Aquaculture is the fastest-growing food-production sector, accounting for over half of all fish consumed by humans. Targets for the anticipated growth of salmon production are very ambitious globally: for instance, the Norwegian government aims to increase production volumes five-fold over 2014 to 2050.
However, salmon aquaculture feed remains reliant on fishmeal and fish oil (FMFO), which are produced from wild forage fish. Supply of forage fish is expected to remain flat into the future, in line with minimal growth across all wild fisheries.
While salmon producers have made clear progress on reducing the use of FMFO over the long term, flat supply is forecast to increase costs and constrain growth for producers. In the 1990s, marine ingredients made up around 80% of feeds and today, they constitute around 20-30%. A World Bank analysis found that over the 2010-2030 period, fish meal and fish oil prices may rise by 90% and 70% respectively.
As FMFO use has declined, the inclusion of soy in salmon feed has increased. However, all three ingredients are vulnerable to climate risk. One study suggests that under various climate scenarios spanning 2016-2050, price increases of 89%-121% are expected for plant oil, 14-92% for fishmeal and 41-85% for fish oil.
Steep price rises in marine and soy ingredients will increase pressure on producers’ margins. If the industry is to continue growing, it requires increased quantities of feed, meaning marine ingredients must be supplemented with novel alternatives.
There is currently a lack of consensus on the extent to which forage fisheries can be exploited, meaning it is difficult for investors to assess how effective current company strategies are to mitigate the risk of feed availability constraints.
The target companies of this engagement are all covered by the Coller FAIRR Protein Producer Index. Our existing individual analysis for these companies covers performance across 10 material ESG factors, last updated in November 2020.
See our research, blogs and podcasts on sustainable aquaculture for more information on the sector.
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