Long-term supplies of whole fish from wild sources available for fishmeal are falling due to political decisions regarding a number of important stocks for which direct human consumption is seen as preferable over reduction to fishmeal.

However, the increased use of by-products from filleting operations, which currently makes up about 25% of fishmeal (though some recent estimates indicate it is between 30 and 40%), has insured a steady supply for fishmeal producers. Thus, demand side pressures from a growing aquaculture sector and steady demand for terrestrial animal feeds is maintaining pressure on fishmeal prices. Eventually, aquaculture and terrestrial animal farmers will likely substitute more plant-based meals into animal and fish feeds, especially as the price differential between fishmeal and soybean meal continues to grow.

Production

Fishmeal production by the top five producers fell 11% during the first nine months in 2013 compared with the same period in 2012. This was mainly due to a decline in Latin American production from the El Nino effects and quota restrictions. Total fishmeal production of Peru and Chile in 2013 dropped to 799 000 tonnes, the lowest level over the last five years.  Higher production in Northern Europe only slightly offset the decline in Latin America production due to the importance of Peru and Chile in the global fishmeal supply chain. Adverse weather conditions continued to hinder fishing in Iceland, Denmark and Norway at the end of 2013. Though stocks of standard fishmeal were available through the end of the year, high quality fishmeal has been limited. 

Chile announced lower fishing quotas for 2014. In the north, there is a slight decrease in the quota for anchovies, set at 750 000 tonnes, while in the south, the anchovy quota is set significantly lower, at 42 200 tonnes. The sardine quota was also reduced, from 605 000 in 2013 to 373 000 tonnes in 2014. It is anticipated that the Peruvian anchovy quotas will return to more normal levels in 2014.

Exports

Latin America

Peruvian fishmeal exports were reported at 645 800 tonnes in 2013, a drop of 43% compared with 2012 production. Peruvian exports to Germany reported a 53% decline. Exports to Asian countries, notably China, Japan, Taiwan PC and Viet Nam also fell significantly.  

Chilean exports declined by 24% with decreased exports spread over its major importers.

Markets

Germany

Germany reported total fishmeal imports of 172 400 tonnes in 2013, a 71% increase over 2012 imports. Major suppliers continued to be Peru, Chile, and Morocco, which combined accounted for 80% of German fishmeal imports in 2013.

USA

US demand for fishmeal was up slightly in 2013. Imports from traditional markets of Chile, Mexico and Canada remained steady in the face of robust US demand for terrestrial meat products, which relates back to strong derived demand for fishmeal used in terrestrial animal feeds. 

UK

UK fishmeal imports declined 21% in 2013, most significantly from Peru due to strict quotas and decreased product availability in 2013.

Prices

Although the fishmeal price of USD 1 800 per tonne recorded in December 2013 remained level with the fishmeal price for December 2012, it is expected that the steady rise of fishmeal prices since 2004, totaling 175% between December 2004 and December 2013, will continue into the future. This is primarily due to static supply of wild marine resources used to produce fishmeal facing steadily rising demand.  Although there has been an increased utilization of by-products, especially by aquaculture producers in northern Europe and some fish farmers in Asia, this has not been enough to match the steady rise in global fishmeal demand. It is anticipated that the growing divergence between fishmeal price and soybean meal price will encourage further substitutions of plant based materials into terrestrial animal feeds, thus freeing limited supplies of fishmeal to meet the growing demand from the aquaculture sector.   

Outlook

Demand for fishmeal remains strong both from terrestrial animal producers and aquaculture. Some substitution has occurred between fishmeal and plant sources such as soybean meal, in response to the growing divergence between fishmeal and soybean meal prices. However, the growing global demand for farmed seafood, both due to population growth and rising acceptability of farmed fish by consumers, is expected to drive the fishmeal market in the future.  Generally, consumers are becoming more aware of the health benefits of fish, including farmed fish and the more efficient feed conversion ratio of farmed fish relative to other protein sources such as beef and pork. 

It remains to be seen what role quotas will play in the coming season, as well as reforms of the European Union’s Common Fisheries Policy, especially as it relates to requirements for traceability of wild caught fish. Currently, the IFFO Responsible Supply Standard certifies 40% of fishmeal production, and this percentage is likely to increase in the coming years. The impact of EU reforms to take force in 2014 with a complete ban on discards for quota stocks by 2019 will prove especially interesting. However, given the growing importance of Asian aquaculture producers, especially China, in the market for fishmeal, the new EU regulations are not likely to have any significant impact on the global fishmeal trade.