FBA Issue 34: September / October 2010
Rethinking the relationship between aqua feed cost, nutrient density and aquaculture profitability
In Asia, too much emphasis is often placed on lowering cost of feed and not enough is placed on minimizing unit feed costs ($ feed /kg fish produced) resulting in the production of feeds that are not always cost-effective for producers This is not to say that there are not legitimate concerns driving a cost-based aqua feed approach. The cost of feed often accounts for 50% or more of the operational expenses for an aquaculture facility.
The temptation to economise on quality
Furthermore, cost of aqua feed ingredients, particularly fishmeal has skyrocketed. Over the last ten years, it has risen much faster than the price of crude oil over the last ten years. The growing scarcity of protein meals and record prices for oil seeds has made both cost and supply availability major concerns.
Thus, formulated aquaculture feeds are among the most expensive animal feeds on the market. The price of the feed varies with the type of feed (e.g., live, wet, moist, or dry). In addition, feed material type and quality, the manufacturing process, and the method of delivery (e.g. bulk, bagged, or sacked) all impacts the unit cost of feeding fish.
However, while feed is the single largest aquaculture expense, cost or even unit costs per se, are a poor driver of farm productivity or even fish rearing expenses. Often times, cheaper aqua feed produces less profitable, more expensive and ecologically dirtier outcomes. Below, we examine all the key factors that determine aqua feed effectiveness and their relationship to cost and fish performance.
The first consideration for the formulation and production of cost-effective diets should be the quality of feed ingredients. Ingredient chemical composition (nutrients, energy, antinutrients, and contaminants) obviously play a determinant role with regards to aqua feed quality. However, biological aspects, such as digestibility and utilisation of nutrients, not unit costs, determine fish performance and profitability to a much greater extent than is generally appreciated. Hence, their role in successful aquaculture operations is often overlooked.
Cost saving illusion of inexpensive feed
Due to the rising cost of feed raw materials, fish nutritionists are being challenged to formulate feeds that not only meet fish nutritional requirements but also minimize production costs, limit aquaculture's environmental impact and enhance product quality. Yet, we shall see that as odd as it may sound, costly, higher quality aqua feed often produces the most productive, lowest cost outcome.
In bottom-line, accounting driven environments, reducing feed costs falsely perceived as the process of minimizing the feed's unit cost ($/kg feed). In truth, it should focus on minimising feed cost per unit fish biomass gain ($feed cost/kg fish produced). That is, the real criteria is not aquafeed's unit cost per se but its feed conversion efficiency.
Consequently, improving aqua feed's cost-effectiveness is not simply a least-cost formulation question (minimum cost per unit of weight of feed). It is also a process that should also take into consideration the monetary value of feed needed to efficiently produce one unit of biomass, or, ($feed cost/kg fish produced).
This is an especially meaningful issue for fish feeds, since their composition often varies significantly. They vary not merely by fish species or life cycle stages for which they are formulated (e.g. salmon feed vs. carp feed, fry feed vs. grower feed). The final nutrient composition of aqua feed used also very much reflects accounting priorities, raw material availability, financial constraints, and fish rearing profit margins.
Amid all these conflicting priorities, nutritional composition trumps cost considerations for one very important reason: The amount of feed required by a fish to achieve a certain amount of weight gain depends primarily on the composition of the feed used.
Assuming that the two feeds have similar nutritional balances, more feed at a lower nutrient density feed will be required when compared to a higher nutrient density feed to achieve the same performance level (see Table 1). This means that when using inexpensive feeds with lower nutrient densities, cost economies gained through lower unit costs are lost through the higher quantity of feed required to grow the fish to a certain size.
The cost saving illusion comes from the fact that feed with fewer digestible nutrients will generally be less expensive per unit of weight than higher nutrient density feeds. Such inexpensive feeds generally use grains and other carbohydrate-rich feed materials. They are usually cheaper than higher protein or fatty feedstuffs but lead to lower feed conversion ratios.
It is also important to note that an appropriate estimate for the final cost of the feed includes ingredient cost, manufacturing cost and other associated costs (e.g. shrinkage, bagging, shipping, profits margins). Generally, extruding and shipping one tonne of lower quality feed costs the same as extruding and shipping a tonne of higher quality feed.
Consequently, when non-feed material manufacturing costs are similar and nutritional density is the main differentiator, we get the following effect: Total feed cost per kilogram of fish produced may be greater with a lower density, cheaper, feed since a greater amount of that feed will be needed to achieve the same level performance (see Table 1).
Consequently, the efficient improvement of fish performance depends on the growth obtained per dollar of livestock feed, not its actual cost per unit.
Feed quality vs. animal performance
For while unit costs are important, we must keep in mind that aquaculture's ultimate goal is to optimise the efficient production of high quality fish/shrimp meat (fillet), not cost minimization per se. Otherwise, cost minimization may lower fish productivity in a manner that outweighs any potential savings.
With respect to aquaculture's efficiency goal, lean weight gain (muscle growth) is mainly determined by protein deposition. This in turn depends not only on the protein level in the diet (Figure 1) but also the biological value of the protein. This is determined by factors such as amino acid proportions and ease of digestibility.
Moreover, biology forces us to respect one unchangeable fact: Fish metabolism cannot efficiently synthesise lower cost feed grains into protein in the manner that land-based livestock do. In fact, most species of fish derive energy from proteins and fats far more efficiently than from carbohydrates.
Only omnivorous fish species, such as carp, tilapia and catfish have a greater ability to metabolize digestible carbohydrates. Nevertheless, the actual "usefulness" of carbohydrates to support protein deposition and weight gain of fish is, however, not always clear, particularly when feed protein levels exceed 40%.
Poor feed stunts growth, pollutes water, breeds pathogens
Moreover, when feeds low in protein and high in carbohydrates and fiber are used, the fish gut's capacity may be exceeded before the fish can even consume adequate amounts of nutrients. This situation leads to a reduction in growth and/or the need for more feed to achieve the fish species' growth potential. That in turn implies higher feed conversion ratios and with them, higher unit costs per kilogram of protein produced.
If the feed is of poor quality and it is not being digested efficiently, it contributes to higher excretion of fecal solids in the water. Therefore, with lower quality aqua feed, assimilation of nitrogen (N), phosphorus (P), potassium (K) and nutrients may not be efficient. This leads to a large proportion of these elements and their compounds being excreted into the water.
Furthermore, if the feed's amino acid profile is unbalanced, the fish will use the carbon skeletons of amino acid molecules for energy while excreting its nitrogen (N) and hydrogen (H) components. Cosequently, during the amino acid breakdown seen with poor quality feeds, excessive quantities of nitrogen in the form of ammonia (NH3) is released into the water. The resulting high levels of ammonia and phosphate increases water pollution levels.
These in turn impact fish growth and the capacity to comply with environmental laws governing water pollution. Hence, a low cost feed may increase the amount of undigested nutrients released into the pond. This leads to inferior feed conversion ratios, substandard fish performance and high water pollution levels.
Yet, in today's cost conscious environment, this can be an inevitable outcome of the increasing reliance on less costly protein sources and low nutrient dense diets. Such 'cost-driven' feeding strategies always imply raising the proportion of aqua feed raw materials with lower protein digestibility, amino acid imbalances and high carbohydrate content.
Due to the unchangeable realities of fish metabolism, this inevitably leads to an inefficient utilisation of feed nutrients, resulting in higher feed usage and poor fish performance. Instead of saving money, this outcome automatically increases the final cost of producing 1 kg of fish.
In effect, you are feeding less nutrition to the fish and more nutrients to the pond ecosystem itself. That creates more complex (and polluted) pond environment. That in turn may inflate the costs associated with treating the pathogens which thrive in such an climate, or paying fines for the exceeding maximum water pollutant standards.
The above are excerpts, full versions are only available in FEED Business Asia. For subscriptions enquiries, e-mail membership@efeedlink.com
