The primary industries are a vital component of New Zealand’s economy, with the food and fibre sector accounting for 80.9% of our country’s merchandise exports in the year to 31 March 2024. Within the primary industries are the seafood and aquaculture sectors, which have long played a key role in New Zealand’s economy.
So how is the aquaculture industry faring currently, and what can business leaders do to take advantage of the current market conditions?
An overview of aquaculture in Aotearoa
New Zealand produces some of the world’s best seafood, exporting to countries all over the planet. As a nation, our seafood export revenue relies heavily on four key species: mussels, rock lobster (crayfish), salmon, and hoki.
The COVID-19 pandemic caused significant challenges for the aquaculture industry, particularly with China being a major trading partner - but the tide is now turning. The Ministry of Primary Industries’ Situation and Outlook for Primary Industries states that aquaculture export revenue is forecast to increase 12% in the year to 30 June 2024, driven largely by higher prices. This is good news for the sector as a whole – but who will benefit the most?
Sector spotlight: Mussels and crayfish
Mussel exports play a significant role in the aquaculture sector. Their exports increased by 19% in the year to 31 March 2024, according to the Ministry of Primary Industries, with growth driven by a 12% rise in price and 6% increase in volume.
This rising demand is generating more work, and not just when it comes to mussel meat. There’s also a thriving market for mussel products within the health and nutraceuticals space, where green-lipped mussel extract is used to support joint health. This is creating opportunities for mussel farmers to grow and supply more product to different markets around the world.
While there is plenty of positivity within the mussel sector, the crayfish industry is experiencing more mixed fortunes. Crayfish (also known as rock lobster) had a bumper year in 2023, hitting record high export prices and revenues led by high demand from China. However, input costs - especially fuel and labour - remain high for crayfish fishing, and changing market demand and lower prices has created concern for some in the industry. Increasingly we’re seeing demand for higher volumes of smaller-sized crayfish, which leads to longer seasons as fishers need to catch more to get the same tonnage.
Encouragingly, there are signs the crayfish industry is set to recover in the second half of this financial year, and we expect the price per kilogram to increase as the year progresses.
Spat survival
Spat health is a major focal point in New Zealand’s mussel sector, with mussel production declining in recent years due to the decreasing availability and survival of wild spat (juvenile mussels). Wild spat has extremely low survival rates when transferred to mussel farms, resulting in not only a lack of product, but a loss of productivity. When mussel farms don’t have enough spat to seed the crop lines, those crop lines sit empty and lose money for suppliers, restricting growth of the industry as a whole.
The last few years have seen a big push in the industry to improve the success rate of spat harvest and growth, looking at how the spat can be nurtured in both artificial and natural environments to sustain a more efficient and productive supply of mussels. This is being supported by the Coalition Government, which has announced a co-investment of $410,000 over three years to a project to boost survival rates of New Zealand mussels and grow the industry.
Steps to success
As the aquaculture sector continues to thrive in New Zealand, businesses in this space should ensure they have the practical expertise and the financial and business support they need to maximise opportunities. As part of this, it’s essential for aquaculture professionals to get to grips with their numbers. This includes cost-to-grow, cost-to-harvest, and, for contractors, cost-to-work.
For mussel farmers specifically it’s important to understand the entire cost of growing the product right from the weed stage through to crop harvesting and sale. This will provide a clearer view on the cash flow requirement throughout the life cycle and an understanding of the ultimate profit per tonne.
Another area of focus for the sector is succession planning. As the next generation of operators move into business ownership roles, it’s a key time to get a deeper understanding of business finances and how operations can be made more efficient and productive.
At BDO, we help aquaculture business leaders and operators get to grips with their numbers to make decisions that support sustainable growth. We work closely with clients across all of their business operations, not just the day-to-day accounting. This includes support with business strategies, planning, modelling, and budgeting.
For practical support with your aquaculture operation, reach out to your local BDO adviser. To learn more about BDO’s work in the aquaculture and primary industries space, click here.