Material issues
The cost of aquafeed ingredients continues to be an issue for producers.
Over the past year, high feed prices took some of the shine off a strong market for farmed fish and shrimp for most producers. Rabobank’s Global Animal Protein Outlook 2023, published in December, reports that global grain and oilseed prices early doubled between May 2020 and May 2022, thanks to “stronger demand, lingering supply concerns and growing geopolitical uncertainty”.
With a large proportion of aquafeed for farmed fish such as salmon now plant-based, this has led directly to higher costs for aquaculture operators.
The war in Ukraine has, of course, been a major factor, but as Rabobank points out it is not the only one affecting feed prices. Drought conditions have impacted many parts of the world, associated with a threeyear weather pattern driven by “La Niña” – a Pacific Ocean current phenomenon. This, says Rabobank, has capped global production of wheat, corn and soybeans, although soy production in Brazil, and grain harvests in Russia and Australia, have been good.
Long-range weather forecasts for 2023 suggest that we could see a more neutral pattern emerging, but Europe and North America remain at risk of drought.
As the Rabobank report points out, similar headwinds also led to an increase of 170% in feed prices between 2005 and 2008, turning margins negative for many animal protein producers.
For producers in 2023, Rabobank predicts that price pressures, especially regarding feed and energy costs, show little prospect of easing.
Alex Obach, Innovation Director with feed producer Skretting, says the key factors for his company over the past year have been: Russia and the war in Ukraine, inflation,logistics, climate change and energy.
He comments: “Skretting has discontinued the export of aquaculture feed and feed additives into Russia after having fulfilled existing obligations, which varied from contract to contract.
“The war in Ukraine has added a huge layer of volatility on already volatile markets.”
In logistics, he is optimistic that transport costs are now coming down and reliability is improving, but warns that there is still high volatility and uncertainty.
In terms of the impact of climate change, flexibility is key for Skretting, he says, and it is important not to become too reliant on any one ingredient, supplier or region.
He adds: “The industry should take a step back and reflect on how it contributes to climate change, and how it can drastically and rapidly reduce its carbon and other environmental footprints, as well as social impacts.”
Reducing energy use has been a focus for Skretting for many years. Obach says: “Climate change and the associated CO2 targets that we have set have been a significant driving force for many of our energy-saving initiatives over the years. The more recent energy crisis in Europe could mean that some previously expensive technologies and solutions can now be justified.”
Sustainability has also been an important theme over the past year. In 2022, Skretting launched its Marine Ingredients Sourcing Policy, which sets out guidelines to reach its ambition of purchasing marine ingredients that are 100% certified or coming from fisheries with a fishery improvement programme (FIP) in place by 2025.
The policy outlines criteria on what to buy according to five sustainability classes of marine ingredients coming from whole fish, byproducts from wild catch and byproducts from aquaculture, aligned with the most important fishery management certifications in the industry.
In addition, Skretting has mapped countries identified as being at high risk for illegal, unreported and unregulated (IUU) fishing activities, as well as countries with a high risk of slave labour on board fishing vessels. In 2021, 80% of the marine ingredients sourced by Skretting came from fisheries certified according to the MarinTrust or MSC programmes, or from fisheries that were part of a MarinTrust FIP.
Earlier, in 2020, Skretting rolled out its Soy & Palm Ingredients Sourcing Policy. By 2025, the company aims to ensure that all its soy and oil palm materials come from deforestation-free sources.
Obach says: “Aquaculture is growing and we’re optimistic about the development of the industry. However, this will not come without challenges such as high ingredient prices, which could limit the growth in certain segments. We’re aware that people have less money to spend on food and we need to see how the global patterns affect seafood consumption.
“Political decisions are also a factor to consider. The development of the new resource tax that the Norwegian government will apply to the largest salmon farmers, the decision of the Ecuadorian government to stop subsidising diesel for large shrimp farms and the transition plan from open-net pen salmon aquaculture towards alternative production technologies are examples of how political decisions will affect our industry already this year.
“Closed Aquaculture systems (CAS) are becoming a reality and several big sites will start their operations in 2023. CAS is a very good opportunity to farm fish closer to the consumer.
“Biological challenges, namely infectious diseases, remain a significant threat to the growth of the industry in all geographies and probably the main reason for the increase in production costs we have observed in several species.
“Still if we consider the bigger picture, the fundamentals of our industry are still very strong. We are producing healthy, nutritious and delicious food for a growing population, and we are making significant progress on
” The industry should take a step back and reflect on how it contributes to climate change
our environmental impact.”
And, as he points out, the industry is allocating significant resources to innovation to address the challenges. In Skretting’s case this means spending more than €20m (£17.7m) on innovation each year.
Feeding the cleaners
Peter Kersh is Managing Director of World Feeds, a specialist producer of aquafeed for a diverse range of aquarium fish species and cleaner fish for the aquaculture sector.
He says that the main factors affecting his business in 2022 have been “economy, [war in] Ukraine, inflation, cost increases and the short- and long-term impact of Brexit”.
Like other producers, company has had to increase its own prices, particularly in response to increased energy costs.
World Feeds has a strong reputation in the aquarium sector around the world, providing complete diets to a range of species, often with separate feeding stations for different species in the same shared space.
Kersh says the parallels are obvious with fish farming, where salmon and cleaner fish are kept in the same pen, but require separate feeds. World Feeds’ offering in this sector is the VAF feedblock, Kersh says, adding: “Our philosophy is to use natural ingredients and we don’t cook or bake the guts out of them!”
He adds: “I am very optimistic for our business in salmon in Norway and Scotland. We have all salmon producers in Scotland on board (except for Cooke, which doesn’t use cleaner fish) and significant progress is now being made in Norway. The aquarium pet market, on the other hand, in the UK is tough as all pet food manufacturers are seeing market tightening as people have less money to spend.”
Just for the krill of it
In the long run, the aquaculture sector is also under pressure to reduce the environmental impact of aquafeed, both in terms of carbon impact and its reliance – which is decreasing – on wild-caught fish stocks. It’s not surprising, then, that farmers and feed producers are actively looking at alternative sources.
One alternative is to look further down the food chain to zooplankton such as krill. In November, in partnership with LetSea and Nofima, Aker BioMarine submitted an application to the Norwegian Directorate of Fisheries to conduct research with the goal of increasing the share of krill and other raw materials used in fish feed formulations today, and shed light on new opportunities.
Currently, Aker BioMarine is one of the few global players that has successfully introduced and scaled a new raw material, Antarctic krill, from the idea stage to producing more than 50,000 tonnes of ingredients annually including its aquafeed Qrill Aqua.
The company now aims to carry out a large-scale research trial, to be conducted in collaboration with LetSea, the experimental and research centre for aquaculture, along with research institution Nofima. Their joint project has been named the “Raw Material Revolution”.
Together, the three companies plan to evaluate the performance of krill, as well as other, new raw material ingredients, when included in fish feed.
Speaking in November, Matts Johansen, CEO of Aker BioMarine, said: “If we receive approval, we plan to test seven new raw materials within seven years, with the goal of increasing the combination of new raw materials in fish feed from 0.4% to 25% by 2030.”
Meanwhile, researchers at Italy-based food and feed specialist Labomar have published an article outlining their conclusions that krill is an effective part of the diet for farmed shrimp.
“The dietary feed represents one of the main cost elements in shrimp production, which makes optimisation of the feed formulation critical for producers. We have seen through years of study that including just 3% krill meal in the shrimp diet can reduce feed cost and improve performance and feed intake in fish-meal-challenged diets,” explains Alberto Nunes, Professor and Aquaculture Nutritionist, Labomar.
“Our theory is that the growth enhancement factors that we’ve seen in our previous studies of krill meal for shrimp is due to the balance between krill’s high feed attractiveness and stimulation with its
” I am very optimistic for our business in salmon in Norway and Scotland
contribution of key nutrients,” adds Nunes.
The review article, titled “Developing sustainable, cost-effective and high-performance shrimp feed formulations containing low fish meal levels”, was authored by Alberto J.P. Nunes, Lise Lotte Dalen, Geronimo Leonardi and Lena Burri.
Well oil be…
Perhaps an even more surprising potential source of marine ingredients is being proposed by energy decommissioning company CessCon Decom – marine growth on defunct oil rigs.
CessCon has teamed up with researchers at Abertay University to explore how marine growth – a waste byproduct of the decommissioning process – can be recycled and reused.
Based on estimates from Offshore Energies UK (OEUK) the feasibility study, which is supported by the Industrial Biotechnology Innovation Centre (IBioIC), could result in up to 40,000 tonnes of marine growth found on platform “jackets” being recycled over the next decade.
At the end of a platform’s life cycle, various types of marine species are found on the underwater jacket. Algae, seaweed, mussels, anemones, and hard and soft coral can be found at different depths, depending on environmental conditions. One of the aims of the project is to gain a better understanding of the matter that is typically found, including the composition of fatty acids and proteins, which could be turned into feed ingredients for other sectors.
The huge global demand for farmed shrimp is also leading some of the biggest feed producers to invest in shrimp nutrition, especially in production hotspots such as Vietnam and Ecuador. In October, Cargill, together with its partner Naturisa S.A., announced an agreement to partner with Skyvest EC Holding S.A. to create a new joint venture.
Cargill’s first venture in Ecuador came in 2015, when it partnered with shrimp-farming company Naturisa to build and operate a shrimp-feed manufacturing facility under the name Aquacargill del Ecuador.
“Since that time, the Ecuadorian shrimp farming industry has continued to grow and there is a need to meet the increased demand for high-quality feed,” says Helene Ziv-Douki, President of Cargill’s aqua nutrition business.
Through a new joint venture with Skyvest, Cargill will expand its shrimp-feed production capabilities to own and operate the shrimp-feed production facility currently owned by Skyvest subsidiary Empagran, located in Guayaquil, Ecuador. The plant has a production capacity of 156,000 metric tonnes and employs more than 200 people.
“We are excited that Cargill will bring its operational expertise and its deep knowledge of global supply chains and risk management to run this facility,” said Victor Ernesto Estrada Santistevan, owner of Skyvest.