Penang’s Aquaculture Sector Does Swimmingly Well

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The highly profitable aquaculture industry not only nets in millions of ringgit, it also creates employment and business opportunities for Penang’s population.

Malaysia is among the world’s top fish-consuming countries, putting away 56.9kg per year per person.1 Fish contribute about 44% of the total animal-sourced protein intake of the population, and more so where resource-poor consumers are concerned (Figure 1). On average, Malaysian households spend about 21.8% of their food expenditure on fish. That percentage is even higher among the rural community (23.3%) and the Bottom 40% (22.5%).2

As fishery resources in the west coast of Peninsular Malaysia are claimed to be overexploited, aquaculture or fish farming as an alternative source has been responsible for the impressive growth in fish supply for human consumption. This is expected to increase with population growth, rising income and adaptive changes in consumption patterns.

The increasing role of aquaculture also supports commercial and recreational fisheries, restores habitat and at-risk species, and encourages economic activity in coastal communities by providing employment, business and investment opportunities in the country.

Farming Fish in Penang

Penang’s aquaculture industry produces high-grade fish mostly for export; marine landings mainly fulfil the local demand. The aquaculture sector in Penang can be characterised as diverse in terms of species and culture systems, comprising mainly food fish farming, ornamental fish farming and aquatic plants.

Aquaculture products exist in two culture systems: freshwater (comprising ponds, cement tanks and canvas tanks) and brackish water (including ponds, cages, cockles, mussels and oysters). In 2016 a total of 444 culturists and 1,872 workers were involved in the aquaculture industry in Penang, the majority in the brackish water cage sub-sector.

The aquaculture industry in Penang provided only 14% of fish for human consumption in 1990, but this share increased to 46% in 2010 and 60% in 2014 (Figure 2). Its wholesale value also expanded at an average annual rate of 23.5% in 1990-2014, turning it into a high-value agricultural activity. However, the sector saw a large decrease in total production and value in the last two years, mostly due to disease, poor water quality and the 2015/2016 El Nino weather phenomenon. Despite the huge drop in aquaculture production and value in 2016, the industry is still a major income earner for Penang’s fisheries sector.

In 2016 aquaculture contributed over 34% (30,226.52 metric tonnes valued at RM649.3mil) to the state’s food fish production. Penang is currently the third-largest producer of aquaculture products in Malaysia after Sabah and Perak. In 2016 its production gained the highest wholesale value in the country.

Produce from brackish water contributes the most to the total fish production and value in the state. Brackish water ponds and cages dominate the aquaculture industry in Penang, amounting to about 90% of the total aquaculture production (Figure 3).

The state has the highest number of brackish water cages in the country, occupying an area of about 74.7 ha. Production solely from brackish water cages accounted for more than 65% of the total brackish water aquaculture production in Penang. Snapper and sea bass recorded the highest production, followed by shrimp, cockles and other brackish water cage species such as grouper and mackerel.

Penang is currently the fourth-largest producer of shrimp in the country, behind Sabah, Johor and Perak, and has the second-highest wholesale value after Sabah. Hawaiian white shrimp aquaculture is one of the key sectors in brackish water aquaculture. Indeed, it is a high-income venture for farmers, more so than fishing and other agricultural activities such as paddy farming and oil palm plantation,3 and has a very high export value, and therefore has an important impact on the state’s economy.

Penang’s numerous natural mangrove mudflats provide a suitable breeding environment for cockles. Cockle culture, which is also considered as mangrove friendly aquaculture, is the fourth-largest income earner for the aquaculture industry in Penang. Although cockle production in 2016 dropped dramatically by about 38% – mainly as a result of poor water quality – its wholesale value increased by nearly 86%. In 2016 the price of cockles at major markets in Penang skyrocketed from RM2.58 per kg to RM5.83 per kg – mostly due to declining production and high demand.

Penang is the third-largest producer of oysters in the country after Sabah and Kelantan. The state contains the only oyster hatchery operation in Malaysia and South- East Asia. Because of increasing demand and market price, oyster aquaculture, which is also considered as green aquaculture, has huge potential for growth. It also provides essential economic benefits to the local community – oyster farming can be an alternative source of income for traditional fishermen who suffer from low income as it is a very simple aquaculture that can be easily adopted by local fishing communities, requiring very low operational cost compared to fish culture.4

In the non-food fish sector, ornamental fish is the major contributor with an economic value of nearly RM24mil in 2016. Penang is the third-largest producer of ornamental fish in the country after Johor and Perak, and is well known all over the world as one of the largest producers and exporters of the discus fish.

Challenges

The growing intensification of culture systems to achieve higher production has led to greater occurrence of disease, resulting in dramatic economic losses. In 2016, for instance, the total aquaculture production dropped dramatically by nearly 49% – mostly due to disease, which resulted in the high mortality of fish. On top of that, pollution and poor water quality can worsen matters. Good management practices and effective environmental management would significantly help to control the problem.

Climate variability is another important factor that influences the quality and quantity of aquaculture production, affecting the sustainable growth of this sector. The 2015/2016 El Nino event impacted overall production in Penang. Furthermore, the strong typhoon in November last year significantly destroyed fishery and aquaculture facilities, especially brackish water/marine fish cages, and caused severe damage and losses to aquaculture production, as well as huge economic losses. Change in sea surface temperature is another threat , which would significantly increase the incidence of disease. There is an urgent need to identify the impact pathways and areas of vulnerability, which requires research to pursue coping strategies and enhance the adaptability of fishermen and culturists.

High production costs play a key role in the development of the sector. Feed cost is a major contributor to the total production cost; being heavily dependent on imported feed has made production costs in this sector very expensive.

Labour shortage is also a major constraint on the aquaculture sector. Most of the labour force in this industry, especially rural youths, has migrated to industrial sectors that provide higher returns. The sector has to rely heavily on foreign workers – indirectly causing a loss to foreign exchange. Aquaculture-related training and education, the adoption of new technologies to decrease dependence on labour, improving living conditions in rural areas, commercialisation of agrobased industries to attract the younger generation, as well as narrowing the wage gap between the aquaculture sector and other economic sectors would significantly help to overcome the labour problem.

Environmental degradation because of pollution resulting from some form of aquaculture activity has also led to a negative impression of the industry, which might hinder its growth. Effective policies with good planning are very much required in order to ensure the sustainable growth of the industry.

Planning for the Future

Given the increasing scarcity and cost of land and labour, it is likely that the future development of the aquaculture industry will depend more on the comprehensive use of land and water resources, as well as the employment of high-yield aquaculture technologies.

The design and construction of commercial fish bases, investments in aquaculture R&D, effective fish health management, the provision of better services to farmers, and private sector participation would result in the rapid increase in production and income in this sector. Other important factors that would promote the growth of the sector are: continuous government support, sustainable aquaculture practices and attractive incentive schemes.

Overall, Penang’s aquaculture sector has great potential, which will only increase with the newly opened Aquaculture Industrial Zone (AIZ). The state is poised to become an export hub for seafood products in the region. Its well-developed port and airport cargo facilities, and the presence of major international seafood brands such as GST Group, Pacific West and Texchem Food Division, mark the state’s strong foundation.

1 Department of Statistics, Malaysia (2014).
2 Household Expenditure Survey Report 2016, Department of Statistics, Malaysia.
3 Kharas, Homi, et al. Cities, people, and the economy: A study on positioning Penang. Khazanah Nasional and the World Bank, 2010.
4 Tan, Shau-Hwai Aileen, et al. “Oyster culture in Malaysia: opportunities and challenges.” Journal of Science and Technology in the Tropics, vol. 10 no. 2, 2014, pp. 99-108.

Negin Vaghefi is a senior analyst at Penang Institute. She holds a Ph.D. in Environmental Economics. Her research interests include agri-environmental economics, climate change, green economics, poverty and income inequality, and policy analysis.



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