Rabobank analyst on fishmeal's transition from commodity to strategic protein

Gorjan Nikolik, senior industry analyst for Rabobank, presenting at the GAA GOAL Conference in Vancouver in October, looked at the role of fishmeal as a crucial marine protein for the culture of many fish species.

January 21, 2016

Gorjan Nikolik, senior industry analyst for Rabobank, presented on fishmeal’s transformation from commodity to a market-driven, globally traded protein at the Global Aquaculture Alliance’s annual GOAL (Global Outlook on Aquaculture Leadership) conference, held in October in Vancouver, Canada.

His interview is summarized in the latest edition of GAA’s Advocate magazine.

Here are some of Nikolik’s conclusions.

Land may be the scarcest of all inputs for aquafeed production. With further industrialization of the sector, “For reasons of biosecurity, we need to get to a more condensed aquaculture production,” he said.

When new species are developed for aquaculture, initial feed formulations “will be very high in fishmeal,” Nikolik said, because we know relatively little about them, compared to salmon and shrimp. Getting feeds to function properly with low fishmeal content requires “a lot of R&D … and a lot of scale,” he added. “This translates to a driver for consolidation. The key is to develop the use of novel ingredients that are cost-effective.” New species development has historically been a key driver for aquaculture volume growth, he said.

Fishmeal supplies today are lower than a decade ago, and the El Niño weather phenomenon in Peru makes forecasting supplies a “bit of a guess,” Nikolik said. The trend is stable, but on a bit of a decline.

Nikolik argued that only fish that require low fishmeal content in their feeds, such as e.g. tilapia or pangasius, can be developed to commercial scale in today’s industry. “Or very high-value niche species,” he added.

Trimmings, or byproducts from fish processing facilities, have “cushioned fishmeal availability,” Nikolik said. Byproducts now account for one-third of the global fishmeal supply, but Nikolik said that it’s “debatable” if more will be available for production in the future. “The best seafood processors utilize 100 percent of the trimmings for human consumption products or combine with pet food products,” he added.

With fishmeal and fish oil prices increasing, fishing rights should increase in value, which bodes well for pelagics harvesters, provided fishing is sustainable and the cost of harvest remains flat. “Some may even find fishmeal and fish oil production assets of strategic value,” Nikolik concluded. “It could create more investor interest in this niche market and strategic M&A (mergers and acquisitions).

The full video of Nikolik’s presentation, “The Appeal of Fishmeal: Fishmeal’s Transformation from a Commodity to a High-Priced, Strategic Protein,” can be seen here.