Bangkok (Thailand) Victam Asia 2008
The (South Antarctic) Krill Industry – How far krill derivatives can become a real feed ingredient substitute? – Brief Industry Overview
Speaker: Dimitri Sclabos
Krill, a term originally applied to “fish fry”, is now taken to refer to euphausiids, a group comprising over 80 species most of which are planktonic. They are widespread around all oceans of the world. Nonetheless, commercial harvesting and economic importance are the two criteria which, when applied to euphausiids, reduces the area of interest to a few geographical regions, among them the Southern Ocean, in the Atlantic sector. Main species is Euphausia superba, commonly referred as the Antarctic Krill.Euphausia superba, commonly referred as the Antarctic Krill.
Exploratory fishing for krill commenced in the early 1960s with catch levels being initially low. From the first commercial fishing activities in the early 1970s, krill catches rose steadily from 19 700 tons in 1973/1974 to a peak of 528 000 tons in 1981/1982. Catches then declined sharply until 1983-1984. The next mayor fishing impact was triggered by the 1991 breakup of the Soviet Union. Other key nations (e.g. Poland and Korea) have historically accounted for about 4% of the total catch.Annual catch has stabilized around 100.000 tons per season for the last 10 years. Very recently there has been resurgence on interest in fishing krill, with the entry of new operators coming from Russia and Norway, either working with their own country-of-origin flags or through flags (countries) of convenience.
Antarctic Krill fishery will then soon face a new growth curve, at a much faster pace compared the last three-decades’ slow move from low-unit catch not-efficient operations to high-catch efficient high-yield operations. Although the 2007/2008 South Antarctic krill fishing season notifications adds 754 000 tons we expect a final maximum tonnage close to 277 000 tons, even much less if some of the new projects are further delayed. If this last figure prevails, the total krill meal and oil supply will be aproximately 30 000 and 140 tons, respectively. Catch and effort data are annually submitted to CCAMLR being this an Intergovernmental organization formed by 24 countries with direct or indirect presence in the krill fishery, responsible for making the necessary rules for the conservation of the Antarctic ecosystem. One of the Convention’s main objectives is the conservation of the Antarctic marine living resources, being the term “conservation” associated with “rational use”.Between the 1980s and 1990s, the three most common South Antarctic Krill end products were feed-grade dried meals and whole raw frozen, plus food-grade peeled krill meat, which, within the 1990s, their average annual production was approximately 7 500, 58 000 and 2 500 tons, respectively, for a total annual estimate amount of 118 000 tons of raw krill capture.Within the 2000s, there has been a shift in the type of targeted end-products, in line with a higher demand of aqua-feed proteins, feed-bait grade whole raw frozen and the “wellness” industry claiming for nutraceutical end-products such as Omega 3. The “wellness” route has also increased whole raw frozen krill demand used to extract pharma-grade krill oil.
Simultaneously, the 2000s witnessed a change in the type fishing methods and on-board processing yields, change that has had a profound effect on the resulting volumes; within the last 3 seasons, feed-grade dried meal and whole raw frozen krill have seen annual average production volumes of 9 000 and 65 000 tons, respectively, for a total capture estimate of 140 000 tons of raw krill for the season 2006/2007.
Nonetheless the current underserved demand for marine proteins and fats, we do not see feasible that dried krill meal and liquid krill oil undertake the lead as sustainable and priceaffordable feed ingredients, among other factors, subject to; fishing & environmental restrictions, price considerations and trade-off products.
Actual CCAMLR’s TAC level is 4 000 000 tons per year on sector 48 and 1 000 000 tons on sector 58. There is also a precautionary limit of 620 000 ton limit (the so-called “trigger level”) whereas, once achieved, CCAMLR can close entirely the krill fishery, “trigger level” that was adopted to prevent local depletion of krill, in the event of a rapid expansion of the fishery. CCAMLR might implement the FAO code of conduct for responsible fisheries, in which case, fishing restrictions will be stronger, on an actual scenario where approximately 20% of the annual krill catch is fully utilized and aprox 55% of its capture volume targets low-end aquafeed grade products, away from higher-value added products.
The season 2007/2008 krill fishing requested permits already exceeds the precautionary limit by at least 20%. Nonetheless, we estimate that approximately 277 000 tons will be captured within this season, a volume that may grow up close to the precautionary limit within the coming 3 seasons (up to 2009/2010).
In the non-achievable and hypothetical scenario that the entire 5 Million TAC quota is processed as dried meal and oil only, using the actual average processing yields, it means aproximately 850 000 tons of meal and 30 000 tons of feed-grade krill oil supply per season. Comparatively, annual brown fish meal and fish oil production is close to 6 000 000 and 1 100 000 tons, respectively.
Unless CCAMLR changes its regulatory policy, or it finds new data about a greater biomass, or it succumbs to the actual pressure applied by fishing corporations through their own governmental agencies, we do not see volumes above 100 000 tons per year of dried meal and 4 000 of feed-grade krill oil available within the coming three seasons (2007/2008-2009/2010), plus whole frozen and food-grade meats.
Pricing is another factor that may preclude krill meal to become an affordable feed ingredient. Krill oil is a sort of new product, so there is not yet a well-known established price trend from where convenient price matrix can be built.
On meals, within the 1980s and part of the 1990s, ex-Japanese prices range from US$450 up to US$750 per ton FOB South American port, few qualities reaching US$975 per ton. Late 1990s and early 2000s, USA and Ukrainian krill meals were able to match, and even surpass Japanese quality meals through Tharos’ prices approaching US$1 300 up to US$1 450 per ton. In the past two seasons (2005/2006 & 2006/2007) average meal prices have move upwards close to US$1 550 per ton FOB and higher, while some lots, within this past 10 months’ work, reaching prices as high as US$1 950 per ton. We expect a higher supply competition forcing somehow prices to diminish within the coming 12-20 months, in line with a higher production base, overall demand-stagnation, vegetable protein supplementation and processing complexities.
Tharos’ proprietary krill meal price predictive model sees first-delivery krill meal prices aprox 15-20% lower compared to actual prevailing prices. Other competing forces are, for example, the recently published chemical answer to the question of why Soya meal reduces the intestinal function of salmon. This work may well open further vegetable proteins usage on aqua feeds at prices much more competitive than krill meal prices do. In respect to krill oil, this past seasons situation are not enough to show us a clear path, nonetheless at present, feed-grade krill oil price is found in the vicinity of US$5,5 per l up to US$25 per l, or higher, depending on quality, which might face an average price increase in the vicinity of 27 up to 32%, for oil made as a by-product from the regular dried meal processing line. Comparatively, pharma-grade oil prices we expect to remain as high as it has been for the past few seasons, in a range of US$75 up to US$225 per l FOB. If the use of krill as a feed ingredient for the aquaculture industry was the 1990s motivation, krill outstanding medical properties and its immense potential in the lucrative nutraceutical market becomes the 2000s driver. As krill fishing operators look for the highest-profitable contribution from every fished ton of krill, and these will come from high-value food/pharma grade oils and frozen meats, they will divert krill processing away from meals and oils towards these highly valued end krill products, among them pharma-grade krill oils (phospholipidsrich), food-grade whole raw frozen krill and white tablecloth food-grade meats. Other relevant aspect of this fishery that will avoid South Antarctic Krill derivatives to become stable, price-competitive feed ingredients is its processing and logistic complexity.