Feed industry ready for Peru’s anchovy shortage

Anchovy season cancellation in Peru will affect global aquaculture through the feed industry, but Cargill, Skretting, and BioMar say they are ready to minimize the impact on their customers.
An employee of Scottish salmon producer Loch Duart feeding fish with Blue Impact feed, launched by BioMar last year. Photo: BioMar.
An employee of Scottish salmon producer Loch Duart feeding fish with Blue Impact feed, launched by BioMar last year. Photo: BioMar.

Following the news of the cancellation of the anchovy season in Peru, the first question was how that would affect aquaculture feed manufacturing companies. "This announcement is likely to have a significant impact on the industry," said Morten Holdorff Møjbæk, BioMar Group Global Sourcing Director. "With less fish meal and fish oil in the market, prices of those commodities will likely rise impacting aquaculture around the world," predicted Helene Ziv-Douki, Cargill Aqua Nutrition President. "This shortage will also bring some challenges to comply with certifications," added Therese Log Bergjord, Skretting CEO. But all three agreed on one thing: they are well prepared. The feed industry is ready.

Supply impact on a global scale

At the press conference where the cancellation of the first anchovy season in the North-Central zone of Peru was announced, the Peruvian Minister of Production, Raúl Pérez Reyes, reviewed the different sectors affected by the anchovy shortage resulting from the closure of this fishery but forgot to mention one for which Peruvian anchovy is fundamental: the feed industry.

"Peru is the world's largest exporter of fish meal and fish oil, disruptions in their season creates an immediate supply impact on a global scale," recalled Helene Ziv-Douki. In fact, the latest Rabobank report predicted a growth of the fishing industry in 2023 that would lead to a decrease in fishmeal and fish oil prices precisely based on an announcement by the Peruvian Ministry of Production.

The Ministry then spoke of an increase in the winter quota, with a target of 2,283 metric tons to be harvested from December to March. However, in February, Peru closed the second anchovy season of 2022 without reaching the planned quota, after industrial fishermen denounced the overfishing of juveniles.

The cancellation announced now only exacerbates this negative trend. "While the season hasn't yet officially closed, it appears likely to be a total loss," Ziv-Douki, Cargill Aqua Nutrition President, told WeAreAquaculture. This is also the opinion of Therese Log Bergjord, Skretting CEO. "The coming season in Peru expected in November does not look good already due to El Niño, but we hope that an increase can be seen in April/May 2024," she said.

Changes in feed formulations

If Bergjord mentioned El Niño as being responsible for the poor forecasts for this year's second anchovy season, Helene Ziv-Douki went even further. "Longer term, we anticipate oceanic conditions and weather anomalies will continue to have an impact on all parts of the global supply chain," Cargill Aqua Nutrition President said.

Likewise, Ziv-Douki also predicted that with less fishmeal and fish oil on the market, prices for these products will most likely rise. Bergjord agreed and added, "When situations like this happen one of the consequences is that alternatives also get more expensive, which means that feed prices are expected to increase because of this. However, we do our best to minimise the impact to our customers through formulation."

As Skretting's CEO also explained in a statement sent to WeAreAquaculture, the formulation changes consist of modifications to feed recipes and the introduction of new, beneficial raw materials, to optimize cost levels while protecting the nutritional requirements. Therese Log Bergjord is confident about this possibility because, she says, they had already anticipated the shortage and started preparing accordingly.

"We buy fish meal and fish oil from other origins, but the availability will be a challenge," she continued. "At the same time, in Skretting we have the knowledge to be fully flexible on the use of marine ingredients for feed formulations, which means that in collaboration with our customers, we can use other raw materials if needed, without having a negative impact on fish performance."

Companies ready thanks to R&D

Indeed, as mentioned before, perhaps Skretting's biggest concern about this shortage is that it will also bring challenges in meeting certifications. "We have an internal target of sourcing marine ingredients that are 100% certified or coming from a FIP by 2025, but to get there we also need farmers and the rest of the value chain to work on the same direction," Therese Log Bergjord explained.

As she also pointed out, it is at times like this that the value of their innovation and R&D really becomes evident. "We have been developing knowledge to expand our raw materials basket for several years, which allows us to be prepared for situations like this," she said. They expected a low quota for this season and had prepared to use alternative sources. "However, we will not be able to absorb all the price increases from other sources of marine ingredients or other raw materials that will rise as a consequence of this, so we will work together with customers and other players in the value chain," she warns.

They are not alone in highlighting the work that R&D departments do. "At BioMar, we have built a robust supply chain with multiple supply streams of key nutrients from sources other than marine raw materials. We have become less vulnerable to these types of incidents than in the past. This is due to our innovation process, which together with R&D, Sustainability and Sourcing, we are driving a strong pipeline of new raw materials," Morten Holdorff Møjbæk, Global Sourcing Director, BioMar Group told WeAreAquaculture.

Cargill, for its part, assures that it will continue to prepare for this type of event with risk management, nutrition and sustainability as pillars. The company, which works with different countries of origin, is confident when managing the uncertainty caused by the cancellation of the anchovy fishery in Peru. "Cargill is well positioned to help our customers navigate this uncertainty and doesn't anticipate any impacts to our sustainability commitments or nutrition in 2023," claimed its Aqua Nutrition President, Helene Ziv-Douki. "We encourage customers to start conversations now so we can partner to figure out the best option for them," she concluded.

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