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Global aquaculture facing new norm amid Covid-19

From national emergencies to lockdowns and travel bans the continued global spread of the novel coronavirus (Covid-19) has every industry bracing for the worst – and the aquaculture industry is no exception.

With the World Health Organization officially declaring a global pandemic, and the number of confirmed cases globally surpassing 230,000 – with a death toll of more than 9,000, as of this writing – organizations across the board and around the world are faced with unprecedented decisions that fundamentally change the way they conduct business and manage their workplaces.

China is still reeling from the outbreak as more than 81,000 of its citizens have been infected and more than 3,200 killed by Covid-19. All indications, however, currently point to at least a slowing down of the spread in that country – but not without leaving behind a trail of economic casualties. China’s global production recorded an all-time low as factories closed and shipping and cargo transport slowed down.

It’s neighbouring countries in Asia have responded in varying degrees all in an effort to contain and slow down the spread of the virus in their local communities. Malaysia has imposed a nationwide travel ban, restricting Malaysians from traveling outside of the country and preventing international visitors from coming in. Singaporeans are worried about food and other supplies resulting in panic buying as people prepare for potential lockdowns, according to reporting from CNN. Singapore imports 90 percent of its food supply. In the Philippines, President Rodrigo Duterte has placed half of the country under “enhanced community quarantine,” effectively locking down around 50 million people living on the island of Luzon and restricting all air travel from and to the island, the country’s biggest and most densely populated region.

South Korea, with the number of Covid-19 cases surpassing 8,000, seems to be on the mend as authorities there report a slowing down of new cases.

Italy has become the epicenter of the virus in Europe. It was the first European country to impose a lockdown and subsequently impose a travel ban, as the number of infections and deaths rise to alarming rates. With large aging population, the death toll in Italy has now surpassed that of China.

There have been more than 7,500 Covid-19-related deaths in Europe – a third of that from Italy alone – since the outbreak began last December. Spain and France, dealing with a fast-acting outbreak in their own jurisdictions, also announced strict lockdown measures to try to contain the spread.

In mid-March the European Union closed its borders to outside travelers, preventing non-EU nationals from entering the bloc. The restriction applies to 26 EU states as well as Iceland, Liechtenstein, Norway and Switzerland.

The United States and Canada both imposed travel restrictions and closed their borders to non-citizens and non-residents, with certain exemptions. The movement of goods and supplies between the two countries remain unimpeded. Workers who cross the border daily for essential work-related matters were also exempted from the travel ban.

For the time being, this is good news for the aquaculture industry in both countries. The U.S. is Canada’s largest fish and seafood export destination, accounting for 62 percent of Canada’s seafood export and valued at more than $4 billion, according to Fisheries and Oceans Canada. Lobsters, salmon and crab are the top three species shipped to the U.S.

Supply chain disruptions

It’s too early to quantify the full economic impact of this global crisis to the aquaculture industry, but early reporting is showing a downward trend. A recent survey from Tempe, Arizona-based Institute for Supply Management says 75 percent of companies are experiencing supply chain disruptions as a result of Covid-19-related transport restrictions.

“The story the data tells is that companies are faced with a lengthy recovery to normal operations in the wake of the virus outbreak,” said Thomas Derry, chief executive officer of ISM.

Fish and fish products are among the most heavily traded food products in the world, according to the Food and Agriculture Organization of the United Nations. China represents approximately 60 per cent of the world’s aquaculture production, and is the largest exporter and third largest importer of fish and fish products globally.

Fish products exports from Norway – the world’s second largest – are not spared from the impacts of Covid-19. While the Norwegian government has imposed stricter travel controls and closed its borders to foreign nationals who do not have a residence permit, the movement of goods and cargoes are carrying on as normal, as of this writing.

“Norway relies on good supply lines to ensure that essential goods are available for the population at large as well as for business and other activities. Air, maritime, road and railway traffic are all important parts of the supply lines in and out of Norway,” a statement from the government said.

The newly appointed Minister of Fisheries and Seafood, Odd Emil Ingebrigtsen, also issued a statement assuring the industry of its critical importance.

“The Norwegian seafood industry plays a very important role in the food supply chain, not only in Norway, but also across the world. In these difficult times it is important to keep society going, and ensure that everyone has access to healthy and nutritious foods,” says Ingebrigtsen.

This is good news for now for the Norwegian aquaculture industry. The alternative could be a grim proposition. In an interview with Norwegian news site Finansavisen, Carl-Emil Kjølås Johannessen, a seafood analyst with investment firm Pareto Securities, said the consequences of a shutdown of transport systems to Europe, Asia and the U.S. could be catastrophic to the country’s salmon industry.

He added, however, that salmon farmers in Norway are in strong business standing and will be able to withstand the initial impacts of Covid-19, before it gets worse for them.

The European Commission has implemented economic measures to help businesses in the European Union, adopting a “temporary state aid framework” to allow member states to provide economic relief to industries, including the fisheries and aquaculture sectors.

It’s a similar picture in North America’s aquaculture industry as more restaurants and hotels close, and demand for seafood drop. Reporting from Aquaculture North America (ANA), Hatchery International’ssister publication, indicates an industry that is starting to feel the economic impact of this global pandemic and bracing for the worst.

New Brunswick, Canada-based hatchery L’Étang Ruisseau Bar tells ANA that despite the slowdown, the hatchery is still in full production. “Stopping now would be disastrous and affect the seed supply for all Atlantic Canada,” said hatchery manager Martin Mallet. He added the Canadian government’s economic aid package will help the industry through this challenge.

Canadian Prime Minister Justin Trudeau has announced a $27-billion economic aid package that provides assistance to Canadian workers and businesses affected by Covid-19. The U.S., on the other hand, has proposed a $1-trillion economic stimulus package as financial relief for Americans and businesses.

In Washington state, Trout egg producer Troutlodge has assured its customers of uninterrupted supply of eggs “even in times of hardship and challenges.”

“Troutlodge’s role as largest trout genetic company in the world is critical for global trout production, so ensuring we’re able to continue delivering trout eggs is essential,” the company said in a press statement.

Anxious farmers

Across Europe, there is increased anxiety among fish farmers, according to André Bravo, co-founder of Devonian Capital, an international investment firm focused on land-based aquaculture projects.

“In addition to protecting staff, being able to keep operations running under adequate control and being able to pay salaries and bills, farmers are primarily concerned with keeping stock alive and healthy,” Bravo says.

Concerns about countries’ ability to maintain working supply chains over the medium term have farmers increasingly worried about maintaining power supply and deliveries of feed and oxygen at their farms.

As more restaurants and hotels are ordered and advised to close amid the Covid-19 outbreak, seafood producers are seeing their clients either reduce or stop their order altogether. Concerns over changes in consumer behaviour, as well as the on-going build-up of fresh inventories in cold storage, might be driving these seafood wholesalers and retailers buying decision, says Bravo.

“This creates an entirely new challenge that farmers need to address now to protect value,” he says. One recommendation is to continue to stock and feed juveniles as if it’s business as usual, as sales may get back on track in the short-term, he adds.

Bravo also suggests reduction in feeding to slow the growth rate of the fish. This will allow farms to reduce its overall costs and buy some time before they reach critical biomass threshold.

Farmers could also “suspend new fry/PL stocking to reserve available capacity for existing stock, and avoid generating additional running costs.”

“Ultimately, each farm will have a different set of opportunities and challenges to be addressed in order to maximize value,” Bravo says.

Business unusual

Aquaculture businesses and organizations are also adjusting to the new norm – for the time being – of operating under the threat of a global pandemic, enforcing new policies and work arrangements and other measure to keep their workers and customers safe.

Troutlodge says it has temporarily stopped farm visits, and implemented shift work to maximize social distancing protocols. Workers who are able to work from home were also asked to do so.

The Global Aquaculture Alliance (GAA), which facilitates Best Aquaculture Practices (BAP) certification has said it is working with its certification bodies (CB) to evaluate the circumstances of each processing plant, farm, hatchery or feed mill and decide how to best proceed with the certification process, given that many facilities may be dealing with the impacts of Covid-19.

“It is important to remember that, while BAP administers the certification process, the CBs make the certification decision and issue the BAP certificates, therefore this coordination is required to grant extensions on a case-by-case basis,” the GAA said.

Norwegian aquaculture products and service provider ScaleAQ has adopted mitigation measures that may affect service provision to its clients. All of its administrative personnel have been advised to work from home and work-related staff travels have been suspended.

“The service department will adapt each order to any restrictions that apply, both to ScaleAQ and to our customers,” the company said in a statement. “Production and flow of goods will be affected by the ongoing pandemic.” Affected customers of ScaleAQ were contacted about the changes, it added.

Boston-based InnovaSea has also adopted similar measures as most organizations in the face of this global pandemic: encouraging employees to work from home, where feasible, and suspending business travels, says CEO David Kelly.

The company has not seen any decline in sales so far, according to Kelly, but his company remains cautiously optimistic.

“Right now, there seems to be a positive spirit out there among the populace, with people doing their best to adapt to this sudden new reality and just trying to work through it,” he tells Hatchery International in an email. “But it could be a different ballgame if social distancing and other measures continue into the summer or beyond. The concern for us then would be seeing a drop in sales or experiencing significant supply chain impacts. Hopefully we’ll be back to business as usual before that happens.”