Why is aquaculture struggling?

BY Leslie Ter Morshuizen

Having been part of the aquaculture industry in Africa, and especially South Africa, for the past 20 years, I have formulated opinions on why the local industry does not appear to be growing as quickly as it should.  These opinions are not meant to offend, but are intended to clearly raise and illustrate hurdles which I believe need to be removed or significantly lowered for the industry to flourish.
There is far too much red tape for any new entrant wishing to invest in aquaculture.  If government is serious about growing aquaculture the number of permits and conditions associated with those permits need urgent attention to appropriately reduce the load.  This includes the complex and often largely opaque cross-Departmental rules which often strangle and trip up investors before they get to break ground or thereafter when they realise they have not applied for something they needed before commencing.  These cause time delays, wasted costs and result in frustration.  Sadly, many aspirant fish farmers have started and not completed process.  I call to the State to get the permitting in order so as to stimulate rather than frustrate the industry.
BBBEE is as evil as its predecessor Apartheid, except that with hindsight one would have hoped and expected that we would have learned that you cannot build by dividing.  I do not accept that it is meant to level the playing grounds and benefit those who were excluded by Apartheid; read the new BBBEE codes, they are specifically designed to create a small pool of `black industrialists’ rather than to grow the economy or uplift general population.  The true effect of BBBEE is to cause many of those who have skills and cash to take them and invest in other countries where the laws are not racially motivated.  This further dilutes the local talent and the economy.  Let’s learn from the past and scrap all forms of racially inspired legislation so that we can start working together to grow the economy and create jobs for the unemployed masses in our country.
Political instability.  I watched the Rand lose 40c to the US$ yesterday morning in a mere 2 hours following the National Prosecuting Authority laying charges against the Minister of Finance.  No one is above the law and if guilty every South African must have their day in court.  However, it is strange that the same NPA that has been unable/unwilling to charge our President on any of the more than 700 alleged charges, is able to quickly whip up a seemingly hollow case against the Minister of Finance!   The instability caused by the many dubious and often blatantly corrupt actions by a pro-Zuma State, leaves investors insecure locally and choosing to rather spend their ZAR elsewhere, where the political game and currency fluctuation are not as risky. If we wish to grow aquaculture in SA we need to clean up our playing field.
It is difficult to secure investment funding in aquaculture in SA.  White investors are again largely excluded by BBBEE or so compromised as to make a local investment unattractive, and non-white players often lack the skills, both on the aquaculture and business sides.  State `development banks’ are risk averse and where support is secured, payment is painfully slow, frustrating the business roll out and increasing the cost of the investment.
There is a national lack of technical aquaculture expertise at all levels from basic workers to senior managers.  Several Universities offer graduate and post graduate qualifications in aquaculture and there is a single Aquaculture Academy which offers practical training.  However, these alone are inadequate to grow the industry in line with the bold intensions of Operation Phakisa.  AgriSETA is in the process of developing new aquaculture training material, but the details of who will pay for this mass scale training have yet to be clarified.
South Africa’s climate is largely temperate with hot summers and cold winters, yet fish need to be grown all at an optimal temperature which varies according to the species.  It is therefore generally necessary to farm fish in an insulated, or semi-insulated, environment such as a warehouse or greenhouse to provide the ideal conditions throughout the year.  This adds to the capital cost and slightly increases the operational cost of rearing these species here versus elsewhere.  But the advantage is that we can offer year round supply of products to the market, a major advantage that harvest fisheries cannot offer.
Market access is a challenge.  The demand for fish is massive as has been confirmed by many independent surveys and detailed marketing investigations, but to penetrate the market and successfully maintain a market share requires significant capital and skill.  Funders typically require off-take agreements from the market before they will invest in a fish farm, yet the markets will not sign off-take agreements until they can inspect the processing factory and see the end product.  A catch 22!  Post-harvest value addition is a field that is largely undeveloped in SA, especially of the freshwater side beyond trout.  Opportunities abound but someone needs to foot the bill to develop the processes and products.
The economy of scale must be big for a fish farm to be truly profitable, yet the vast majority of people interested in entering the industry wish to start and operate a modest business.  Opportunities exist to club together and form a Satellite Grower Scheme, either for the entire process or merely in order to market products collaboratively.
When the above set of circumstances is considered in the light of Operation Phakisa and the stated desire by government to grow the aquaculture industry, I wish to propose that the State itself holds most of the keys needed to unlock commercial scale aquaculture in the nation.  In order for this to happen I strongly advocate that the State does several things, which will result in the private sector being able to run with the baton it is already holding in anticipation; these include:

  • scrap BBBEE and all other racial inspired laws and motivations; let’s together grow this industry based on economic principles to produce food and develop employment opportunities
  • streamline the permitting process to make the assessment of an application a simple, rapid process based on clearly defined appropriate environmental criteria sort out the politics!
  • if the president is a rotten egg get rid of him and his cadre, and replace them with honest leaders who are willing to stand against corruption, stabilise the platform and encourage international investment in SA
  • let the State fund the development of the market and especially of value added products based on catfish, tilapia and other species which hold enormous potential but have received little attention thus far
  • fund training centres that provide practical aquaculture training based on techniques and technology that is appropriate to the local environment
  • provide investment funding to all South Africans who wish to invest in the industry and have shown themselves to be skilled in both aquaculture and business 

Aquaculture has immense potential to create sustainable jobs in the rural areas, to develop a healthy protein and add significantly to the national economy, but will you as the State allow this to happen?

 December 05, 2016
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