SCOTTISH SALMON FUTURE FEED OPTIONS. Douglas Low Managing Director EWOS Scotland

Transcription

1 SCOTTISH SALMON FUTURE FEED OPTIONS Douglas Low Managing Director EWOS Scotland

2 Overview Scottish salmon are differentiated and command a premium Focus on quality, safety, welfare, feed sustainability Feed is integral to the differentiated/premium proposition. What defines feed formulation now? What will be the key drivers in the future? What are the implications and what diets will be available? 2

3 Current Status of Feed Formulation Salmons nutritional requirements have been established - Amino Acids/Energy/Micronutrients Minerals and Vitamins Deliverable from a huge range of ingredients which feed companies routinely evaluate But in the UK we must ensure: - Responsible sourcing of ingredients and Minimised Eco-footprint - Minimisation of environmental impact on feeding - Human health benefits are delivered and low levels of contaminants - Other non statutory market requirements are met - Non GM, Plant oil, Organic, LR etc - Levels of performance and cost of production that are acceptable - Superior eating qualities 3

4 Current Market Specifications High marine Organic (by default) Label Rouge (min 70%) Mid marine Fish Oil only restriction Low marine Targeted Flesh Quality Omega 3 defined Unparalleled market complexity and significant inconsistencies in requirements 4

5 Consequences of market restrictions Comparatively limited material basket with specific marine ingredient sourcing challenges Defined standards and flesh quality requirements dictate feed formulations and materials required not performance Higher feed cost than global norms with diets inherently inefficient Feed cost per unit production higher by up to 50% Significant operational challenges for UK Feed companies with a high degree of complexity and additional infrastructure Leverage impacts 5

6 Key Future Drivers ENGO Position - Forage Fisheries and Ecofootprint Material cost and availability - Fishmeal - Fish Oil Omega 3 Market - Relative values of ingredients GM developments Standards emerging or changing Changing Market Demands and Economics - Retailers and Consumers 6

7 ENGO s ENGO s have been setting the agenda Range from overtly hostile through critical to collaborative Numerous areas of engagement Feed is a key sensitivity - Forage fisheries - Contaminants - Ecofootprint - Environmental impact 7

8 8 World Fish Meal Production & Use E Material Costs 1000 tons World Fishmeal Production Others (pet, human, a.o.) Animal Feed Other Aqua Feeds Salmonid Feed Sources: Production: FAO Usage: IFFO

9 Fish Meal future status Available at a price dictated by supply/demand Credibly sustainable Inclusion 20% and falling Current premium of up to 30% for High FM diets LR diet premium Use as principles, conscience and price permits /tonne feed Fishmeal /tonne 9

10 World Fish Oil Production & Use E 1000 tons World Fish Oil Production Direct Human Hardening/Technical Other Aqua Feeds Salmonid Feed Sources: Production: FAO Usage: Holtermann

11 Pressure from rapidly growing human consumption The global market for refined omega-3 fish oil is growing fast volume in tonnes (blue columns) and percentage growth (red line) (Source: GOED, 2010) 11

12 Omega 3 Market Fish Oil requirement Source GOED

13 Serious shortages may occur quickly Three possible scenarios for the fish oil market depending substitution levels with plant oil prosent 1000 EPA/DHA i fettet ,5 prosent 5 prosent Tilgang 2010 Tilgang Oppdrett pluss humant konsum Gap: 744 t Oppdrett Tilgang Oppdrett pluss humant konsum Gap: 546 t Oppdrett Gap: 318 t 2023 Oppdrett 2024 Oppdrett pluss humant konsum on With EPA/DHA concentrations of at least 10%, the industry has two to three years to identify new solutions. If EPA/DHA concentrations are reduced to 7.5%, the salmon industry is "granted" a further two years. By halving EPA/DHA concentrations from 10% to 5%, an acute shortage may be delayed until

14 Impact of Constant Level Fish Oil Replacement in Salmon Diet on n-3 HUFA Level in the Fillet 8 7 n-3 HUFA (g/100g fillet) JHCI rich source One 140g portion per week* Two 140g portions per week* EPA/DHA in fat 10% 5% NA oil SA oil % 20 % 40 % 60 % 80 % Veg oil replacement (% of Total oil) *to meet BNF human weekly requirement for n-3 HUFA (DHA+EPA) Wild coho salmon level in fillet 14

15 ..but no fully satisfactory solution is in the pipeline Illustration of estimated supply curve; 2010 and The figure shows that even with a sharp rise in the supply of fish oil substitutes, there is a long way to go with current EPA/DHA contents and growth rates. A significant increase in the price of fish oil should be expected before substitutes begin to make an impact. 15 Cost per tonne of omega-3 fat Total consumption based on 10% EPA/DHA content Algae? Krill; 4,000 Fish oil; realistic; tonnes Fish oil; Calanus finmarchicus? Calanus finmarchicus; three times the volume of krill; proportion for salmon feed? Algae; approx. 10% of total fish oil volume, proportion for salmon feed? Krill; twentyfold doubling in volumes? GMO rapeseed - only EPA; 100? Unit costs halved? 500 Total consumption based on 10% EPA/DHA content Tonnes of oil

16 Fish Oil - Global perspective NILF predicts CRITICAL SHORTAGES of fish oil in 2 to 5 years unless Salmon industry moves to 5% EPA/DHA target Price will become exceptionally volatile and a new economics of pricing fish oil can be expected US$/MT Fish Oil Rape Oil UK Feed companies cannot expect preferential access to supplies and will not be allowed to chase prices 16

17 Time to use Fish Oil intelligently Set target levels for Omega 3 Ration as necessary Reap benefits of energy value in Plant oil Use appropriate dietary strategies/finishing diets Expect EPA/DHA to be priced Exploit market sectors with differentiated products 17

18 Development of new fisheries Demand drives price and encourages development of new difficult to fish fisheries/species Are High Marine feed users acting responsibly? - Any use contributes to demand. Boarfish/Krill Mesopelagics Pearlside/Lantern Fish Almost certainly unacceptable until adequate science and fisheries management are in place Limited conscience elsewhere competitive impacts 18

19 19 Future availability non GM

20 Fishmeal, Soyameal + Ratio FM/SBM ene97 m ar97 m ay 97 jul97 s ep97 nov97 ene98 m ar98 m ay 98 jul98 s ep98 nov98 ene99 m ar99 m ay 99 jul99 s ep99 nov99 ene00 m ar00 m ay 00 jul00 s ep00 nov00 ene01 m ar01 m ay 01 jul01 s ep01 nov01 ene02 m ar02 m ay 02 jul02 s ep02 nov02 ene03 m ar03 m ay 03 jul03 s ep03 nov03 ene04 m ar04 m ay 04 jul04 s ep04 nov04 ene05 m ar05 m ay 05 jul05 s ep05 nov05 ene06 m ar06 m ay 06 jul06 s ep06 nov06 ene07 m ar07 m ay 07 jul07 s ep07 nov07 ene08 m ar08 m ay 08 jul08 s ep08 nov08 ene09 m ar09 m ay 09 jul09 s ep09 nov09 ene10 m ar10 m ay 10 jul10 s ep W 9 W11 W13 W15 W17 W19 W21 W23 W25 W27 W29 W31 W33 W35 W37 W39 W41 W43 W45 W47 W49 W51 W53 MonthYear-Week 6,60 6,30 6,00 5,70 5,40 5,10 4,80 4,50 4,20 3,90 3,60 3,30 3,00 2,70 2,40 2,10 1,80 1,50 1,20 0,90 0,60 0,30 0,00 P RICE S in US D per m etric ton R atio Soyameal / Fishmeal Ratio Soy.meal, 44/45%, Hmb, fob exmill Fishmeal, 64/65%, Bremen fca Ratio fm/sbm

21 Standards LR Possibility of Change Organic MSC accreditation impacts Salmon Aquaculture Dialogue - FFDR s 21

22 Market Demands and Economics Current salmon prices make farming profitable and feed affordable Differentiated strategies viable. What happens if global prices fall and premiums eroded? What will consumers pay for? - Salmon Welfare - Environmental responsibility - Perceived quality - Health/Omega 3 - A good value tasty protein meal 22

23 Implications- High marine diets 23 Available on request Possibility of significant feed price premiums Sustainability credentials can be achieved through responsible sourcing but ENGO challenge remains? Production volumes and market volumes need to be matched Possibility of producing a one size fits all diet suitable for - Organic - Label Rouge - Retailer Premium ranges MSC accreditation of Anchovy or other opens up Organic sourcing improving contaminant and Omega 3 profile Organic Plant material strictly non GM(GM Free?)

24 Implications - Mid marine Diets Fish Oil Only - 50%-60% of Scottish Feed is Fish Oil only (100kt-120kt) - Actual requirement for FO only = 25kt fish = 30kt feed - Excess feed 90kt=25kt FO=8kt replaceable=160kt forage fish Surely unsustainable and change inevitable but what will trigger it? - Price? - NGO pressure? - Retailer action? If the market cannot manage this how will it deal with LAPS and GM? /tonne feed Price differential at different levels of substitution Fishoil premium over Rape oil /tonne 0% Substitution 30% Subs 80% Subs" 50% Subs 24

25 Implications - Low marine Index Plant protein concentrates essential for FM replacement High reliance on Soya - availability of non GM uncertain Market/Environmental issues - Maintaining non GM - Plant protein price flips with FM - Fish Oil cheaper than Plant Oil - Environmental loadings Plant vs FM/LAPS - Ecofootprint of plant imports vs domestic LAPS - Taste and flavour Would LAPS be the lesser of several evils? 25

26 Least Cost /LAPS Materials would be pulled into formulations based on relative nutritional value and price Will change constantly as market forces move material prices High Protein Meals particularly interesting - Blood Meals - Poultry meals Reduction in nutrient loadings increase discharge consents Poultry fat cost effective alternative to Rape Tick a lot of boxes Will require further investments and create additional complexity but are there segregation issues? 26

27 Eco absurdities 30kt Soya products used in UK Salmon Feed 40kt Poultry byproduct ex Europe used in Chile Salmon Feed 27

28 Future Feeds Low Environmental Responsibility High Marine Low Cost High plant GM High Plant Non GM High Cost Least Cost LAPS 28 ` High Environmental Responsibility

29 Comparison of Material Categories High High LAPS Marine Plant Responsible Mixed High High Sourcing Environmental Impacts Low Medium Low Ecofootprint High Medium Low Health benefits High Medium Medium Cost High Medium Low Performance High Medium High 29

30 Conclusions A range of dietary options can remain available to meet different market requirements. Increasing price premium and price volatility likely for restricted diets Close alignment with production and target market demand necessary to recover differentiated feed costs Use of LAPS brings significant positives for environment, cost and performance. Use aligned with interests of the majority Challenge is to communicate the benefits and gain a consensus for use. 30