Spend Matters welcomes this guest article by Michael Liberty of Mintec.
After rising 60% in 2014, the price of fishmeal has fallen 15% so far this year. But why is fishmeal important to the world? Well, it’s the feed material supplementing or forming the diets of farmed fish, pork and chicken. In some cases, 50% of the cost of a farmed fish can depend on the fishmeal price, so any volatility of feed materials can swallow chunks of our shopping budget.
Fishmeal is a powder formed from small fish, predominantly anchovies, which are pressed, cooked, dried and then ground into powder. Fishmeal provides higher protein content compared to any vegetable counterpart, offering fast growth, development and reproduction.
Global production of fishmeal is 4.8m tonnes per annum, with the majority produced in Peru, Chile and Thailand. Peru accounts for around 60% of global anchovy production, thus gives the best market indicator for fishmeal prices. Although the much cheaper soyabean meal offers a substitute, fishmeal contains much higher protein content with vital amino acids that aid growth.
2014 was a bad year for anchovy production. The Pacific was suffering from a weak El Niño effect, (El Niño Modoki – as our business development director believes) where sea water temperatures are seasonally high, causing anchovy reproduction cycle to slow down. In the first fishing season, which ran from January to August, the Peruvian fishing commission (IMARPE) set a Total Allowable Catch (TAC) at 2.53m tonnes.
However, during that period, only 87% of the TAC could be filled. This caused concern over the amount of anchovies available and the sustainability of future seasons. To protect juvenile anchovy biomass, the IMARPE banned all anchovy fishing for the rest of the year and delayed the start of the 2015 season to April, leaving the total 2014 anchovy catch at only 2.2m tonnes, down 51% y-o-y. This lead to a sharp increase in fishmeal prices in 2014. The price at the end of the year was nearly 60% higher than at the start and a 6-year high.
In 2015, the first fishing season is planned to run from April to June and the TAC has increased to 2.58m tonnes. In the first 11 days of fishing in April, 32% of the current TAC was reached at 0.83m tonnes. The IMARPE responded by implementing temporary bans in order to spread the TAC over the remaining season and protect any juvenile anchovies in the biomass.
As the new season got underway prices started to fall, and, at the end of April 2015, were down 15% from the start of the year; however that’s still up 18% y-o-y. The good news for fish producers is that prices are likely to continue falling as catches in 2015 are forecast to reach 5m tonnes, the highest catch since 2011.