Feed supply shortfall prompts M&As
By Erich LueningNews
Fishmeal shortages have led to a rush of mergers and acquisitions (M&As) as feed producers seek to meet fast-growing demand from the seafood sector, according to industry observers.
A Bloomberg article pointed at Cargill, the biggest grain trader, as an example of this M&A frenzy. A glut in fishmeal, seen over the past four years, continues to plague the sector.
Cargill will keep expanding in aquaculture as world demand for food protein is seen growing 70 percent by 2050, said Cargill executive, Neil Wendover. The Minneapolis-based trader, along with Aqua-Spark and others, provided $30 million in funds to fish-feed maker Calysta earlier this year (ANA Mar/Apr 2016).
World output of fishmeal, usually made from anchovies, fell short of demand in nine of the past 10 seasons and a fifth straight annual shortage is expected this year, the US Department of Agriculture says. Seafood sales will rise 5 percent this year, the biggest gain since at least 2011, reported Bloomberg, citing data from Euromonitor International.
“Aquaculture is one of the fastest-growing areas of food production and Cargill is committed to continue to grow its aquaculture business, both organically and through acquisitions,” Wendover said. “We will continue to explore opportunities, such as Calysta.”
The industry has also seen the $4-billion takeover of salmon-feed supplier Nutreco NV by SHV Holdings NV, and Mitsubishi Corp’s acquisition of salmon farmer Cermaq ASA.
Rising seafood consumption is making fish farming more important. The world is now eating more farmed fish than wild catches, according to the United Nation’s Food and Agriculture Organization.
With fishmeal production unlikely to meet demand, companies are looking for alternatives, said Mike Velings, a managing partner at Aqua-Spark, a fund investing in aquaculture. Production will be about 300,000 metric tons lower than consumption this season, USDA data showed. Fishmeal prices in top producer Peru have more than tripled since 2001, according to the Bloomberg report.
— Erich Luening
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