Rabobank: High fishmeal prices to limit new farmed species growth
The high price of fishmeal, which is being driven by both falling supply and rising demand, will polarize the global aquaculture industry whereby production will favor species that require lower priced feed with low inclusion rates of marine ingredients or those that receive a high market price, according to a new report compiled by Rabobank International.
The report, “The Appeal of Fishmeal – Fishmeal’s Transformation from a Commodity to a High-Price Strategic Marine Protein,” states that 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.
“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,” it says.
Further down in the value chain, Rabobank believes aquaculture farmers face “a number of strategic options” due to the changing role of fishmeal, such as creating diversification based on the level of marine ingredients in the feeds.
The report says one option would be to produce fish or shrimp using feeds with high levels of marine ingredients for markets that are prepared to pay more for such products, while also producing a similar product using feeds with lower fishmeal inclusion for markets that prefer lower costs.
Differences in taste preferences and farming conditions in different regions allow for this type of diversification, says Rabobank, adding that it is possible that this strategy could yield higher average prices and the lowest average feed cost compared to the current situation.
However, when farmers and researchers consider developing new aquatic species, which is “a key growth driver of the aquaculture industry,” the high price of marine ingredients may be a limiting factor, it says. This is especially the case for carnivorous species such as groupers, bluefin tuna, cobia, lobsters and others that are at a very early stage of commercialization.
For these species, feed costs will be very high compared to what they had been when salmon farming first started some 30 years ago. At that time, more than 70 percent of the feed was made up of fishmeal and fish oil, simply because it was not then known how to reduce the inclusion level, says Rabobank’s report.
“But as the price was low, farmed salmon was still fairly affordable and could be commercialized successfully. Today, producing feed with the old formula would make it impossible to farm all but the very highest value species. Consequently, the high cost of fishmeal can have a negative effect on the development potential of new species.
“Aquaculture will have to focus only on species which have either very low or no fishmeal requirements naturally, such as pangasius or tilapia, which are omnivorous species, or species which have a very high market value per kg, such as bluefin tuna. All other species are unlikely to be developed,” it says.
The report estimates that total global fishmeal production was less than 4.5 million metric tons (MT) last year, which was a record low.