October 11, 2008
Aquaculture's fading star: No fish without the fishmeal
Once touted as a plentiful, inexpensive protein supply, a lack of high-quality feed ingredients appears to be limiting aquaculture's expansion.
An eFeedLink Hot Topic
by Eric J. BROOKS
For a long time, aquaculture has been seen as the great hope of the world's animal and meat processing lines. Traditionally, fish were always more plentiful and less expensive than land animals. As global population grew much faster than the oceans, it seemed for a time that aquaculture would be the answer. Yet, even here, we are seeing a clutch of symptoms which, collectively, signal that an aquaculture capacity constraint is just are around the corner.
Without feed, there can be no supply growth
And what aquaculture constraint can be more fundamental than a lack of feed raw materials? Fishmeal, aquafeed's traditional key ingredient has been in secular long term decline for over a decade. Yet, most analysts still expect sea food to make up a larger portion of the average person's diet in years to come.
Yet, how is this to occur with out an expandable supply of key feed raw materials? According to the UN Food and Agriculture Organisation, aquaculture production must rise by 61 percent from 51.7 million metric tons in 2006 to 80.5 million tonnes in 2030 for global per capita fish consumption to merely remain constant, not rise. With fishmeal stocks in long term decline, where will all that additional aqua feed come from?
Superficially, everyone talks about developing new, alternative aqua feeds but these have a long, disappointing history of failing to materialise. For example, analysts have talked about krill's potential for replacing traditional fishmeal for longer than some of this article's readers have been alive. Scientists have spoken optimistically about krill being a decade away from being harvested since the mid 1970s.
Apparently, despite decades of research and much optimism, this abundant protein source does not readily lend itself to human ingenuity. Today, more than ever, high fossil fuel prices are making a long fishing journey to the Antarctic circle and on-site krill processing followed by refrigeration for the entire return trip back uneconomical.
Can you turn an apple into a steak? Vegetable protein-based alternatives always come up short Similarly, all efforts to design plant-based substitutes to fishmeal were said to be 'five years away,' even in reports from the early 1990s. Even now, we continue to have conferences where researchers share what they have learned in their attempts to adapt vegetable protein sources to fish diets.
Unfortunately, the scientific effort to make vegetable protein as nutritious and digestible as fishmeal can be compared to giving an apple the enzymes that make it resemble a steak. Will it fool anyone at the dinner table? Apparently, the fish too, refuse to be fooled. Consequently, even after decades of research by Americans, Japanese, Russians, Chinese, government and private industry, a vegetable protein source that can be fully substitutable for fishmeal remains forever 'just over the horizon.'
In all of these ways, appears that the world is not much closer to finding a solution to its chronic fishmeal shortages today than it was five years ago but we now have many more fish to feed. Nevertheless, most fish species require a minimal amount of omega 3 fat for proper growth and development. Yet, omega 3 fat is even rarer in feed grains than fishmeal is out in the oceans. Fishmeal is increasingly scarce, yet remains an indispensable component of aqua feed.
This leads to a consensus of analyst's forecasts that without a viable substitute, long run fishmeal prices will rise by at least 7 to 8 percent a year after adjustment for inflation. An annual price increase exceeding 7 percent compounds itself into a doubling of fishmeal's cost in less than ten years. Needless to say, this will, over time, make farmed seafood too expensive to be considered a plentiful, low cost alternative to land animal-derived meat.
Fishmeal shortages crimp aquaculture growth
With all this in mind, have we found any evidence that aquaculture is feeling the strain of scarce fishmeal supplies?
The answer appears to be yes on several different levels. Market-wise, the UN Food and Agriculture Organisation (FAO) reports that global aquaculture enjoyed an annual growth rate of 11.8 percent from 1985 to 1995. This decelerated to 7.1 percent during 1996-2003 before tapering off to 6.1 percent in the 2004-2006 period. Since then, the industry's growth rate may have fallen to a little over half this amount.
eFeedLink noted that China, the world's biggest aquaculture producer, saw aquaculture profit margins drop precipitously from 2005 to 2008. Coincidentally, China also suffered precipitous drops in the quality and quantity of its fishmeal supply during this time.
Vietnam's aquaculture sector lags China but in the last two years, it too has suffered a drop off in growth. More recently, the Philippines Department of Agriculture reported that its optimistic hopes for aquaculture are being disappointed. After growing 7.2 percent in 2007, aquaculture production is following the path blazed by China, with this year's farmed seafood output only rising by a paltry 2.2 percent. Everywhere we go, within a few years of fishmeal's mid decade hyperinflation, aquaculture industry growth tapered off.
Why would aquaculture growth fall as protein demand rises?
What is most interesting about this drop off in aquaculture production is the following: everyone agrees that demand for protein grew more rapidly after the late 1990s than before. Yet, even as demand for protein took off in China and other developing nations, aquaculture's growth slowed down. This implies that there exists a shortage of aquaculture supplies or raw material inputs, not a lack of demand.
Melamine implies a shortage of feed raw materials
Finally, if a shortage of appropriate feed is holding back aquaculture growth, this should manifest itself in lower quality aqua feed, which will in turn produce lower quality fish. This too, seems to be happening. The US, Australia and EU have caught numerous instances of farmed sea food from China and Vietnam containing high levels of melamine, a plastic used to disguise abnormally low protein levels in feed, milk and meat.
The need to resort to melamine in feed implies that China and Vietnam's aqua feed producers might be facing a shortage of protein rich feed raw materials. This again, implies high costs and scarce supplies of high-protein fishmeal.
Desperate measures to hide inferior fish quality or low protein levels is precisely the kind of behaviour one would expect when high quality aqua feed is in short supply. In the long run however, as consumers become aware of the quality differences between wild catch fish, properly raised sea food and low quality products, demand for the latter will taper off. Along with the supply constraints described above, laws that ban substances like melamine and consumer revulsion against low quality sea food will serve to limit the demand for aquaculture products.
Back to the drawing board…
While we believe these predictions are reasonable, we also find it personally disappointing. Everywhere in the world, our capacity to raise livestock and catch wild fish is running into serious, environmental capacity constraints. Aquaculture was supposed to be how the world would supply everyone with enough protein to grow up to the same physical height as Europeans and Americans. Now that a shortage of aqua feed raw materials appears to be limiting aquaculture's scope for expansion, the world must find another way of turning feed into protein. May it do so sooner rather than later. 

All rights reserved. No part of the report may be reproduced without permission from eFeedLink.