Players in the aquaculture, aquaponics and allied industries in the United States are raising alarm and seeking to identify resources to support their business as 90 percent of farmers say the coronavirus disease pandemic (COVID-19) had impacted their operations in Q1 2020.
This was the key finding of a survey jointly conducted by Virginia Tech and the Ohio State University Extension representing 652 companies within the broader aquaculture/aquaponics ecosystem. The year-round survey, with quarterly reports scheduled, seeks to determine the prevailing market conditions and the industry’s overall economic sentiment as it struggles with the unforeseen impact of COVID-19 in the months ahead.
While grim realities of market disruption and loss of business didn’t seem to have hit the 10 percent of the respondents in the study in the first quarter, 20 percent of them expect to be “definitely” impacted by COVID-19 within the year.
The survey results indicate the sector’s diminishing confidence in its resiliency amid the uncertain business climate. When asked how confident they are to survive six months without intervention, 32 percent of respondents said “no”; 47 percent said “maybe”; and only 20 percent think they can survive. However, when the time frame was extended to 12 months, half of the respondents said their business would not survive without help.
Respondents think interventions in the form of Federal and State assistance, waiving or delay of state fees and selected loan guarantees will help keep the industry afloat.
Measures to flatten the curve in the pandemic–ranging from social distancing and restaurant dining prohibitions to stay-at-home orders–have disrupted aquaculture market channels. Since an estimated 68 percent of all seafood consumed in the US is sold at food service establishments, loss of marketing channels means significant revenue losses for farmed fish suppliers.
Over Q1 2020 period, 84 percent of respondents reported that their business had experienced lost sales due to COVID-19, with approximately a quarter attributing lost sales to the lack of international markets. While most respondents could not quantify the value of lost sales during the quarter, 50 percent of them report to have lost $10,000 to $250,000, while four percent said they lost over $1 million in sales.
The survey also bares the sector’s vulnerability to cash flow disruption. When asked to estimate how many months their business could operate without any sales before suffering longer-term cash flow impact, 43 percent said their business could operate without any sales for between one and three months. Only 5 percent of respondents say their business could survive without sales for a period of more than 10 months.
Layoffs are an inevitable outcome of business instability. So far only 33 percent of respondents said they laid off employees, but 26 percent said they would have to lay off employees “soon.” The number of people that were let go ranges from one to three (57 percent) to four to six (20 percent). Only 7 percent said they laid off more than 20 staff, with one company having to slash 66 staff from its headcount. To avoid layoffs, others implement less extreme measures such as standby layoff, salary reduction for the management, or owners work without pay.
With reduced workforce, production will likely be impacted. The survey says 41 percent of respondents say they experienced issues with labor.
Besides labor issues, the survey shows that business is currently wrestling with challenges in financial services, in production inputs of feed, chemicals and therapeutants and unavailability of services including repair, construction, consultancy and engineering. Farmers think these problems will prevail in the near term.
Another critical problem is the holding of market-ready products as some farmers could only keep them for a maximum of three months without interfering with new production. Some farmers also think that holding ready-for-market products during the pandemic would decrease their marketability.
Read the firsthand account of fish farmers struggling to cope with the challenges wrought by the pandemic here https://www.aquaculturenorthamerica.com/covid-19-hammers-north-american-aquaculture/
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