This section should be read in conjunction with the supporting material in Appendix 1.
2.1 Key points and implications for risk management
2.1.1 Mature industry sectors
New Zealand’s mussel, oyster and salmon sectors are now mature industries that have grown from experimental and small-scale operations to broad participation, including major corporate interests, research capability and supporting players. There are now companies, individuals and researchers across the country with significant experience and knowledge of aquaculture in New Zealand conditions.
Many marine farms are using sophisticated and tested technology with significant capital value, which can be recovered and reused. Significant improvements to systems have resulted in stronger structures with greater ability to resist tidal and weather events. There is also a deepening body of knowledge on the impacts of marine farming activities on the coastal marine environment, and this is shared between researchers, farmers and regulators.
2.1.2 Increasing industry concentration
Increasing industry concentration is leading to a smaller number of industry participants that are typically well resourced and have long-term perspectives for their businesses and the shared resource in which they operate. They are equipped to assess and mitigate their operating risks and manage and withstand external risks. They are also able to take over the marine space vacated by smaller participants exiting the industry for a variety of reasons.
The maturity of species sub-sectors and broader experience in withstanding risks to viability has led to industry-level strength in managing business risks, and improved awareness and mitigation of external risks and management of the impacts of risk events. Committed and well-resourced companies that share these characteristics are likely to take the industry forward: the current consent and investment requirements in New Zealand aquaculture are not likely to attract "cowboy" or "fly-by-night" entrants.
2.1.3 Industry collaboration
The aquaculture sector is typified by a strong sense of informal collaboration, particularly at sub-sector and regional levels. Marine farmers have a high awareness of other farmers’ activities in their regions and among species sub-sectors. Formal industry collaboration is evident in a number of regional and species sub-sector groups, and in the industry-driven development of an Aquaculture Sector Strategy (the Sector Strategy).
With the establishment of Aquaculture New Zealand, the national sector-wide industry body envisaged by the Sector Strategy, the aquaculture industry is better organised and resourced than ever before to build on the existing informal collaboration, co-ordinate existing formal collaboration, and undertake sector- and nationwide initiatives. These may include facilitating the development and adoption of national standards for coastal marine space and aquaculture activities, and facilitating better risk monitoring and management in aquaculture. Aquaculture New Zealand is well positioned to act as a repository for aquaculture industry data, which can be used to inform risk assessment by a range of stakeholders.
2.1.4 Global market growth
A strong and sustainable market for seafood products is expected in the foreseeable future. Market growth will be driven by world population increases and a growing preference for seafood as a protein source. The aquaculture share of the seafood market is likely to increase given that there is already considerable pressure on wild fisheries. The ability of New Zealand’s aquaculture sector to deliver consistent, high-quality product will help ensure ongoing marine farm viability over the next several decades.
2.1.5 Strong incentives for sustainability
The aquaculture industry has strong production, marketing and reputation incentives for being proactive about sustainable development. New Zealand’s high water quality and low endemic biosecurity threats have significant positive impacts on productivity, product quality and market acceptability and differentiation. Marine farmers also value positive public perceptions of their operations as sustainable, because this has positive impacts for coastal planning, may reduce objections in consent processes, and may help build a premium in the domestic market for aquaculture products. This is reflected in the Sector Strategy, and initiatives are underway to build a public perception of the industry that reflects aquaculture as it is practised in New Zealand.
Throughout the aquaculture industry there is awareness that poor risk management can have significant adverse effects on the wider industry, and this creates a climate highly conducive to industry self-regulation. Efforts in this area include recently developed environmental codes of practice (see Appendix 1).
2.1.6 Value creation and growth
The Aquaculture Sector Strategy is not based on access to large amounts of new water space. Extracting additional value from existing farms is a major thrust, but small areas of new water space may be critical to experiment with and test high added value species or techniques. Also, new space could be better suited for aquaculture, replacing existing space. For example, marine farmers are keen to explore the link between low ecological impact sites and better production conditions.
The aquaculture industry has a strong signal that its growth is desirable, meets a number of national objectives, and will be supported so long as it meets sustainability criteria. This is set out in Our Blue Horizon: The Government’s Commitment to Aquaculture.
2.1.7 Threats to viability
A number of external factors can affect - and have already affected - marine farming profitability and therefore viability. Periodically, returns have been driven down by exchange rate pressures and falling international prices, but businesses have withstood these pressures and have sought ways to maintain international competitiveness. Biosecurity threats can deliver a range of impacts, from small productivity losses to massive stock mortality. Although there is no history of biosecurity threats having caused severe impacts on New Zealand aquaculture, controls are being established in conjunction with the Government to manage the current risks and reduce the impact of future risks. Pollution events in the coastal marine area can cause stock to fail to meet sanitation requirements and result in limits on harvesting. These are typically outside the direct control of marine farmers.
Despite a history of fluctuating profitability and current pressures from a high New Zealand dollar, industry players have few concerns about the ongoing viability of their operations, and there is widespread confidence in the industry’s ability to withstand future external pressures.