“Should we be worried about our intake of animal-sourced protein? Should we continue to have a much greater consumption of fish than the world average (nearly three times the global mean of 20.3 kg per capita per year)? Should we be aware of the sharp drop in aquaculture production from 269,431 to 202,966 tons?” asked the founder of RAS Aquaculture, Yit Tung in an interview with Maritime Fairtrade. “The Malaysians, unfortunately, are not aware of all these questions,” he continued.
Founded in 2017, RAS Aquaculture, based in Johor, has expanded the agricultural and organic farming spectrum in Kluang by introducing indoor aquaculture, which includes culturing Scylla mud crab, Vannamei shrimp, and Tilapia fish. At present, RAS Aquaculture has six farms located in Malaysia – four in Johor, one in Terengganu, and one in Ipoh. The Kluang farm alone has supplied fresh mud crab to 52 restaurants in Kluang, Batu Pahat, and Palor.
In 2019, Malaysia’s fisheries industry accounted for 1.1 percent of the global total, with 0.4 percent coming from aquaculture. This increased the national agricultural Gross Domestic Product (GDP) by 8.9 percent and generated 1.75 million jobs for Malaysians. According to the National Agro-Food Policy (NAFP) from 2011 to 2020, the aquaculture industry is marked as a high-value activity and is expected to grow by 8.6 percent over the nine-year period. This interview focuses on the struggles of the aquaculture industry in Malaysia and how they have caused a rapid decrease in production.
Challenge 1: Cost elasticity
According to Tung, farming shrimp and fish can be expensive, with production costs ranging between 30 to 40 percent for shrimp and 60 to 70 percent for fish, respectively. “If everyone has the same cost structure, no one gains a competitive advantage. As a business, this is an important concept to be aware of,” Tung highlighted.
“The real challenge, however, lies in elasticity; understanding how flexible these costs can be and if they can offer an edge over others.” In other words, if the prices of goods increase too rapidly, the quantity sold will decrease.
He continued: “Over the past 12 months, I noticed that while our profit margin remained stable when the prices of crab or shrimp rose, we encountered a decrease in sales volume. Additionally, the cost of the feed is largely determined by commodity prices in the market.”
More specifically, feed meal prices (which vary by commodity) are an important factor in determining the profitability of farmers. As such, when the price of a commodity increases, a farmer may need to switch to another option in order to remain profitable. This could involve changing their feed meal supplier.
Tung said: “The farmers, unfortunately, are usually unaware of the quality of feed meal that the suppliers produce. Thus, when they purchase feed with certain protein content written on its label, they only realize later that it is not as effective as it should be. This can happen due to the replacement of raw materials which may depend on commodity prices. The feed meal suppliers suggested a brand of feed they had, but when farmers bought and tried it, they weren’t pleased with the quality. This is the issue we’re faced with.
“While some brands stay true to their promise of not changing the raw material for their product, this does not guarantee a steady price. It depends on if your business can absorb the volatility that comes with such commodities.”
Challenge 2: Environmental pollution
From Tung’s viewpoint, those who bear the brunt of the effects from industrialization are small landowners, such as families who have passed down land for generations and are now sitting alongside a factory. He said: “Industrial waste has especially severe effects on fish, for ‘kelong’ farms situated along the river. For example, if your grouper or sea bass business is located near a river contaminated by agricultural runoff, you have no choice but to put up with it.”
Despite the fact that agricultural activities and the feeds used by farmers are usually obscured from view, they still result in substantial amounts of environmental pollution. This largely goes unnoticed due to the lack of visibility.
Tung explained: “The way farmers in Malaysia act can have an effect on agricultural outcomes. They have a habit of not revealing their knowledge and strategies, perhaps out of pride or some other motive. This includes releasing water into the environment without anyone knowing. Due to their priority being the safety of the fish, they wanted to ensure that the water was clean before doing anything else. Thus, they changed the order of priorities.”
Tung highlighted the importance of collective solidarity among farmers in order to be able to relay important news like a discharge rapidly. The lack of communication can have devastating consequences, as it is one of the main reasons for disease outbreaks.
If one person does not communicate effectively with the others, it can lead to discharge of infected water which in turn can cause various problems for other farms. Therefore, it is essential to make sure that everyone remains up-to-date about any changes that may take place and collaborates when certain decisions are being taken.
Challenge 3: Environmental change
“I’m not worried about too much sun or the rainy months like December and January, since I can prepare for them by taking necessary precautions,” Tung said. “Climate change has become harder to anticipate due to its unpredictable nature. What worries me more than pollution are the various environmental changes, such as floods, which we cannot ultimately overcome.”
According to Tung, it is important to manage any risks associated with inclement weather. By taking the necessary precautions such as pumping water from the ground two days before a storm, one can prepare and make sure that any losses are minimized. Depending on the forecast, it may be necessary to have less on-hand stock to mitigate risk.
Challenge 4: Labor shortages
The aquaculture sector in Malaysia is a small one, with only around 10 percent of jobseekers possessing a Bachelor’s degree related to this field. As the industry has yet to evolve much, recent graduates face an uphill battle when seeking out such roles.
“The industry I’m a part of has rigid expectations and is slow to adapt. Farms remain traditional and outdated, while expectations from graduates tend to be very high,” Tung said.
“These days, there is a need for the industry to evolve and pay attention to what the young generations desire. Instead of bemoaning the lack of quality personnel in aquaculture, it is better to incentivize potential workers to become a part of this industry. Thus, changes must be made in this situation.”
Maritime Fairtrade discovered that RAS Aquaculture has a significantly higher percentage of women in their workforce, led primarily by their indoor aquaculture plant operations.
Tung said: “This wasn’t because I was specifically looking for female candidates; rather, when applications came in, those who were more qualified happened to be female. From there on out, we began hiring more female based on their strengths and what they could bring to the company.”
This is very encouraging and demonstrates the company’s commitment to providing equal opportunity for all.
Challenge 5: Land acquisition cost
“Land cost is the most significant issue facing aquaculture production, and it far surpasses feed, labor, and pollution as key challenges,” Tung said.
In Malaysia, high land prices can often make it difficult to maximize returns on investment. To compensate, farmers may opt for practices that allow them to increase their yield with limited resources. This includes intensifying production using more efficient methods, even if the individual items are not worth as much.
Tung explained: “Intensifying your fish farming operation doesn’t come without its costs. Your expenses will likely increase due to needing more oxygenation, higher feed conversion and other additional resources to support the extra fish. Ultimately, this results in a higher per-unit cost which drives up overall expenses.”
“In some parts of the world, such as South America, land costs are much lower than other places. This means production costs can be lowered and a less intensive approach can be taken, resulting in further cost savings. In Ecuador, a shrimp costs RM12 (US$2.70), whereas in Malaysia it costs RM25 (US5.60). This is due to the cost of land.
“We try to use technology to compensate, but that is only important if we are all competing. That means if we are all vying for Europe’s business and we are in a price competition. When considering domestic markets, cost structures are usually equal for all participants. This is true unless you own inexpensive land that was handed down to you. Even in this instance, the opportunity cost must be taken into account, as they can easily opt for renting it out instead.”
The aquaculture industry in Malaysia has been facing difficulties in recent years, leading to a sharp drop in its production. Several factors have been correlated with the declining trend, such as soaring land costs and environmental issues. To ensure the industry’s future success, stricter regulations, improved management practices, the introduction of sustainable aquaculture practices, and the investment in research projects that aim to increase productivity must be implemented.
Top photo: RAS Aquaculture has decided to invest in shrimp farming for the foreseeable future, making it a major part of their business.
All photos credit except where stated: Yit Tung