Eco Investor September 2017
Novel Aquaculture Feedstocks Address Protein Issue
The good news for aquaculture investors is that Australia is one of only a few developed countries that is perfectly suited for aquaculture, and novel alternatives using bacteria and insects have begun to appear to replace contentious animal proteins in fish food, said a visiting global aquaculture expert.
Gorjan Nikolik, a senior analyst with Rabobank in the Netherlands, said carnivorous fish such as salmon can sell for a premium price, but they are very expensive to raise and feed as their diet requires substantial supplements of high quality proteins and most of the premium supplement brands use large quantities of fish meal and fish oil.
This has become a sustainability issue for the industry as one source of animal proteins is the large anchovy schools off Peru and Chile. The slow takeup of alternative sources of protein has led to concerns about the sustainability of wild anchovies.
Mr Nikolik says the expense and growing scarcity of fish-based proteins have resulted in a number of alternatives beginning to attract interest. There is increasing investment in alternative feed projects, particularly in algal, bacterial and insect-based feeds.
"We expect in the medium term that 20 to 30 per cent of the non-vegetable-sourced oil used in aquatic feeds will be from algae sources," he said. "The number of facilities producing algae oil has increased substantially and, as the natural and sustainable method of producing high-quality EPA and DHA, is an excellent alternative to fish oil in aqua feed."
Bacterial and insect larvae are also beginning to emerge as novel alternative sources of proteins to replace fish meal. "Bacterial protein meals use predominantly methane gas, carbon dioxide and waste carbon to produce their bio protein, making it highly sustainable, with limited water and land use," he said. "The production of a protein-rich meal from the larvae of insects, such as the black soldier fly, is just as exciting and has the potential for turning waste into a feed a source."
Mr Nikolik said additional investment is needed to ensure the scaling up of these technologies, but he sees no reason Australia why wouldn't be able to adopt these feed sources. "These meals will be highly transportable and easily adapted by feed companies already operating in the industry, once any legislative prohibitors have been resolved."
"Seafood is one of the most highly-traded commodities in the world due to its climatic growing constraints and global salmon prices have never been higher. If Australia continues to gain efficiencies in production and feed, and gains the capacity required to meet an increasing global demand, its geographic location alone should set it in good stead to ensure the continued growth of its seafood industries."
Mr Nikolik said there are global export growth opportunities for Australian seafood producers who can meet the demand. Among Australia's natural advantages are our enormous coastline, varying climatic conditions, and proximity to Asia. As one of only a few developed countries perfectly suited to aquaculture, Australia has the potential to create a very successful export-orientated seafood industry.
"However, while the potential is definitely there, a lot of work remains to be done in regards to ramping up infrastructure and market access. Currently Australia is a very small player in the wild catch and aquaculture market, contributing less than five per cent of the world's seafood exports.
"That said, a number of producers here have large expansion projects due to come on line in the next couple of years and that could definitely flip the switch for Australian seafood exports."
Mr Nikolik was a speaker at the recent Australian Prawn Farmers Association Symposium.
Another factor in Australia's favour is its reputation for strong biosecurity - a key selling point for exports. While the discovery of white spot in prawns in south east Queensland has been devastating, he did not believe it would harm Australia's reputation in the longer term. "White spot is a disease that has impacted prawns throughout many parts of the world, but it is manageable and it is a challenge that Australia will have to meet head on."
"The shrimp industry in Ecuador was virtually decimated by white spot in the 1990s, but thanks to a complete overhaul in how they feed, breed and produce their shrimp, they have now emerged as one of the largest exporters in the world and their reputation is excellent. Part of the reason Ecuador was so successful in overhauling its production processes was because the industry was already held by large, well-managed operations, much like it is in Australia.
"Prawn production in most Asian countries continues to be dominated by small holders, making it almost impossible to guarantee a high level of biosecurity."
Mr Nikolik said challenges for Australia are the cost of production and compliance with stringent environment standards.
Australia's listed aquaculture sector and its investors have had a difficult past, but the number of viable companies and the variety of farmed fish are growing.
Tassal and Huon Aquaculture are successful farmers of Atlantic Salmon. Clean Seas Seafood is an emerging farmer of Hiramasa Kingfish, and Seafarms Group is an emerging prawn farmer. Another ASX listed aquaculture company is New Zealand King Salmon Investments which farms King Salmon. (ASX: TGR, NZK, HUO, CSS, SFG)
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