The aquaculture industry is experiencing a surge in demand for fishmeal and fish oil, driven by the expansion of high-value species and more intensive farming practices, cautions a new RaboResearch report from Rabobank, with the analysis advising that this demand is clashing with stagnant marine ingredient availability and increasing vulnerability to supply shocks, particularly those linked to climate change and recurring El Niño events.
According to the report, titled “Hooked on scarcity: Navigating aquafeed nutrition amid looming ingredient shortages”, as aquaculture production continues to rise globally, so the industry faces the “significant challenge” of ensuring a stable supply of essential omega-3 fatty acids and proteins amid stagnating marine ingredient availability.
Fishmeal and fish oil production, ranging from 5.5 to 6 million tonnes annually, is dependent on commercial fishery harvests and byproducts. The report deems that most wild-capture fisheries have now reached sustainable limits, while climate variability increases the risk of supply disruptions and price volatility.
RaboResearch Seafood Analyst Novel Sharma projects that from 2024 to 2033, the production of mid-value and high-value fed aquaculture species will grow at a compound annual growth rate of 3%, resulting in an increase of approximately 12 million tonnes over the next decade. This growth, he said, will be driven primarily by higher-trophic-level finfish and crustaceans, which rely heavily on wild-caught fisheries as their primary dietary sources of protein and lipids.
“The current supply of commercial feed ingredients, such as fishmeal and fish oil, will be insufficient at current inclusion rates for this growth to materialise.”
Rabobank maintains that fishmeal and fish oil sourced from wild-caught fisheries face limited prospects for supply growth, and with the supply remaining stagnant and demand continuing to rise, the expectation is that the gap between supply and demand will narrow,
“Given the limited availability of effective substitutes at scale, even modest supply disruptions can lead to sharp price increases,” Sharma said.
The analysis asserts that in recent years, supply disruptions have had a more pronounced impact on fishmeal and fish oil prices, and that looking ahead, fishmeal shortages are projected to emerge as early as 2028, while fish oil scarcity is expected to intensify throughout the decade.
As shortages deepen, demand inelasticity is likely to increase further, leading to greater price volatility and establishing higher price benchmarks during future supply shocks, it states.
The RaboResearch further notes that fishmeal and fish oil markets are experiencing rising price volatility, exposing a “structural vulnerability” in the aquaculture value chain. It highlights that Peru, the world’s leading producer and exporter, plays a pivotal role in shaping global prices and that a decline in its output can reduce global supply by up to 20%, making the market highly reactive.
In 2023, a sharp supply shock in Peru – driven by climate-related disruptions and rigid demand – pushed prices to record highs. This event illustrated how concentrated supply and inelastic demand can amplify price movements, the report states, adding that while past disruptions were temporary, the growing imbalance between supply and demand suggests that volatility may persist.
Sharma suggests that to support sustainable growth, the aquaculture industry must adopt proactive strategies to secure access to essential feed ingredients, and that novel feed sources, like algal oil or insect meal, will play a critical role – not merely as alternatives, but as essential components of future feed formulations.
Embracing these innovations will be key to building resilience and ensuring long-term viability in a resource-constrained environment, the report states.
