INTERVIEW: Role of Fishmeal is Changing
Feedinfo News Service
Gorjan Nikolik, Senior Analyst, Rabobank
18 June 2015 - Global demand for fishmeal is rising, driven by the growth of the aquaculture industry. However, supply has been declining (from approximately 7 million tons produced globally in 2000 to an average of 5 million tons in recent years). According to Rabobank, falling supply and rising demand will impact the traditional role of fishmeal as a commodity to become a "strategic" and higher-priced ingredient.
30 years ago, more than 70% of farmed salmon feed was made up of fishmeal and fish oil because prices were low and farmed salmon was still fairly affordable. Today, producing feed with the old formula would make it impossible to farm all but the very highest value species. Users are increasingly buying fishmeal for its role as a palatability agent, its health benefits, and for marketing purposes.
Speaking to Feedinfo News Service, Rabobank’s Gorjan Nikolik, seafood analyst and author of the recent report, “The Appeal of Fishmeal”, said a key profitability driver for aquaculture feed producers will be to minimize the use of fishmeal and fish oil while maintaining performance and that utilizing novel ingredients such as algae-derived proteins and oils will also play an important role in their success in the future.
“Those who are not able to dedicate sufficient research and development resources to feed formula optimization are likely to struggle or be acquired by the leading players. This clearly is an advantage for large producers that can spread R&D costs across a large sales volume”, Nikolik said.
However, when farmers and researchers consider developing new aquatic species, the high price of marine ingredients may be a limiting factor. As a result, the high cost of fishmeal could have a negative effect on the development potential of new species.
Nikolik also pointed out to another factor affecting global fishmeal production. A number of species which were traditionally used only as a source of fishmeal are now the raw material for human consumption products, at least in part. Blue whiting and Chilean jack mackerel are examples. In the past these species were harvested primarily for fishmeal production. Today, a large part of the harvest is directed straight to human consumption markets and therefore reducing the raw material available for fishmeal production.
Moreover, in the last ten years trimmings have become a major source of fishmeal, and now represent over a third of global supply. However, when analyzing the best performing seafood processors Rabobank noticed that in these companies very little of the trimmings were used to make fishmeal. But through innovation and good marketing, products were created for the human consumption market, such as reconstructed fillets, burgers, various snack products, salads, spreads, soups etc.
“If innovation continues in this direction fishmeal supply from trimmings may decline or at least not grow as it has in the past”, commented Nikolik.
For Nikolik, there are no “real” alternatives to fishmeal as of yet. By that he means products with exactly the same or better properties than fishmeal, and available for a similar price.
He notes a strong interest by various parties in the fishing industry to develop krill meal. However, if this industry is to develop, it can only do this alongside strong scientific and regulatory frameworks ensuring sustainable exploitation and minimal impact to the environment.
For Nikolik, ingredients based on algae or insects seem to have an advantage based on the fact that they are part of the natural food chain of fish and shrimp in the oceans and rivers, and would consequently have properties which these species have evolved to digest.
“Perhaps we will see a real fishmeal alternative emerge based on these raw materials?” commented Nikolik.
“Vegetable protein concentrates come close as an alternative to fishmeal, but still lack certain properties. Krill meal is an excellent substitute but it is not available in sufficient quantities. There are some interesting novel alternatives emerging based on algae, insect, bacteria or yeast, but to my knowledge these have not (yet) been scaled up to produce the type of volumes which the large buyers of fishmeal need”, argued the seafood analyst.
Asked how he sees fishmeal prices evolving during the rest of the year and in 2016, Nikolik stressed that we are at a point where predicting fishmeal prices is even more difficult than usual.
“The price expectations are based on the quota and eventual catch rate of the second season in Peru. The success of the first 2015 season may have pointed to normalization and declining prices. However, since scientists are predicting another El Nino, this will in turn support prices - especially for 2016”, he said. “So, it is impossible to predict at the moment”.
“Long-term we do expect a continuation of the cyclical upward movement until a viable bulk-produced alternative is available”.
30 years ago, more than 70% of farmed salmon feed was made up of fishmeal and fish oil because prices were low and farmed salmon was still fairly affordable. Today, producing feed with the old formula would make it impossible to farm all but the very highest value species. Users are increasingly buying fishmeal for its role as a palatability agent, its health benefits, and for marketing purposes.
Speaking to Feedinfo News Service, Rabobank’s Gorjan Nikolik, seafood analyst and author of the recent report, “The Appeal of Fishmeal”, said a key profitability driver for aquaculture feed producers will be to minimize the use of fishmeal and fish oil while maintaining performance and that utilizing novel ingredients such as algae-derived proteins and oils will also play an important role in their success in the future.
“Those who are not able to dedicate sufficient research and development resources to feed formula optimization are likely to struggle or be acquired by the leading players. This clearly is an advantage for large producers that can spread R&D costs across a large sales volume”, Nikolik said.
However, when farmers and researchers consider developing new aquatic species, the high price of marine ingredients may be a limiting factor. As a result, the high cost of fishmeal could have a negative effect on the development potential of new species.
Nikolik also pointed out to another factor affecting global fishmeal production. A number of species which were traditionally used only as a source of fishmeal are now the raw material for human consumption products, at least in part. Blue whiting and Chilean jack mackerel are examples. In the past these species were harvested primarily for fishmeal production. Today, a large part of the harvest is directed straight to human consumption markets and therefore reducing the raw material available for fishmeal production.
Moreover, in the last ten years trimmings have become a major source of fishmeal, and now represent over a third of global supply. However, when analyzing the best performing seafood processors Rabobank noticed that in these companies very little of the trimmings were used to make fishmeal. But through innovation and good marketing, products were created for the human consumption market, such as reconstructed fillets, burgers, various snack products, salads, spreads, soups etc.
“If innovation continues in this direction fishmeal supply from trimmings may decline or at least not grow as it has in the past”, commented Nikolik.
For Nikolik, there are no “real” alternatives to fishmeal as of yet. By that he means products with exactly the same or better properties than fishmeal, and available for a similar price.
He notes a strong interest by various parties in the fishing industry to develop krill meal. However, if this industry is to develop, it can only do this alongside strong scientific and regulatory frameworks ensuring sustainable exploitation and minimal impact to the environment.
For Nikolik, ingredients based on algae or insects seem to have an advantage based on the fact that they are part of the natural food chain of fish and shrimp in the oceans and rivers, and would consequently have properties which these species have evolved to digest.
“Perhaps we will see a real fishmeal alternative emerge based on these raw materials?” commented Nikolik.
“Vegetable protein concentrates come close as an alternative to fishmeal, but still lack certain properties. Krill meal is an excellent substitute but it is not available in sufficient quantities. There are some interesting novel alternatives emerging based on algae, insect, bacteria or yeast, but to my knowledge these have not (yet) been scaled up to produce the type of volumes which the large buyers of fishmeal need”, argued the seafood analyst.
Asked how he sees fishmeal prices evolving during the rest of the year and in 2016, Nikolik stressed that we are at a point where predicting fishmeal prices is even more difficult than usual.
“The price expectations are based on the quota and eventual catch rate of the second season in Peru. The success of the first 2015 season may have pointed to normalization and declining prices. However, since scientists are predicting another El Nino, this will in turn support prices - especially for 2016”, he said. “So, it is impossible to predict at the moment”.
“Long-term we do expect a continuation of the cyclical upward movement until a viable bulk-produced alternative is available”.