Higher fishmeal prices result in good business

Fishmeal production was low in 2006, with production in Peru declining by 32%. Fishmeal prices went up constantly during the course of the year, and this trend is likely to continue well into 2007. All main producing ccountries reported stable or higher export earnings from fishmeal as a result of these higher fishmeal prices. China continues to be the main market for fishmeal products, with stable or even expanding demand.

Fishmeal production down

Fishmeal production in 2006 was lower than in 2005, with all major producing countries reporting declining fishmeal output. Fishmeal production in these countries was 2.8 million tonnes in 2006, down from 3.5 million tonnes in 2005. Total landings of small pelagics in the six main producing countries were down by 20%. Peru was the main country responsible for this decline with 6 million tonnes production, compared to 8.8 million tonnes in 2005. Otherwise landings in Chile, Denmark and Iceland were only slightly lower than in 2005. Only Norway reported a 10% increase in small pelagic landings for reduction purposes.

Fishmeal prices were firm in the opening months of 2007, after overall high prices in the course of 2006. Unsold stocks in Peru were drastically reduced, due to relatively low landings during the December 2006 period. Fishmeal prices reached about US$ 1 000 per tonne.

Fishmeal production in Peru was 1.45 million tonnes in 2006, which compares to 1.9 million tonnes in 2005. This sharp reduction was caused by lower small pelagic landings, prompted by a mild form of El Niño. Reduced production led to lower exports in quantity terms; however, high fishmeal prices kept total earnings from fishmeal stable at US$ 1.2 billion.

China continues to be the main fishmeal importing country from Peru, but imports declined sharply in 2006: only half of the 2005 amount. Germany is the second major importer, re-exporting huge quantities of fishmeal to other European countries. The unit value of fishmeal exported from Peru varies with the country of destination, being lowest for China (US$ 800/tonne) and highest for Australia (US$ 1074/tonne). In years of low supply, like last year, Peru is exporting more fishmeal to countries which are willing to pay a higher price for the product. As a result, exports to Japan and Australia grew in 2006.

Chilean fishmeal production was about 4% lower in 2006 when compared with 2005. As a result Chilean exports of fishmeal totalled 520 000 tonnes in 2006, which compares to 710 000 tonnes one year before. As in case of Peru, however, exports earnings were positive. Total export earnings reached US$ 515 million, 12% ahead of 2005. The unit value of Chilean fishmeal exports increased thus strongly by 53%.

China is the main fishmeal buyer in the world and in a move to take advantage of this market power, Pacific Andes, one of the major traders with China, bought a top Peruvian fishmeal processing company: Alexandra SAC. Pacific Andes sees that fishmeal situation as very positive, and that the acquisition will show profitable results already in the very near future.

It is interesting to note that the USA is now relying on Mexico for fishmeal supply, while Peru and Canada are losing ground. Some 80% of German fishmeal imports are coming from Peru, while the share from European suppliers is decreasing.

Further fishmeal price increases likely

All indicators are positive for a further increase in fishmeal prices, as landings and production are likely to stay at the low 2006 level, or decline even further. Demand for fishmeal in China and other Asian countries is likely to stay strong.

By Helga Josupeit
© FAO GLOBEFISH 2007