Professional Documents
Culture Documents
Aquaculture Risk Management
Aquaculture Risk Management
107-2008
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investigating insurance options for aquaculture and does provide significant protection from some risks; (2) care-
have other insurance programs that could provide aqua- fully observing animal behavior (e.g., fish off feed, errat-
culture producers some protection from risk. ic swimming) and/or monitoring key water quality
Currently, RMA has three insurance programs that variables such as dissolved oxygen, pH, and ammonia
would afford aquaculture producers some protection from will provide sufficient warning that a problem is looming;
risk, specifically, the Cultivated Clam Crop Insurance (3) building redundancy into your operation (e.g., back-up
Pilot Program, the Adjusted Gross Revenue-Lite program generators, oxygenation systems) can mean the difference
(AGR-Lite), and the Noninsured Crop Disaster Assistance between an inconvenience and failure; (4) improving feed
program. While neither of the two latter programs targets management can result in higher feed conversion ratios,
aquaculture specifically, both would protect an aquacul- better water quality, and ultimately reduced production
ture producer from certain risks. For example, the AGR- costs; (5) employing stringent bio-security measures
Lite Program is intended to protect a farms revenue when and/or the use of Specific Pathogen Free (SPF) animals
faced with natural disasters or market fluctuations, while can help to exclude disease from a culture facility; (6)
the Noninsured Crop Disaster Assistance Program is taking proper precautions should a disease outbreak occur
intended to safeguard against low-yields, loss of invento- can significantly reduce the severity of any outbreaks by
ry, or the inability to stock as a result of natural disaster. minimizing cross contamination; (7) knowing appropri-
More information, including eligibility and reporting ate chemical and drug therapies can ensure that disease
requirements for each of these programs, can be obtained outbreaks are properly treated when they are encountered
directly from the RMA website (www.rma.usda.gov). and can ensure that disease organisms do not become
Conversely, the National Risk Management Feasibility resistant to treatment this is particularly important
Program for Aquaculture is a partnership between Missis- given the limited number of therapeutic drugs that aqua-
sippi State University and the USDA RMA and has begun culturists are permitted to use, making the exclusionary
to assess the feasibility of developing commodity insur- approach to managing disease risks the best option.
ance for four aquaculture species groups: catfish, baitfish, Diversification of your production to include other
salmon, and trout. More information about the status of species, categories of production (e.g., foodfish, baitfish,
this program can be found online at www.agecon. ornamentals, plants, sport fish) or production technologies
msstate.edu/aquaculture. In addition to the USDA RMA (e.g., ponds, raceways, recirculating systems), and inte-
insurance programs that are available to aquaculture pro- gration of production with other enterprises (e.g.,
ducers, some private insurance companies (e.g., The Hart- aquaponics) may help alleviate some productions risks.
ford International Agribusiness Group, The American While these options will likely not be as easy to imple-
Farm Bureau Insurance Services, Inc.) also provide crop ment as changing husbandry techniques, they will also
insurance that can help protect aquaculture producers provide some protection from marketing risks, too, in that
from loss. Consult with your local insurance agent to you will have additional products to bring to market.
determine what coverage is available to suit your needs. Traditional agricultural marketing practices dictate
that a producer is a price taker, not a price setter this
often holds true in aquaculture as well, where producers
Non-insurance Options generally sell into commodity markets with similar prod-
In some instances, non-insurance options to manage ucts and try to compete on price alone. An alternative
risk in aquaculture may provide a producer with a viable approach to offset the risks associated with this type of a
alternative to crop insurance. While, non-insurance risk marketing strategy is to create a unique identity that can
management options are likely to be as varied as the very help differentiate your product from others in an attempt
risks they are intended to manage, these too can be to capture a higher consumer price (i.e., niche marketing).
grouped together based on the type of risk encountered, Options to achieve this goal include branding, where
namely production and marketing risks. While some con- the product form does not necessarily differ from your
cepts will overlap, others are unique to either production competitors, but the brand association indicates to a con-
or marketing. Regardless of the specific risk they are sumer that your product is of superior quality or has other
intended to deal with, they all are intended to preserve the desirable characteristics (e.g., locally produced, all natu-
bottom line. ral); creation of value-added products, where the origi-
Management of production risks such as disease, nal commodity is further processed to make it more
predation, water quality degradation, and power outages, appealing (e.g., vacuum packaging, smoking, breading),
can be accomplished by a number of methods: (1) chang- and selling into alternative, often higher value markets
ing husbandry practices is one simple method that can (e.g., live, direct to retail, retail).
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Conclusions gating risk management issues. USDA also has a fact
sheet, Risk and Risk Management (USDA RMA Fact
All business involves risk the best we can do is to min- Sheet # PA-1667-03) that may be useful. Extension
imize the impact that risks have on the financial stability agents and specialists, university personnel or your state
of our operations. How we manage risk in aquaculture is aquaculture association can help provide further informa-
almost as important as the risk itself. While any number tion; a list of state aquaculture extension personnel is
of options may exist to manage each potential risk, each available on the NRAC website (www.nrac.umd.edu) or
option has associated costs and benefits that you must you can contact your local Cooperative Extension Office
weigh against the risk itself. Keep in mind the three guid- for an initial contact. Further information about aquacul-
ing rules of risk management: (1) dont risk more than you ture insurance programs around the world is available
can afford to lose, (2) dont risk a lot for a little, and (3) from Review of the Current State of World Aquaculture
understand the likelihood and severity of possible losses Insurance (FAO Fisheries Technical Paper No. 493.
prior to investment or initiating an aquaculture business. Rome, FAO. 2006. 92p).
Whether you are new to aquaculture or an experienced
producer, these rules should be second nature. Doing your Acknowledgments
homework, educating yourself about aquaculture produc-
tion and marketing strategies, and remembering that aqua- This work was conducted with the support
culture, as with other agricultural enterprises, is a business of the Northeast Center for Risk Manage-
will help you manage the risks that lay ahead. ment Education and the Northeastern
Regional Aquaculture Center, through
grant number 2004-38500-14589 from the
For More Information Cooperative State Research, Education, and Extension
The National Risk Management Feasibility Program Service, USDA. Any opinions, findings, conclusions, or
for Aquaculture website (www.agecon.msstate.edu/ recommendations expressed in this publication are those
aquaculture/) and the USDA Risk Management Agency of the author and do not necessarily reflect the view of the
website (www.rma.usda.gov/) are first stops for investi- U.S. Department of Agriculture.