Aquaculture and capture fisheries provide a significant source of protein and economic activity for people in the United States and other countries. U.S. commercial fisheries landings and value in 2017 were 9.9 billion pounds and $5.4 billion, up by 3.6% and 2.1 % from 2016, respectively (National Marine Fisheries Service 2018a). Aquaculture total production (freshwater and marine combined) in 2016 was valued at $1.5 billion with landings of 633 million pounds, maintaining a 1% annual increase in production volume since 2010 (National Marine Fisheries Service 2017, 2018a). The most valuable marine aquaculture item is oysters, followed by clams, salmon, shrimp, and mussels. Aquaculture represents 21% of the U.S. seafood production by value and is expected to grow in the coming years as the consumers’ demand for seafood continues to increase (National Marine Fisheries Service 2018a).

At the same time, the U.S. is the world’s largest importer of seafood by value, with anywhere from 65% to 90% of total domestic consumption originating outside the country (Gephart et al., 2019). Irrespective of the exact percentage, there is no doubt that the U.S. seafood market is dominated by imports. This situation has emerged because domestic seafood production – both wild-caught and aquaculture – have been unable to meet the increasing aggregate demand and per capita consumption of seafood (Shamshak et al., 2019). The U.S. wild-caught fishery stocks are essentially fully utilized and well-managed to avoid overfishing, which has resulted in stable annual production of about 5 million metric tons (mt) since the late 1980s (Garlock et al., 2020a). As late as 1975, the U.S. was the world’s third-largest aquaculture producer but increases in domestic production have been much smaller than global trends (FAO 2018) and peaked at just over 600,000 mt in 2004. Global aquaculture production has expanded rapidly since then, while U.S. aquaculture production declined to just over 400,000 mt in 2017 (Garlock et al., 2020a). This has created a situation where most of the increases in U.S. seafood demand since the 1980s have been met through imports, which have almost tripled to just under 3 million mt product weight in 2017. High volume segments of the U.S. seafood market are very competitive, characterized by keen price competition between domestic and foreign producers, and low-cost foreign producers have captured significant market share (Anderson et al., 2018).

A shift in the tide that could benefit domestic producers may, however, be on the horizon. Recent studies have shown that consumer demand exists for seafood that possesses a specific quality, production process, and origin attributes (Garlock et al., 2020b). There is also evidence that niche-oriented clusters with local suppliers could improve competitiveness in the domestic aquaculture industry in other countries (Asche, 2008), and this is a type of industry structure that can create new opportunities for the U.S. aquaculture sector. In Rhode Island, for example, oyster aquaculture is one of the fastest-growing industries with an estimated net value of over $6 million (RI Coastal Resources Management Council 2019), and in Florida, clam aquaculture has been highly successful during the last two decades (Lallo, 2016). Local producers of Pacific white shrimp in Hawaii compete successfully against foreign imports of the same species (Hawaii Department of Agriculture, 2016), and locally farmed shrimp, tilapia, and milkfish are in high demand in Guam (Guam Economic Development Authority, 2019). It is also worthwhile to note that there is increasing recognition for other purposes that local aquaculture may serve. For example, in Hawaii, traditional fishponds have played a role in food security for generations but are also culturally significant sites that allow for the continuation of cultural practices. A streamlined permitting process was recently developed to encourage fishpond practitioners (Watson et al. 2016). 

In the short term, however, the heavy dependency of the U.S. seafood industry on imports is expected to remain. This produces both a degree of food security risk as well as a significant trade deficit. Disruptions to the global supply chain are no longer hypothetical as we have seen during the on-going COVID19 crisis. Domestic fisheries would be unable to fill the demand-supply gap in case of any significant supply chain disruption, and the risk of shortages could become higher if wild fisheries are negatively affected by other disruptions such as climate change. These risk scenarios were mostly hypothetical until recently, but this year has seen reduced fishing due to both collapsed demand and safety concerns for fishermen and their crews. Global and domestic supply chains were disrupted, causing much chaos during early periods of the pandemic, and food security risk became acute in regions such as Hawaii and Guam which are represented by our consortium partners. This situation was made worse by the absence of a large and diverse domestic aquaculture industry.

The COVID19 pandemic incident also brought to light a lack of diversity in many parts of the U.S. aquaculture industry. Focusing on high-value species is both desirable and preferable from a purely business and economic efficiency perspective, but this can create challenges when supply chains are disrupted. The RI aquaculture industry’s focus on oysters that serve mainly the tourism and hospitality industries is one such example. The industry has recently put a lot of effort into promoting the consumption of farmed oysters at home (Kelly 2020), but the local market is small compared to the scale of oyster production. This situation can create imbalances in local seafood markets if supply chain disruptions create an over-supply of local species and a concurrent shortage of imported seafood. It also highlights the importance of investing in diverse local aquaculture production that is resilient to external shocks.

Another important and interesting aspect of aquaculture is that it interacts with capture fisheries in many ways. One example is the provision of hatchery-raised fish and shellfish that are released into the wild to enhance or rebuild wild stock populations, thereby providing support for both commercial and recreational fisheries. The state of wild fish stocks and associated fishery regulations could influence the demand for farm-raised fish and shellfish. It could also affect technological innovations, such as the recent introduction of genetically modified (GM) Atlantic salmon (Smith et al. 2010). Capture fisheries also interact with aquaculture products in exchange markets, regulatory environments, and economic development activities (e.g., Knapp et al. 2007). The importance of the multifaceted relationship between aquaculture and capture fisheries suggests a need for reliable economic studies of these two critical resources, especially as management, regulatory, and market demands change over time.

This proposal was developed based on the previous multistate project W3004 that ended in 2019 and the discussions by the members of WDC4004 that took place in the past two years. Some components from W3004 were retained while other components are newly introduced, but the focus will remain as the study of the marketing, trade, and management issues found in various aquaculture and fishery resources. New tasks will be undertaken under the three interrelated areas: 1) marketing, niches, and new products; 2) production for dynamic markets; and 3) analyzing the ‘seascape’ of the aquaculture industry in the U.S. Conducting the proposed work within a multistate framework will facilitate the examination of important stakeholder issues by bringing together experts from across the country, thus avoiding duplication of effort in the design and implementation of research studies. In doing so, the project will continue to create and maintain the human capital infrastructure of the previous W3004 project and WDC4004, and provide a scientific resource that can respond to emerging problems in this resource sector.

The remainder of this section briefly describes the issues and justification for each of the main areas of research to be conducted under the project.

Marketing, Niches, and New Products

The last three decades witnessed the globalization of trade in seafood products. World exports of fishery products equaled approximately $23 billion in 1986 and had increased to $142.5 billion by 2016 (FAO 2018). Much of the increase in seafood trade was fostered by advances in worldwide aquaculture production, which has been steadily increasing over time while capture fisheries remained stagnant worldwide (FAO 2020). U.S. imports of edible seafood products in 2017 were 5.9 billion pounds valued at $21.5 billion, an increase of 1.6% and 10.4% from 2016 respectively (National Marine Fisheries Service 2018a).

Many of these imports competing directly with the U.S. capture fisheries (e.g., salmon, pollock, and shrimp) and aquaculture (e.g., catfish and crawfish) sectors. In many instances, this competition resulted in declining real dockside prices for the nations domestically produced products and gradual erosion of economic activity in the harvesting and supporting sectors. Many rural U.S. communities that depend on the production of captured and farmed aquatic products are at a crossroads because of this expanded globalization. Eventually, participants in this sector must respond to global competition and adopt new methods and frontier technologies with the goals of sector rejuvenation and economic security in a changing marketplace.

To meet the challenges ahead, these communities and the small to midsize companies that support them must innovate by developing new products favored by end-users, position products in market niches that increase market penetration, and/or communicate with end-users to maximize the perceived value of the product. Thus, information concerning product distribution and flow, end-user preferences and perception, pricing, processing methods and technology, packaging, and institutional and structural arrangements in the supply chain is needed to ensure marketing success and the sustainability of fisheries and aquaculture assets.

Production for Dynamic Markets

Rapidly changing prices and business opportunities have led to increasing economic stress and uncertainty concerning the future direction of aquaculture and fisheries production in the U.S. (National Marine Fisheries Service 2018b). If these industries are to survive, research must focus on improving efficiency and competitiveness. Many aquatic species exhibit inter- and intra-annual changes in physiological characteristics which significantly influence consumer and producer welfare. To remain competitive, U.S. aquaculture producers need to continually improve production efficiencies in order to maximize the financial benefits that can be extracted from their managed production operations, all the while doing so in an environmentally and socially responsible manner. For capture fisheries, it is essential to design regulations and management systems that both maximize the market-related economic benefits derived from the resource and reward well-managed fisheries. Research that integrates both temporal and spatial characteristics of aquaculture and capture fisheries production can be an effective way of evaluating policy options and illuminate the important mechanisms operating between fish-based resources and their respective industries and markets.

Another factor influencing production is the way in which sector growth and changing international markets have affected the trade of fish products. Optimized production practices and breakthroughs in biotechnology research have resulted in declining costs of production for most aquaculture species at a time when many traditional commercial fisheries face increasing resource exploitation, overcapitalization, and marketing infrastructure constraints. Given that these trends are expected to continue, an increasingly dynamic aquaculture sector is likely to erode the competitiveness of traditional fishery products, resulting in a need to devise strategies that will help the traditional fisheries sector adjust to the changing market scenarios. Only by carefully managing the quality and quantity of aquaculture and capture fishery production, both from a temporal and spatial perspective, will the U.S. achieve the national and regional objectives of economic efficiency, full utilization, and stock conservation.

Analyzing the ‘seascape’ of the aquaculture industry in the U.S.

The U.S. aquaculture industry has been a minor participant in the global blue revolution that has occurred over the past several decades. As mentioned above, the U.S. was the world’s third-largest aquaculture producer as late as 1975, but after its domestic production peaked in 2004 it declined to just over 400,000 mt in 2017 (Garlock et al., 2020a). Overall, domestic marine aquaculture production has increased while total production from other environments has declined. This overall reduction primarily stems from lower catfish production, but certain producers have been able to take advantage of increasing domestic demand in specific seafood market segments. Future opportunities to reverse long-standing negative trends in U.S. aquaculture production will likely depend on successful targeting of market niches where U.S. farmers have a competitive advantage in supplying products with specific attributes, as well as improving the rate of farm expansion, and the stability and endurance of these new enterprises.

While there are signs of industry growth, especially with regard to marine aquaculture, these success stories are often focused on narrowly defined market segments that are vulnerable to market disruptions. What we need is to investigate for enabling conditions, as well as impediments, for opportunities to expand and diversify U.S. aquaculture production. The proposed project would combine national-level analyses on consumers' preferences, trends, and production challenges and opportunities, with a series of in-depth local case studies that investigate the same questions at the local scale and identify specific innovations and local success stories. The national studies will provide critical baseline knowledge, while the local case studies will focus on identifying effective policies, strategies, and knowledge that can be transferred to other regions.