China’s changing aquaculture species mix could have more of an impact on global fishmeal markets over the next decade than the overall growth of seafood production, according to Rabobank.
In its latest RaboResearch analysis, the Dutch financial services firm found aquaculture has historically been able to expand without a proportional increase in fishmeal and fish oil demand, thanks to lower inclusion rates, better feed conversion ratios, and advances in formulation. That relationship, however, could become harder to maintain as seafood demand shifts toward species with higher marine ingredient requirements, according to Rabobank.
The report, “Modeling future seafood demand onto marine ingredient demand,” found that while carp and other low-value freshwater species continue to underpin Chinese production, demand growth is increasingly moving toward carnivorous freshwater fish, shrimp, and marine finfish.
Under Rabobank’s baseline scenario, which holds species-specific marine ingredient inclusion rates constant, China could generate around 700,000 metric tons (MT) of additional fishmeal demand and 80,000 MT of fish oil demand over the next decade.
That compares with around 50,000 MT of additional fishmeal demand in the United States and 40,000 MT in the European Union.
The report’s global estimate is approximately 900,000 MT of additional fishmeal and 130,000 MT of fish oil by 2035, though Rabobank stressed these are modeled demand estimates rather than forecasts.
Much of China’s potential increase in fishmeal demand is linked to carnivorous freshwater species such as largemouth bass and snakehead, which can have relatively high fishmeal requirements, according to Rabobank Specialist in Animal Protein for Seafood Novel Sharma, who wrote the report.
“Several of China’s carnivorous freshwater species still have relatively high fishmeal requirements, in some cases higher than salmon, so continued production growth could create significant additional demand if inclusion rates remain where they are today,” Sharma told SeafoodSource.
The “biggest challenge,” he said, is the combination of high fishmeal dependency and rapid production growth.
Sharma did not put a precise time frame on the feed industry’s ability to respond, explaining that higher fishmeal prices should encourage formulation improvements and substitution but the speed of that adjustment remains uncertain.
In an already tight supply environment, fishmeal and fish oil are likely to become “increasingly strategic ingredients,” he said.
“If the higher prices and volatility of recent years persist, the economics of investing in alternatives should become progressively more compelling,” he said.
Meanwhile, a wholesale change in species choice is less likely in the short term, Sharma said.
Smaller producers, particularly in parts of Asia where production systems can be relatively flexible, may make tactical changes, but globally, Sharma said he expects marine ingredient scarcity would need to become both severe and persistent before any material alteration in species mix.
“Species switching is more likely to be the end of the adjustment process than the beginning,” he said.
This potential pressure is heightened by the relative maturity of the species involved.
Salmon and vannamei shrimp have benefited from decades of investment in feed technology, nutrition, production efficiency, and ingredient optimization, with Sharma explaining these advances have helped the industries grow while reducing their marine ingredient intensity.
But, Rabobank argued that some of China’s fastest-growing species are earlier in that development curve; production has expanded rapidly, but formulation capability has not necessarily kept pace.
Therefore, the report points to two possible paths.
If feed formulation, ingredient substitution, and nutritional efficiency improve rapidly, China could continue expanding production while progressively reducing the intense marine ingredient needs of its emerging species.
Alternatively, if production growth outpaces those gains, China could compete more directly with mature aquaculture sectors such as salmon for marine ingredients, increasing competition and potentially pushing up feed costs.
“China represents both the largest potential source of future marine ingredient demand and the industry’s largest innovation opportunity,” the report said.
Regarding the much smaller increase expected in European marine ingredient demand, the report said salmon will remain the principal driver of the increase but noted it’s already been demonstrated that feed innovation can offset the effects of production growth, with fishmeal and fish oil use having declined over the past decade despite salmon’s increasing importance in the market.
For salmon producers, the report suggested emerging issues they may face could include price and competition for marine ingredients rather than physical supply alone, particularly if Chinese demand rises faster than formulation efficiency improves.
Climate-related supply volatility could add to that pressure, with Rabobank’s analysis highlighting El Niño risks to anchoveta supply and the potential for long-term warming of the world’s oceans to amplify uncertainty in marine ingredient availability.
