Key takeaway:
- Aquaculture is under pressure from increasing feed costs, with the basket commodity price index rising by about 50% since 2022.
Aquaculture has become a vital source of food production in the Indo-Pacific region, with countries like China, India, Vietnam, and Indonesia leading the way in production and value.
While Australia is a relatively minor producer of aquaculture, the industry accounts for 45% of the nation’s seafood production by value and volume. With an increase in Asian migration and aging population, demand for seafood in Australia is expected to outstrip supply.
The global aquaculture market is expected to reach $232.4 billion by 2026, and the industry will need to produce an additional 27 million tonnes of edible product to meet this demand.
The challenge for all aquaculture producers is the global phenomenon of rising commodity prices.
The reliance on common input ingredients such as soybean, corn, fishmeal, fish oil, rice, and wheat for aquafeed production has placed the industry in competition with the animal husbandry sector and direct human consumption for these commodities.
Since 2022, the basket commodity price index (CPI) has risen about 50 percent, with soybean meal, fishmeal, corn, wheat, and major oils used in the aquafeed industry experiencing significant price increases. These global market shocks and volatility are of particular concern for smallholders and rural farmers, who may be more vulnerable to the fallout of rising aquafeed prices.
There is also increasing pressure to intensify aquaculture productivity through the use of commercial feeds over farm-made feeds. This is further exacerbated by urbanisation and the demand for high-value fish species. Intensified aquaculture puts a strain on the availability and affordability of aquafeed, especially fishmeal and fish oil, which are highly favoured for aquafeeds.
The search for alternative protein sources to replace wild-caught proteins in aquafeed manufacturing is crucial for the industry’s sustainability. Soybean meal is currently the primary alternative to fishmeal, which currently trades at usd$3000/tonne. The current price of soybean meal is significantly lower than fishmeal and fish oil, which can make up anywhere between 25 and 45% of fish feed.
Developing countries within Asia, Africa, and Latin America hold the greatest opportunities by value and volume of output for the aquaculture industry. However, the rising prices of aquafeed may impact the industry’s growth and sustainability, particularly for smallholders and rural farmers. Therefore, it is important for the industry to continue to search for sustainable and affordable alternatives to traditional aquafeed ingredients.
Given the major producers of feed are located in the South China Sea, what supply chain pressures will Australia feel in the future should disruption in the region continue?