In terms of fishmeal production and supply, the past two years are “as good as it gets,” according to Rabobank analyst Gorjan Nikolik.

Fishmeal supply seemed to reach a low point in 2016 and until the next El Nino “we expect good supply," he said during a presentation Thursday at the North Atlantic Seafood Forum in Bergen, Norway.

For the last couple of years there has been around 1 million metric tons more fishmeal produced than during the low point of 2016, he said.

“Peru is the key price setter due to its size and volatility, and the last two fishing seasons were as good as it gets.”

What’s more, the demand for fishmeal is only going to increase in the coming years as aquaculture is set to continue growing, said Nikolik.

One such demand driver will come from the shrimp farming sector, which is also set to boom. Shrimp farming will need more fishmeal because of both volume growth and possible harvest unit size increases, said Nikolik.

"It is not unrealistic to expect to see a production growth of around 500,000 metric tons in the next few years,” he said. This alone would translate to an additional fishmeal demand of 300,000 metric tons.

Meanwhile, the marine fish aquaculture industry, which is roughly 3 million metric tons globally, is also growing and Nikolik estimates it could grow a further 25 percent in next five years – driven by China.

“This segment can also consume an additional 300,000 metric tons – so these two together suggests an implicit demand drive for fishmeal of 600,000 metric tons in the next five years.”

While bacterial proteins are the most likely alternative to add considerable supply of high-quality feed proteins, the question is, when will this happen at scale.

“We expected these to be producing more by now,” said Nikolik. “It doesn’t mean they’re not doing well, and they are still scaleable, but it takes time to get financing early on.”

Nevertheless, these fishmeal alternatives will not even be able to put a dent in the demand for protein in fish feed, with the best-case scenario of a production of 200,000 metric tons by 2025. “Even if we are being hugely optimistic the level would be just 400,000 metric tons."

Meanwhile, the emergence of insect protein won't impact fishmeal supplies very much. These companies are currently striving to carve a niche for themselves and consequently avoid competition with fishmeal.

Here the best-case scenario for production, Nikolik estimates, is 100,000 metric tons by 2025 or 200,000 at the high end.

“Insects are not as scaleable and although they are successful and many of them are good at getting financing, it doesn’t really compete with fishmeal,” said Nikolik.

“They are expensive – about three to four times the price – and I don’t think the volume will really impact the fishmeal sector.”

In general, proteins used in aquafeed form a diverse market and these alternatives do not just compete with fishmeal but also target markets outside of aquaculture.

“Fishmeal supply seems to have peaked again, and demand is steady,” said Nikolik. “In the long term there will be demand for at least 500,000 metric tons of fishmeal even with changes to formulas. This is a very good basis for this sector, so there is not much to worry about yet.”

Fisheries

Rabobank: Fishmeal sector ‘doesn’t have much to worry about yet’ when it comes to alternatives