The low catch was caused primarily by the abnormally high sea temperatures, forcing anchovy stocks to deeper and cooler waters or to the south where industrial catches were prohibited within a ten mile zone. A short ban to suspend fishing operations for a few days due to high juvenile levels complicated the situation further. It seemed apparent that the El Niño would affect all agents of the value chain this year, although the full effects can never be completely predicted or confirmed. Nevertheless, the market was quiet during this period as buyers hesitated to order and China, the largest global fishmeal consumer, had built up a stock of 253,000 metric tonnes.
Low catch levels trigger high prices in Peru
The quiet was broken shortly after the first anchovy fishing season in Peru concluded in August. Despite the deadline being extended to 10 August, only 68% of the Total Allowable Catch (TAC) was caught, or 1.71 million tonnes. Compared with the catch from the two seasons of 2013, which allowed 2.05 and 2.3 million tonnes respectively, the confirmed low catch level brought anxiety to markets immediately. Furthermore, in October, IMARPE made the recommendation that no quota be allowed for the second season until a reassessment survey was completed. This recommendation was due to the fact that after the first survey, only 1.45 million tonnes of anchovy biomass were found, while in 2013 the figure was 10.8–12.1 million. With these factors, the market did not hesitate to respond with record high prices. In October 2014, an FOB price of USD 2 400 per tonne was recorded for super prime fishmeal in Peru.
Since then, prices have remained generally stable at this level. Usually at the end of the year, Chinese demands for its pork industry, which is the largest in the world, increase for the upcoming Spring Festival. This year is no exception and by December 2014, China had already quickly consumed its large fishmeal stock and had only an estimated 30 000 tonnes left. Peruvians may sell their remaining stock of just 30 000 tonnes soon and obtain rewarding prices.
Human consumption will compete with animal feed for fish oil
In the long term, demands for fishmeal and oil can only increase with the growth of the aquaculture and terrestrial farming industry. Noticeably, Viet Nam, a significant aquaculture producer, has become the fourth largest destination for Peruvian fishmeal export. Oil production destined for direct human consumption will also seriously compete with the aquaculture and animal farming sectors.
Globally, efforts to reduce the pressure on supply never cease, with countries working to diversify their sourcing. According to Undercurrent News, China has had to diversify its sources of product from Southeast Asia, Morocco and Panama. Norway has initiated contact with Chinese authorities in order to return to the largest fishmeal market. Denmark could continue its exports to China, and there may also now be a chance for Iceland to get a supply license from the Chinese Government.
High prices propel the search for alternatives
GLOBEFISH anticipates that consuming countries will strengthen their search for alternatives in order to reduce their dependency on fishmeal, especially given the current extreme prices. The fishmeal and soymeal price ratio is now 4.13:1, compared with 2.10:1 last year. In the short term, it seems that the vulnerability of fishmeal/oil production will not change if production continues to mainly rely on pelagic species. Utilising more by-products from processing factories could help the situation.
In early December 2014, IMARPE confirmed its recommendation after a second survey that there should be no quota issued for the second fishing season. The justification for this recommendation was that the anchovy habitat had been significantly reduced and that a large portion of the anchovy in the Northern-Central region consisted of juveniles. There are hopeful prospects for this spring however, as the survey for the first TAC of 2015 will be carried out in April, when they could potentially find considerable stock volume with the appropriate size and weight. However, it could still be a difficult financial year for Peruvian fishmeal producers in 2015, as they will have to sell production made from the low catch of 2014, similar to the situation in 2013.