Fish food: Feed, fishmeal sectors saw innovation, volatility in 2019 – Undercurrent News

Aquafeed and its components may not always be the highest-profile segment of the seafood industry, but given that feed is typically farmers’ biggest expense, it’s usually a top concern. 

Aquaculture’s growth is spurring concerns about the use of forage fish to produce fishmeal and fish oil and encouraging the development of alternative ingredients rich in protein and omega-3 fatty acids. This drove rapid innovation in the feed sector in 2019 as entrepreneurs and established players sought to cash in on the sector’s promise. 

Undercurrent News was the first to report on many of these developments, which you can review in our recap below:

The fishmeal markets began 2019 on a bearish note as global supplies got a boost amid strong anchovy landings in Peru even though fishmeal stockpiles in China saw lower demand due to an outbreak of African swine fever. Sources told Undercurrent that Peruvian superprime fishmeal prices, ex-warehouse, Shanghai, China, averaged CNY 10,700 per metric ton ($1,566/t) in January, down CNY 1,200/t from mid-October 2018.

Undercurrent profiled Escondido, California-based Menon Renewables, the maker of MrFeed, which relies on soybeans, corn, corn stovers and other inputs to create an alternative to fishmeal and fish oil. The company set a 2019 production goal of 300,000 metric tons of finished feed that included its MrFeed ingredient. 

Taiwanese feed firm Grobest Group confirmed to Undercurrent that it had brought in a new CEO, Samson Li, as well as a new chief financial officer and a chief operations officer following the November 2018 investment from the global private equity fund Permira.

Niels Alsted, a 45-year veteran of Danish feed producer BioMar Group, nicknamed “Mr. Aquaculture”, retired in January. He told Undercurrent in a parting interview that believed alternative aquafeed ingredients will have their markets in the future of aquaculture, but the real, usable volumes are going to come from “new versions” of existing raw materials.

Meanwhile, trade statistics revealed that China imported 1.46 million metric tons of fishmeal in 2018, down 7% compared with 2017. Average unit values of imports increased by 8% to $1,520/t.

And according to US feed maker Alltech, global production of aquafeed grew by 4% in 2018, with an estimated 40 million metric tons produced over 12 months.

February began with a bang for US agribusiness giant Archer Daniels Midland Company (ADM) after it closed the acquisition of animal and aquafeed maker Neovia on Feb. 1, creating one of the world’s largest animal nutrition businesses with estimated sales of $3.5 billion.

Undercurrent reported days later that ADM, Dutch biotech firm Corbion and Veramaris, a joint venture between Royal DSM and Evonik Industries, had positioned themselves as earlier leaders in the development of omega-3 rich oils made from algae. The firms are all working on producing algal oils ar greater scale in order to bring prices down and increase adoption.

Lowell, Massachusetts-based KnipBio, the maker of a protein-rich fishmeal alternative became the first single-cell protein to achieve “generally recognized as safe” status for its KnipBio Meal product from the US Food and Drug Administration’s Center for Veterinary Medicine.

February was an especially exciting month for makers of fishmeal and fish oil alternatives, which took center stage at the biannual F3 Feed Companies Got Talent event. 

Startups raising black soldier flies en masse to produce a fishmeal alternative were a particular focus of the event with several of the companies having reached off-take agreements with feed producers and embarked on ambitious expansion plans. Similarly, France’s Ynsect, which raises mealworms, said it raised €110m ($125m) to build a farm in Poulainville, France, capable of producing 20,000t of protein annually.

Giant Chinese feed firm Liaoning Wellhope Agri-Tech Joint Stock Co told Undercurrent at the start of March that invested in Karka Nutri Industri, a shrimp feed subsidiary of Indonesian farmer Seka Bumit that planned to build a large feed facility in the country.

As Dutch food and biochemicals maker Corbion announced its full-year 2018 financial results, it emerged that its 2017 acquisition of bankrupt algae oil maker TerraVia weighed on its earnings and sales growth.  

Days later BioMar released its 2018 earnings revealing that the company was being edged out of the Norwegian market by fierce competition but enjoyed brisk growth in Chile’s salmon sector. Additionally, the company said it would buy out Empresas AquaChile from the firms’ Chilean joint venture, Alitec Pargua, at a cost of $17m.

Another insect farmer with big plans for the aquaculture space, Vietnam’s Entobel, announced in March that it had raised €1m, with which it planned to build a commercial-scale plant in the country with an expected capacity of 1,000t per year. 

During a speech at the North Atlantic Seafood Forum in Bergen, Norway, Rabobank senior seafood analyst  Gorjan Nikolik said that despite the challenges of African swine fever and the US-China trade war weighing on fishmeal producers, 500,000t of new fishmeal demand could be just around the corner. That’s partially due to increased demand from shrimp farmers, he said.

Despite the newfound investment and excitement surrounding alternative aquafeed ingredients, the nascent space received a setback in April. An article published in the academic journal Sustainability suggested that the substitution of fishmeal by plant ingredients in shrimp feed formulations could place significant extra strain on agricultural demand.

In China, feed company Guangdong Haid Group announced it had broken ground on a CNY 500m aquafeed plant in south China, the region’s largest.

Undercurrent published an interview with Moises Del Rio, the general manager of Empresas AquaChile’s premium salmon brand Verlasso. He said that the company had transitioned its salmon to consume a diet that phases out the use of feeder fish from directed harvests.

In other sustainability news, the Global Aquaculture Alliance (GAA) and IFFO, the Marine Ingredients Organisation, released the findings from a joint-funded project, the first overarching study to look at the fishmeal industry across Thailand and Vietnam. The project aims to improve understanding of the fisheries of Southeast Asia which supply raw material for fishmeal production.

As 2019 entered its fifth month, sources told Undercurrent that Peruvian superprime fishmeal prices stayed stable at the $1,640/t to $1,640/t level. This stability came despite an announcement from the Peruvian government that it would reduce the country’s first season anchovy quota by 1m metric tons due to reports of a lower than expected biomass. The quota was set at 2.1m metric tons, a 36% drop from 2018.

Some sources within Peru alleged to Undercurrent that the country’s government had purposely delayed the announcement of the first season quota in an attempt to pressure the sector into accepting a new fishing rights tax.

Also in May, Peruvian fishmeal and fish oil producer China Fishery Group, which is the subject of an ongoing sales effort, was thrust into an unwelcome spotlight. Undercurrent was first to report that allegations emerged that members of the Ng family, the founders of its parent company, Pacific Andes International Holdings, engaged in a massive trade finance scam believed to have involved over $5.3bn of transactions.

At the Brussels seafood show, Thai Union Group caused a stir when representatives began handing out samples of farmed shrimp fed with the seafood giant’s own tuna byproducts and also FeedKind, a product made from a patented natural-gas fermentation process by Menlo Park, California-based Calysta. Thai Union later announced plans to spin off its feed arm,Thai Union Feedmill Co, as a separate publicly traded entity.

Also during the month, a UK judge sentenced Welsh businessman Anthony Smith to four years in prison after he defrauded the government out of £4.7m ($6.3m) by claiming grants to develop a fish feed alternative.

Additionally, agribusiness giant Louis Dreyfus Company and Guangdong Haid announced the start of construction of a feed mill in Tianjin, China, that will produce high-end aquatic feeds, including for shrimp, as well as fermented soybean meal.

As the US-China trade war raged on in June, China’s Han Jun, the country’s vice-minister of agriculture and rural affairs, was quoted by the South China Morning Post as saying that the US soybean exporting industry could be irrevocably damaged if the dispute were to linger. Soybeans are a significant component in most aquafeeds. 

The fish feed arm of US ag giant Cargill, Cargill Aqua Nutrition, announced in its 2018 sustainability report that just 27.6% of the ingredients in its salmon feed were from marine sources in 2018, down from 30.7% in 2017.

In Singapore, global chemical giant Evonik commissioned a second “world-scale” plant for the production of its animal feed additive product “MetAMINO”. When incorporated into animal diets the DL-methionine product reduces the amount of crude protein needed, including for fish diets, the company said. 

Also during the month, a venture capital fund affiliated with major energy company BP invested $30m with Calysta and Cargill made its first investment in the insect meal space entering into a strategic partnership with black soldier fly producer InnovaFeed.

On July 10, algal oil producer Veramaris inaugurated a $200m, commercial-scale facility in Blair, Nebraska, that it said will produce ample quantities of an oil rich in omega-3 fatty acids. The oil is produced by growing the marine algae strain Schizochytrium at industrial scale in bio-reactors.

India’s Avanti Feeds said in its 2019 annual report that the company plans to focus on shrimp processing and export business in 2020 as shrimp feed demand is projected to be flat.

Meanwhile, in Australia, aquafeed maker Ridley officially opened an AUD 50m ($34.8m) feed production plant in the country’s southern island of Tasmania, a major hub for salmon farming.

And on July 31, the Peruvian government announced it would end 2019’s first anchovy season with over 95% of the 2.1 million metric ton quota fished.

August saw several feed companies announce new investments. These included the Australian-Vietnamese joint venture Mavin Group, a meat producer that plans a $50m investment package in grouper, barramundi and pompano farming in Vietnam that will include a marine fish breeding center and a 300,000t capacity aquafeed plant.

Additionally, Danish biotechnology firm Unibio signed a memorandum of understanding in August to build a $200m facility in Saudi Arabia which will convert natural gas into high-protein aquafeed and livestock feed.

An executive at Chinese feed maker Guangdong Haid told Chinese publication Southern Daily that the company planned to spend plans to spend some $350m on investments abroad with plants to be built in Indonesia, India, and Ecuador.

Meanwhile, on Aug. 7 Cargill announced that its Lattitude brand fish oil alternative made from genetically modified canola, which it had been developing since 2010, received approval from the US Department of Agriculture. 

In Europe, aquafeed makers braced for a possible ban on the additive ethoxyquin, a synthetic antioxidant used to preserve fishmeal, due to concerns over its health risks. However, the European Commission’s European Food Safety Authority postponed a decision on banning the chemical, which was expected to be made before Sept. 30. 

On Aug. 22, Undercurrent profiled the Hong Kong startup iCell Sustainable Nutrition, which has two Chinese plants that make its fishmeal alternative from waste food processing water and plans to develop a third. 

Speaking to Undercurrent on the sidelines of the AquaNor conference, Skretting CEO Therese Log Bergjord said that the decision by Mowi, the world’s largest salmon farmer, to open its own salmon feed plants created a sector-wide feed overcapacity in the UK and Norway. The move prompted Skretting to redouble efforts on shrimp and tilapia feed in order to pursue growth. The company’s UK feed mill was later bought by Canada’s Cooke.

On Sept. 9, the organizers of the F3 Fish-free Feed challenge announced that its next competition would be expanded to include three categories of carnivorous farmed species of fish and crustaceans.

Days later, Ricardo Ekmay, vice president of nutrition for Durham, North Carolina-based Arbiom, told Undercurrent that his company’s “wood to feed” platform is emerging as a strong contender among fishmeal alternatives. The company’s technology relies on sugars found in waste wood collected from the pulp and paper industry that feed a single-cell yeast that serves as a fishmeal replacement. 

On Sept. 17, US producers of fishmeal received good news when China announced that it would exempt the product from a list of tariffed items. 

At the end of the month Undercurrent reported that Peruvian superprime fishmeal prices had fallen as low as $1,300/t owing mainly to weaker Chinese demand due to African swine fever.

On Oct. 14, Cargill confirmed to Undercurrent that Pilar Cruz, a 17-year veteran executive, was named president of Cargill’s Aqua Nutrition division.

In India, the country’s Marine Products Export Development Authority issued a moratorium on the registration of new fishmeal and fish oil units with effect from Jan. 1, 2020, to curb the over-exploitation of fish resources. It also decided to extend the moratorium to future expansions of the production capacity of existing fishmeal units. 

Thai Union, meanwhile, announced that it was developing a “zero fishmeal product range” to be rolled out in 2020. The move is part of Thai Union’s feedmill “action plan”, which also saw the introduction of a “wild-caught fish-free” shrimp product range already. 

Fellow Thai seafood giant Charoen Pokphand Foods announced days later that it pledged to source all of the fishmeal the group uses from legal and traceable sources.

Speakers at IFFO’s annual conference, which was held in Shanghai, China, from Nov. 4 to Nov. 6, said that omega-3 fatty acids eicosapentaenoic acid (EPA) and docosahexaenoic acid (DHA) from marine algae had emerged as a ‘viable alternative’ to fish oil in 2019.

Additionally, Cargill-backed insect meal producer InnovaFeed announced that the company was close to completing the construction of a 15,000 metric ton capacity factory for insect protein in Nesle, in the north of France. InnovaFeed plans to use the facility as a blueprint for five more factories around the globe by 2023.

On Nov. 15, Wilbur-Ellis Nutrition, a Vancouver, Washington-based producer of feed for aquaculture-raised trout, salmon and shrimp, announced that it had acquired the feed production assets of Rangen, which operates in Idaho and Texas

In Peru, anchovy fishing for the second season began on Nov. 16, with a 2.79m metric ton quota, up 38% compared with last year’s total allowable catch for the north-central zone. 

Owing to concern about fires destroying the Amazon, salmon farmers Mowi, Cermaq and others signed on to an open three-page letter urging the Brazilian government to stop the deforestation of the Amazon rainforest. The companies threatened to stop buying soy, a key aquafeed ingredient, from Brazil if president Jair Bolsonaro did not respect the Soya Moratorium, an initiative first organized in 2006.

Cayetana Aljovín Gazzani, a lawyer and former minister, who was elected as the head of Peru’s Sociedad Nacional de Pesqueria, its national fishing society, told Undercurrent that  Chinese market conditions were a worrying factor for the Peruvian industry and one of its main challenges, as they were resulting in lower fishmeal and fish oil demand.

On Dec. 16, Danish aquafeed maker Aller Aqua opened a new factory in Secanj, Serbia, part of the company’s plans to serve the Balkan market for carp feed.

And in a major feed scandal to emerge in Chile, the country’s Fiscalia Nacional Economica (FNE) announced that will seek some $23.9m in fines from each of the country’s major salmon feed producers — BioMar, Skretting and Salmo Food — due to alleged price-fixing.

Cargill told Undercurrent that it acted as a whistleblower about the alleged activity. BioMar parent Schouw & Co later said it “does not acknowledge the charges brought by the FNE”, and that it intends to rebut them.

And in China prices of Peruvian superprime fishmeal jumped to CNY 11,000-11,200 per metric ton ($1,569-$1,597/t) after Peru’s Ministry of Production partially suspended fishing to protect juvenile anchovies.