Japan is aiming to increase exports of yellowtail – the country’s largest finfish export by value – but the efforts to increase exports are coinciding with tightening competition from new aquaculture ventures abroad.
In 2019, yellowtail made up 9 percent of Japan’s fish and fishery product exports - third by value behind scallops and pearls. Primarily, Japan's yellowtail exports consist of frozen fillets, with a small amount of frozen loin. The total frozen export quantity had been steadily rising before the COVID-19 outbreak, growing from under 1,000 metric tons (MT) in 2008 to over 8,000 MT in 2019. Air shipments of chilled product to the U.S. –Japan's top yellowtail market – were steady over the period at about 1,000 MT.
Export prices for the species plunged between 2011 and 2013 to a little over JPY 1,300 (USD 12.62, EUR 10.02 at the time) on overproduction, but stabilized between JPY 1,700 and JPY 1,800 (about USD 15.00 to 17.00, or EUR 12.65 to 14.70 at the exchange rates of the time) from 2014 to 2019.
In 2012, 160,000 MT of cultured fish of the genus seriola were produced, but domestic wholesale prices fell below the estimated producer breakeven price of JPY 800 (USD 10.02, EUR 7.79 at the time). The government requested fishery cooperatives cut production by at least 10 percent to protect struggling family operators. It enforced this by limiting the mojako (yellowtail juvenile) harvest to 27 million fish for all seriola species combined, so farmers had to reduce their total number of fish stocked in net-pens. This class of juveniles matured in 2014, and prices stabilized.
Since then, Japan's production volume has been kept at a little over 130,000 MT, with about 100,000 MT in Seriola quinqueradiata (buri/hamachi), 30,000 MT in Seriola dumerili (kampachi), and a small amount of Seriola lalandi (hiramasa).
However, in July 2021, following the 2018 reform of Japan's Fisheries Act, the Fisheries Agency of Japan announced a strategy to develop aquaculture as a growth industry, setting a yellowtail production goal of 240,000 (MT) by 2030, a 70 percent increase from its base year of 2018.
To achieve the goal, Japan is considering a reversal of its previous stocking limitation. To do so may risk another crash in the domestic market price, and would also require a large expansion of aquaculture sites, going against stricter siting policies intended to reduce toxic algal blooms caused by the influx of organic wastes around the farms. Offshore and land-based aquaculture have been discussed as possible solutions, but no decisions have been made yet by the government.
Additionally, a massive increase might necessitate a shift to hatchery-reared juveniles, away from the current practice of capturing wild juveniles for farm-rearing. Scientists have determined the current levels of wild-capture are not a threat to population levels, which are stable and have been augmented by warming ocean temperatures, which have increased the species' suitable spawning area.
Japan was the pioneer in yellowtail farming, starting in 1927 with the grow-out of undersized yellowtail in shore enclosures, then moving to floating net-pen aquaculture following the World War II. Since then, until recently, only Japan had commercialized it. South Korea has experimented with production on a small scale, but this has mainly been pond grow-out of captured juveniles.
While Japan's intended production boost is mainly aimed at the export market, especially in light of an aging and declining Japanese population that is eating less seafood, new producers having been popping up in other countries. Companies in Australia, the Netherlands, the U.S., and Mexico have all begun pursuing yellowtail aquaculture.
In Australia, Australia’s native yellowtail kingfish (Seriola lalandi, hiramasa in Japanese) supports a growing aquaculture industry. Clean Seas Seafood, based in Adelaide, South Australia, was the first entrant in 1998. It holds leases at several sites in Spencer Bay with stocking capacities of up to 10,000 MT. The company sold 3,166 MT in FY2021, up 31 percent from the year earlier. However, production costs rose from AUD 11.05 (USD 7.98, EUR 7.10) per kilogram in FY2020 to AUD 15.29 (USD 11.04, EUR 9.83). Clean Seas reported a statutory loss after tax for the year of AUD 32.1 million (USD 23.1 million, EUR 20.6 million), an increase of AUD 14.5 (USD 10.4 million, EUR 9.3 million) compared to FY2020. Factors contributing to the loss were higher fish mortality, reduced growth rates, and surplus fish biomass. The company slowed feeding and held fish longer in response to a COVID-19 related drop in demand. After these effects on costs have passed, the company will aim for a production cost of AUD 9.00 (USD 6.50, EUR 5.78) per kilogram. It sold 1,809 MT of its production domestically, 904 MT in Europe, 406 MT in the Americas, and 47 MT in Asia. Its distribution in North America has benefitted from cooperation with the Alesund, Norway-based salmon Hofseth Group, which also an investor in the company.
Indian Ocean Fresh Australia, based in Geraldton, Western Australia, had been developing aquaculture processes and commercially producing fish off the Geraldton coast since 2016. However, after pausing operations due to COVID-19 related disruptions and oversupply, the company had a falling-out with the Western Australia government when the state opened talks with Harvey Road Oceans on cooperation in a land-based yellowtail kingfish operation. Owner Erica Starling made the decision to cull 30 breeding fish and discontinue the farming operation entirely in September 2020.
Huon Aquaculture Group, which is primarily a salmon-farming company, entered the yellowtail kingfish market in 2015 with a trial at facilities in Port Stephens, New South Wales. In 2018, it announced plans to establish a 2,200-hectare yellowtail kingfish farm off the Western Australia coast near the Abrolhos Islands, off Geraldton, but the plan is still in development.
In Europe, The Kingfish Company is producing yellowtail inland-based facilities in the Netherlands. The company produced 637 MT (whole, in the round) of Seriola lalandi in 2020, up from 485 MT in 2019. The company is pursuing expansion of both its Netherlands farm and a new construction project in the U.S. state of Maine, for which it recently secured critical permits. Like Clean Seas in Australia, the company is losing money, though it attributes this to the cost of its rapid expansion.
The U.S. features other existing yellowtail aquaculture operations, aside from the planned on in Maine. A January 2021 report by NOAA, “Status of Seriola Aquaculture in the United States of America,” estimates the sushi restaurant market for seriola species at USD 20 billion (EUR 24 billion), mostly on the East Coast and West Coast, and in particular in Los Angeles. Ceviche, poke, tacos, and grilled applications may further expand the market size. The total seems overly optimistic, since Japanese Customs reports that Japan’s exports of frozen fillets of seriola to the U.S. in 2019 were valued at JPY 13.3 billion (USD 116 million, EUR 100 million).
Blue Ocean Mariculture, based in Kona, Hawaii, is currently the only company in the production stage in the U.S. It cultures about 800 MT of Seriola rivoliana (kanpachi) in open-ocean cages.
Another proposed project is Pacific Ocean Aquafarms’ offshore project. The company has filed applications to build a yellowtail farm four miles off the coast of California.
The California-based project will face nearby competition in Mexico. Privately-held Omega Azul Seafood raises Seriola rivoliana (kanpachi) using a closed-cycle hatchery system. The head office, hatchery, and ocean farm are all located in La Paz, Mexico. Omega Azul sells its product domestically in Mexico, and exports to the U.S. and Canada. In 2021, sales and revenue of the company's branded Baja Kanpachi were small, through the company expects growth as the U.S. dining scene re-opens.
Two others yellowtail projects exist in Mexico: Baja Seas, with pens in Magdelena Bay, and King Kampachi in La Paz. The former was founded in 2012 and produces Seriola lalandi (hiramasa) from a recirculating aquaculture system (RAS) hatchery. The company introduced its products to the U.S. in 2014 with distribution through Catalina Offshore Products. However, the company’s website and social media are now dormant, and its products are out of stock at vendors that previously featured them.
King Kampachi farms raises Seriola rivoliana and can trace its roots to Kona Blue Water Farms in Kona, Hawaii. The company operates a land-based hatchery and an offshore farm site. The product has been available in restaurants in the U.S. and Mexico since March of 2019. In response to the COVID-19 pandemic, the company created national U.S. distribution channels through Los Angeles-based Riviera Seafood Club, a web-based food delivery company. Prior to the outbreak, King Kampachi planned to produce 1,200 MT per year.
Currently, the primary competitors to Japanese production are all in either a start-up or growth phase, with operations funded by new investors rather than revenue from sales. With high operating costs, a tight price situation brought about by a removal of the Japanese stocking limit could put the squeeze on all new entrants.
Photo courtesy of haruka japan/Shutterstock
