generally not available for
purchase, so growers either hatch their own eggs or
purchase them as fingerlings. Even though most growers
purchase trout eggs from a single source, this market
appears to function well. Growers do not complain of any
improprieties from the participants in this market.
Fingerlings. Since most growers have at least a small
fingerling enterprise, most species grown in the state are
readily available as fingerlings. Most purchased trout
fingerlings are acquired from Michigan growers, although
when in short supply a small amount are obtained from
Wisconsin and other surrounding states. Fingerlings of cool
and warmwater fish are almost entirely purchased from
Michigan growers. There also is considerable buying and
selling between growers to fill customer orders.
Given the large number of suppliers within the state,
and that some growers from outside the state annually
transport fingerlings for sale, the market seems to
function well. In addition, some growers aggressively
price and promote their product, further applying downward
pressure on prices.
Labor. Although the amount of hired labor varies
across growers, the primary source of labor is the owner-
operator. Most of the hired labor is used for food-fish
processing or by larger farms that grow many species. The
supply of labor that is trained in aquaculture is small.
In addition, most growers are too small to be able to hire
those trained aquaculturists that are available. Although
general farm labor is available, their usefulness to an
aquaculture operation depends upon the intensity of the
production system. It is difficult to assess how this
market is performing since few growers use hired labor.
Product marketing
The method by which aquacultural products are marketed
varies considerably across enterprise types, including game
fish (planting stock), food fish and fee-fishing. The
marketing of products from each enterprise is presented in
terms of importance, products marketed, marketing channels
and the degree of competition.
Game fish. Almost 75 percent of Michigan fish
growers market game fish (planting stock). The six most
common species sold as planting stock are, in order,
rainbow trout, brook trout, brown trout, bass, bluegills
and catfish. Growers most frequently sell directly to
individuals that own private lakes or ponds. A few larger
growers, however, also supply fingerlings to other growers.
Most sellers are willing to deliver the fish to the buyer,
usually at a fixed rate per mile. Although some growers
aggressively advertise locally (mostly in newspapers and
flyers), most rely on repeat customers and word-of-mouth
for new business. Although there is little competition
from out-of-state growers, the game fish market appears to
perform well.
Food fish. About 50 percent of Michigan fish growers
market food fish. The most commonly sold species is
rainbow trout (approximately 75 percent of the growers),
although brook trout, brown trout, catfish and yellow perch
are also raised as food fish. Growers sell to wholesalers,
retailers, restaurants and, to a lesser extent, directly to
consumers. Larger growers more frequently market to
wholesalers, while small to medium operations sell
primarily to retailers and restaurants. Selling directly
to restaurants and retailers has limited growth potential
for medium-sized operations because of the high transaction
costs involved in having the grower do all of the marketing
activities (from initial contact to product delivery). As
a result, some growers have facilities that are
underutilized. Sales directly to consumers comprise a
relatively small portion of the total sales volume of food
fish. The main competition facing Michigan food fish comes
from outside the state. Domestically, Michigan growers
face competition with other states for rainbow trout and
catfish. Idaho producers can deliver rainbow trout to
Michigan markets at a lower price than can local growers,
primarily because of ideal water sources and large
vertically integrated firms which can capture economies of
scale. Similarly, producers in the southern part of the
United States can supply catfish at a lower price than can
Michigan growers, primarily because of the longer growing
season, lower input prices, and scale of operations. In
addition, Michigan fish growers face competition from
commercial fisheries in the Great Lakes, domestic and
foreign ocean fisheries, and foreign aquacultural
businesses.
Fee-fishing. Slightly less than 40 percent of growers
have fee-fishing operations. The most common species
available is rainbow trout, although some growers make
available brook trout, brown trout, catfish, bluegills, and
largemouth bass. By definition, growers sell directly to
consumers who come to the fee-fishing operation to either
catch or buy fish. Most growers don't charge an entrance
fee. Customers are obligated to purchase all fish they
catch, priced either by the pound or the inch. Although
most of the growers provide cleaning, bagging and icing of
caught fish, few offer additional services such as hatchery
tours, refreshments, or souvenirs. Only a few of the fee-
fishing operations aggressively advertise their business.
Most, therefore, rely on repeat customers and word-of-
mouth. Because the fee-fishing operations are dispersed
throughout the state, there is little competition among
growers for customers. Fee-fishing operations face
competition primarily from public fisheries (lakes and
rivers).
Emerging Issues and Assumptions about the 1990s
New biological knowledge
In the coming decade, a great deal of new biological
knowledge will become available for a number of farm-raised
fish species. Research on husbandry practices, growth
requirements, nutrition, and other applied subjects, as
well as basic physiological research, is being carried out
around the country. In the North Central Region,
researchers are evaluating a number of species that may be
particularly suited to Michigan conditions, including
yellow perch, walleye, bluegills, crappie, hybrid striped
bass, baitfish and crayfish.
New technology
Production
The rapid growth of the aquaculture industry is
expected to provide a number of innovations in production
technology. New equipment will continue to be developed
for production, processing, and harvesting. For example,
work is ongoing to develop a fish pump that will work with
hard-spined fish such as catfish, and members of the
crayfish industry are calling for the development of
equipment that will peel crayfish tails. As production of
aquacultural products increases, so will the need for
specialized types of equipment.
A relatively new and much-touted production system is
the "recirculating", "reuse" or "closed" system. In this
system, the water is circulated through the fish tank, then
through a number of cleaning components, and then
circulated again through the system. Fish densities are
generally high and daily water replacement can be as low as
5 percent of the total volume. These systems have a number
of advantages. First, heat added to the water is retained
in the system. In colder regions, such as Michigan, the
constant heating of new water is prohibitively expensive.
Second, the amount of wastewater discharged from this type
of system is very low. As aquaculture production
facilities increase in number and size around the country,
government agencies responsible for regulating discharge of
effluent into public waters are becoming more strict about
permitting these discharges (see "Wastewater discharge",
page 18). Third, land and water requirements are very low
for these facilities, an advantage in areas where land and
water costs are high. Finally, the high degree of control
over the rearing environment greatly increases the variety
of aquatic organisms that can be grown.
At this time, however, none of the many systems
developed for commercial use are economically feasible,
unless they are used for extremely high-value species. The
fixed costs of the system and associated equipment are too
high, as is the rate of system failure and resultant crop
loss. Research on recirculating systems is increasing, and
many industry observers eagerly await further developments.
In this region, with its relatively short growing
season, investigation into alternative sources of heat,
such as waste heat from power plants, is expected to
accelerate. Additionally, greater amounts of economic
information on the feasibility of all aspects of
aquaculture should be available in the coming decade.
Economic research has lagged far behind technical research,
but this is changing.
Consumer
Due to rapidly changing lifestyles and demographics,
consumers are demanding products that are more convenient
to prepare (Pierson and Allen, 1990). It is assumed that
this long-run trend will play a greater role in the way in
which aquacultural products are marketed in the future.
Increasingly, more consumers have access to technologies
that shorten meal preparation time. For example, 66
percent of households have a microwave oven (Allen and
Pierson, 1987). It is expected that this access to
technology will continue to apply pressure on the marketing
system to supply more convenient food products.
Marketing
The two major anticipated changes in the marketing of
aquacultural products are in packaging and in product
development. First, it is anticipated that more
aquacultural products will be shipped individually quick
frozen (IQF). The IQF process reduces product handling and
increases shelf life. Many marketing agents expressed the
desire to receive their shipment in this form. Currently,
larger trout farmers in Idaho ship their products in IQF
form, and it is possible that this is how Michigan fish
products will be marketed in the future.
Second, it is expected that the current trend towards
developing more convenient consumer products will continue.
Although ready-to-eat products are available for both
catfish and trout, more have been developed for catfish.
For example, Delta Pride has recently begun to market three
prepared international catfish meals (Italian, Mexican and
Far Eastern) that can be cooked in either conventional or
microwave ovens (Anonymous, 1991). Catfish producers have
also kept up with current food trends, for example
supplying catfish fillets that are marinated in a cajun
sauce. It is expected that convenient and trendy products
will become increasingly available.
Legislation and policy
National Aquaculture Development Act
In 1991, Representative Stallings of Idaho introduced
a bill into Congress to provide a coordinated national
aquacultural policy for the private sector. The short
title of this bill is the National Aquaculture Act of 1991.
Major provisions of the bill would: 1) designate the U.S.
Department of Agriculture (USDA) as the lead federal agency
for aquaculture; 2) establish an Office of Aquaculture
Policy Coordination and Development within USDA; 3)
instruct USDA to treat aquacultural products as
agricultural commodities. Additionally, high priority is
to be given to research programs for therapeutic compounds
and an analysis of the economic impact of damage to
aquaculture due to predation. As of September 1991, the
bill had 40 co-sponsors. Aquaculture industry leaders,
including the National Aquaculture Association (NAA), agree
that the bill presents an excellent opportunity for
aquacultural development and have given it their support.
Aquaculture drugs and therapeutants
Drugs and therapeutants used on fish are regulated by
the Food and Drug Administration (FDA). For a compound to
be approved by the FDA, it must go through a lengthy and
expensive (up to $10 million) registration process. So
far, only six compounds have been registered as
therapeutants for fish, and only three are available for
use on food fish. Until recently, FDA has exercised some
regulatory discretion in allowing the use of other commonly
used drugs, especially in emergency situations. Increasing
consumer concern over food safety issues, however, has led
FDA to adopt a new policy. With very few exceptions, only
drugs that have gone through the entire registration
process may be used for any reason. While the FDA has
recently declared that compounds such as salt, vinegar,
baking soda, and carbon dioxide are of "low regulatory
priority", these compounds have limited effectiveness. As
disease is a leading cause of fish mortality, and there are
few pharmaceutical companies interested in investing the
money needed to register new compounds for use in
aquaculture, the situation is becoming very serious.
Fortunately, this problem is widely recognized and some
federal research programs are beginning to make aquaculture
drug research a priority. Still, years of research are
required for each compound that goes through the
registration process, so little relief is expected in this
decade.
Nutritional labeling
The FDA has recently initiated a voluntary nutritional
labeling program for the twenty most frequently consumed
fish and seafood products, including trout, catfish, salmon
and whiting (FDA, 1991). The objective of this program is
to make information on the nutritional content of fish and
seafood more accessible to consumers. Although the program
is currently voluntary, in May 1993 FDA will assess whether
a sufficient level of compliance has occurred (more than 60
percent of the retail outlets have labeled at least 90
percent of the specified products). If sufficient
compliance has not occurred, the program will become
mandatory. The cost of compliance with the program,
estimated at between $100 and $160 million, is to be borne
by retailers.
The aquaculture industry generally supports the
labeling program, but is ambivalent about inconsistencies
in the proposed reporting formats. Given the good
nutritional content of farm-raised fish, this program will
be a positive development in the long run for Michigan fish
growers.
Seafood inspection
There appears to be growing public concern about the
safety of seafood products. Red meat and poultry are
federally inspected at various stages of processing, but
the only seafood inspection available is a voluntary
program through the National Marine Fisheries Service
(NMFS). In 1989, four bills before Congress called for a
mandatory seafood inspection program. These bills differed
in three main areas: 1) the enforcing agency (USDA, NMFS or
FDA); 2) the inspection process to be used; 3) the source
of funding for the program. A Hazard Analysis and Critical
Control Point (HACCP) inspection process has since been
agreed upon, but there are still disagreements over the
enforcing agency and funding source. Currently, another
set of bills has become mired in Congress, but a seafood
inspection program is expected to be initiated in this
decade. The seafood industry generally welcomes mandatory
inspections and sees the program as a way to build consumer
confidence.
Wastewater discharge
The federal Clean Water Act and its amendments
authorize the Environmental Protection Agency (EPA) to
regulate the discharge from aquaculture facilities larger
than a given size. In many states, including Michigan,
these permits are issued through the appropriate state
enforcing agency. In Michigan, this agency is the Michigan
Department of Natural Resources. Discharges must meet
certain water quality standards, and individual permit
requirements are established on a case by case basis.
Unfortunately, little data is available on typical
discharge water quality parameters, and it is difficult for
the EPA or the responsible state agency to establish these
requirements. The industry generally feels that the
required standards for discharge water quality are too
strict. In some cases, the maximum nutrient levels allowed
in the discharge are lower that those found in the incoming
water. In an effort to alleviate this problem, the USDA
regional aquaculture centers have begun research projects
to collect baseline data necessary for the EPA to use when
establishing criteria for discharge water quality.
Legislation and related issues in Michigan
The Michigan Aquaculture Advisory Committee, an
industry-led committee which also includes representatives
from state agencies, universities and tribal communities,
renewed its efforts in 1991 to establish a favorable
atmosphere for aquaculture development in the state. The
purpose of the committee is to help the private sector and
state government work together for the advancement of the
industry. The main goals of the committee are a state
aquaculture plan to be written with the full participation
of both the Michigan Department of Agriculture (MDA) and
the Michigan Department of Natural Resources (MDNR), and
legislation that will address current and future industry
needs.
At the same time, an internal MDNR committee is
working on a set of new regulations for aquaculture in the
state. These proposed regulations reflect a recognition of
aquaculture as an agricultural enterprise and are designed
to regulate the industry in a more balanced and efficient
manner.
Consumer demand
Consumer demand for fish and shellfish products in
general, and particularly aquacultural products, will
continue to grow throughout the 1990s. Industry observers
estimate that the demand for fish will rise by 24 percent
through the 1990s, to 20 pounds per capita in the year 2000
(NOAA, 1990).
Due to changing lifestyles, changing populations, and
the rapid development of food processing and preparation
technologies, consumers increasingly demand convenience,
quality, variety, familiarity and value in food products
(Pierson and Allen, 1990). Farm-raised fish products have
the potential to address all five of these consumer
demands. First, to improve the convenience of farm-raised
products, some aquacultural processors are developing
ready-to-cook aquacultural products, both for conventional
and microwave ovens. Second, since farm-raised products
are grown in a controlled environment, they offer quality,
consistency, and safety. Third, farm-raised products offer
consumers a healthy dietary alternative. Fourth, with more
information about fish preparation and handling available
(e.g., recipe cards), the perceived risk of failure in
purchasing farm-raised fish is decreasing. Finally, as
more anglers follow the practice of "catch and release" of
sport fish, aquaculture will be increasingly relied upon to
provide fish for their home consumption. Michigan growers
have the potential to deliver farm-raised fish products
that are consistent with consumers' demands.
Projections to the Year 2000
Projecting changes in Michigan's aquacultural industry
to the year 2000 is a difficult task. Although the
industry is small and has had relatively little growth in
the past two decades, many changes could occur in the next
few years which would significantly affect the structure
and performance of the industry. Therefore, projections
will be offered under two scenarios. First, a current-
rate-of-growth scenario is presented. Then, a high-rate-
of-growth scenario is presented which assumes that changes
are made in the level of state support for industry
development and that the growers coordinate the industry.
Current rate of growth
Assumptions
This scenario assumes that past industry trends and
institutions will remain relatively unchanged. Given the
industry's size and little structural change over the past
two decades, this scenario projects what will occur without
concerted efforts to address current industry problems.
Projections
Number and size of farms. Under this scenario
there will be approximately the same number of farms in the
year 2000. In the last 15 years, the number of breeder's
licenses (necessary to raise fish) has remained unchanged
(117 in both 1976 and 1991). Without a more favorable
investment climate, it is unlikely that the number of
growers will increase appreciably.
Shifts in location throughout the state. It is
expected that there will also be little change in the
spatial distribution of growers throughout the state. As
was the case with the number and size of growers, the
spatial distribution of growers has changed only slightly
in the past 15 years. In 1976, growers were located in 57
counties in Michigan, while in 1991 they were in 54
counties.
Species raised. There are few changes expected
in the types of fish species raised, except for the
potential increase in the culture of yellow perch. The
Michigan Department of Natural Resources (MDNR) is
designing new rules that may allow new species to be
brought into the state. If this does not occur, the types
of species raised is expected to remain unchanged.
Enterprise combinations. As the market for game
fish (fingerlings to stock private ponds) becomes
saturated, it is anticipated that more emphasis will be
placed on raising food fish. This projection is consistent
with both national and state trends over the past five
years. For example, of all aquaculture businesses started
in the last five years, 51 percent were food-fish
operations, 13 percent were game fish, and 13 percent were
fee-fishing.
Production levels. It is expected that there
will be little change in total fish production and
productivity (yield). Although new, improved production
technologies are available for the fish cultured in
Michigan, few growers either are aware of these
technologies, or have adopted them. Therefore, there is no
reason to expect a change in the industry's performance.
Production inputs. Given the lack of adoption of
improved production technologies, regulations governing
which species can be raised, and the spatial distribution
and size of growers, there is little expected change in the
types and delivery of production inputs.
Market coordination. Few changes in the
coordination of the input and output markets are expected.
Because the growers are small, dispersed and highly
independent, they haven't organized themselves to influence
market coordination and regulation.
In summary, under this scenario the Michigan
aquaculture industry in the year 2000 will be relatively
unchanged. The industry structure, production processes
and output levels of Michigan aquacultural products will be
similar to those now found in the state.
High rate of growth
Assumptions
This scenario assumes that changes will be made in
state policy and coordination of the aquacultural industry
to address key development constraints, including changes
in institutional arrangements and information flow. First,
large efforts in changing the institutional arrangements
are required for rapid growth, including an aquaculture
plan (to specify interagency jurisdiction and cooperation),
a state aquaculture coordinator, more research and improved
extension coverage. Second, improved information flow for
both the production (primarily the availability of new
technologies and where to procure inputs) and the marketing
aspects (primarily product promotion, increased awareness
of industry and changing consumer perceptions) of
aquaculture are needed.
Projections
Number and size of farms. Under this scenario it
is expected that there will be more and larger farms in the
year 2000. A favorable investment environment could
potentially attract new growers and encourage some current
growers to expand their operations. New investors and some
marketing system participants have expressed willingness to
invest in Michigan aquaculture. Improved information flow
and clearer institutional boundaries should provide
stability to the industry.
Shifts in location throughout the state. As more
growers enter the industry and existing growers expand
their operations, there will be increased pressure to lower
costs of production. This will result in larger fee-
fishing and food fish operations being located nearer to
urban and tourism centers in an effort to lower their costs
of production and marketing (transportation). This shift
will be limited by the availability and cost of water (both
source and receiving waters) and land.
Species raised. With the changes outlined in
this scenario, more species could be raised for food fish.
Interviews with producers, marketing agents (retailers and
restaurants) and consumers have indicated a demand for the
culture of yellow perch, bluegills and walleye as food
fish. Although these fish are currently raised for
planting stock, few growers raise them for food. In
addition, with new MDNR regulations regarding species
importation, it is expected that innovative growers will
try to raise new fish.
Enterprise combinations. The assumptions made
under this scenario will accelerate the trend toward start-
up and expansion of food fish production enterprises.
Marketing agents have expressed a willingness to handle
more volume, as well as an expanded line of aquacultural
products. This trend is consistent with consumer demands
for healthier and safer food products. In addition, as
firms become larger, it is expected that more growers will
concentrate on fewer enterprise combinations.
Production levels. This scenario will result in
higher production levels and productivity. With more and
larger growers, total production will increase. In
addition, with increased quantities marketed, the resultant
lower prices will put pressure on growers to improve
productivity (yields) and lower their costs of production.
Production inputs. In addition to the increased
demand for inputs as a result of the change in industry
structure (more and larger firms), there will be changes in
both the types and delivery of production inputs. Because
of the increased demand for inputs, the bargaining power of
growers will increase. This trend will be further
strengthened by the need of growers to lower their costs of
production.
Market coordination. Because there will be more
and larger growers, there will be more pressure and
resources to improve the coordination of both the input and
output markets. Specifically, the main change in input
delivery will be in fish feed. In addition, there will be
more pressure on the government and the private sector to
promote the industry (especially food fish and fee-
fishing). Little change in game fish enterprises is
expected since this market appears saturated.
Need for Action and Recommendations
Constraints on aquaculture development in Michigan
While the Michigan aquaculture industry has the
potential for development and growth, a number of
constraints exist that limit its development. Many of
these constraints are similar for aquaculture producers
throughout the United States, such as limited access to
credit, therapeutic compound restrictions and bird
depredation. Many other constraints, however, are specific
to Michigan.
Lack of state recognition and support
Perhaps the greatest constraint to aquaculture
development in this state is the lack of recognition by the
state government--including the governor's office, state
agencies, and state universities--of aquaculture products
as agricultural commodities, and aquaculture as
agriculture. Without this recognition and official support
for development of the industry, it is unlikely that many
of the other constraints will be overcome.
Regulatory complexity and confusion
Michigan aquaculture businesses are licensed by the
Michigan Department of Natural Resources (MDNR). At this
time, however, only growers raising those species defined
as game fish need to be licensed. The majority of permits
necessary for constructing or making changes in an
aquacultural facility are also issued by the MDNR. Fish
that are raised for food, however, are regulated by the
Michigan Department of Agriculture (MDA), as are the
pesticides that may be used for weed control in a fish
pond. Because other state and local agencies may have
jurisdiction over other aspects of the business, growers
intending to begin a new aquaculture business may have to
work with as many as eight different government agencies,
and obtain up to 12 different permits and licenses. At
present, there is no one place an interested investor or
potential grower can go to learn about the proper licensing
and permitting procedures.
Environmental concerns
Increasing concerns about environmental issues, such
as discharge of wastewater, bird depredation, introduction
of new diseases into wild populations and possible escapes
of exotic fish could hinder the expansion of aquaculture in
Michigan. For example, limited availability of receiving
waters for direct aquaculture discharge could place limits
on both the availability of sites for, and economic
feasibility of, new aquaculture operations. This will be
especially true for larger businesses.
Lack of technical information and extension
Little information is available on suitable species,
production systems and the economics of aquaculture under
Michigan conditions. The information that is available is
difficult to obtain. Michigan has few extension personnel
involved with aquaculture. One of these is the extension
fisheries specialist at Michigan State University (MSU) in
East Lansing; the others are district extension Sea Grant
agents. Furthermore, the extension personnel have only a
fraction of their time allocated to aquaculture, even
though over 1400 requests for aquaculture information are
received yearly.
Marketing
The constraints on the marketing of Michigan
aquacultural products vary considerably depending on the
enterprise type: game fish (planting stock), food fish and
fee-fishing.
Game fish (planting stock). Although this market
appears to be saturated, there are few constraints in
marketing game fish. Since game fish are marketed
primarily to individuals with private lakes, the largest
constraint is identifying and making information available
to new customers. Larger game fish producers aggressively
market their fish, including maintaining up-to-date
customer lists.
Food fish. The most important constraints on the
marketing of food fish are related to market structure,
poor information flow, and government regulations. First,
Michigan fish growers are small, dispersed throughout the
state, and highly independent. As a result, most growers
market their own food fish, resulting in high transaction
costs (time). Efforts to strengthen business relations
among growers have been only moderately successful,
specifically with input procurement (feed). There is
little cooperation among growers with respect to product
marketing.
Second, there is poor information exchange not only
among growers, but also between growers and participants in
the marketing system (inputs and outputs), and between
growers and consumers. Survey results indicate that
businesses that market fish and shellfish products are
largely unaware that there is an aquaculture industry in
Michigan. Growers have little information accessible to
them about available input sources and potential marketing
outlets. Furthermore, consumers are unaware of where to
purchase Michigan aquaculture products. In addition,
growers are largely unaware of consumer preferences
regarding fish species and level of processing.
Fee-fishing. The largest constraint on expanding
fee-fishing in Michigan has been the grower emphasis on the
production aspect of the enterprise, rather than its
tourism and recreational aspects. Few growers possess the
knowledge of how to market their fee-fishing operation as
a tourist attraction. Extension materials are either not
available, or not accessible, to growers.
Recommendations
Aquaculture development plan and legislation
For the aquaculture industry in Michigan to achieve
its full potential, it needs the recognition and support of
the state government. The first step in this process is an
aquaculture development plan to be written with the full
and active participation of both the MDA and the MDNR. It
is important that both agencies recognize the value of the
industry and demonstrate their commitment to encourage and
aid its development. It is also important to pass
legislation that addresses the current and future needs of
the industry. This legislation should include: 1)
identification of aquaculture as an agricultural
enterprise; 2) product marketing and promotional
assistance; 3) availability or sources of financial
assistance; 4) personnel and facilities for disease
diagnostics; 5) research and development funds for both
production and marketing; 6) aquaculture educational
programs.
Aquaculture coordinator
A state aquaculture coordinator, as found in a number
of other states, would help alleviate many of the
regulatory constraints. This person would serve primarily
as a liaison to the state agencies involved with the
industry, as well as the primary resource person for those
needing assistance or information pertaining to
aquaculture. Additionally, an aquaculture coordinator
could work with product promotion, educational programs for
lenders, and a variety of other activities designed to
address the unique needs of the aquaculture industry.
Research and extension
Technical and economic research is necessary to enable
Michigan fish growers to increase both their production and
productivity, to address environmental concerns, and to
expand their businesses in new areas. At this time,
however, available funds and research facilities are
extremely limited. Little technical research can be done
without sufficient facilities, yet it is difficult to get
funding for facilities when there is little to show in the
way of research progress. Specifically, increased funding
is needed to more closely investigate the economic
feasibility of fish species that are both well known and
have an existing market demand.
The North Central Regional Aquaculture Center is
funding projects that are examining the potential of yellow
perch, walleye, hybrid bluegills, salmonids and hybrid
striped bass. More funding is needed to accelerate this
important research. The baitfish industry, in particular,
offers Michigan fish growers a lot of potential. With
almost 1.5 million licensed anglers in Michigan, and
increasing MDNR restrictions on the capture of wild bait,
there is a ready market. Additionally, many of the
baitfish now found in Michigan are supplied from southern
farms. More research is needed to determine the preferred
species and sizes, the extent of competition from out-of-
state growers and in-state wild caught fish, and the costs
of production.
Correspondingly, research results need to be extended
to interested farmers. A full-time aquaculture extension
position is needed to address grower needs and issues.
Funds for research, research facilities and extension
should be made a high priority at both the state and
university levels.
Industry promotion
Differentiate Michigan products. Michigan
aquacultural products can best be promoted by
differentiating them from products from other states. This
is especially true for products from food fish and fee-
fishing enterprises. Industry sources have reported that
Michigan farm-raised fish products (primarily rainbow
trout) have a better appearance and texture than similar
products from other states. Yet brokers, wholesalers and
retailers stated that Michigan aquacultural products are
priced too high compared with other fish and shellfish
products they handle, including Idaho rainbow trout.
However, retailers expressed an interest in paying a
premium for Michigan farm-raised rainbow trout. A
promotional campaign that highlights the non-price
advantages of Michigan aquacultural products would help
growers differentiate their products. Growers should
consider assessing themselves--perhaps by a set fee per
quantity of fish sold or feed purchased--to raise revenues
to undertake promotional activities.
Additionally, fee-fishing should be promoted as part
of an overall Michigan tourism experience. Linkage with
other recreational activities in the state offers fee-
fishing operations another source of first-time and repeat
customers. Also, a fee-fishing operation should make
available a more complete set of tourism activities other
than just fishing, including activities such as fish
feeding demonstrations and hatchery tours. In addition,
these operations should work with other U-pick businesses
and area attractions to provide visitors with a more
complete set of activities. Therefore, fee-fishing
operations should advertise in more traditional tourism
outlets, and be affiliated with other local recreational
activities and attractions.
Contaminant testing of Michigan farm-raised fish. One
of the major concerns of Michigan consumers is that the
fish they buy may be contaminated (PCB's and heavy metals).
In a 1991 survey of Michigan consumers, over 70 percent of
the respondents indicated that they either agreed or
strongly agreed that Michigan fish are contaminated
(Chopak, in press). Therefore, there is a need to test
Michigan farm-raised fish for contaminants to substantiate
the claim in a promotional campaign that their products are
healthy and safe.
Increase awareness of the industry in Michigan. A
promotional campaign is also necessary to increase
awareness of Michigan aquacultural products at all levels
of the marketing system as well as for consumers. Although
most brokers and wholesalers enthusiastically stated that
aquaculture is the future source of both fish and
shellfish, few were familiar with the Michigan's
aquaculture industry. They are, though, familiar with the
success of the U.S. catfish industry and have expressed a
desire to do business with Michigan growers. Although 60
percent of the Michigan consumers surveyed stated they were
aware that fish are raised in the state, less than 40
percent had a family member that has knowingly eaten a
locally-grown fish. Moreover, an even smaller percent
could identify where Michigan farm-raised fish could be
purchased (Chopak, in press).
Education on handling and preparing fish. In addition
to raising general awareness of Michigan aquacultural
products, a promotional campaign needs to focus on
educating both consumers and retail counter staff on fish
handling and preparation techniques. Consumer education is
necessary to address their concerns about their ability to
successfully handle and prepare Michigan farm-raised fish
given the cost and consumer unfamiliarity with the product.
Furthermore, many of the counter staff at general-line
retail operations are unfamiliar with the handling and
preparation of all fish and shellfish products, especially
aquacultural products. A promotional campaign should
suggest handling and cooking techniques that reduce this
risk of failure.
Market coordination
Input delivery. Alternative methods to
coordinate the delivery of inputs should continue to be
explored, especially for fish feed which is approximately
half of a grower's production costs. Both cooperatives and
improved market information have potential to improve input
delivery. Cooperatives permit collective bargaining and
group purchasing of inputs which should increase growers'
bargaining power and lower their average cost of
production. Although some of the larger growers currently
group purchase fish feed, a cooperative would especially
help smaller growers lower their cost of production.
Market information also has the potential to help
growers lower their production costs or acquire higher
quality inputs. For example, some growers are unaware of
the location, price, delivery schedules and cost of
production inputs. They subsequently purchase inputs at
elevated costs. The industry's newsletter could make
available to members the price and delivery information of
inputs as a service to help growers compare relative prices
between suppliers.
Product markets for food fish. Michigan growers can
improve the performance of the marketing of their
aquacultural products with cooperatives, market information
or contracting. First, food fish growers could form a
product marketing cooperative, which would give all
growers, and especially smaller ones, more bargaining power
and access to larger market outlets, such as brokers,
wholesalers and large retail chains. Also, an output
cooperative can better control product quality and, in the
long run, increase producer prices. More than half of the
growers interviewed (67 percent) reported a willingness to
join a marketing cooperative (Chopak, in press).
Furthermore, those growers who stated that they did not
want to join a cooperative said it was because their
business was too small. Ironically, it is these smaller
growers who would benefit most from a marketing cooperative
because it would give them more market power.
Second, greater market information can improve the
marketing of aquacultural products in Michigan. Most
growers face high transaction costs in marketing their
products. Because of their small size, spatial dispersion
and limited marketing experience, many growers spend too
much time seeking new markets.
Finally, growers can improve their aquacultural
marketing through contracting directly to buyers. For
example, growers can contract directly with a wholesaler,
grocery chain or other marketing business to sell their
food fish. Both growers and marketing businesses can lower
the risks inherent in marketing fish products by agreeing
ahead of time on the quality, form, size and delivery
schedule.
Conclusions
Aquaculture is a new agricultural enterprise that
offers Michigan farmers an opportunity for rural
development and enterprise diversification. Although the
industry's structure and performance have remained
relatively unchanged over the past two decades, potential
changes in the institutional arrangements that govern the
industry offer encouragement for future growth. More
research is needed to assess the economic and financial
feasibility of the industry, further investigate new fish
species appropriate for Michigan's climate and markets,
adapt production technologies to local environmental
conditions and assess how best to promote the industry.
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