Fish­ing for al­ter­na­tives

Grain traders prep­ping fish oil sub­sti­tutes for aqua­cul­ture, health fads

Global Times – Metro Shanghai - - CITY PANORAMA -

The world’s top agri­cul­tural traders and biotech­nol­ogy firms are find­ing novel ways to make fish oil sub­sti­tutes from grains and al­gae as they seek to cash in on con­sumer health fads that have led to a scarcity of the fatty acids com­monly found in fish.

Fish are the fastest-grow­ing pro­tein source in a global food sup­ply chain strain­ing to feed a pop­u­la­tion of nearly 7.5 bil­lion peo­ple.

To keep farm-raised fish healthy, they are fed Omega 3 fatty acids that are found in the oil of other fish. The same acids are in­creas­ingly pop­u­lar in fish oil di­etary sup­ple­ments for hu­mans.

The surg­ing de­mand has pushed fish oil prices to a record high and pre­sented the aqua­cul­ture in­dus­try with a prob­lem: how to source more fish oil with­out putting de­pleted global fish stocks un­der even more pres­sure.

About 90 per­cent of ma­rine fish stocks world­wide are al­ready fully or par­tially over-fished, ac­cord­ing to the United Na­tions.

“We have fi­nite fish oil, grow­ing aqua­cul­ture and a world that needs more Omega-3s,” said Mark Grif­fin, pres­i­dent of an­i­mal nu­tri­tion at Omega Pro­tein Corp, the big­gest US fish oil pro­ducer. “They’re go­ing to have to come from some­where else.”

De­mand out­strips sup­ply

The short sup­ply has at­tracted the world’s largest grain traders, such as Cargill Inc, Bunge Ltd and Archer Daniels Mid­land Co.

These agri­cul­tural gi­ants are in the midst of trans­form­ing them­selves into food pro­cess­ing and in­gre­di­ent sup­pli­ers as they look to di­ver­sify away from bulk trad­ing of grains and raw ma­te­ri­als amid a four-year global sup­ply glut. The $2.4 bil­lion fish oil sec­tor is niche for ma­jor grain traders and rep­re­sents a frac­tion of their in­come. But fish oil is the sort of high-re­turn prod­uct they are tar­get­ing as they grap­ple with slim mar­gins in their tra­di­tional busi­ness. As de­mand out­stripped sup­ply, whole­sale prices in top fish oil pro­ducer Peru soared to an av­er­age of $2,986 per met­ric ton in 2016, the high­est ever recorded. Global an­nual pro­duc­tion of fish oil has for years been lim­ited to about 1 mil­lion tons, said Ei­nar Wathne, pres­i­dent of Cargill’s aqua nu­tri­tion busi­ness, in an in­ter­view from Nor­way. “It could be a kind of show­stop­per for growth in aqua­cul­ture if we can’t find other sources for these valu­able Omega-3 fatty acids,” Wathne said. Cargill’s plan to pro­duce more fish oil could soon change the color of up to half a mil­lion acres of the land­locked Mon­tana prairie, com­pany ex­ec­u­tives told Reuters. The firm plans to pay farm­ers there to grow a new va­ri­ety of canola, dis­tinc­tive for its bright yel­low flow­ers. Half a mil­lion acres would be eight times as much farm­land as is cur­rently planted with canola in the state. Vegetable oil made from canola is high in Omega3s, and Cargill teamed up in Novem­ber with chem­i­cal com­pany BASF SE to de­velop a canola type by 2020 that it will use to make oils for fish food. The new canola is ge­net­i­cally en­gi­neered to make long chain omega-3 fatty acids by in­tro­duc­ing genes from al­gae in the ocean, an­other source of the fats. A half mil­lion acres of canola could pro­duce about 159,000 tons of oil, the equiv­a­lent of one-fifth of global fish oil sup­plies. “It may be ap­peal­ing, an op­por­tu­nity to try new crops,” said Tom Clark, one of Mon­tana’s few canola grow­ers. But he added that man­ag­ing to change farm­ers’ habits on such a large scale would be chal­leng­ing.

In ad­di­tion to Cargill, Dow Chem­i­cal is de­vel­op­ing its own va­ri­ety of canola to make oil with sim­i­lar Omega-3 acids as fish oil, and is count­ing on Cana­dian Prairie farm­ers to grow it.

US seeds gi­ant Mon­santo is de­vel­op­ing soy­beans that can be pro­cessed into soy oil with the Omega-3 fatty acids, for food prod­ucts such as baked goods and soups.

ADM launched an al­gae-based prod­uct DHA Natur for fish di­ets last year, and has “ro­bust plans in 2017” for the prod­uct, said spokes­woman Jackie An­der­son, who de­clined to give more de­tails.

Swim­ming in rev­enue

Bunge, work­ing with Ter­raVia Hold­ings Ltd, started us­ing al­gae to con­vert sugar into an Omega-3 in­gre­di­ent for fish di­ets last year.

The com­pany has ca­pac­ity in Brazil to an­nu­ally pro­duce tens of thou­sands of tons of their prod­uct, Al­gaPrime, said Walt Rak­it­sky, Ter­raVia’s se­nior vi­cepres­i­dent of emerg­ing busi­ness.

Bunge and Ter­raVia are sup­ply­ing the prod­uct to BioMar Group, the third-largest fish feed sup­plier. The fish oil al­ter­na­tives come with their own chal­lenges.

Al­gae oil is ex­pen­sive to pro­duce, and the canola and soy­bean va­ri­eties used to make oils rich in Omega-3s are ge­net­i­cally mod­i­fied.

That can be a sen­si­tive is­sue, for ex­am­ple in Nor­way, which is the world’s big­gest salmon pro­ducer and has tough re­stric­tions on ge­net­i­cally mod­i­fied foods.

The $166 bil­lion aqua­cul­ture in­dus­try ac­counts for half the world’s fish, and sales are ex­pected to ex­pand up to 5 per­cent an­nu­ally for at least the next three years, ac­cord­ing to Rabobank an­a­lyst Gor­jan Niko­lik.

With high prices and con­cerns about sus­tain­ing fish­eries, fish farms have for years re­duced use of oil and pro­tein-rich meal in di­ets, risk­ing pro­duc­tion of less-healthy fish, ac­cord­ing to Tom Frese, pres­i­dent of con­sul­tancy AquaSol.

“That’s why the de­vel­op­ment of fish oil sub­sti­tutes is crit­i­cal,” said Vi­dar Gun­der­sen, BioMar’s global sus­tain­abil­ity di­rec­tor. “The tim­ing now is of the essence,” he said.

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