Experts say that we are running out of food for the fish that we eat every day. What should we feed the fish? Can the aquaculture industry, the engine of a growing fish farm industry and its pantry, respond to the demand? After all, costs are rising, weather is irregular, and supply is limited.
Absolutely, say industry experts, who point to a rapidly growing $75 billion market opportunity and improved, sustainable ways of doing business.
Put in perspective, seafood consumption is way up, as hungry middle classes in Asia and India spur demand. Half of the fish consumed is now farmed, and the World Bank bets it will be two-thirds by 2019. Globally, aquaculture has surpassed beef production.
Traditionally, fish feed for farmed fish has been made from fish meal (ground-up forage fish) and oil — mainly from small bony fish like herring, menhaden, anchovy, pitchard, mackerel, and sardines. But rising concerns about economics and sustainability have led to a broad exploration of alternative feed ingredients. Prices for fish meal have skyrocketed over the last two decades, climbing to near $2000 per metric ton in 2015.
Irregular weather has exacerbated the problem. In 2014, an El Niño weather pattern in Peru decimated that country’s anchovy industry (which provides 40 percent of global fishmeal, according to Fish 2.0’s market report on fish feed.) That translated to $1 billion in revenue losses for the year. Meanwhile fish meal prices elsewhere rose to all-time high, driven higher by Peru’s low anchovy catches. All of this, as global demand continued to increase.
Challenges are opportunities. A perfect storm is driving innovative and sustainable solutions and greater efficiencies. Companies of all sizes are driving change: smaller startups are focusing on alternative feed ingredients and technologies, and larger traditional players from the agricultural sector are taking on larger positions within this growing industry.
Industry Sets Up Shop
Cargill, the Minnesota-based agriculture corporation, is devoting resources to build its aquaculture business line. In August, they announced the $1.35 billion euro ($1.5 billion) acquisition of EWOS, a top salmon feed producer in Norway, effectively becoming one of the three biggest players in the aquafeed industry.
The transaction, subject to regulatory approvals, is expected to close before the end of 2015. It buttresses Cargill’s existing aquaculture presence in Mexico, China, Central America, Southeast Asia, India, the US, and Ecuador. Sarena Lin, president of Cargill’s Feed and Nutrition division said, “Adding [EWOS’] industry-leading talent and capabilities as well as its thought leadership in sustainable business practices will be transformational for our aquaculture nutrition business.”
The acquisition of EWOS comes right on the heels of Cargill’s joint venture with Ecuador-based Naturisa for a $30 million shrimp feed facility near Guayaquil, Ecuador in July.
Nutreco, the Dutch animal nutrition and fish feed company, owns the aquaculture feed company Skretting, which now produces fish feed on five continents with a total annual sales volume of 1.9 million tons. Skretting has directed millions toward research over the past 15 years into alternative feed sources and new technologies as a means to produce a more sustainable supply chain. This means reducing the cost of raw materials, and moving toward more sustainable sources without compromising the delicate balance of proteins, minerals, growth factors, carbohydrates, vitamins, and fats needed to support marine life.
“Certainly they’re one of the companies out in the front, leading,” said Mike Rust, the NOAA Office of Aquaculture’s Science Coordinator, adding that Biomar and Biomin have also been focused on similar research into alternative ingredients. “It all started in the 1970s not because people were worried about forage fish, but because of price increases set off by an El Nino season, we all thought the fish feed prices were going to climb to today’s peaks in the 1980s or the 1990s,” he said.
Smaller companies and start-ups are developing technologies to better exploit the protein possibilities of insects: single cell proteins including yeasts, microbes and bacteria produced from carbon sources; and the byproducts (largely protein and fat) leftover from ethanol production. Enterra, Calysta, Entofood, and Ynsect are among the frontrunners.
Algae-based biofuel is also generating excitement in the feed business, in part because marine algae generate the long chain omega-3 fatty acids and amino acids that make fish such a healthful food. When oil is recovered from algae, the byproducts are those highly desired amino and fatty acids. A growing list of companies around the world is now focused on algae biofuels.
Sustainable Ingredients Make Sustainable Feed, But Are They All Safe?
Soy is major player in the aquafeed industry, triggering concerns about GMOs, hormones, and monocultures. But according to NOAA’s Mike Rust, those concerns haven’t been proven by studies on fish feed containing soy or limited its use. “If there’s one dominant ingredient in fish feed, it’s probably soy meal,” Rust said, noting that soy is the largest source of protein for feed on Earth. “Soy accounts for 150-160 million metric tons of protein a year out of a total pie of maybe 250 million metric tons. They’re the big kid on the block,” he said.
Soy makes sense as a component of aquaculture feed blends not only because of its availability but because of its makeup of 47-50 percent protein, 1 percent lipid, 40 percent carbohydrate, and 5-6 percent ash. High in lysine, soy is relatively low in certain amino acids and tryptophan. Those deficiencies can be addressed with supplements, just like you build a vitamin pill, or mix beans and rice to provide a vegetarian person a complete protein. For fish with higher protein needs, like salmon, soy can be mixed into a blend of other ingredients.
Experts Say Fish Should Eat Fish
Soy may be dominant, but many argue the best ingredient for fish feed is, naturally, fish. The question is how to use other fish for feed in a sustainable, efficient way. It can take 1-3 pounds of fishmeal (some fish, like salmon, require more protein) to produce a pound of farmed fish.
That formula undercuts notions of sustainability. Rick Barrows, who develops Fish Feeds at the USDA lab told National Geographic the amount of forage fish used per pound of output has fallen around 80 percent from rates 15 years ago. but he said, could fall a lot further.
Rust says most of the almost 20 forage fish-based fisheries around the world are sustainably managed, and typically don’t deal with overfished species, that is not the main issue. “The issue isn’t the amount being produced today. The issue is the increasing amount needed by increasing populations or increasing amounts needed by populations moving in higher economic classes, like in China and India. The issue is about looking forward.”
The question is using what is already there for the taking, perhaps considering processing byproducts from other industries, such as other underutilized, value-added resources like fish trimmings and waste. According to Fish 2.0’s market report, 35 percent of fish meal is now sourced from trimmings. That presents a huge opportunity. Rust agrees. “If I catch a fish, I fillet it out, and about 50 percent of the weight is the fillets. About 50 percent is the head and the yucky stuff most of us don’t want to eat. That makes a perfectly good fish meal.”
This fish meal has growth potential. “Looking at really round numbers, we catch up to 90 million metric tons a year of fish. Roughly a third of that goes directly into fish meal and oil. If you fillet all of that, you’d have 30 million more metric tons of trimmings that could go into fish meal. It’s not reasonable to get all of that, but we could do better getting more of it.”
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Photo Credit: Seafood Watch
This post was originally published on ImpactAlpha.com
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