FAO: Fish feed costs to remain high

Costs for the key ingredients in fish feed, which are closely linked to global commodity and energy prices, have increased as much as 50 percent in recent years, according to the United Nations’ Food and Agriculture Organization, which on Friday called a special meeting of policymakers on 24 September to discuss escalating food prices.

Fish feed represents 50 to 70 percent of fish farmers’ production costs, and the average price of the ingredients commonly used in fish feed jumped between 20 and 92 percent from June 2007 to June 2008, said the FAO in a recent report.

“The aquaculture industry is not immune to this global phenomenon, and the major concern is how it will impact aquaculture,” warned the FAO, adding it is “highly unlikely” that commodity prices will fall to pre-2000 levels in the foreseeable future.

Fish feed prices vary from a few hundred dollars a ton to more than USD 1,000 a ton, depending on the species being fed. Aquaculture relies on a basket of common ingredients such as soybean, corn, fishmeal, fish oil, rice and wheat, but since 2005 prices of these commodities have soared — prices of wheat, rice and fish oil have increased 180, 225 and 284 percent, respectively.

Concomitant factors pushed global food commodities to all-time highs in 2008: Stock levels for major grains dropped following unpredictable weather conditions and weaker harvests. Rising incomes in developing countries, particularly China, boosted demand for food staples. Even futures markets — used to mitigate price risks for global commodities — have been singled out as a contributory factor.

The increased cost of energy due to soaring fuel prices also contributed. In July 2008, crude oil prices peaked at more than USD 130 a barrel. By the end of 2008, they slipped to around USD 50 a barrel. And today the price is hovering at USD 74-a-barrel mark.

Key commodities used in fish feed production such as corn and soybean are largely sourced from the Americas, notably Brazil, Argentina, Chile and the United States. In Brazil, where production areas can be more than 1,000 miles from port, trucks are predominantly used to transport soybean. The cost of such transportation also escalated due to rising fuel prices, doubling from USD 6 per 100 miles in January 2005 to more than USD 12 per 100 miles in July 2008.

Increasing demand has also led to the global rise in fishmeal prices; fishmeal makes up nearly 50 percent of the total feed cost. Figures from the FAO report show that global prices for fishmeal ranged between USD 500 and USD 700 a ton from 2000 to 2005. But by May 2008, the price of fishmeal had doubled, reaching USD 1,210 a ton.

The FAO cited figures from fish feed supplier BioMar that finds while the inclusion level of fishmeal in feed is 25 percent, it actually accounts for 43 percent of raw material costs and 32 percent of total production costs. Alternative proteins such soybean, wheat and corn gluten, which can make up 45 percent of volume, account for 19 percent of raw material costs.

Another costly ingredient in fish feed is color — pigments/binders, which are less than 1 percent of the diet, account for 13 percent of costs.

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