The 2020 aquafeed market

In 2019, good days were seen in the Asian aquafeed market, with the expansion in the farming of fish and shrimp and with many farms learning to manage diseases and costs of production. However, in 2020 opinions vary with regards to the state of the aquafeed market and depended on how the countries in Asia have implemented lockdowns to control the COVID-19 coronavirus.

The pandemic brought uncertainties along the supply chain; complicating strategies developed to meet future aquafeed demand. Industry feels that however well-prepared they have been for adversities, the situation in 2020 is entirely unique. A common goal aside from running the business is ensuring employment.

Across Asia, aquafeed millers share some common challenges; in Thailand, Vietnam and India with social distancing rules, feed operations could continue but required working in small groups, Interruptions in supply chain slowed down operations. Feed distributors working from home, did not have logistics issues with deliveries; however, payments for feeds were either slow because of poor sales or farmers took the opportunity of the pandemic to delay payments.

Jeff Jie Cheng Chuang, General Manager, Sheng Long Bio-Tech International, Vietnam commented, “Among the three countries where Sheng Long is active in, Vietnam had a better containment on the spread of the virus. Therefore, we see less impact on aquafeed

sales, production and job security of staff. In the shrimp market, cancelled export orders and low prices resulted with reduced stocking of ponds. We have estimated a potential 10-20% drop in shrimp production.

“In India, where Sheng Long started aquafeed milling in 2019, it was more complicated,” added Chuang. “Operations at factories stopped until we had approval to operate all our businesses - aquafeed, shrimp hatchery and aquaculture inputs - with minimal manpower. We estimate a huge shrimp shortage in the second half of 2020 in India. As suppliers of feeds, we will be affected by a possible 30-40% decline in shrimp production.”

Seshu Akkina, CEO of Deepak Nexgen Feeds Pvt Ltd, India said that they faced problems in logistics: the supply of trucks, drivers and restrictions on interstate movement during this lockdown period. “There were also shrimp procurement, manpower, local community protests and infrastructure issues as farmers did forced harvests anticipating lockdowns. One such dilemma was the disruption with rice milling and supplies of deoiled rice bran (DORB) for fish feeds.

“As fish farmers delay harvesting because of the poor market situation, they still have to continue feeding their stocks, which means that they are actually increasing their costs of production and in the end may end up with losses for their crops.” Seshu predicted that in 2020, if the current market situation does not improve, demand for shrimp feeds will drop by 35-40% and that for fish feed demand, by 30%.

“As prices of raw materials continue to rise, it is expected that increases in feed price will inevitably happen in 2020," said Wei Che Wen, Sales Manager, Uni President Vietnam. "We will try our best to maintain the quality and fair price and work with farmers to overcome this tough situation together.”

Haris Muhtadi, Chairman at the GPMT (Indonesian Feedmills Association) said that this Covid-19 pandemic will most likely bring down fish feed demand by 28% and that for shrimp feeds by 16% as compared to 2019.”

A bad first half 

“In Vietnam, food consumption is badly affected,” said Nguyen Anh Tuan, Deputy Director General at Mavin Aquaculture which farms tilapia and carp and produces fish feed. “The first half of 2020 will be a tough time for the aquafeed business, but it may be able to recover from the third quarter of the year. Many small feed mills in Vietnam may close in 2020 with tough competition from big players who have an advantage of large scale production and their own farms (swine, poultry, aquaculture) that keep their production volume high and stable the whole year round.”

In Bangladesh, it was estimated that aquafeed demand was 300,000 tonnes in the first 3 months of 2020. This indicates that perhaps there will be as much as a 45% drop in fish feed production because of the coronavirus as well as reduced financial capacity of the farmer.

“The way we operate during this period is a real change from the normal; we are all staying indoors, limiting visits, video conferencing, training our sales team, and optimising our internal control,” said Chuang.

While there is a loss of confidence in farming, farmers will continue to farm as this is the only economic activity, they are familiar with, and they need the support of the aquafeed industry.

Published in May/June 2020 AQUA Culture Asia Pacific.