Day 3 - Summary of 57th IFFO Annual Conference
Market Forum 2
The last day of the conference had a packed programme, starting with the second Market Forum which this time focuses on the demand side, and ending with a closing session, completing a rounded picture on the marine ingredients industry. The market presentations cover fish oil and fishmeal trade and consumption markets, salmonid feed trends and emerging/new feed ingredients.
First up was Chistian Meinich from Chr. Holtermann ANS to give an update on global fish oil trade, starting with crude fish oil, which short term in the second quarter has low world stocks but potential for good stock recovery in 2018, assuming normal fishing/oil yealds. Fish oil based EPA and DHA had the usual competition between feed and omega-3 consumption, and next year’s market depends importantly on Peru. Meinich ended by looking at alternative sources of EPA and DHA (algae and GMO vegetable oils), where low supplies are predicted for next year but aquafeed producers expect a considerable increase in 2019-2020.
Stretting’s Marta Rojo gave insights from a feed company on salmon feeds. Rojo noted that although fishmeal production has stabilised, trends in growth in carnivores species will drive demand for fishmeal, the supply of which is finite. Skretting is investing in alternatives and the use of by-products. Feed producers are the link between producers and farmers and innovation is key. In Norway, the salmon industry is heavily investing in new methods to fuel growth; and in Peru, a joint Fisheries Improvement Project aims to ensure that the anchoveta fishery meets the full requirements of the FAO code of conduct for responsible fisheries.
The latest market figures were presented on fishmeal trading in Peru, Europe, Asia and Chile by James Frank (MSICeres S.A.C.), Jon Tarlebø (Nordsilmel), Tomonori Sugiyama (Kanematsu Corporation) and Sylvia Alonso (Andes Connections SpA). The FAO’s Stefanie Vannuccini took discussions back to a global approach, looking at trends in aquaculture production and the industry’s outlook. She focused on the high nutritional qualities of fish, calling them nature’s superfood and analysed regional and species consumption trends. She showed the trends of moving from capture to aquaculture and the accelerated growth in Asia, especially in China. Various uncertainties were highlighted, such as fish seeds and feeds, disease control, productivity of fish stocks and ever changing trade policies. Vannuccini concluded that global food security needs to be met by meeting the needs of the present without compromising resources for future generations.
The session ended with DSM’s Christian Martin revealing the latest on EPA+DHA rich algal oil, which is the company’s latest development to respond to the supply gap. Joining forces with Evonik, the joint venture is called Veramaris and is headquartered in the Netherlands. The aim is to produce a future proof source of omega-3 EPA+DHA from algal oil and the venture’s capital expenditure will amount to around US$200 million over the next 2-3 years. Martin closed with noting the environmental and health benefits of this new oil.
The final session of the conference opened with global feed company Cargill’s Willie Loh carrying on the theme of alternative and novel sources of omega-3’s. Cargill’s efforts are focusing on Canola oils, developing closed loop production systems. With R&D starting in 2000 by BASF, Cargill now operates 3 aqua nutrition research centers, as well as 52 crush and 70 refining plants. There is strict stewardship throughout the supply chain and a feeding test conducted in Chile with identical levels of long chain omega-3’s from either fish oil or EPA/DHA canola oil alone produced comparable results.
As mentioned earlier, China is the market of interest and IFFO’s China Director, Maggie Xu presented the countries latest production and trade figures, painting a vivid picture of the overall economy. China’s economy is heading for a slower but steadier growth with government focus shifting to improving the quality and efficiency of growth, drawing on strength from consumption, services sector and innovation. With scarcity of raw materials for fishmeal, consolidation and overseas expansion are expected in the coming years, with half the fishmeal in the China market predicted to come from the top 5 producing consumers. Guided by Chinese government’s preferential policies, technical progress will bring revolutionary changes to China’s aquaculture industry, which is moving towards the deeper and open seas and relying more and more on compound feed rather than trash fish feeding. According to China’s development plan, fishmeal consumption will grow by 50,000-100,000 tons a year in the coming 5 years to fulfill the off-shore aquaculture demand. In pig farming, leading enterprises are speeding up the expansion in key development regions and as a result the pig industry’s capacity is recovering gradually. Consolidation stabilizes inventory, irons out pig price fluctuations and prepares for introduction of hog future market. By now, the general consensus in market is that pig feed is fuelling this year’s fishmeal consumption in China.
GOED’s Adam Ismail shifted focus back to the omega-3 market, stating that demand is starting to accelerate again with concentrated forms of omega-3 growing fastest, while dietary supplements are adding the most volume and infant formula is the fastest growing segment globally. Again, Asia is the dominant focus of consumption, with China in the lead. Demand for crude oil is also accelerating, in a market still dominated by anchovy and like species, but squid is the fastest growing source. The demand for crude oil is still dominated by supplements, with pharma coming next. Ismail ended by noting some foreseeable events that could impact demand. The first is an upcoming decision in the US on the import and distribution of ethy ester and triglyceride omega-3 concentrates. The second is in China where 8 companies are seeking approval for omega-3 based pharmaceuticals for triglyceride reduction. And lastly, results from the VITAL trial could be negative and impact the market in the short-term.
The last presentation of the conference was given by Christine Delivanis (Charles River Associates), who took a fresh approach by looking at how to shift the market paradigm of fishmeal. Delivanis opened by looking at what a valued and superior product fishmeal is and how perception could be moved away from its traditional use. She highlighted examples of how the coffee industry has used language to differentiate products and prices, and how The Napa Valley area achieves premium pricing through cluster benefits. By collaborating as an industry, there can be mutual benefits towards the creation of long-term value.
Gala Dinner and IFFO awards
Delegates gathered together one last time for the event’s Gala Dinner, which included the the announcement of the winners of the IFFO Awards. Danish feed company Aller Aqua (IFFO Non-Producer member) won a Leadership and Innovation Award for their expansion work in Africa, delivered by implementing a strong management structure and taking a responsible approach and focussed on CSR. IFFO Producer member American Seafoods Co. won a Leadership Award for their work in driving fisheries improvements in their industries, such as MSC certifications of the Bering Sea/Aleutian Islands and Pacific hake fisheries, both posting the highest MSC scores in any whitefish fishery; and being the first US fishing company to complete a 4-pillar, Sedex Members Ethical Trade Audit (SMETA) with no corrective actions.
The awards were presented by the IFFO President Michael Copeland who noted that “this year’s winners showed that taking brave steps in expanding to the new markets and improving sustainable practices can both strengthen your business and ensure the continued prosperous growth of our marine ingredients industry. I would like to congratulate both Aller Aqua and American Seafoods for their important work and the other finalists in these awards, who all put forward strong examples of both leadership and innovation.” The winners were selected by the IFFO Management Board.
On concluding the conference, IFFO’s Director General Andrew Mallison said that “for three short days the IFFO conference is the heart of the marine ingredients industry and it gives us a unique chance to share, engage and plan together. We enjoyed another successful year as an industry, but with changes in supply, new areas of innovation and the constant requirement for growth, it is vital that we stay on our toes. Our ingredients remain the best for nutrition and we must continue to work together to ensure a sustainable future”