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Soaring fishmeal prices make algae more appetizing

March 18, 2016
AlgaeIndustryMagazine.com

Culture of algae in outdoor tank as feed for shrimp. Photo: FAO Aquaculture photo library

Culture of algae in outdoor tank as feed for shrimp. Photo: FAO Aquaculture photo library

J dropcapason Holland writes in SeafoodSounce.com that the ability of marine and freshwater algae to produce omega-3 oils makes them increasingly suitable for replacing price-volatile fish oil and fishmeal products, especially aquaculture feeds.

The fish and shrimp farming sectors have been experiencing significant fluctuations with regard to marine raw material markets and prices in recent times. These variations are largely the result of El Niño-related events, and it is widely expected that the depleted marine raw material supply trend will continue in the years ahead, making feed production increasingly expensive.

Because of these spiraling prices, this could be one of the first areas in which algae products become competitive with existing products, according to the new report, “Algae: A Brave New Industry,” compiled by Rabobank International.

The study delves into the potential of using algae in animal and human nutrition, and forecasts that increased use of algae should be expected in both segments. It surmises that to reach its full potential and become truly commercialized, the algae industry needs support from established finance and accounting (F&A) companies at different stages in the supply chain.

The development of a farming industry is essential for the success of algae, according to the report. However, at present there are too few commercial algae growers who have been able to get investment, because the risks are considered too high. In Rabobank’s view, though, algae production is reaching a “tipping point,” where it goes from being a product with potential to a potential game-changer.

With the aquafeed market worth an estimated $24.6 billion USD (EUR 22.2 billion) in 2014, and forecast to grow to $30 billion USD (EUR 27.1 billion) by 2020, leading companies in the sector are increasingly looking at ways in which algae and other ingredients can play a greater role in their product portfolio.

Rabobank’s report points to the salmon industry, which alone is responsible for the consumption of around 350,000 MT of fish oil annually and which it says is actively looking for sustainable alternative sources.

At the same time, the growing demand for fishmeal – brought by declining wild catch of key small pelagic species as well as increased human consumption of such species – will intensify the pressure on prices. While at $1.30 USD (EUR 1.17) per kg protein, fishmeal prices are currently much lower than the best-case price for microalgae of $1.65 USD (EUR 1.49) per kg protein, but with technological improvements and lower costs for production, algae can quickly become competitive in price.

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