INTERVIEW TRANSCRIPT - Dr. Jason Clay Interview #1

Could you talk about the need for certification?

I think the main role of certification for aquaculture is going to be to move the industry towards better practices. Certification itself would be based on the creation of better practices by different species. I think what we're really doing is trying to spawn innovation. With government regulations, you can force producers to do things that are minimally acceptable. You can get them to adopt good practices.

But through certification, you can actually identify better practices. Things that are going to reduce the cost of production reduce the impacts of production and really have a potential to play them out through the whole industry. Because they're marketplace, that makes more sense to do it this way, because you make more money.

Will this cost a premium price?

My sense is on certification, there may be a premium price initially. That's not clear. It's not clear though, even if the premium price would offset some of the initial costs. I think over time, though, what's going to happen with certification is that it's going to encourage practices that cost less. So you're going to have fewer inputs. You're going to have resources used more efficiently. You're going to have waste turned into by products that you can sell or you can use to offset some of your other input costs. Those are the kind of things that I think are going to happen.

I don't really look to a big price premium. If that happens that's great. But in declining commodity markets where the price is going down year after year, decade after decade, from 1900 to present, I think that even getting today's price tomorrow is going to be a premium and that's where I think certification can help producers too.

Certification results in a label on a product in a store, correct?

I think the goal for certification should be that a product is sold, either in a store or in a restaurant with a label to identify that this product was produced under better practices. That's the only way the consumer is ever going to know that there is an issue here, that there's better products and worse products and there are better production practices and worse production practices.

What are the main criteria for the better practices?

The certification would be that this entity that is certifying the product has identified that 8 to 10 major environmental and social impacts of producing this product. Whether it's shrimp, or shellfish of some kind, seaweed, whatever; that these 8 to 10 impacts are the core of the certification system.

We would be identifying principals and criteria that address those 8 or 10 impacts, but also measurable standards that actually show what the impact of the production is visa vi those 8 or 10 criteria. That to me is if we are buying an eco labeled product, we want to know that it has an impact on the environment. You don't know that unless you measure it. You can have a production process that is very interesting like "we don't use these kind of inputs, these kind of feeds" or "this kind of water exchange", but in the end you have to measure what the impact is. That's what makes it credible.

Certifiers would actually be measuring against these standards. You would, I think, have to have a minimal performance on any of the 8 or 10 standards in order to be certified. It wouldn't just be a sum of the minimal performance, because we would want you to do better than that on average. Because if you do well in some categories, you're going to do worse in others, we know that. So we would allow you to get by with a minimal score for certain standards. But across the board, it's got to be better than average.

How would you track fish from international locals?

I think certification for shrimp is probably a lot easier than some of the big fisheries that are being certified by the Marine Stewardship Council. Shrimp is generally processed in boxes that are one, two, or 10 kilos, which means that each of those boxes has a bar code on it. The bar code actually traces the shrimp, not just back to the processing plant, but actually to the pond it was produced in, and the cycle of production. That's how exact you can be with bar codes now. So, I don't think that that's going to be a big issue.

Now, you could have fraud, you could have multiple bar codes being printed for product that wasn't - but that's why you have to have inspection of processing plants and those kinds of things in place. The biggest issue, I think, is a co-mingling issue where you've got shrimp coming into a processing plant from different producers, or where you have shrimp coming off of a wild caught trawl, coming into the same processing plant. There you are going to have to have serious systems to keep the products separate. Have the plant operate on different days for different kinds of product. This is standard, though, with organic processing. This is standard with other kinds of eco labels. It's not rocket science; you just need the systems in place.

How would certification help the problems of small operations in Thailand?

I think that the history of animal aquaculture to get the kind of quantity of production we need and to get the quality of production we need, we're moving into larger and larger units. You don't see small farmers growing pigs in their back yards for sale into markets anymore. It's industrial hog operations. The same with live stock, other kinds of livestock, I think, where shrimp operations could play a role or have a future, is that they can get together. They could actually begin to operate as co-ops. They could begin to bring their water in together, and to use the discharge systems together. They could even begin to develop processing plants and value added processing together. They could get a stake in a processing plant. So they had some kind of an equity position in the value that was added to their product. There are ways that small producers can take advantage of global markets. Most people aren't thinking of those right now. Most people are trying to survive. I think that's fine for the farmer, but somebody's got to be thinking about it.

So, if it's not the government of Thailand, then maybe it's a business association or maybe it's somebody that sees sustainable production and having relationship with producers over decades, is more important than having a cheap crop for one year. Now, Vietnam has a totally different system. Vietnam has a lot of small farmers, but they produce on very huge areas. So, Vietnam has 25 percent of the shrimp farmers in the world. Also about 25 percent of the total land in production as well. It's amazing to only produce 8 percent of the shrimp. So Thailand has a lot more intensity and can do a lot more damage from an environmental point of view from pollution and effluence. But Vietnam does much more damage from simply the impact on the habitat where they are clearing much larger areas to produce shrimp at all.

Mangrove areas?

Even in areas where they are doing rice and shrimp culture it is devoting huge amounts of land to a very small amount of production. However it's worth it to them because they can make money-growing shrimp at global prices, because the economy of Vietnam has such a low per capita income.

Is Vietnam headed for the same mistake as Taiwan and Thailand?

Thailand and Taiwan collapsed because of the intensity of the systems they were using and because of the carrying capacity of those intensive systems. Vietnam has much, much more land than either of those systems ever had in production. But their potential to collapse, is just because of the scale. So the carrying capacity of having huge areas of land in shrimp will become an issue over time.

What about the different labels that already exist?

I've actually compared six different shrimp labels to see what the strengths and weaknesses are of the different labels. One or two are organic; a government in Thailand sponsors one. A grocery store chain in France sponsors one. One is sponsored by the global Aquaculture Alliance. It seems to me that none of these labels are acceptable from the point of view of - do they address the major impacts of shrimp aquaculture - on the one hand. None of them really do with measurable standards where every principal and criteria has a standard that can be measured.

None of them have been particularly transparent or inclusive in terms of how they've been created; somebody with an interest has created each. So an organic body that wants to buy and sell has created it. A grocery store chain that wants a certain kind of product for itself has created it. The industry has created their own, Thailand has created its' to showcase Thai shrimp. Those are major issues. We think that if you're going to create a credible certification program for Aquaculture you have to involve a lot of people who have an interest in the performance of the industry.

You've got to realize from the outset that you can't ever speak to everybody. Today, we have means to get more people involved than ever before. You can post your draft standards on the Internet and invite comment. And then you can show how you use those comments or why you use it or why you don't. You don't have to take every comment seriously because some of them are going to be off the wall. But there are good comments out there. There are a lot of people thinking about these issues and they need to be brought into the process. It will give any label more credibility to involve a wider range of people to have an interest in sustainable shrimp aquaculture.

What about industry created certification programs and labels?

I think the industry can actually address a lot of the technical issues of shrimp production within ponds, and that's kind of where some of the certification programs that industry's working on have headed. They are going to need to involve a lot more people to look at the social issues, and the socioeconomic issues, as well as the unanticipated environmental issues that are beyond the engineering or the feed requirements and those kinds of things. More importantly I think the industry's not going to look at cumulative impacts. It's never the first shrimp pond, or the hundredth shrimp pond. It's the thousandth or the ten thousandth one that's going to cause the problem. It's the same way with salmon farming or scallops. It's the intensity of systems, but it is also just how many there are.

What about socioeconomic criteria?

There are several concerns about socioeconomic impacts of aquaculture in general and shrimp aquaculture in particular. In the first instance, they're created. These ponds are created right on top of areas where people have lived or made a living or collected resources they have depended on for their own livelihoods. So, that's a big impact. Most of those people are never included in the shrimp industry. They are explicitly excluded. They're kicked off the land. They're not hired as laborers. They don't really want to be laborers. They don't want to work 9 to 5 or more likely 8 to 8 at night.

I think that in addition to displacement and natural resource conflict kind of issues, the are also the issues of "Isn't there more that shrimp farming can do to benefit it's own workers and the communities where its based." Some of the research that's gone on so far, has shown that shrimp farming has a tremendous positive impact, often, where the owners are enlightened on infrastructure. Getting electricity into areas, getting health clinics into areas, getting schools set up and getting roads that are more functional and passable than the existing roads. Likewise, I think, shrimp farms can also have benefit programs where there are worker incentives.

Workers get paid more if they produce more. These aren't sweathouse or put out systems where you work to the bone to get minimum wage. There's good evidence that shows that shrimp farms can be as much as four times profitable as their neighbors by having worker benefit programs. The workers make three or four times as much money too. So these are kind of win - win situations. Something that hasn't really been explored yet is the question: are there ways to give workers equity holding in shrimp companies or give smaller producers equity ownership in processing plants?

Those are the kind of things that could bring other benefits to local communities in the form of income. The only place where communities really have equity in shrimp operations in a large scale is in Mexico where communities own 70% of shrimp farms or in joint ventures between communities and companies. There the average income is phenomenally higher than neighboring communities, three to four times higher. The shrimp certification that we've talked about so far has really focused on reducing the total amount of feed used and the amount of fishmeal and fish oil that's used in the feed. We haven't focused yet on the sources of the fishmeal and the fish oil.

Our assumption has been if you can get the total content down, that that's a least a first step in the right direction. Remember, we're talking about better practices here. We may be decades away from the best of systems. But at least better is a heck of a lot better than worse. We're finding shrimp operations nowhere. Seven kilos of wild fish are used to make a kilo of shrimp. That I think ought to be acceptable in anybody's book. The big carnivorous fish feed aquaculture operations are going to have a much harder time to get down to those kinds of ratios. If they do it's going to be because they have new technologies, new sources of amino acids and new sources of protein.

Some of which may be biotech. Some of which may be newly refined processes that give you products that can be used in fish feed formulation. I think the different aquaculture industries need to have their feet held to the fire on this one. They need to get more efficient. More efficient is always better environmentally. We don't want to see four kilos of wild fish converted into one kilo of farmed fish. That's not going to be something that's ever going to be certified. The feed issue's important because feed is also a potentially incredible source of contaminants in seafood. Things like PCB's and dioxins, which are in wild caught fish when they're rendered into fishmeal or concentrated. When they are fed over time to either shrimp or salmon or other carnivorous or omnivorous species become concentrated as well.

My sense is that a certification program should be certifying the feed on the way in against PCBs and dioxins and it should be required of the feed manufacturers. I think also, the cortication program needs to be doing enough testing of its own product that it certifies the product that's being sold as a certified product to not have certain contaminants. Now this raises all kinds of liability issues, it raises all kinds of issues. But it seems to me that at the end of the day, the consumer is buying a product not a process and they want to know that the product is healthy and safe for them and their children to eat. And if you can't say that, I don't think you have any business in an eco label business.

What about new aquaculture practices?

Well, I think the future of shrimp operations is going to be more capital intensive, more information intensive. But I don't think they're necessarily going to be uniform. I think we're going to see a lot of different things out there. I've seen an operation in Belize that I think is state of the art that produces shrimp with very little water, with very little feed. It uses a fair amount of energy. Those are the kind of trade offs that we've got.

I think that one of the principles that we should look for in any aquaculture is, can they produce more and more of the feed that's being consumed on site. If you close the system, and you begin to use bacterial flock, and if you can begin to grow some of the bacteria in the water column, then you can reduce your fishmeal use and your input use a lot. More importantly you're cleaning up your own potential effluent before you even release water. There are systems that are producing 40% of their own feed now. If they could produce 80% of their feed, we'd be talking about something different because this wouldn't be an issue anymore.

Anything to say about the overall shrimp Aquaculture industry?

I think the biggest change in the industry is that the price of shrimp is no longer going up. The price of shrimp is going down and with declining price it means producers have to get more efficient. That's good for the environment. They have to use feed better, they have to be smarter about it, and they have to reduce their production costs. I think that's pushing them in a much more sustainable direction. That's a huge issue. It also means that some of those hidden costs, those sunk costs that you wouldn't think about. If you could produce shrimp and only produce three crops on a piece of land and make money, you would be willing to do that forever.

These days the price of shrimp is so low, that if you cleared a mangrove and produced shrimp for 3 years on it, you would lose money. It wouldn't be a viable operation. You've got to be able to produce shrimp five to ten years to begin to make money on the same piece of land. That's a good thing. That's going to push the people on marginal lands out of production, land that shouldn't have been farmed, ever. What's gong to happen to that's another whole issue. Will it be put back to nature? Will it be kept as an investment for some other kind of aquaculture? That's another issue.

Are Mangroves still an issue?

Mangroves are a very big issue. Is it a reality? Much less so. The problem with a lot of environmental groups and a lot of news groups is that they go to the literature. Anything that's in publication now, even recent things, is based on data that's five to ten years old. There have been some really major changes. When the Global Aquaculture Alliance, an industry based group, said that they would not allow shrimp to be farmed and certified by them on Mangrove areas that sent a signal. The biggest reason that Mangroves aren't really used, at least by large operations, is because it just doesn't make sense. If you're investing anywhere from $10,000 to $100,000 a hectare to get a shrimp farm started, you want it to last 20, 30 years. You want it to last until you decide to produce something else on it.

You don't want it to go out of production in three to five years. So, that's a big issue. The other thing that's happening is that smaller farmers simply are not getting into the business the way they used to. The prices aren't as attractive, the inputs are more expensive, and the margins are gone. It's really discouraging for those kinds of producers. So, you lose that potential source of income for development purposes and we've got to figure out, is there another way to address equity issues within shrimp aquaculture. It could be worker equity; it could be bonuses, incentive programs, and this issue on processing plants, equity for producers for workers, and those kinds of things. Those are ways to benefit from an industry that generates a lot of cash flow.

Are the huge financial institutions bankrolling shrimp aquaculture?

I think in the early years, in the 70s and 80s, the Asian Development Bank, the World Bank was involved in some direct shrimp loans. In the 80's and 90's the World Bank was involved in some sectarian loans to fisheries, part of which went into shrimp. I know that the IFC is actually doing some investment right now in some shrimp operations but their criteria are pretty ridged. I'd way; they're probably supporting the kinds of shrimp farms that I would be more interested in. I've actually, I know a few of the project that they are looking at.

In the whole history of shrimp farming, I would doubt that multilateral banks and development banks have put more that one or two percent of the investment in the shrimp industry. The industry has been too valuable. There's just too much money to be made growing shrimp historically that you can find money many places. The return on investment in an average shrimp farm has been 25 to 35 percent. It's hard to get data about how disease affects shrimp farming profits. It's catastrophic in one year but most farmers don't expect to make money every year.

What about lower tropic species?

I think aquaculture should be driven by what there's market for. There are markets for fish for food and shellfish for food. Depending on where you are in the world, the market may be more profitable than other places. So there are those markets. There are certainly markets for feed. I think aquaculture really needs to look at growing microorganisms to feed other aquaculture. I think that's a huge business. Growing artemia, plankton, phytoplankton, and those kinds of things. This would be good business.

We also need to look at growing, if you will, perhaps, trash fish or other organisms that can clean up the waste of aquaculture operations, and themselves be converted into fishmeal or fish oil, so that the industry becomes more self-sustaining in that sense. Not the same species, we don't want to feed one species to itself. This is what caused mad cow disease, and some other things like that. But, we need to look at aquaculture not from what we think we can grow but from the point of view of what we think we can sell. What the world wants to buy.

Do you think consumers are ready to try lower species of fish?

The answer is, it depends. If you feed me a plate of oysters on the half shell, I'll eat them. Scallops, you bet. Abalone, yep. Mussels, no problem. Am I going to go out and buy carp and eat it? Don't think so. Did a lot of that as a child. I don't really have any interest in returning there. Catfish? Maybe on occasion if it's really spiced up and has some interesting things done to it. Tilapia? In a pinch. Those are not the kinds of fish that most people are going to a white table clothed restaurants in the US and Europe and expect to buy when they buy finfish. We have to figure out how to produce fish that are not the lions and tigers of the sea, but are something above the lowest tropic levels.

Have we got anything to learn from the Chinese?

It's interesting. China's a lot of things, China's the perfect metaphor for Aquaculture because can you can find something to a say about Chinese aquaculture that will take any position you want on aquaculture. If you take shrimp in China, for example, Chinese White Shrimp are produced extensively on 90% of the land that's devoted to shrimp aquaculture. They are produced by themselves. They account for about 20% of production. Imported vandemai now from the Western Hemisphere is produced on about 10% of the land, yet accounts for 80% of total production.

Produced super intensively, aeration and all those kinds of things. It's a totally different system. They do have "polycultural" kinds of production systems, but that's not where most of the production comes from. That's certainly not where the market oriented production and much, and definitely not the export-oriented production comes from. So, if you're looking at oysters, it's huge areas that are devoted totally to oysters. If you're looking at shrimp for export, even shrimp for domestic Chinese consumption, it's always monoculture. So there are a lot of different things that go on in China. And again, half of Chinese aquaculture by weight is seaweed.

Do you have any more comments on certification?

Let me talk a little bit about what were doing on certification and why. Coming at aquaculture from an environmental organization point of view, we're interested in what the environmental impacts are. That's what drives the species that we focus on. In the case of shrimp, we focused on shrimp aquaculture because we saw that as being a better way to produce shrimp than shrimp trawling. It didn't mean that it didn't have problems, but we thought the problems were solvable. We don't think they are with trawling, by in large. I think it's also fair to say that most environmental groups focus on salmon and salmon aquaculture because there are big environmental problems.

But from a strict certification point of view, scallops, abalone, oysters, mussels, and clams are 'slam-dunks' from a certification point of view. There are environmental issues. There are carrying capacity issues, but nothing like the more complicated shrimp and salmon stories. Likewise, Tilapia, catfish, even trout, because it's so well regulated have far fewer impacts. Most of them can be addressed, I think, in ways that people would find acceptable. Now again, if we use certification to improve production, rather than try to create perfect production, we will be able to certify products and move the industry along very quickly in many of these species. That's why we really want to focus on what the major impacts are. Let's make sure we address them, and move on.