The already declining popularity of tilapia in the United States of America is set to take another hit if the current 10 percent tariff on Chinese-origin fish is raised to 25 percent as previously announced. In expectation of this tariff escalation, trade was strong in the closing months of 2018. Latin America, Southeast Asia and Africa continue to increase in relative importance as both consumers and producers of farmed tilapia.

Production

Global production of tilapia is expected to continue to have risen by around 3–4 percent in 2018, reaching 6.3 million tonnes, even though the overall growth is slowing. The total output share of biggest player, China, is projected to drop as smaller producing countries such as Egypt, Indonesia and Brazil increase their production relatively faster.

Asia

According to the most recent Global Aquaculture Alliance (GAA) survey data, Chinese tilapia harvests are expected to have reached 1.75 million tonnes in 2018. Reports at the end of the year indicate that a number of farms in key producing regions experienced mass mortalities as a result of a period of abnormally cold weather, but the full extent of the losses are not yet known. Elsewhere in Asia, combined production in Indonesia, Viet Nam and the Philippines is expected to have totalled around 1.33 million tonnes in 2018. These countries have had varying success in their search for new markets to offset the drop in exports to the United States of America, but the urgency of this search may be reduced by the obvious opportunity presented by the new tariff regime and its potential to inhibit China’s dominance of the US market.

Latin America

Latin American tilapia production is expected to keep growing incrementally through to 2020, according to the GAA estimates. Production estimates for 2018 amount to 390?000 tonnes in Brazil, 75?000 tonnes in Mexico and 72?000 tonnes in Colombia. Motivated by the declining demand in the United States of America, Latin American tilapia companies have started to increase their focus on domestic markets to supplement their export business. Consumer acceptance of tilapia continues to grow in South America, helped by strategies intended to boost consumption, such as the recent campaign launched by the Mexican seafood industry and Guatemala’s first celebration of National Tilapia Day in November 2018.

Exports

China’s supply to the US market remains the most significant flow in international tilapia trade by some distance, but US per capita consumption of tilapia is falling as it struggles to compete with alternative seafood options. Markets in Africa such as Côte d’Ivoire and Burkina Faso are now absorbing some of the Chinese volume previously destined for the United States of America while growing production in countries such as Brazil, Mexico, Indonesia and the Philippines is increasingly directed to domestic and regional markets.

Latin American tilapia farmers are seeing a decline in exports to a US market that has stopped buying tilapia fillets. In the first nine months of 2018, Honduras, Ecuador and Costa Rica observed drops in both value and volume terms compared with the same period in 2017, while Brazil and Mexico exported higher volumes for lower value. Meanwhile, Colombian tilapia exports to the United States of America increased by 10.5 percent in volume terms and 11.6 percent in terms of value. Colombia has also started to export fresh high-quality tilapia to Iceland in November as part of commercial strategy coordinated at the national level.

Imports

United States of America

According to NOAA, US tilapia imports in the first three quarters of 2018 fell by 2.4 and 1.84 percent in terms of value and volume, respectively, compared with the same period of 2017. Tilapia imports from China account for 62 percent of US tilapia imports, and the announcement of tilapia’s inclusion in the new tariff regime caused a flurry of activity in the last quarter of 2018, pushing prices temporarily upwards. However, the increase of the import duty on tilapia to 25 percent, originally expected to take effect in January 2019, has now been pushed back to March and the resulting price decline may have negative consequences for wholesalers who are now sitting on large inventories.

A report from the National Fisheries Institute (NFI) released at the end of 2018 shows the clearly declining popularity of tilapia in the United States of America compared with other seafood options such as salmon. In the 2017 (the last available year), tilapia and salmon consumption was estimated at 1.08 kg and 2.41 kg per capita annually, figures which represent an 8.5 decline in the case of tilapia and a 10.6 increase in the case of salmon.

European Union (Member Organization)

EU28 imports of tilapia fell by 16 percent in euro terms during the review period, pointing to continued challenges for tilapia marketers targeting this market. According to the European Union Fish Processors and Traders Association (AIPCE-CEP), the EU28 consumes only about 1 percent of global tilapia supply, most of which is in the form of frozen fillets coming from China. The unit value of Chinese-origin tilapia into the EU28 remained approximately stable year-on-year, at an average of around EUR 2.25 per kg over the first three quarters of 2018.

Prices

Average unit value of frozen Chinese tilapia into the United States of America was USD 1.71 per kg (CIF) in the first nine months of 2018, which is a small increase from USD 1.67 per kg in the same period in 2017 but marks a substantial decline from a peak of USD 2.22 per kg in 2014. The downward trend reflects the erosion of demand in the important US market, while the relative stability of the past couple of years is primarily a consequence of China’s efforts to identify alternative markets. In contrast to China’s diversification of its export markets, exporters in Latin America are still very dependent on the US market, and the price decline over the last few years means that a significant proportion of exported tilapia from these regions is being sold at a loss. The rush by US importers to beat the anticipated tariff increase has also caused some disruption for the Chinese industry, with wholesale prices reportedly spiking in November on the back of US-lead demand.

Outlook

The outcome of the trade negotiations between the United States of America and China during the first few months of 2019 will be a crucial focus for the global tilapia market as any decision to delay, reduce or remove the 25 percent tariff on imports of Chinese tilapia will have significant implications for the wider market. If the tariff does indeed come into force in March 2019, the decline in China’s share of the US market can be expected to accelerate. At the same time, exporters in Latin America and in the rest of Asia will have to do some manoeuvring in order to take advantage of this opportunity, given that they generally try to avoid competing directly in the segment that Chinese tilapia occupies. Meanwhile, the importance of tilapia as a food fish can be expected to continue to increase in developing regions in Latin America, Africa and East and Southeast Asia.