This year's virtual conference by IFFO, or The Marine Ingredients Organisation, is being held Oct. 19-21
This year's virtual conference by IFFO, or The Marine Ingredients Organisation, is being held Oct. 19-21. Industry experts will discuss market trends, sustainability issues, and climate change, in relation to the global marine ingredients sector.
The last year represented a major sea change for the global trade in omega-3 oils, explained Aldo Bernasconi, vice-president of data science at non-profit GOED.
“In a normal year, the more-stable, older markets like the US and Europe remain more or less flat, but you see a big growth in the developing markets — that did not happen this year,” he told listeners.
In the case of Australia, a market that has been seeing a gradual contraction in demand over recent years, “the combination of economic uncertainty and trade issues made it very difficult for this market to continue at the same levels; it contracted quite drastically.”
In contrast, over in Europe, demand for omega-3 oil grew, as did long-term interest in omega-3 oil as a preventative for disease.
“Because there was a fairly good year for the production of cod liver oil, and it was not possible to export this due to trading issues and a higher cost of shipping, a large amount of codliver oil also remained in Europe.”
In China and the Asia-Pacific region — which had been seeing rapidly growing demand for omega-3 supplements year-on-year — a combination of economic uncertainty, trade issues, and local differentials to production resulted in the market remaining essentially flat.
Norwegian fish oil trader Christian Meinich, managing director of Chr Holtermann AS, said with rising rapeseed oil prices aquafeed producers are getting EPA and DHA “basically for free”.
Rapeseed oil prices at the factory have risen to $1,800 per metric ton, closing in on fish oil prices (see chart).
“What happens if this gap narrows even more? Probably the feed producers, if they were to use more fish oil than rape oil, it would mainly be as an energy source,” he said.
“But I think it is something to follow, as we see higher prices result from this general rise in prices of commodities.”
Rapeseed oil is used in feed formula both as a source of saturated, monounsaturated and polyunsaturated fatty acids.
Iceland’s mega capelin quota for the 2021/22 fishing season is set to bolster fish oil stocks next year, said Christian Meinich, managing director of Norwegian fish oil trading firm Chr Holtermann AS.
At 904,000 metric tons, the quota should add 40,000-50,000t to global fish oil production, likely the biggest single-country increase, he said. (Peru, the world’s biggest producer, can always be a surprise factor.)
Amid stronger capelin fishing global fish oil stock growth is set to continue through to the first quarter of 2022, before tapering off in Q3 and Q4 of 2022.
EPA and DHA content in capelin is on lower side — about 10% content — meaning the additional supply has a bigger impact on the oil supply picture, he said.
He added there shouldn’t be issues with Iceland’s ability to process the fish. “Looking back they have had some good years, so personally I do not see sufficient logistics and storage capacity being huge challenges here.”
“It’s an important change for next year [in global fish oil markets],” he said. “You need to go back at least 15 years to see a similar quota.”
Driving home the importance of fish oil supply for the salmon farming industry, IFFO market research director Enrico Bachis explained that salmonids had become the majority consumer of fish oil within the aquaculture sector last year.
Altogether, aquaculture is responsible for 70% of global fish oil consumption. Within that figure, a disproportionate volume of fish oil is consumed by the salmonid sector, and in particular the major producing nations of Norway, Chile, and Canada.
Norway especially is responsible for more than 20% of global fish oil imports.
In the last year, global salmonid consumption of fish oil increased by 5% — now, the industry is responsible for 55% of the total aquaculture consumption of fish oil.
In contrast, after a decline in global production, demand for fish oil from the crustacean farming sector — and particularly shrimp farmers — dropped by 6% between 2019 and 2020.
Altogether, the aquaculture sector’s consumption of fish oil grew by 3% year-on-year in 2020, IFFO’s statistics show. Similar gains were seen for direct human consumption (+3%), and consumption by other uses, particularly pet food (+5%).
After a year with significant downturns in production volumes — both pre-planned and the result of an algal bloom earlier in the year — Chilean salmon can expect to see a spike in production in 2022.
Gorjan Nikolik, senior analyst with Rabobank, explained that Chilean salmon harvest volumes are currently on course to see a long-anticipated 15% reduction in 2021. Much of this volume contraction is due to come in the fourth quarter of this year, he added.
However, “somewhere between Q1 and Q2 [2022] the Chilean recovery will start again,” Rabobank’s forecast data indicates.
This should lead to a double-digit recovery in production volumes out of the country in 2022. Currently, Rabobank is estimating “around 12% recovery” for next year, and Nikolik noted that with firm demand expected to continue from the US, prices are unlikely to take too much of a hit.
Globally, 2021 is likely to be something of a flat year for growth in salmon production volumes, but Chile’s recovery is expected to produce a 4.1% increase in total harvests next year.
The coronavirus pandemic has delayed the reauthorization of under-fire fishmeal stabilizer ethoxyquin, said Brett Glencross, technical director at IFFO.
A ban on ethoxyquin for use in fishmeal and animal feed in the EU followed scientific question marks over its safety for human health.
Glencross said that, according to the European Feed Manufacturers Federation, a decision on its reauthorization by the European Food Safety Authority probably won’t come until early 2022.
Most companies have already fully removed the substance from their supply chains and switched to BHT — another synthetic stabilizer — or natural stabilizers.
Glencross said BHT is also undergoing a reauthorization process as a feed additive. However, it remains permitted for use.
“There have been minutes presented in June that show a lot of dialogue about this issue [with ethozyquin]. It’s very clear that the European Food Safety Authority is being very, very thorough in this area. And they’ve indicated they want to have more discussion about the future direction of this,” said Glencross.
In a year where general fishmeal demand patterns remained very much on the same track even as the world changed around them, the rise of shrimp culture, pig farms and pet food are forecast to offer the main sources of fishmeal demand growth in the next couple of years.
Enrico Bachis, market research director at IFFO, noted that pet food in particular has the fastest growth rate of any fishmeal-consuming sector worldwide — up 8% between 2019 and 2020.
“It’s not easy to estimate pet food sector consumption because only the premium market uses fishmeal,” Bachis said. “Our estimate now is that 40% of the dry petfood supply is premium, and inclusion rate of fishmeal is between 1 and 1.5%.”
What this means is the global pet food sector is estimated to consume between 150,000 and 200,000 metric tons of fishmeal this year, still only 2-3% of total consumption but growing faster than any other segment.
Then, the pig sector is also recovering after a year where global production saw a 9% dip due to a major outbreak of African swine fever (ASF).
However, Bachis explained that IFFO could not easily gauge current demand as fishmeal is typically used in the diet of piglets, and there is not as yet any data on the number of piglets in Asia after ASF for 2020.
Lastly, crustaceans — and in particular, shrimp — remain the main source of demand for fishmeal among farmed seafood, consuming 27.8% of all fishmeal used in aquaculture in 2020. However, total demand from shrimp was down notably last year as production dropped.
Peru’s fishmeal industry is having a “blockbuster year” with this year’s exports on track to reach 1.2 million metric tons, according to James Frank, director of Peruvian fishmeal trading company MSICeres.
Exports from the Latin American country are forecast to rise by 43% compared with 2020, after a good second season catch last year and first season catch in 2021, said the executive. “Plus some fishmeal was finally produced in 2021 in the south,” he added.
Exports to China are “awesome”, he said, increasing to 853,000t in the first eight months of 2021, or 85.2% of total exports and a “new record for us”, he said.
Germany numbers are recovering “very well” with exports in Jan-August, 2021, 45,000t, versus 24,000t over the same period last year, he said.
“The bulk shipments to Germany got very, very lucky, because overnight container freight prices more than doubled to Europe, which simply made shipping by container to Europe uncompetitive,” he said.
Frank said Peru’s good fishmeal production was supported by strong anchovy biomass and fishing, with quotas 24-25% of the biomass and around 30% or above for Peru’s first and second fishing seasons, respectively.
“We should have at least 30% biomass share for the next quota [next month]. Let’s cross our fingers and hope for that,” he said.
The maximum quota expected is 2.0-2.5m metric tons; the worst-case scenario, 1.5 or 1.8m, he said.
IFFO has revised down estimates for Chinese domestic fishmeal production.
According to Maggie Xu, China director of IFFO, China produced 366,000 metric tons of fishmeal in 2020, down 4% compared with 2019.
It followed the publication of the China Fisheries Statistical Yearbook in August, which pointed to lower output.
The yearbook shows 70% of fishmeal came from whole fish, while 30% of Chinese fishmeal production comes from seafood byproducts.
Lower domestic fishmeal output should support fishmeal imports. According to Chinese customs, China imported 1.3 million metric tons of fishmeal in the first eight months of 2021, up 56% compared with the same period last year, said Xu.
“The current domestic fishing season started a couple of months ago, but marine ingredients production usually gets into full speed only last quarter of the year,” said Xu.
“On the other hand, [China’s] ministry of agriculture… extended the summer fishing ban by10-15 days in some regions, including Shandong peninsula, the key fishery production area of China. Punishment of violations is also much more severe,” she said.
She added that China also produced 46,000t of fish oil in 2020, down by 2% compared with 2019.
“Wild catch fishery is not likely to increase, let’s put it that way. We’ll be lucky to keep it at the current level,” she said.
She added that while using more seafood byproducts was an option the disruption to pollock trade had led to a drop in such production of white fishmeal from pollock byproducts.
The possibility of using mesopelagics as a future marine aquafeed ingredient remains something of an open question, according to Arni Mathiesen, senior advisor with Iceland Ocean Cluster.
Speaking on a panel of leading figures in aquafeed, Mathiesen said that “some trials have been undertaken on mesopelagics” indicating that a potential resource exists in the ocean’s twilight zone that “could be huge”.
“But before we do anything, we need to know about the size, what do they eat, who eats them, and what could happen if we began catching even a smaller amount,” he continued.
In Norway, the ministry of trade, industry and fisheries has recently decided to grant permits for trial fishing of mesopelagic fish species, granting permissions of up to 10 years at a time.
“There has been talk about these mesopelagics for a long time; I have been speaking with pelagic captains here in Iceland, they believe there is something there and are very enthusiastic, but they do need these questions answered.”
A greater share of the world’s supply of feed should come from the marine environment to relieve stresses on terrestrial sources, said a former official at the Food and Agriculture Organisation and United Nations.
Arni Mathiesen, former deputy head at FAO’s Fisheries and Aquaculture Department in Rome, noted just 2% of the global food supply comes from the seas, despite water covering 70% of the globe.
Mesopelagics, a group of marine species inhabiting the middle pelagic, or twilight zone, is one potential source of feed that remains completely untapped, he said.
“I think it’s time that we really find an answer to that question. Is there a possibility [with mesopelagics] or isn’t there?” he asked.
He said with greater production of feed he was confident aquaculture production could increase 100-fold.
In her opening address to viewers of this year’s IFFO conference, IFFO president Anne Mette Baek stressed the importance of seafood byproducts in meeting the growing demand for aquafeed ingredients.
“We are convinced that byproducts will play an increasing part of the industry,” she stressed. “We have no doubt that a lot of byproducts are not being collected, and there is plenty of opportunity to further increase their use in fishmeal and fish oil.”
In this regard, data from IFFO shows that currently 29% of the world’s fishmeal and 48% of its fish oil already comes from such byproducts — a good start, but with plenty of room for improvement, Baek suggested.
The need to find new sources of aquafeed is clear and remains one of the most pressing requirements for an industry already stretching the available marine raw material.
The demand for feed ingredients from aquaculture is expected to double by 2050, and already in the past decade the sector’s demand has jumped to take the lion’s share of global fishmeal production, Baek showed in her presentation.
IFFO’s second annual conference to be held virtually aims to provide a comprehensive overview of the sector in the absence of face-to-face meetings.
The event, which is being held online from Oct. 19-21, got off to a noteworthy start with the news IFFO has established a new sustainability initiative.
Partnering with the NGO Sustainable Fisheries Partnership (SFP), the two organizations have established a roundtable group for fishmeal and fish oil, replicating SFP’s signature roundtable process used for its sustainability projects around the world.
The independent chair of the roundtable, Arni Mathiesen — a former official at the Food and Agriculture Organisation and United Nations — said the roundtable would consider food security in terms of quantity and nutritional properties, as well as encompass waste reduction.
Contact the authors [email protected], [email protected]
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This year's virtual conference by IFFO, or The Marine Ingredients Organisation, is being held Oct. 19-21
This year's virtual conference by IFFO, or The Marine Ingredients Organisation, is being held Oct. 19-21. Industry experts will discuss market trends, sustainability issues, and climate change, in relation to the global marine ingredients sector. [...]
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