25.06.2020
Category: Fish
By: Cornelia Kreiss

The profit margin determines large part of typical farm’s future profitability under climate change scenarios


grafitti-1

grafitti-2

figures

C. Kreiss, Thünen Institute, own results

During the most recent decade, fish and shellfish resources in marine and freshwater aquatic habitats have been impacted by climate change induced shifts in their distribution and/or productivity. The impacts on the global food systems, including seafood production, are thereby complex and exceed those of direct environmental impacts.

Economic, social, but also technological and legal aspects are important to be considered as additional dimensions and, besides the aquaculture production itself, impacts on the industry’s inputs (e.g. feed) should also be taken into account. Within the EU H2020 project Climate change impacts on European aquatic RESources, CERES (Opens external link in new windowhttps://ceresproject.eu/), four contrasting yet plausible socio-political climate change future scenarios were developed (see figure below).

Typical farms defined for the key European aquaculture species (Atlantic salmon, rainbow trout, seabass, seabream, carp) from a total of 8 countries were used to investigate future profitability under the climate change scenarios. The considered time frame covers the period until mid of the century and results were compared to present-day operative earnings. Temperature induced changes in growth and feed conversion ratios, species-specific feed cost developments, trends for future energy costs and market returns were combined with assumptions on subsidies and marketing options.

From all species and production systems, typical seabass and salmon farms were predicted to be most profitable in the future (see Figure). For the other species, substantial reductions in profit were observed in most instances. However, exceptions were typical German carp farms under local scenarios, where local marketing opportunities were assumed (see also CARPLAND study Lasner et al. 2020), as well as German best practice trout farms (500 mt and 100 mt production volume) that developed increased profits under all scenarios.

Future profitability of the typical farms examined was less sensitive to future environmental changes than to the future development of costs, returns and marketing options. In general, the combination of market price and feed costs determines large part of the future profitability and explains major differences between the four scenarios. This relation is least favourable for the global scenario with environmental focus (S3) with comparably low fish prices, going back to scenario-specific changes in population, income, international trade, agricultural expansion and technological change being major drivers for long-term changes in world food prices.

Farms being no longer viable in midst of the century under all four scenarios had a present profit margin of 6-7%. A profit margin between 11- 31% often led to a decreased future profitability compared to today, however, depending on the scenario, these farms will still be able to continue operation. On the other hand, a present profit margin of >30% led to increased future profits under all four scenarios (e.g. German best practice farms, seabass farms).

The results highlight the importance of using future scenarios that include not only environmental but also, economic, political, social, technological and legal dimensions. Thereby, the typical farm approach is a very suitable tool to implement such scenarios. Further, it allows a combination with local environmental projections which are often only conclusive on such a small-scale level.

Want to learn more about it?

Download the full
Opens external link in new windowCERES project synthesis report

or read the topical publication:
Opens external link in new window"Future Socio-Political Scenarios for Aquatic Resources in Europe: An Operationalized Framework for Aquaculture Projections"
(Cornelia M. Kreiss et al. 2020)

Sources:

IPCC, 2013: Climate Change 2013: The Physical Science Basis. Contribution of Working Group I to the Fifth Assessment Report of the Intergovernmental Panel on Climate Change [Stocker, T.F., D. Qin, G.-K. Plattner, M. Tignor, S.K. Allen, J. Boschung, A. Nauels, Y. Xia, V. Bex and P.M. Midgley (eds.)]. Cambridge University Press, Cambridge, United Kingdom and New York, NY, USA, 1535 pp

Pecl, G.T., Araújo, M.B., Bell, J.D., Blanchard, J., Bonebrake, T.C., Chen, I.-C. et al. (2017) Biodiversity redistribution under climate change: Impacts on ecosystems and human well-being.’ Science 355:6332: eaai9214

Lasner T., Mytlewski, A., Nourry, M., Rakowski, M., Oberle, M. (2020). Carp land: Economics of fish farms and the impact of region-marketing in the Aischgrund (DEU) and Barycz Valley (POL). Aquaculture 519:734731, doi.org/10.1016/j.aquaculture.2019.734731

 

 


© 2022 by TI and global networks