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To thrive, aquafeed companies must diversify, analyst says


January 3, 2020
By Colin Ley

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The aqua feed industry needs to think out of the box to find future growth, according to RaboResearch analyst Gorjan Nikolik. This means feed-focused aquaculture companies must be willing to embrace the prospect of combining their proven feed production activities with a range of complementary inputs.

This is the argument made in a new RaboResearch report titled, “How to Succeed in Aqua Feed: The Feed Industry Should Be the Driver of Change in Aquaculture.”

Gorjan Nikolik

Nikolik, a senior animal protein analyst with the research arm of the Netherlands-based multinational financial firm Rabobank group, makes the case for aqua feed companies developing greater input commitments to such areas as genetics, animal health products, data analysis solutions, hardware and farm management software. He also suggests companies should become the lead investors in the key areas of aquaculture development, for their own good and for the greater good of the industry at large.

“Aqua feed players are well-positioned to act as investors in a number of rapidly evolving aquaculture technologies, ranging from novel ingredients to new farming techniques, such as recirculating aquaculture systems or offshore aquaculture,” suggested Nikolik, author of the new report.

“By transforming into aqua-technology suppliers or aqua-venture capitalists, feed companies may be able to enter the higher-growth and higher-profitability segments of the aquaculture inputs industry and drive the growth of the entire aquaculture industry.”

For those tempted to ask why such companies should bother to spread themselves and their money more thinly across the industry, the answer is simple enough, according to the report: feed sector growth and prosperity isn’t as good as it used to be.

“After years of growth, the aqua feed industry is experiencing a deceleration, with increasing overcapacity in nearly all key markets globally,” stated the report, hence the need for business leaders to “think out of the box to find growth” going forward.

Highlighting a number of complementary products to keep feed companies growing, Nikolik included several related to the demands of juvenile production; ranging from vaccines to biocides, alongside water treatment products for use in the control or pathogens or the improved management of water quality.

“Genetcs and animal health products in aquaculture are rapidly developing industries,” he said, adding that they both offer good synergetic diversification options for aqua feed producers.

“The combination of feed with one or two other inputs can be a powerful way to create value for farmers and improve the profitability of input suppliers.”

The most obvious synergy is the ability to cross-sell appropriate products into the same customer base, he added. This is a business practice common among larger aqua feed producers in Asia, according to Nikolik. The key is developing inputs that are complementary to the company’s products and designed to be used together, like for improving disease resistance, for example.

“In salmon, this could mean combining a strain developed to be resistant to lice with feed products which are designed to further boost this resistance and guarantee optimal growth.

“Another such option concerns vannamei shrimp, which have been bred to grow in high-intensity farming systems with water treatment products and feed designed specifically for that shrimp strain, greatly boosting yields and profitability,” Nikolik said.

For those who may still be questioning the need for such innovation, the report’s conclusion is decidedly blunt.

“Change is coming,” it states, “ready or not!”


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