Risk Management

We all must manage risk.

With every decision we make, everyone needs to consider: 1. What could happen 2. The likelihood that it will happen. 3. The outcome or consequence of the event happening.

So risk management can be somewhat subjective. Interpretation. A gamble.

Different people may come to different conclusions.

However, knowledge is power. The more you know, the better the odds of success.

Aquaculture has many aspects that need to be considered when determining risks and how to manage risks.

These individual considerations have consequences which affect other aspects. So risk management requires looking at each piece of the jigsaw in order to consider the big picture.

Hernen Consulting follows logical thought processes when assessing an aquaculture proposal.  These map and overlap risk assessments rather than simply considering individual risks.

Considerations 

These are many and varied. Some potential examples only are provided below.  Each venture will be different and will require appropriate considerations.

The Product

Start with customer requirements. There is a risk that customers will not want your product. Or not at a price that makes you a profit.  Therefore, what aspects of the product are valued?  Size, shape, taste, texture, colour, provenance, quality, traceability, safety, sustainability? How can the enterprise consistently meet the market requirements?

For example, if customers require a 3kg fish, this means that it will take longer to grow (at least one winter) and be susceptible to greater risks than a 1kg fish.  Is the market value of growing a 3 kg fish worth so much more than the 1kg fish, in order to justify the additional risk?

In this case the species of fish may achieve a better conversion of its food as it grows larger.  However, it may also be susceptible to predators, parasites, and bacteria which may require expensive treatments, plus possible exposure to extreme weather.

Does the market require a specific species or simply white fleshed frozen fillets? A different species may be more appropriate to grow in the proposed location.

Is the proposed species a carnivore or a herbivore? Carnivores grow more quickly (and are often cannibals as juveniles) and require high protein levels (potentially higher costs). Herbivores usually grow more slowly but cost less to feed.

Growing and processing affects flavour. Stressed fish release cortisol.  Freshwater fish sometimes obtain a “muddy” flavour from the water (Geosmins). Some species contain wax esthers.

What processing is required?  Different products require different processing considerations.

Sizes need to be consistent to fit machinery, packaging etc.  Live transport requires specialised considerations.  Chilling /freezing requires sufficient power facilities. Drying loses water content (weight).

Note that freezing is better for less oily species as oily fish tend to oxidise.  Smoking may be preferable for oily fish.

Does the market require a specific colour?  Does the colour attract a price premium (eg consider salmon). Can this be achieved naturally in feed? (For example using natural beta carotene or astaxanthin).

Does the market require a specific shape? Pacific Oysters in the shell are usually valued by size and shape. This requires constant grading. However, if meat only is required then the size and shape of the shell may be irrelevant.

There is no point being able to grow a product if the market does not value it above the cost of production.

Basic principles 

Aquaculture is as much about managing the environment as it is about growing species.

It is important to understand natural processes so that the best fit can be made between the environment and the species, and consequently lower risk.

Animals produce “waste” products.

If these “wastes” build up in a confined environment then an imbalance occurs which nature tries to fix.

Therefore the confined space must be maintained as a balanced ecosystem whereby “waste” products are managed either being removed or used beneficially. If not, the enterprise risks oxygen stress and potential diseases.

Certain animals utilise only specific proteins, carbohydrates and lipids from the food that they consume. Their “waste” products contain “waste” proteins, carbohydrates and lipids that can be utilised by other species. If these “wastes” are not managed they will be recycled by organisms that may use up available oxygen or become vectors for disease.

The rate that the animal grows is determined by how it utilises the energy that it gains from its food or environment. If it is stressed (by temperature, lack of oxygen, poisons, ph, predators, parasites, poor digestion etc) it will utilise that energy for survival rather than growth. Stressed animals produce cortisol. Long term cortisol production affects the health and taste of the animal.

When animals metabolise food, they burn oxygen (from air or water) and release carbon dioxide.  Liquids hold approximately 30 times more carbon dioxide than oxygen. This includes the water in the animal’s environment and its blood. So there is a risk that the appropriate balance between oxygen and carbon dioxide may be affected both in the water and in the blood of the fish. Poorly managed stocking densities can saturate water and blood with carbon dioxide, making both more acidic.

Air is mostly nitrogen, a small amount of oxygen and very little carbon dioxide.  Waste nitrogen produces ammonia, nitrites and nitrates which are toxic to fish.

The risk of day and night swings in temperature, available oxygen, acidity and alkalinity must be managed.

Microalgaes utilise carbon dioxide that builds up in water, plus light during the day during photosynthesis, and release oxygen.  However, at night, oxygen is consumed and carbon dioxide is released. Dead matter is utilised by bacteria which further consumes oxygen.

Poorly managed systems can therefore easily lose stock because of oxygen depletion caused by algal blooms which then crash.

Rain is acidic and seawater is alkaline. Therefore allowing rain to mix with the water used for your animals causes a proton flow which may risk altering the optimum ph for your stock.

Providing appropriate minerals and amino acids is also vitally important. Including minerals such as potassium, magnesium and zinc and amino acids such as taurine.

For example, taurine is essential for cardiovascular function, and development and function of skeletal muscle.  Lack of taurine risks poor growth or mortality.  A risk management strategy would be to ensure sufficient taurine in feeds.  Herbivores may obtain taurine from eating the seaweed gracilaria.

Animals require different environmental and feed compositions to suit the different stages of life.

Therefore if an aquaculture venture wishes to grow juvenile animals it must ensure that the environment and food are appropriate for juveniles.  Adult broodstock will often travel large distances to access an environment which provides the optimum shelter, salinity, temperature, ph and feed types for their juveniles.  It does not follow that a site which has many wild adults of a species is the best place to grow juveniles.

Disclaimer

This site provides information about risks and risk management strategies that Hernen Consulting may consider when assessing opportunities.

This is provided for information only.  Hernen Consulting accepts no responsibility for any loss, damage or injury incurred by any party using this information for their own purposes.

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© Martin Hernen 2016