A primer on Fishmeal

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*Disclaimer: The World Fisheries industry is rather poorly covered and reported. Research material and figures are often estimates given that there is always IUU (illegal, under-reported, under-regulated) activities on going. For the largest traded food commodity in the world this is rather surprising. Even the market structure on how fish is sold in the markets are also via silent auctions and prices are generally not known. Up to date figures are hard to come by and are often dated by 2-3 years. I have tried to remain as factually accurate as possible. But having said that, the global demand for fish and fishmeal/oil is growing.

Fish was the world’s single-most traded food commodity with an estimated export value of USD 143.9bn in 2014. The estimated global fish export volume during the year marginally increased to 57.8 million tonnes compared to 57.4 million tonnes in 2012.

World fish production in 2013 exceeded 162.8 million tonnes, comprising more than 90 million tonnes of capture fisheries and about 70 million tonnes of aquaculture fisheries. Global fish production is dominated by developing countries such as China, which alone accounts for more than 30% of the total fish output, while Norway leads farm salmon production.

China is also the biggest exporter of fish, followed by India, Indonesia, Japan, Philippines, Thailand and Vietnam. Thailand, Indonesia and Vietnam are among the world’s biggest shrimp exporters. The European Union (EU) and the US are the major fish importers.


Source: FAO: Food Outlook 2015

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Source: Rabobank World Seafood Trade Map 2015

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As we study the fishmeal/fishoil market, we have to look into the demand drivers that underpin the whole. That overarching theme for this market would be the global consumption of fish as a whole as well as how fish Is produced.
Global fish production has grown steadily in the last five decades, with food fish supply increasing at an average annual rate of 3.2 percent, outpacing world population growth at 1.6 percent. World per capita apparent fish consumption increased from an average of 9.9 kg in the 1960s to 19.2 kg in 2012.  As of 2015 based on the most updated figures, it is estimated to have exceeded 20kg per capita consumption.
Fish production can be utilized for food and other non-food uses. Since the early 1990s, the proportion of fisheries production used for direct human consumption has been increasing. In the 1980s, about 71 percent of the fish produced was destined for human consumption, this share grew to 73 percent in the 1990s, and to 81 percent in the 2000s. In 2012, more than 86 percent (136 million tonnes) of world fish production was utilized for direct human consumption. The remaining 14 percent (21.7 million tonnes) was destined to non-food uses, of which 75 percent (16.3 million tonnes) was reduced to fishmeal and fish oil. The residual 5.4 million tonnes was largely utilized as fish for ornamental purposes, for culture (fingerlings, fry, etc.), bait, pharmaceutical uses and as raw material for direct feeding in aquaculture, for livestock and for fur animals.


Source: FAO The State of World Fisheries and Aquaculture 2014

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It can be seen from the above that fish production comes in 2 main forms. One of it is capture production and the other is from aquaculture.
Global capture fishery production of 93.7 million tonnes in 2011 was the second highest ever (93.8 million tonnes in 1996). Moreover, excluding anchoveta catches, 2012 showed a new maximum production (86.6 million tonnes). Nevertheless, such figures represent a continuation of the generally stable situation reported previously.
Global fishery production in marine waters was 82.6 million tonnes in 2011 and 79.7 million tonnes in 2012. In these years, 18 countries (11 in Asia) caught more than an average of one million tonnes per year, accounting for more than 76 percent of global marine catches.

Global aquaculture production attained another all-time high of 90.4 million tonnes (live weight equivalent) in 2012 (US$144.4 billion), including 66.6 million tonnes of food fish and 23.8 million tonnes of aquatic algae, with estimates for 2013 of 70.5 million and 26.1 million tonnes, respectively. China alone produced 43.5 million tonnes of food fish and 13.5 million tonnes of aquatic algae that year. Some developed countries, e.g. the United States of America, have reduced their aquaculture output in recent years, mainly owing to competition from countries with lower production costs.

World food fish aquaculture production expanded at an average annual rate of 6.2 percent in the period 2000–2012 (9.5 percent in 1990–2000) from 32.4 million to 66.6 million tonnes.

The global trend of aquaculture development gaining importance in total fish supply has remained uninterrupted. Farmed food fish contributed a record 42.2 percent of the total 158 million tonnes of fish produced by capture fisheries (including for non-food uses) and aquaculture in 2012. This compares with just 13.4 percent in 1990 and 25.7 percent in 2000. Asia as a whole has been producing more farmed fish than wild catch since 2008, and its aquaculture share in total production reached 54 percent in 2012, with Europe at 18 percent and other continents at less than 15 percent.
The overall growth in aquaculture production will continue to remain strong to the increasing demand for food fish.


Source: FAO The State of World Fisheries and Aquaculture 2014

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Source: Bloomberg

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The above graphic shows the demand-supply gap that marine capture vs human consumption of fish into 2030. Do note that the graph does not contain inland (freshwater) capture.

The future of the fisheries and aquaculture sector will be influenced by its capacity to address strategic interconnecting challenges of global and local relevance. Population and income growth, together with urbanization and dietary diversification, are expected to create additional demand for animal products, including fish in developing countries.

Looking at the model projections of FAO (see below), it can be seen that on the basis of the baseline assumptions used and stimulated by higher demand, world fisheries production is set to rise over the projection period (2013–2022) to 181 million tonnes in 2022. Capture fisheries production is projected to increase by 5 percent to about 96 million tonnes. This improvement is due to a combination of factors including: recovery of certain stocks following improved resource management; growth in the few countries not subject to strict production quotas; and enhanced use of fishery production, including reduced discards, waste and losses as driven by legislation or higher market prices. However, in some years (2015 and 2020 in the model), the El Niño phenomenon will reduce catches in South America, especially anchoveta. Overall increased supplies will come mainly from aquaculture, which will reach about 85 million tonnes in 2022 (up 35 percent in the period). However, its annual production growth is projected to average 2.5 percent in 2013–2022, compared with 6.1 percent in 2003–2012. The main causes of this slower growth will be: freshwater scarcity; less optimal production location availability; and high costs of fishmeal, fish oil and other feeds (about 50 percent of global aquaculture depends on external feed inputs). Nonetheless, aquaculture will remain one of the fastest-growing food-producing sectors. Its share in global fishery production* is projected to rise from 41 percent in 2010–12 to 47 percent in 2022.

In terms of fish destined for human consumption, aquaculture should surpass 50 percent of the total by 2015 and reach 53 percent by 2022.


*Note, fishery production includes not only fin fish but also other types of seafood; crustaceans, molluscs, cephalopods, seaweeds, aquatic algae.


Source: FAO The State of World Fisheries and Aquaculture 2014

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With a growing human population worldwide, the demand for fish and fish products will increase even if the per capita consumption remains at the present world average level of almost 19 kg/year. Capture fisheries production has, in general, levelled off. The increasing demand for fish products will drive improved utilization of present resources, which could reduce wastage and divert more fish into food and less to feed. However, the growing demand for fish will, in practice, mainly be met by increased production from aquaculture, thus, also driving the demand for feed.



Fishmeal is a generic term for a nutrient-rich feed ingredient used primarily in diets for domestic animals, sometimes used as a high-quality organic fertilizer. Fishmeal/oil can be made from almost any type of seafood but is generally manufactured from wild-caught, small marine fish (pelagics) that contain a high percentage of bones and oil. Major groups of industrial fish rendered into fishmeal are anchovies, herrings, menhaden, sardines, shads, and smelts (see below).

Source: University of Florida: The Benefits of Fish Meal in Aquaculture Diets

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High-quality fishmeal normally contains between 60% and 72% crude protein by weight. From a nutritional standpoint, fishmeal is the preferred animal protein supplement. Fishmeal of high quality provides a balanced amount of all essential amino acids, phospholipids, and fatty acids [e.g. DHA (docosahexaenoic acid) and EPA (eicosapentaenoic acid)] for optimum development, growth, and reproduction, especially of larvae and brood stock. The nutrients in fishmeal also aid in disease resistance by boosting and helping to maintain a healthy functional immune system.
Incorporation of fishmeal into diets of aquatic animals helps to reduce pollution from the wastewater effluent by providing greater nutrient digestibility.

There are 2 key regional markets for fishmeal. First is the ‘Asia-Pacific’ market, which accounts for close to 60% of global demand for aquaculture and pigs (mainly China). Second is the ‘European/Mediterranean’ market, which accounts for about 20% of global demand for aquaculture.
The fishmeal/oil market is a cash market without any futures traded. Price discovery is a fixing system via bids from large feed buyers to large producers that ‘frame contracts’. Trades are based on a B2B business model without any intermediaries and are prices are executed mostly unknown to the rest of the market.


World Fishmeal/oil global demand
Source: The World Fishmeal Markets: Current situation and medium term outlook.

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The main index used as a price point for trade is the ‘Peruvian Super Prime Fishmeal’. The rest of the other fishmeal are priced using Super Prime as the base price.
Peruvian Super Prime Fishmeal is a quality fishmeal produced in Peruvian factories with high technical and hygienic conditions and dried with steam or enercom. Peruvian Super Prime Fishmeal is selected for very low histamine level which indicates very good freshness of the fish at production.

The specifications are as follows:
SD min 68/10/11.5/4-1, TVN 100, FFA7.5, hist 500 SUPER PRIME (SD: Steam dried)

Source: http://www.norsildmel.no/products/MARINE%20PROTEINS_PERUVIAN_SUPER%20PRIME_FISHMEAL.pdf

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Global trade of fishmeal is concentrated around a few key players. China as can be seen in the graph below is the greatest consumer with a fishmeal consumption level of about 1.4million metric tonnes (MMT) annually. Japan, Taiwan and Thailand follows with about 0.9MMT annually.

Approximately 60 per cent of world fishmeal production is each year exported and not consumed in the manufacturing country, meaning world fishmeal trade equals about 3-4 million tons each year. Excluding China, which is a net-importer of fishmeal, the world trade share is raised to over 70 per cent. Peru and Chile contribute about 60 per cent of the globally exported fishmeal, and this further underlines the importance of the South American fisheries to the fishmeal market. The statistics show that even though China is one of the world’s biggest fishmeal producers, is also by far the biggest importer of fishmeal with 30 per cent of the global trade volume in 2007. Following China are the Asian nations Japan (11per cent), Taiwan (4per cent) and Vietnam (3per cent). The Scandinavian nations and Germany are involved in much intra-European trade (both importing and exporting fishmeal) and their figures should therefore be interpreted with caution.


Fishmeal Consumption and Usage
Source: The World Fishmeal Markets: Current situation and medium term outlook 2014

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Top 10 Largest importers of Fishmeal/oil 2014
Source: The World Fishmeal Markets: Current situation and medium term outlook 2014

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Top 20 Fishmeal/oil producers 2014
Source: http://www.indexmundi.com/agriculture/?commodity=fish-meal

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Top 10 Largest exporters of Fishmeal/oil 2014
Source: The World Fishmeal Markets: Current situation and medium term outlook 2014

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Fishmeal is a light brown flour or meal produced by cooking, pressing, drying and milling fresh raw fish and fish trimmings.
There are four different products sold as meal:
• High quality – usually for small-scale aquaculture units (trout farms) or marine species.
• LT (low temperature) meal – is highly digestible and used in salmon and piglet production.
• Prime
• FAQ (fair average quality) – lower protein content feed ingredient for pigs and poultry

World-wide annual production from approximately 300 dedicated fishmeal plants has been approximately 5 million tonnes of fishmeal over the last four years. The main producing countries in 2014 were Peru, Chile, Thailand, Denmark (EU-27) and China. World production of fish oil is just under 1 million tonnes.

This is all produced from about 20 million tonnes of whole fish and trimmings (both for Fishmeal and oil).

Fishmeal/oil prices has quadrupled since 2000. Global demand for fishmeal is rising driven by the growth of the aquaculture industry as can be seen almost 0% in 1960 to more than 60% in 2012.
However, production of fishmeal is declining as wild catch of key small pelagic species used in the production of fishmeal has declined: such as the anchovy catch in Peru; jack mackerel and sardines in Chile; and blue whiting, capelin and sand eels in Europe.
In some cases, such as the decline in jack mackerel catches, the historical harvest levels were not sustainable.


Price of Fishmeal/Oil
Source: http://www.undercurrentnews.com/2015/06/09/fishmeal-will-move-from-being-commodity-to-high-price-strategic-marine-protein/

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Declining Global fishmeal production
Source: http://www.undercurrentnews.com/2015/06/09/fishmeal-will-move-from-being-commodity-to-high-price-strategic-marine-protein/

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Also there has been a move of small pelagics towards human consumption markets as well as the use for the production of nutraceuticals (eg. omega-3 oil capsules). The first market that felt the impact of the changing dynamics is the fish oil market where the aquaculture industry typically consumes 75% of available fish oil supply and about 22% is used for human consumption. Thus the price dynamics of vegetable and marine oils have been going in opposite directions that broke a price correlation that lasted for decades.
Fishmeal and its alternative, soymeal, is also experiencing a similar situation where the historical link between fishmeal and soymeal is weakening.

Thus there has been growth in the production of fishmeal/oil from fisheries by-products and wastes (eg. trimmings, guts, offal, bones etc). About 35% of world fishmeal/oil production was obtained from fish residue in 2012.
Given the above, efforts to replace fishmeal and fish oil are ongoing and further improvements are expected. In recent years, the percentage of fishmeal and fish oil in compound feeds for aquaculture has shown a clear downward trend while their international prices have increased. At present, and in the near future, fishmeal and fish oil are and will be widely used as strategic ingredients at lower levels and for specific stages of production, e.g. fry. However, depending on the alternatives used, their substitution by other ingredients may affect the health properties of farmed fish.


Fish Farm of the Future Goes Vegetarian to Save Seafood – Video



The majority of alternative fish feed however, are still in their infancies today. Insect protein, recycled waste, algae/vegetarian feeds faces challenges of low production capacity, high costs and consumer aversion, makes alternative unrealistic feeds for aquaculture currently. Consequently fishmeal /oil will remain a major component of fish aquaculture diets for the foreseeable future.

As a result, fishmeal/oil will no longer be a just another commodity, but a ‘high-price’ strategic marine protein, when other protein sources cannot be used.



A side note on El Niño: El Niño is the warm phase of the El Niño Southern Oscillation (commonly called ENSO) and is associated with a band of warm ocean water that develops in the central and east-central equatorial Pacific (between approximately the International Date Line and 120°W), including off the Pacific coast of South America. El Niño Southern Oscillation refers to the cycle of warm and cold temperatures, as measured by sea surface temperature, SST, of the tropical central and eastern Pacific Ocean. El Niño is accompanied by high air pressure in the western Pacific and low air pressure in the eastern Pacific. The cool phase of ENSO is called “La Niña” with SST in the eastern Pacific below average and air pressures high in the eastern and low in western Pacific. The ENSO cycle, both El Niño and La Niña, causes global changes of both temperatures and rainfall. Mechanisms that cause the oscillation remain under study.

Countries dependent upon agriculture and fishing, particularly those bordering the Pacific Ocean, are the most affected (primarily Peru and Chile). El Niño’s warm rush of nutrient-poor water heated by its eastward passage in the Equatorial Current, replaces the cold, nutrient-rich surface water of the Humboldt Current. When El Niño conditions last for many months, extensive ocean warming and the reduction in easterly trade winds limits upwelling of cold nutrient-rich deep water, and its economic impact to local fishing for an international market can be serious. Due to the reduction of the upswelling of cold nutrient rich water which sustains large fish populations, it results in fish kills or lowered biomass of fish.

Some of the notable events that was brought about by El Niño was the collapse of the world’s largest fishery during the 1972 El Niño Peruvian anchoveta reduction. During the 1982–83 event, jack mackerel and anchoveta populations were reduced, scallops increased in warmer water, but hake followed cooler water down the continental slope, while shrimp and sardines moved southward, so some catches decreased while others increased.