Three years of low Peruvian anchovy harvests brought on by El Niño have focused investor attention on companies offering alternative fish feed proteins, but only a select few will thrive over the long-term, according to Rabobank.
Entitled To Fishmeal… or Beyond? and released earlier this month, the report says that producers of alternative proteins “will need new strategies to help bridge the years of [potentially] lower prices ahead” after a recent improvement in Peruvian anchovy supply.
The report specifically mentions Menlo Park, California-based Calysta as a company well-positioned to find a place within a fish feed market it labels as “ever-changing.”
Calysta, which secured $40 million in Series D funding last week to support commercialization of its methane-derived bacterial feed ingredient, FeedKind, is described as “promising” in the report.
Rabobank highlights the scale advantages of a Calysta partnership with Cargill, which has invested in a gas fermentation facility in Memphis, Tennessee.
The report estimates that fish feed protein from all alternative sources – including algae oil, bacteria, insects and other sources – will grow from current levels of about 500 tons to 500,000 tons by 2022.
Calysta intends for the Memphis facility to produce 200,000 metric tons of its FeedKind bacterial protein meal annually when it comes online in late 2018.
Calysta president and chief executive Alan Shaw told Agri Investor that more than half of planned production from the Memphis facility is already under supply contract, demonstrating the traction the product has already developed with fishfeed producers.
Shaw said that while some of the companies mentioned in the Rabobank report have entered the fishmeal alternatives market in response to El-Niño-related changes of the past 18 months in order to use methane supplies they already had access to, his company was actually established in response to supply chain challenges resulting from the 20-year trend of increasing seafood demand.
“A couple of these companies were never focused on fishmeal; they were looking at converting methane into chemicals. You can understand why they would jump on the next best thing, particularly if they were raising finance. That’s human nature,” he said. “Those companies will come and go quickly.”
Shaw agreed with Rabobank’s conclusion that that first movers will dominate in a sector requiring scale and a long-term strategy.
Over the long-term, Calysta plans to add value to its product by expanding from salmon feed into shrimp, building facilities like the Memphis plant directly in the developing markets of Asia and developing feed ingredients that improve health of animals.
While marine-based ingredients constituted around 70 percent of aquafeed in 1990, only around 25 percent is currently marine-based, according to the report.