A look at news and events affecting the industry. PCBs Year 2004 started with a controversial news for aquaculture. A study published in Science in the first week of January claimed that PCBs and other environmental toxins were present at higher levels in farm-raised salmon than in their wild counterparts. The study also attributed the origin of the toxins to the feeds used in salmon farming. The study was immediately and vehemently criticized by the scientific and aquaculture community for its methodology, wrong conclusion and unnecessary creation of media attention created by the study’s authors through a pre-publication media release. Scientists and public health officials were quick to point out that even if the data published in the study were valid, the levels of PCBs in farmed salmon were well below the safety limits set by various national and international agencies and that the health benefits of eating salmon far outweighed the potential risk due to the contaminants. One of the best responses to the controversy was written by Dr. Ronald Hardy in his column on feeds in the Aquaculture Magazine (March/April 2004). Dr. Hardy’s column on the topic is the best trade magazine article I read in 2004. Bird Flu The biggest news in the animal production industry in 2004 was bird flu. The outbreak of avian influenza in Asia and elsewhere in early 2004 continued unabated through the year. Worst affected were big poultry exporting countries like Thailand where the flu virus also affected and killed humans and other animals (including 100 tigers in zoos that were fed raw chicken). Aquaculture received an unexpected boost as chickens were replaced by seafood at homes and restaurants. Many markets reported higher, albeit temporary, prices for aquaculture products when the bird flu reports started filling the media. Trade Issues Trade in aquaculture products became a highly contentious issue in 2004. The final antidumping tariffs on shrimp exported to the US were announced by late 2004. The tariffs were 10.4%, 3.26%, 112.81%, 9.45%, 6.03% and 25.76% for Brazil, Ecuador, China, India, Thailand and Vietnam, respectively. The tariffs are subject to a final round of authorizations in early 2005. While the duty rates are lower than expected for most countries, the basis of the duty will be questioned by the countries at the World Trade Organization. WTO has already stated that some of the methods and provisions of the US antidumping tariffs are illegal. Many experts are of the opinion that the duty rates are too small for all except China that the effect on shrimp exports to the US will be minimal. Salmon industry is undergoing its own trading row over exports. The European Union has opened an investigation into possible dumping of farmed salmon by Norway. Salmon producers within EU, mainly Britain and Ireland, fear the low cost salmon from Norway would negatively impact their competitiveness. The investigation is expected to take up to 15 months and may end up in anti-dumping tariffs on salmon from Norway. The EU has already imposed a provisional six-month quota on the Norwegian salmon imports from August 2004 onwards. Trade disputes in aquaculture products are essentially responses to market conditions in which supplies exceed demand. Market prices of both salmon and shrimp, once considered luxury food, have fallen over time and remained depressed in 2004. Realignment to improve efficiencies is already occurring in the salmon sector. It will also occur in the shrimp sector in the next few years. Acquisitions & Mergers The big news was Nutreco’s announcement in September 2004 that it would take over the fish farming operations of Norway's Stolt-Nielsen and merge it with its own fish farming business, Marine Harvest, to create an independent business entity. The merger was to improve operational efficiency in a business that was hit with low profitability due to low prices for salmon. Nutreco said that it would concentrate its resources to grow of its worldwide animal nutrition and fish feed business. Nutreco along with Skretting is the world’s largest fish feed producer and its premix and specialty feed entity, Trouw Nutrition, is the third largest in its category. Analysts, however, remained skeptic about an immediate turn-around in Nutreco’s fortunes because of the fundamental weakness in salmon markets overall. The smaller, but surprising acquisition was Cargill Animal Nutrition’s purchase of Burris Mill & Feed. Cargill, one of the largest family businesses in the world, bought the smaller, but competitive family business owned by brothers, Bob and David Burris. The company excels in customized feeds for niche markets in the southern US, whereas Cargill is one of the leading aqua feed manufacturers in the US and around the world. Commenting on the reason for acquisition, a Cargill executive remarked that Burris has “built a focused business that can grow with Cargill resources.” Ingredients Ingredient prices were generally high in 2004 due to seasonal shortages. Adding to the woes were the higher freight prices and slower movement of freight due to increased Chinese import of materials for infrastructure development in the country (particularly, for Olympics 2008). Ingredient prices are predicted to be lower in 2005. Fishmeal production by the top five producers is estimated to be 3.4 million metric tons in 2004, approximately 25% higher than the production in 2003. There are also reports of above-average grain and soybean production in most production regions of the world. Higher freight costs may be the only negative factor on ingredient prices next year. Innovation Wenger Manufacturing has been awarded a patent for its new extruder system that combines an adjustable back pressure valve and an external density chamber to produce both floating and sinking aquatic feeds with a wide range of properties, without the need for extruder configuration changes. (An article on this system appeared in Vol. 1; Issue 2 of Aqua Feeds: Formulation & Beyond). In May 2004, Schering-Plough Animal Health Corporation launched an orally administered vaccine that is claimed to protect shrimp against five species of Vibrio bacteria. The product, AquaVac™ Vibromax™, contains inactivated cultures of Vibrio blended into a novel delivery system called an Antigen Protection Vehicle (APV). The microcapsules of the vaccine are incubated with Artemia nauplii for uptake by the latter. The enriched Artemia are then fed to the shrimp post-larvae for 10 days. The coating on the capsules protects the antigen from breakdown by enzymes in the digestive tract of the shrimp. People Stuart Barlow, who has played a vital role in fishmeal organizations for the past 35 years, retired from the International Fishmeal and Fish Oil Organization (IFFO) in 2004. Jonathan Shepherd, previously the Group Managing Director of BioMar, has taken over as the new Director General of IFFO from October 2004. |
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