By far the largest aquaculture producer in the world, China produced more than 50 million tons of farmed seafood last year, more than three-quarters of its total production of 64.5 million tons. That level of production makes China a vital market for aquafeed companies such as Cargill.
SeafoodSource talked to Henry Tang, the managing director for North Asia at Cargill Aqua Nutrition Group, about how the sector is changing in terms of investment, species development, and government policy, and how feed companies like his are responding to changes being implemented by the Chinese government affecting China’s aquafeed sector.
SeafoodSource: What are your views about how the Chinese aquaculture market is developing, especially in terms of new products and new trends?
Tang: The annual growth rate of aquaculture production in China remains very fast and steady. We have to understand that consumers’ seafood choices are very diversified in China, and there are many cultured species. Alongside the growth, consumption demand is changing from people “eating enough” to people eating “quality and healthy” seafood. We believe that the development and application of new raw materials can significantly improve the quality and flavor of aquaculture products, and we have done much exploration in this area. Cargill has been advocating a safe, responsible and sustainable way to help the world thrive, in the use of byproducts, which is what we continue to focus on. We are very happy to see that, with the progress of technology and processes, the utilization of fish [processing] byproducts is increasing; This means that the industry is in constant progress in the direction of sustainability.
SeafoodSource: How are you changing your business to meet the demand for quality feed?
Tang: Cargill Aqua Nutrition China is mainly focusing on the middle- to high-end market. We have established our own technology application centers in local areas and have been cooperating with well-known universities to continuously optimize our nutrition model in order to better match the nutritional needs of animals. In addition, we are constantly exploring the development and application of new materials. We hope to move towards better sustainable development. At present, the use of new raw material in our product range and dosage is rising. It is good to ensure the quality of our products. At the same time, we have well-known brands in China in some species because of our strong product value proposition, brought by Cargill nutrition technology, and this differentiates us in the market. In our marine aquaculture species businesss, new customers often find us through referrals from our existing customers. And also, we focus on quality management systems, from raw materials selection to production procedure control.
SeafoodSource: What is the “new raw material” to which you referred?
Tang: We are talking about functional additives that can improve animal health, for example, parasite infection prevention.
SeafoodSource: What new species are coming into popularity in Chinese aquaculture currently?
Tang: The industry is currently making very fast structural changes. Besides existing hot species like vannamei shrimp and crab, we see two categories of fast-growing species. One is the marine fish, such as golden pompano, yellow croaker, and grouper. Marine fish brings [food] safety, health and delicious flavor, and it is becoming a new lifestyle. Thus, we believe that the next 10 years will be a golden period for the development of marine fish. Secondly, freshwater species like crab, crayfish, and shrimp are now very popular. The government is encouraging more farmers to raise species through poly-culture crayfish with rice, to increase farmers’ income. And, also, government wants better quality product in the market, [therefore] these species also have great space to grow in the future.
SeafoodSource: Have you developed new feed products for these marine fish?
Tang: Yes. For example, three years ago, we started to penetrate the golden pompano market and now we have a very good reputation. Our products are considered as high value-added products with low FCR [feed-conversion ratio] and high ADG [average daily gain]. These help customers reduce risk and earn more money.
SeafoodSource: How do the new environmental rules, and stricter enforcement, affect your business model?
Tang: With the continuous development of the industry, in recent years, new environmental protection laws and regulations have been issued across China, such as the restrictions on the use of some feed additives, the control of feed plant emissions, forbidding [the use of] trash fish and so on. Environmental bars are being raised. Of course, we support and actively respond to the relevant laws and regulations of the government. We believe that only by focusing on green and sustainable production mode, the whole industry can achieve long-term and healthy development. For example, in terms of production emissions, we invested heavily in equipment renewal, greatly reducing odor emissions, so as to better integrate into the local community. Although production costs have been increasing [as a result], the impact of such laws and regulations on Cargill is more positive, because Cargill has always advocated a healthy and sustainable business model. The restriction of feed additives will raise entry barriers to the feed industry and make the whole industry more standardized. And the ban on the use of trash fish will promote the development of the feed market, so that we have greater development space. In fact, many times, before the government issued the corresponding laws and regulations, we have [already] invested a lot of energy in research. We will continue to add investment in research and development to provide safer and healthier products for the market.
SeafoodSource: When you say “trash fish,” are you referring to trash fish from Chinese waters or trash fish from anywhere in the world?
Tang: I mean the fish from local Chinese waters.
SeafoodSource: Regarding Cargill’s efforts on odor suppression – did you do this because of new government laws, or this is your own choice or company policy?
Tang: We are ahead of government laws. And also, we understand that government’s action on restricting odor emissions of factories will take sooner or later. In order to avoid passivity, we have to prepare in advance. In addition, this is in line with Cargill’s values.
SeafoodSource: What are the big changes at the farming level in Chinese aquaculture occurring right now in China? Are farms getting bigger, are big corporations and corporate investors investing in aquaculture?
Tang: It depends on species and markets. In freshwater culturing, the consolidation is not obvious. Fragmented farmers still account for a big portion of the total market, while in marine species or in the vannamei market, yes, there has been consolidation. The aquaculture industry has changed a lot at the farmer level and the scale is expanding. Now there are some companies with over 10,000 mu [one mu equals 667 square meters] in acreage of ponds or sea cages. And many large-scale aquaculture groups are increasing [their] investment in aquaculture. Some large-scale aquaculture groups can leverage their professional advantages, such as seedlings and feeds along the value chain. I think consolidation and industrialization will have a positive impact on the food safety, because [this model of] operation is more standardized and government supervision is easier.
SeafoodSource: How do you offer new skills and training to aquaculture farmers in China?
Tang: Training farmers is a matter of achieving more with one stroke, which has a profound impact on farmers, enterprises, and industries. We always put a lot of effort to provide new knowledge training for customers and set relevant KPIs [key performance indicators] to our market-facing team. Firstly, the salesperson is not only doing sales for sales, but also providing technical support to solve common problems. Secondly, when we encounter some relatively complex problems, we have regional technical service managers to provide more professional technical support. In addition, the technical managers will hold technical lectures in the market to introduce culturing modes and technologies, to help farmers keep profits and improve their capabilities. Thirdly, with the development of communication technology, online training becomes easier. We are also trying to provide more technical knowledge for farmers through online teaching. Fourth, we seek to integrate industry resources, cooperate with professionals in the industry and provide consultation on diseases, aquaculture, water treatment, etcetera. In the future we will continue to increase investment in technical support, complete the transformation from product suppliers to solution suppliers and provide customers with all-round support.
SeafoodSource: Can you share an example of a relatively complex problem you have solved for farmers?
Tang: Low survival rate is a big issue for shrimp seedlings. This was especially so in 2018. Through on-site investigation by our technical managers and discussion with customers, we developed a solution which contains water management skills and bacterial control measures. We taught this program to farmers and salesmen, and then raised the survival rate of seedlings by 10 to 20 percent.
Photo courtesy of Henry Tang/Cargill
