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AFRICAN CATFISH

Willem van der Pijl
28 Oct 2021

Another Avenue for Investment and Solving Sub-Saharan Africa’s Food Challenge?

While the first Aqua Insights Report focuses entirely on tilapia, tilapia farming isn’t the only possible aquaculture solution to sub-Saharan Africa’s food challenge. Catfish (C. gariepinus) production is increasing at a similar—or maybe even faster—pace. However, compared to the production of tilapia, catfish production is concentrated in only a few places, and most notably so in Nigeria. This is mainly due to a lack of consumer familiarity with the species in most other sub-Saharan African countries. But in Nigeria, catfish is one of the most popular fishes. It’s therefore not surprising that the country has become Africa’s largest catfish producer. On its own it produces a similar volume of catfish to the tilapia production of the whole of sub-Saharan Africa combined. In this blog, we’ll look at whether we at Aqua-Spark see the catfish industry as an interesting investment opportunity.

AFRICAN CATFISH

Photo 1: African catfish in a grow-out production unit

"Once Catfish Survive the Fingerling Stage, They Grow Relatively Easily into Adult Fish"

I remember walking around the parking lot of the African and hybrid catfish farm and hatchery of Fleuren & Nooijen—a well-known catfish breeding company in the Netherlands—and seeing an African catfish that had escaped from the hatchery crawling over the street to a nearby canal. This is my impression of catfish: an incredibly strong (and, in my opinion, ugly) fish. Once through the fingerling stage, the fish easily survives in all kinds of production systems. It can be cultivated in low-density, simple earthen ponds; in higher-density concrete or plastic tanks; or in even more intensive recirculation aquaculture systems (RAS). As long as the fish don’t suffocate at the grow-out stage, which is unlikely given that they’re air-breathers, the fish will survive in most conditions as they’re not so susceptible to viral diseases and can thrive in harsh conditions. They can also survive out of the water as long as their skin remains wet.

In sub-Saharan Africa, catfish is now increasingly produced by commercial small-, medium-, and large-scale farmers alike. Whether catfish farming is a profitable business, though, depends largely on how well the fish is fed and the genetic source of the fish.

"Nigeria Is the World’s Largest Catfish Farmer: How Have Nigeria’s Farmers Become Successful?"

Catfish farming in Nigeria already started at an experimental stage in the 1950s. The government, supported by donors, was responsible for driving the expansion of catfish breeding and farming all the way until the end of the 1990s. It was at the beginning of the 21st century that the private sector became interested. While in tilapia, large corporate farms—such as Yalelo and Lake Harvest in Zambia and Uganda (Eastern Africa), and Tropo Farms and Triton in Ghana (West Africa)—drive production growth, for catfish, in Nigeria expansion is primarily driven by small- and medium-scale entrepreneurial farms. Contrary to earlier catfish farmers, many of these entrepreneurs started to grow catfish in tanks and raceways in peri-urban locations.

The Dutch, also farming some catfish in the Netherlands—sometimes in refurbished livestock farms—have played an important role in developing Nigeria’s catfish sector. In 2000, Willy Fleuren (former co-owner of catfish breeding company Fleuren & Nooijen) together with the late Ade Alakija, founded Durante Fish Industries in Nigeria. The company specialized in catfish breeding and feed production. It imported hatchery and farming systems, and feed manufacturing equipment from the Netherlands, and became one of the drivers of the rapid expansion of catfish production in Nigeria during the first part of the 21st century. At that time, as was the case in tilapia as well, a lack of fingerlings and feed was detrimental to the development of the catfish sector. While the government managed a couple of breeding stations, these fingerlings were not widely available and, even if available, often didn’t perform optimally. But once the private sector got involved, higher-quality fingerlings became available. With Durante producing extruded feed locally, farmers also became less dependent on imported feeds. This was a major step for farmers in making intensive catfish farming profitable.

Video 1: Willy Fleuren being interviewed on Nigerian television about the potential of catfish farming Source: www.youtube.com

In 2014, fish feed producer Skretting, part of the Dutch animal feed producer Nutreco, acquired 60% of Durante Fish Industries’ feed business and 3 years later Durante sold the remaining shares to Skretting. Currently, Skretting is building Nigeria’s biggest fully dedicated aquafeed plant. But Willy Fleuren didn’t leave the catfish industry. Today, he manages Gerrit Fleuren Ventures through which he continues to contribute to the expansion of the aquaculture sector in Nigeria. He runs his own hatchery and feed distribution business, and also provides consultancy services. He’s one of the main drivers of the adoption of RAS in Nigeria’s catfish industry. He also has a YouTube channel and has published two books about catfish farmers (see Video 1). By sharing his experience, passion, and expertise, and of course combined with the strong business results of his own operations, he encourages and motivates other entrepreneurs to venture into catfish farming as well. He’s still a true pioneer of the industry.

Although most farmers of African catfish in Nigeria still farm in ponds, the greatest production volume derives from peri-urban concrete tanks, raceways, and RAS. All of these production systems, which can be used pretty much anywhere in the country including in backyards, could become a major part of the solution to meeting the future demand for fish from the growing urban population in Nigeria. According to the Food and Agriculture Organization of the United Nations (FAO), in the typical backyard 4m x 3m x 1.3m concrete tank, 400 catfish fingerlings are being stocked and fed with a balanced diet for 6 months. The water is renewed once or twice per week and an average production of 150 kg/m3/cycle is expected. More recently, the use of RAS has expanded. These systems come with an electric pump and a plastic substrate biological filter. Production rates of around 400 kg/m3/cycle are more common in these systems—these new systems are many times more productive than ponds and traditional concrete tanks, but they also require more investment.

Kees Verbeek, who worked for Rabobank in Africa for many years and had the opportunity to visit catfish farmers in Nigeria during his tenure, tells us enthusiastically that for him the catfish farming sector in Nigeria is a strong example of how entrepreneurship can drive growth. He remembers that once the commercial potential of catfish farming in a small set-up was proven, many small- and medium-scale entrepreneurs jumped on the opportunity and became the engine for the growth of Nigeria’s catfish sector. For Aqua-Spark, investing in such small-scale producers is not feasible. Instead, just like we describe in the Tilapia Report, we look for slightly larger companies that can become platforms for growth and that can create vibrant local industries. As a result, we hope that these companies become vertically integrated production hubs to provide smaller farmers with access to inputs, knowledge, and markets, and maybe even facilitate financing.

Catfish production expanded rapidly in Nigeria from the early 2000s until 2010, but since then growth has stagnated. There’s a variety of reasons for this. Willy Fleuren notes that many farmers come and try their hand at catfish farming, but fail and then leave. The current economic and security situations in Nigeria are also unfavorable for the aquaculture industry—the situation in war-torn areas of the country in particular necessities heavy security for people to be willing to work, and even then many are unable to, creating an economic bottleneck and bringing society to a standstill. Economically speaking, while feed prices have been on the rise, market prices for catfish haven’t responded accordingly, squeezing the profit margins of farms. In these conditions, only the strongest can survive. Catfish is still one of the most popular animal proteins in Nigeria, especially in the food service segment. So, if the government manages to improve the economic, security, and COVID-19 situations, the industry will be set to enter the next phase of growth.

"Catfish Production Didn’t Only Expand in Nigeria but Also in Other Countries Like Uganda and Ghana"

According to the FAO, just like in Nigeria, catfish production in Uganda increased significantly from the early 2000s until 2010. However, other sources suggest that production in Uganda never really took off and the FAO’s figures are significantly inflated—the FAO estimates around 35,000 MT (for Uganda alone) but some insiders estimate Uganda’s catfish production to never have exceeded a couple of thousand MT. Nevertheless, even though this insider estimate is probably right, there are many reports about hatcheries and farms in Eastern Africa, and also in Ghana and Congo, targeting catfish production. We believe that it’s only a matter of time before a broader catfish industry will be developed in those countries where consumer acceptance is realistic.

AFRICAN CATFISH

Figure 1: Catfish production in sub-Saharan Africa according to the FAO. Source: FAO

In Ghana, a local catfish industry is slowly developing, too. Traditionally home to some of sub-Saharan Africa’s largest tilapia producers, according to a recent article on The Fish Site, most of the recent big investments that have been made in aquaculture in Ghana were in catfish. Examples of bigger firms entering catfish farming in Ghana include Cluster Farming and Wontesey Ventures.

The Fish Site quotes the directors of these companies in its claim that catfish is seen as a delicacy in Ghana by an increasingly large group of consumers. With wild stocks of the species becoming depleted, fish farmers are filling the void. According to these directors, the demand for all sizes, but especially the larger ones, has shot up.

While the catfish market in Ghana mainly consists of smoked fish, alive catfish (kept in tanks in restaurants) is common in the capital, Accra, but it’s now being increasingly sold in restaurants in other major cities as well, such as Kumasi and Takoradi. Restaurant customers prefer the larger (>1 kg) sizes instead of the smaller 500-600 g fish that are traditionally used for smoked catfish products. To further increase the popularity of catfish in forms other than smoked, Cluster Farming’s director emphasizes that consumers must be made aware that you can do so much more with catfish than just smoke it.

While the Ghanaian domestic market offers some potential, the catfish directors interviewed by The Fish Site say that the biggest potential is abroad, in the African diaspora and in Nigeria. However, with Nigerian producers already having difficulty selling their own catfish, the Ghanaian producers might be overestimating their potential in the Nigerian market.

AFRICAN CATFISH

Photo 2: Cluster Farming’s hatchery and farm location in Ghana
Source: Cluster Farming

A company like Cluster Farming (see Photo 2)—managed by Gerrit Valkenburg and his son Maurice, and currently producing 1.5 million fingerlings and just over 100 MT of harvest-size fish annually—has large potential not only to produce fish and create jobs within its company but also in the communities where it’s active. Cluster Farming has developed an outgrower program through which the company provides farmers with support to develop small- and medium-scale catfish production modules, which they refer to as “satellite farms”. The company provides the farmers with the required inputs, technical assistance, and financial support, and buys back the fish the farmers produce. It’s exactly this kind of company that can become a platform for growth and can spark the development of broader smallholder inclusive aquaculture industries. The company aims to process most of the fish whole round and freeze it, thereby making it more feasible to target export markets and to only sell the fish when there’s actual demand and reasonable prices. Cluster Farming aims to develop its business to such an extent that its satellite farms and own farm can produce more than 1,600 MT of catfish annually.

"Is Catfish Farming in Sub-Saharan Africa a Major Opportunity from an Investment Perspective?"

We definitely believe that catfish, besides tilapia, can become an engine for the growth of sub-Saharan Africa’s aquaculture industry. If consumer acceptance is there, contrary to tilapia that we think will—in the short term—mainly be produced in cages and ponds, we expect catfish production to already have significant potential relatively soon in and around cities where farmers can grow the fish in tanks and RAS. With Africa’s rapid population growth and urbanization rate in mind, farming catfish in (peri-)urban environments is a great opportunity. The fact that catfish, contrary to tilapia, is often consumed as a smoked fish means that also in the downstream supply chain, the catfish industry offers job opportunities in the processing segment. The absorption capacity of an increase in catfish production will depend on the extent to which consumers are ready to accept the species as a healthy and tasty source of protein that can compete with tilapia, chicken, and other protein sources. Outside some specific countries such as Nigeria and—to a certain extent—Ghana, this may require considerable marketing efforts by catfish producers and the wider industry.

In terms of investability, we at Aqua-Spark will target our investments towards larger companies that can become platforms for growth for broader aquaculture industries through local outgrower programs. In this model, smaller entrepreneurial farms can get all their inputs and sell their outputs through these larger platforms; the larger producers can support the successful growth of the fish but also the processing into value-added products and the development of a larger market for the catfish products. Both in Nigeria as well as in other countries such as Ghana, we’re already on the lookout for catfish producers that can take on this role and need investment to grow. If you are yourself, or you know of, a producer that fits this description, get in touch with us.