Has the Regulatory Compliance Burden Reduced Competitiveness of the US Tilapia Industry?

Emerging research on aquaculture governance has pointed to the conundrum of negative global environmental effects from economic incentives for aquaculture production to shift from more highly regulated to less regulated countries. This study has focused on examining whether regulatory costs on U.S. tilapia farms may have contributed to their contraction in contrast to the growth of global tilapia production that contributes to the volume of seafood imports into the U.S. A national survey (coverage rate = 75% of tilapia sold; response rate = 18%) found that on-farm regulatory costs accounted for 15% of total production costs on U.S. tilapia farms, the fifth-highest cost of production. The total direct regulatory costs nationally were $4.4 million, averaging $137,611/farm. Most problematic were regulations of effluent discharge, predatory bird control, international export, and water and energy policies. Manpower costs for monitoring and reporting were the greatest cost of regulatory compliance. The lost sales revenue resulting from regulations was $32 million a year, or 82% of total annual sales, indicating that the regulatory framework has constrained the growth of U.S. tilapia farming. The smallest tilapia farms had the greatest regulatory cost per kg. This study provides evidence that regulatory costs, along with other challenges related to live fish markets, have contributed to the decline in U.S. tilapia production. Increased competitiveness of the U.S. tilapia industry will require a combination of: (1) improved regulatory efficiency that reduces on-farm cost burdens without reducing societal benefits; (2) research and on-farm extension assistance to evaluate new tilapia fillet equipment; and (3) research on changing consumer preferences to provide guidance on effective strategies to penetrate the large U.S. fillet market.