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By Rod Nickel
Feb 28 The world's top agricultural traders and
biotechnology firms are finding novel ways to make fish oil
substitutes from grains and algae as they seek to cash in on
consumer health fads that have led to a scarcity of the fatty
acids commonly found in fish.
Fish are the fastest-growing protein source in a global food
supply chain straining to feed a population of nearly 7.5
To keep farm-raised fish healthy, they are fed Omega 3 fatty
acids that are found in the oil of other fish. The same acids
are increasingly popular in fish oil dietary supplements for
The surging demand has pushed fish oil prices to a record
high and presented the aquaculture industry with a problem: how
to source more fish oil without putting depleted global fish
stocks under even more pressure. About 90 percent of marine fish
stocks worldwide are already fully or partially over-fished,
according to the United Nations.
"We have finite fish oil, growing aquaculture and a world
that needs more Omega-3s," said Mark Griffin, president of
animal nutrition at Omega Protein Corp, the biggest U.S.
fish oil producer. "They're going to have to come from somewhere
The short supply has attracted the world's largest grain
traders, such as Cargill Inc, Bunge Ltd and
Archer Daniels Midland Co.
These agricultural giants are in the midst of transforming
themselves into food processing and ingredient suppliers as they
look to diversify away from bulk trading of grains and raw
materials amid a four-year global supply glut.
The $2.4-billion fish oil sector is niche for major grain
traders and represents a fraction of their income. But fish oil
is the sort of high-return product they are targeting as they
grapple with slim margins in their traditional business.
As demand outstripped supply, wholesale prices in top fish
oil producer Peru soared to an average of $2,986 per metric
tonne in 2016, the highest ever recorded.
Global annual production of fish oil has for years been
limited to about 1 million tonnes, said Einar Wathne, president
of Cargill's aqua nutrition business, in an interview from
"It could be a kind of showstopper for growth in aquaculture
if we can’t find other sources for these valuable Omega-3 fatty
acids," Wathne said.
YELLOW FIELDS IN MONTANA
Cargill's plan to produce more fish oil could soon change
the color of up to half a million acres of the landlocked
Montana prairie, company executives told Reuters.
The firm plans to pay farmers there to grow a new variety of
canola, distinctive for its bright yellow flowers. Half a
million acres would be eight times as much farmland as is
currently planted with canola in the state.
Vegetable oil made from canola is high in Omega-3s, and
Cargill teamed up in November with chemical company BASF SE
to develop a canola type by 2020 that it will use to
make oils for fish food. The new canola is genetically
engineered to make long chain omega-3 fatty acids by introducing
genes from algae in the ocean, another source of the fats.
A half million acres of canola could produce about 159,000
tonnes of oil - the equivalent of one-fifth of global fish oil
"It may be appealing, an opportunity to try new crops," said
Tom Clark, one of Montana's few canola growers.
But he added that managing to change farmers' habits on such
a large scale would be challenging.
In addition to Cargill, Dow Chemical is developing
its own variety of canola to make oil with similar Omega-3 acids
as fish oil, and is counting on Canadian Prairie farmers to grow
U.S. seeds giant Monsanto is developing soybeans that can be
processed into soy oil with the Omega-3 fatty acids, for food
products such as baked goods and soups.
ADM launched an algae-based product DHA Natur for fish diets
last year, and has "robust plans in 2017" for the product, said
spokeswoman Jackie Anderson, who declined to give more details.
Bunge, working with TerraVia Holdings Ltd, started
using algae to convert sugar into an Omega-3 ingredient for fish
diets last year.
The company has capacity in Brazil to annually produce tens
of thousands of tonnes of their product, AlgaPrime, said Walt
Rakitsky, TerraVia's senior vice-president of emerging business.
Bunge and TerraVia are supplying the product to BioMar
Group, the third-largest fish feed supplier.
The fish oil alternatives come with their own challenges.
Algae oil is expensive to produce, and the canola and soybean
varieties used to make oils rich in Omega-3s are genetically
modified. That can be a sensitive issue, for example in Norway,
which is the world's biggest salmon producer and has tough
restrictions on genetically modified foods.
SWIMMING IN REVENUE
The $166 billion aquaculture industry accounts for half the
world's fish, and sales are expected to expand up to 5 percent
annually for at least the next three years, according to
Rabobank analyst Gorjan Nikolik.
With high prices and concerns about sustaining fisheries,
fish farms have for years reduced use of oil and protein-rich
meal in diets, risking production of less-healthy fish, said Tom
Frese, president of consultancy AquaSol.
That's why the development of fish oil substitutes is
critical, said Vidar Gundersen, BioMar's global sustainability
"The timing now is of the essence," he said.
(Editing by Simon Webb and Brian Thevenot)