About Sustainable aquaculture: managing ESG risks in feed supply chains

Collaboration details

Aquaculture is a relatively new but fast-growing form of food production. Given the challenges facing livestock production, particularly in terms of climate and land use, aquaculture has often been positioned as a sustainable way to meet growing demand for protein in support of achieving food security and improved nutrition.
However, salmon aquaculture remains reliant on fishmeal and fish oil (FMFO) in feed, which are produced from wild forage fish. Supply of forage fish is forecast to remain flat into the future, in line with minimal growth across all wild fisheries.
While salmon producers have made clear progress on reducing FMFO use over the long term – marine ingredients made up around 80% of feeds in the 1990s, to around 20-30% today – flat supply is forecast to increase costs and constrain growth for producers.
A World Bank analysis found that over 2010-2030, fish meal and fish oil prices may rise by 90% and 70% respectively.
As FMFO use has declined, inclusion of soy in salmon feed has increased. However all three ingredients are vulnerable to climate risk. One study suggests that under various climate scenarios spanning 2016-2050, price increases of 89%-121% are expected for plant oil, 14-92% for fishmeal and 41-85% for fish oil.
Steep price rises in marine and soy ingredients will increase pressure on producers’ margins. If the industry is to continue growing, it requires increased quantities of feed, meaning marine ingredients must be supplemented with novel alternatives.
There is currently a lack of consensus on the extent to which forage fisheries can be exploited, meaning it is difficult for investors to assess how effective current company strategies are to mitigate the risk of feed availability constraints.