Fishmeal industryoverview

Jonathan Shepherd, Andrew Jackson and Jean-Francois Mittaine

Visit to FAOJuly 4th 2007

What is IFFO?

The International Fishmeal and Fish Oil Organisation, the global trade association representing fishmeal and fish oil producers and related trades.

Represents two-thirds of world production plus 95% of exports of fishmeal and fish oil worldwide

History of fishmeal & oil use

19501950--1969 1969 -- Fish Oil extracted for production of margarines Fish Oil extracted for production of margarines and soaps. Fishmeal more a byand soaps. Fishmeal more a by--product used for fertilizer & product used for fertilizer & animal feedanimal feed

19701970--1989 1989 -- Fishmeal important feed ingredient in intensive Fishmeal important feed ingredient in intensive animal production (poultry, cattle & pigs). Oil becomes animal production (poultry, cattle & pigs). Oil becomes more of a bymore of a by--product often just used for fuelproduct often just used for fuel

19901990--2009 2009 -- Fishmeal increasingly used in aquaculture diets Fishmeal increasingly used in aquaculture diets and becoming a strategic ingredient for critical phases in and becoming a strategic ingredient for critical phases in the lifecycle of animal production due to its unique the lifecycle of animal production due to its unique nutritional qualities. Fish Oil increasingly valued for its nutritional qualities. Fish Oil increasingly valued for its health and nutritional benefits to humans and animalshealth and nutritional benefits to humans and animals

Annual Fishmeal & Fish oil ProductionAnnual Fishmeal & Fish oil Production

Fishmeal & Fish Oil Production

0

1

2

3

4

5

6

7

8

1986

1988

1990

1992

1994

1996

1998

2000

2002

2004

2006

(est

)

ton

nes m

illi

on

s

Fishmeal

Fish Oil

IFFO DataIFFO Data

Fishmeal Production by Country or RegionFishmeal Production by Country or Region

IFFO DataIFFO Data

Major Fishmeal Producers

0

1000

2000

3000

4000

5000

6000

7000

2000 2001 2002 2003 2004 2005 2006

(prov)

tonnes ,000

Others

South Africa

Japan

USA

Thailand

China

Scandinavia*

Chile

Peru

IFFO Data

Estimated Global Fishmeal ConsumptionEstimated Global Fishmeal Consumption

Consumption of Fish Meal 2006 (tonnes ,000)

3055, (57%)1147, (21%)

739, (13%)

359, (6%)

Fishmeal Consumption 2002 (tonnes ,000)

558,( 9%)

2769, (45%)1364,(22%)

1513, (24%)

Aquaculture

Pigs

Poultry

Others

IFFO/FAO Data

Estimated Aquaculture ConsumptionEstimated Aquaculture Consumption Consumption of Fishmeal 2006 (tonnes ,000)

(60, 2%)

515, (17%)

28, (1%)

148, (5%)

193, (6%)

525, (17%) 698, (23%)

146, (5%)

723, (23%)

18, (1%)

Shrimp

FW Crustaceans

Marine Fish

Salmon

Trout

Eel

Milkfish

Carp

Tilapia

Catfish

World Fishmeal ConsumptionWorld Fishmeal Consumption

WORLD FISH MEAL CONSUMPTION AND STOCKS

6809 6897.56665.6

5383.8

6390.6

7103

6520.4 6034

5170.8

6235.85835.1

0

1000

2000

3000

4000

5000

6000

7000

8000

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005

YEAR

Th

ou

san

d T

on

nes

Far East Europe Americas All others

Summary of trends in Fishmeal

Production of fishmeal has remained relatively constant

Approximately 40% of production comes from South America

Aquaculture now represents over 50% of consumption

South East Asia now represents over 50% of consumption

Growing importance of Aquaculture & S.E. Asia

Summary of trends in Fish Oil

Production of fish oil has remained relatively constant

Approximately 40% of production comes from South America

Aquaculture now represents over 80% of consumption

Salmon now consumes nearly 40% of world production

Fishmeal Price/Production/ConsumptionFishmeal Price/Production/Consumption

Peruvian Fishmeal Production

Years 2004 - 2006 (in 1000 MT)

1 000

1 200

1 400

1 600

1 800

2 000

2 200

2004 2005 2006

CHINA - Fishmeal Imports 2004-2006 (in 1000 MT)

500

700

900

1 100

1 300

1 500

1 700

2004 2005 2006

FOB PERU FISHMEAL (F.A.Q.) PRICES

From Jan. 2004 to June 2007

400

500

600

700

800

900

1 000

1 100

1 200

1 300

20

04

w0

7

w1

3w

19

w2

5

w3

1w

37

w4

3

w4

9w

02

w0

8

w1

4w

20

w2

6

w3

2w

38

w4

4

w5

0w

04

w1

0

w1

6w

22

w2

8

w3

4w

40

w4

6 2w

06

w 1

2

w 1

8w

24

US$/MT

2004 2005

2006 2007

Fish Meal and Fish Oil will not limit Fish Meal and Fish Oil will not limit aquaculture growth Iaquaculture growth I

Estimated Feed ProductionEstimated Feed Production

Aquaculture Feed Production

0

5000

10000

15000

20000

25000

30000

35000

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

Pro

du

cti

on

to

nn

es

,0

00

Catfish

Tilapia

Carp

Milkfish

Eel

Trout

Salmon

Marine Fish

Freshwater Crustaceans

Shrimp

FAO 2006FAO 2006

Fishmeal and Fish Oil will not limit Fishmeal and Fish Oil will not limit aquaculture growth IIaquaculture growth II

Estimated Fishmeal UsageEstimated Fishmeal Usage

Fishmeal Usage

0

500

1000

1500

2000

2500

3000

3500

4000

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

Us

ag

e t

on

ne

s ,

00

0

Catfish

Tilapia

Carp

Milkfish

Eel

Trout

Salmon

Marine Fish

Freshwater Crustaceans

Shrimp

Based on FAO 2006 with IFFO dataBased on FAO 2006 with IFFO data

Fishmeal and Fish Oil will not limit Fishmeal and Fish Oil will not limit aquaculture growth IIIaquaculture growth IIIEstimated Fish Oil UsageEstimated Fish Oil Usage

Fish Oil Usage

0.0

200.0

400.0

600.0

800.0

1000.0

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

Us

ag

e t

on

ne

s ,

00

0

Catfish

Tilapia

Carp

Milkfish

Eel

Trout

Salmon

Marine Fish

Freshwater Crustaceans

Shrimp

Based on FAO 2006 with IFFO dataBased on FAO 2006 with IFFO data

Assumption of fishmeal inclusionAssumption of fishmeal inclusion

%%

345Tilapia

374047Eel

253035Salmon

343841Marine Fish

161924Shrimp

201020062002

Fishmeal and Fish Oil will not limit Fishmeal and Fish Oil will not limit aquaculture growth IVaquaculture growth IV

% Use of Global Production% Use of Global Production

Percentage Use in Aquaculture

0.0

20.0

40.0

60.0

80.0

100.0

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

%

Fishmeal% used in Aqua

Fish Oil % used in Aqua

Based on FAO 2006 with IFFO dataBased on FAO 2006 with IFFO data

Most Feed Fisheries are being managed Most Feed Fisheries are being managed sustainablysustainably

The most obvious evidence is that output has remained relativelyThe most obvious evidence is that output has remained relativelyconstant for decadesconstant for decades

The worldThe world’’s largest fishery in Peru contracts due to an El Nis largest fishery in Peru contracts due to an El Niññoo every every few years, but is managed back to give a Maximum Sustainable Yiefew years, but is managed back to give a Maximum Sustainable Yieldld

Unlike most fishing for human consumption, feed fish are mostly Unlike most fishing for human consumption, feed fish are mostly small small bony almost inedible pelagic fish with a short lifebony almost inedible pelagic fish with a short life--cycle, therefore cycle, therefore recovery is rapid recovery is rapid

Most major feed fisheries are controlled by Most major feed fisheries are controlled by TACTAC’’ss, area catch limits, , area catch limits, seasonal bans, min. mesh sizes, vessel registration satellite trseasonal bans, min. mesh sizes, vessel registration satellite tracking acking and monitoring of all landings e.g. SGS in Peru and monitoring of all landings e.g. SGS in Peru

Mistakes have been made in the past, but improved stock knowledgMistakes have been made in the past, but improved stock knowledge e and management controls have had a beneficial effectand management controls have had a beneficial effect

EcoEco--efficiency wild to farmedefficiency wild to farmed

0.00

0.50

1.00

1.50

2.00

2.50

3.00

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

Ra

tio

Wild

to

Fa

rme

d

All Aquaculture

Bellona Salmon

Based on FAO 2006 with IFFO dataBased on FAO 2006 with IFFO data

EcoEco--efficiency wild to farmedefficiency wild to farmed

0.00

0.50

1.00

1.50

2.00

2.50

3.00

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

Rati

o W

ild

to

Farm

ed

All Aquaculture

Carnivores only

Bellona Salmon

Based on FAO 2006 with IFFO dataBased on FAO 2006 with IFFO data

Optimal use of the ResourceOptimal use of the Resource

An increasing amount of fishmeal is coming from fish An increasing amount of fishmeal is coming from fish processing byprocessing by--products e.g. trimmingsproducts e.g. trimmings

There are increasing amounts of meal and oil being There are increasing amounts of meal and oil being produced from aquaculture processingproduced from aquaculture processing

The estimated 1.5 million tonnes of salmon harvested The estimated 1.5 million tonnes of salmon harvested this year could yield around 30,000 tonnes of this year could yield around 30,000 tonnes of fishmeal and 20,000 tonnes of fish oilfishmeal and 20,000 tonnes of fish oil

All this further improves the ecoAll this further improves the eco--efficiency calculationefficiency calculation

New Resources New Resources –– not manynot many

Discarded ByDiscarded By--catchcatch•• Many economic reasons for dumping of Many economic reasons for dumping of incidentally caught fishincidentally caught fish

•• Recent estimates put the figure at 7.3 million Recent estimates put the figure at 7.3 million tonnes worldwide (FAO 2005)tonnes worldwide (FAO 2005)

•• Efforts are being made to reduce the figure and it Efforts are being made to reduce the figure and it has come down in recent yearshas come down in recent years

•• Catch should be minimised Catch should be minimised –– should the remainder should the remainder be made into fishmeal & fish oil ?be made into fishmeal & fish oil ?

New Resources 2New Resources 2

Trash FishTrash Fish

•• Estimated 5Estimated 5--6 million tonnes of low value wet fish 6 million tonnes of low value wet fish used in Asian aquaculture (Allan 2004)used in Asian aquaculture (Allan 2004)

•• More efficient use if turned into meal & oilMore efficient use if turned into meal & oil

Antarctic KrillAntarctic Krill

•• Biomass of 400Biomass of 400--500 million tonnes500 million tonnes

•• Sustainable annual catch of 4Sustainable annual catch of 4--5 million tonnes5 million tonnes

•• This would yield 500,000This would yield 500,000--750,000 of meal750,000 of meal

•• Currently only about 100,000 tonnes harvestedCurrently only about 100,000 tonnes harvested

•• Aker Seafood Corp about to start increasing krill Aker Seafood Corp about to start increasing krill meal production, investing heavilymeal production, investing heavily

Factors Influencing SupplyFactors Influencing Supply

• Regulations affecting fishing areas & quotas

• Natural Variation e.g. el Niño

• Fishing Effort

• Demand for direct human consumption

• Developments e.g. by-product utilisation, krill

Factors Affecting DemandFactors Affecting Demand

• Price elasticity of demand

• Growth of aquaculture

• Growth of Chinese protein production

• Cost effective alternatives (including with new technology, biofuel etc)

• Growing appreciation of the role of EPA and DHA Ω-3 fatty acids in human and animal nutrition

• Consumers’ perception of the sustainability of fishmeal and fish oil

Poor growth & survivalPoor growth & survivalUGF & UGF & immunostimulantsimmunostimulants

GM issues and unGM issues and un--naturalnaturalPerceived as entirely naturalPerceived as entirely natural

Low palatability & digestibilityLow palatability & digestibilityHigh palatability & digestibilityHigh palatability & digestibility

AntiAnti--nutritional factors & enzyme nutritional factors & enzyme inhibitioninhibition

No antiNo anti--nutritional factorsnutritional factors

Perceived health risks Perceived health risks -- MBMMBMResidual health promoting oilResidual health promoting oil

Amino acid deficienciesAmino acid deficienciesAlmost perfect amino acid profileAlmost perfect amino acid profile

Substitution Substitution --vesves

High fibre High fibre

Fishmeal +Fishmeal +vesves

High proteinHigh protein-- dietary spacedietary space

Factors Influencing DemandBarriers to substitution

Changing role of fishmeal & fish oiloil

FishFish

PigsPigs

PoultryPoultry

Starter, finisher, Starter, finisher, broodstockbroodstock & &

recovery dietsrecovery diets

Moderate use Moderate use in most dietsin most diets

High use in most High use in most dietsdiets

Breeder & Breeder & recovery dietsrecovery diets

Creep & Creep & WeanerWeaner dietsdiets

Grower dietsGrower diets

Breeder diets & Breeder diets & recovery dietsrecovery diets

Starter dietsStarter dietsGrower dietsGrower diets

201220122006200620022002

Commodity Strategic Ingredient

Incr animal prod.

Decr FM inclusion

Constant FM prod.

Future implicationsDespite new resources total volumes of Fishmeal/Oil are likely to remain relatively constant

As the cost of Fishmeal/Oil rises, so their inclusion level willdecrease

But Aquaculture is still growing strongly so that the total volumes fed to aquaculture will in future be higher than today while less will go to terrestrial agriculture

Farmers have same overall feed cost but feeds deliver high performance and yield healthy livestock products with natural EPA and DHA

Consumers can be confident they are being given safe and healthy products from a well managed sustainable source