The El Niño-enforced cancellation of the Peruvian anchovy fishery in the second-half of 2014 created a massive shortfall in fishmeal production that was felt through to the early months of this year. While the fishery has now reopened and fishmeal manufacturing has been scaled up again, the global supply is expected to continue following a declining trend in the long term.
It’s estimated that total fishmeal production fell below 4.5 million metric tons (MT) last year – a record low level. Furthermore, current production is approximately one-third, or 2 million MT, less than recorded in 1997. Output is forecast to total around 4.8 million MT this year.
As a result of the El Niño event, the Peruvian anchovy fishery, which is the single-largest fishery in the world, harvested just 2.2 million MT of anchovies last year, the lowest figure since 1998 – the year of the last strong El Niño. In Chile, the second-largest fishmeal producer in South America, production has fallen from more than 1 million MT in the 1990s to a level of 350,000 MT last year and a further decline is expected for 2015. Very similar decline patterns have been experienced by Nordic producers and by the U.S., U.K. and Japanese industries.
The new report, “The Appeal of Fishmeal,” compiled by Rabobank International, cites the declining wild catch of key small pelagic species as one of two main causes of the steady shrink in fishmeal production. The other reason is that human consumption of small pelagics has increased, thereby reducing the amount of raw materials available to fishmeal producers.
The report points to catch reductions in Peru’s anchovy, Chile’s jack mackerel and sardines and Europe’s blue whiting, capelin and sand eel. In addition to the volatility and downward trend in these catches, Rabobank adds that within these markets, all key producers have made investments in plants and infrastructure to supply human consumption markets.
The growing number of products for human consumption mainly comprises frozen pelagics, mostly for African markets, or canned products consumed in many developing markets across Latin America, Africa and Asia. These represent not only the lowest cost seafood but also the lowest cost animal protein in the world, said Rabobank. For instance, in Nigeria – Africa’s leading importer of seafood – whole small pelagics are sold frozen to end consumers for between USD 0.20 (EUR 0.18) to USD 0.60 (EUR 0.54) per kg.
More recently, the latest wave of investment has been in the production of high-value food ingredients for human consumption, using small pelagics as a raw material. Refining fish oil for the production of omega-3 capsules is perhaps the best-known example, but there have also been investments in creating highly refined proteins and calcium for use as functional food ingredients in pharmaceuticals or pet foods.
In the longer term, we may see stabilization of the catch of small pelagic species, and some fisheries may even recover. However, human consumption of pelagics is a trend that is likely to ramp up the pressure on animal and aquaculture feed producers.
Rabobank expects that prices will rise in line with the growing demand and that this will have implications for the small pelagic fisheries as well as the global aquaculture industry. The owners of pelagic fishing quota in Peru, Chile or the North Atlantic should experience an increasing value estimate for their fishing licenses, while the profitability driver for feed producers will be successfully reducing fishmeal and fish oil inclusion levels without any negative effect on the performance of the feed. Utilizing novel ingredients such as for instance algae derived proteins and oils will play an important role, it said.
