The current global surge in energy prices and related inflation are potential enablers of the alternative proteins sector.
An inflationary global economy make the case for feed replacement “even more powerful,” according to F3, the Future of Fish Feed, a collaboration of NGOs, researchers, and private companies.
“Inflation in energy prices also makes alternatives more attractive since alternatives have planned logistics that can minimize energy costs. By contrast, fishing has unpredictable logistics borne by searching for fish with expensive diesel-powered boats, even with government tax breaks. Correspondingly, fishmeal has become more expensive,” it said in a statement to SeafoodSource.
Fishmeal prices have risen significantly since the beginning of 2022, partially as a result of the instability caused by the war in Ukraine, F3 noted.
“In the context of a forecast that ecological limits of fishmeal and fish oil production will be attained by 2037 under business-as-usual scenarios, there is still plenty of market and need for new protein sources,” F3 said. “If anything, the war in Ukraine demonstrates how supply chains for nutrients can change abruptly, so the availability of new, more-stable production of protein is needed. Global trade disruption also makes it important to have local sources of feed ingredients. The weather alone has been attributed with maintaining the yield of fishmeal, but ecological conditions have resulted in an abrupt 6 percent decrease in fish oil.”
According to F3, feed companies prefer the more-predictable quantity and quality of supply from alternatives, with the recently announced partnership between Cargill and Innovafeed being a concrete example of that trend.
“Other aquafeed producers have been equally explicit, particularly the Chinese feed companies, in their declarations at our F3 meetings several years ago, that they are indifferent as to the source of nutrients, and will switch as soon as alternatives have comparable price,” it said. “Prices will become comparable with scale. Feed company customers, the fish farms, also need reliable feed production and that is not possible if feed supplies are unpredictable due to unpredictable ingredient and energy inputs. We believe that Calysta has published research on the quantified value of stable pricing of their FeedKind ingredient, in contrast to volatile fishmeal [prices].”
F3 said the launch of an alternative feeds facility in China by Calysseo with a planned 20,000 metric tons (MT) of production a year will address only 0.83 percent of fishmeal protein replacement, since global fishmeal is reportedly at 2.4 million MT.
“All of the longer-term trends – accelerating shortages in fishmeal and fish oil, reductions in fishing subsidies, growing need for decarbonization, greater need for supply chain agility – bode well for alternative ingredients, particularly carbon-soaking ones,” noted F3, adding that for traditional feed companies “the time for R&D is now.”
Alternative ingredient-makers like NovoNutrients and Feedkind have an added upside, F3 said.
“[They] have the added benefit of not only a lower footprint with scale, but because the single-cell organisms feed on carbon, the ingredients can also fix carbon from the environment or decarbonize, and may potentially be candidates for carbon credits,” it said.
NovoNutrients CEO David Tze told SeafoodSource hydrogen is the key operating cost for his firm.
“The challenges of economical transportation of hydrogen is a pro, not a con. Combined with our general flexibility around siting, the high cost of hydrogen transportation is good for us because it means that there will be low-cost hydrogen production sites where we can be a monopsony or oligopsony. We won't have to bid against users of hydrogen for transportation, home heating, etcetera,” he said. “Additionally, the development and demonstration or proving of novel hydrogen generation technologies and projects has been expanded in Europe by billions of euros explicitly as part of the very recent additional push for more energy independence on the continent. Those developments in technology and scale-up will improve the hydrogen landscape globally.”
Tze also sees competitive advantages for alternative feeds in logistics costs.
“NovoNutrients production site selection can take into account the latest thinking about and changes to logistics and its cost structures, in contrast to marine proteins that ultimately come from fixed fishing grounds and long-established plants,” Tze said. “Because NovoNutrients can tailor its production at a particular location for specific applications, more product will be used closer to production than is the case with generic commodity proteins.”
Tze said he anticipates commercial demonstration production of natural food ingredients by NovoNutrients in 2023, commercial production of protein and carotenoid feed ingredients in 2025, and commercial production of natural protein feed ingredients in 2027.
“In the current inflationary economy, the entire supply chain will be more cost-sensitive, which is advantageous to NovoNutrients, as we aim to deliver more nutritional performance per cost than existing ingredients – or other, novel ones – at meaningful inclusion levels in diets,” Tze said.
Photo courtesy of NovoNutrients