September 6, 2010

Global fish feed costs to remain high

Costs for the key ingredients in fish feed, which are closely linked to global commodity and energy prices, have increased as much as 50% in recent years, according to the UN Food and Agriculture Organization (FAO).

Fish feed represents 50-70% of fish farmers' production costs, and the average price of the ingredients commonly used in fish feed jumped between 20% and 92% from June 2007 to June 2008, said the FAO in a recent report.

FAO warned that the aquaculture industry is not immune to this global phenomenon, and the major concern is how it will impact aquaculture, adding it is "highly unlikely" that commodity prices will fall to pre-2000 levels in the foreseeable future.

Fish feed prices vary from a few hundred dollars a ton to more than US$1,000 a tonne, depending on the species being fed. Aquaculture relies on a basket of common ingredients such as soy, corn, fishmeal, fish oil, rice and wheat, but since 2005 prices of these commodities have soared - prices of wheat, rice and fish oil have increased 180%, 225% and 284%, respectively.

Concomitant factors pushed global food commodities to all-time highs in 2008: Stock levels for major grains dropped following unpredictable weather conditions and weaker harvests. Rising incomes in developing countries, particularly China, boosted demand for food staples. Even futures markets - used to mitigate price risks for global commodities - have been singled out as a contributory factor.

Key commodities used in fish feed production such as corn and soy are largely sourced from the US, notably Brazil, Argentina and Chile. In Brazil, where production areas can be more than 1,000 miles from port, trucks are predominantly used to transport soy. The cost of such transportation also escalated due to rising fuel prices, doubling from US$6 per 100 miles in January 2005 to more than US$12 per 100 miles in July 2008.

Increasing demand has also led to the global rise in fishmeal prices; fishmeal makes up nearly 50% of the total feed cost. Figures from the FAO report show that global prices for fishmeal ranged between US$500 and US$700 a tonne from 2000 to 2005. By May 2008, the price of fishmeal had doubled, reaching US$1,210 a tonne.

The FAO cited figures from fish feed supplier BioMar that finds while the inclusion level of fishmeal in feed is 25%, it actually accounts for 43% of raw material costs and 32% of total production costs. Alternative proteins such as soy, wheat and corn gluten, which can make up 45% of volume, account for 19% of raw material costs.

Another costly ingredient in fish feed is colour-pigments/binders, which are less than 1% of the diet, account for 13% of costs.