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 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 U.S. fish oil producer. "They're
going to have to come from somewhere else."
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 tonne in
2016, the highest ever recorded.
Global annual production of fish oil has for years been limited to
about 1 million tonnes, 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.
YELLOW FIELDS IN MONTANA
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 Omega-3s, 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 tonnes 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.
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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.
U.S. 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.
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 tonnes of their product, AlgaPrime, said Walt Rakitsky,
TerraVia's senior vice-president 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.
SWIMMING IN REVENUE
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, said 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.
http://bit.ly/2m5V5kp
(Editing by Simon Webb and Brian Thevenot)
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