Aquaculture has long been acknowledged as the most efficient center-plate protein resource with feed-conversion ratios (FCRs) far superior to those of terrestrial animals, and yet farmed seafood is invariably more expensive for consumers to buy in stores.
Historically, a number of factors have contributed to the premium price attached to aquaculture, but two of biggest – feed prices and biological costs – could be about to change for the betterment of the entire value chain, believes Gorjan Nikolik, senior analyst at Rabobank International.
There has been a long-term decline in fishmeal production, which “halted” in 2017, but still left a shortfall of two million metric tons (MT) or one-third when compared with 20 years ago, said Nikolik. However, the scarcity of fishmeal and also fish oil has led to a “proliferation of innovation,” especially over the last two or three years, as companies have sought alternative sources of omega-3 rich fish feed ingredients, with a few in particular catching the attention of investors both inside and outside the aquaculture sector.
The area of novel feed development that has secured the most industry participants to date is algae oil. As a bottom-of-the-food-chain organism with high scalability, “a lot of the smart money is on this technology,” despite prices still being very high, he said.
Another, quite similar field of innovation to algae oil is microbial-based protein, and this too has hooked a number of investors, while insect-based feeds also offer a promising solution but currently lack large investors.
Fortunately for the aquaculture supply chain, the recent conclusion of an El Niño provided an extra 500,000 metric tons (MT) of Peruvian fishmeal, which in turn brought prices down to a level of USD 1,200 (EUR 1,025) per MT, which is close to the bottom of the range.
At such a price, Nikolik believes investors are reluctant to put alternatives into full-scale production or even start, but if prices were to climb to levels above USD 1,700 (EUR 1,452) or USD 1,800 (EUR 1,538) per MT, then the investment should kick in.
“I think this next period will be essential for the feed producers looking to get a head of the rest," he said.
Meanwhile, technological progress is key to addressing aquaculture’s biological challenges and Nikolik said there has been “incredible developments” in the last couple of years to overcome some of the risks that are associated with farming in open environments.
New farm designs have been deployed with sectors such as shrimp switching to higher levels of production intensity and biosecurity, while others such as salmon producers are looking to isolate their farms from the marine environment through land-based farming, closed containment technology and sub-sea and open-sea farming.
“I’m not sure which of these will survive and be commercially viable but it’s great to see the sheer level of innovation in the industry,” he said. “But it’s not just about innovation, we also hear a lot more about cooperation.”
The wave of maturity and technological growth taking pace in aquaculture has attracted many global players from the agro-sector and beyond. Consequently, about 70 percent of Nikolik’s work is now with companies that were, until recently, operating outside of fish and shrimp farming.
In bringing aquaculture closer to the rest of the agro-industry, it can benefit from the transfer of technology from these other sectors, it gets better access to capital, better scale and synergies in raw material procurement as well as marketing and distribution, he said.
“I’m very happy to see that we are becoming part of the larger agro-industry with all of the innovation that we are doing," he said.
