Higher fishmeal prices result in good business

The Fish Site
by The Fish Site
23 April 2007, at 1:00am

PERU - Fishmeal production was low in 2006, with production in Peru declining by 32%. Fishmeal prices climbed constantly during the year, and this trend is likely to continue well into 2007.

All main producing countries reported stable or higher export earnings from fishmeal as a result of these higher prices. However, production in 2006 was lower than in 2005, with all major producing countries reporting declining fishmeal output. Production in these countries fell from 3.5 million tonnes in 2005 to 2.8 million tonnes. Total landings of small pelagics in the six main producing countries were down by 20%. Only Norway reported a 10% increase in small pelagic landings for reduction purposes.

Peru was the main country responsible for this decline with 6 million tonnes production, compared to 8.8 million tonnes in 2005.

The unit value of fishmeal exported from Peru varies with the country of destination, being lowest for China at US$ 800/tonne and highest for Australia at US$ 1074/tonne. In years of low supply, Peru favours exports to countries that are willing to pay a higher prices. As a result, exports to Japan and Australia grew in 2006.

A similar trend was seen in Chile, where the unit value of fishmeal exports increased strongly by 53%. Overall, exports fell to 520 000 tonnes in 2006, compared to 710 000 tonnes in 2005. However, revenues were better with total export earnings of US$ 515 million, 12% up on 2005.

China is the main market for fishmeal products and in a move to take advantage of this market power, Pacific Andes, one of the major traders with China, bought leading peruvian fishmeal processor: Alexandra SAC. Pacific Andes believes that the market situation as positive, and that this acquisition will show profitable results in the very near future.

Interestingly, near neighbour Mexico has become the USA's primarily fishmeal supplier. Both Peru and Canada have lost ground here. Alternative markets have been secured with some 80% of German fishmeal imports now coming from Peru.

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 which bodes well for the South American industry.

To read the report click here