Sustainable feed ingredients -a great challenge for the fish feed producers?

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1 Sustainable feed ingredients -a great challenge for the fish feed producers? Kjell Bjordal, Head EWOS Group European Maritime Day 2012 Gothenburg Knowledge makes the difference

2 Approach Introduction to EWOS Challenge Feed requirement Feed prices Summary

3 EWOS in a Nutshell A world leader in fish nutrition Established in Norway, UK, Chile, Canada and Vietnam 897 employees 7 factories 22 feed production lines 36 % share of the world salmon feed market (>2.9m tonnes) 1,081,400 tonnes feed sales in % owned by Cermaq ASA 3

4 Feed sales volumes since 1980 Compound growth >18% per year Feed Sales (tonnes) EWOS NorAqua /FK

5 Approach Introduction to EWOS Challenge Feed requirement Feed prices Summary

6 Can we double Aquaculture production by 2030? The World population will grow from today s 7 billion to 8,2 billion in Million tonnes Billion people Aquaculture supply must increase from 60 mill. tonnes today to 120 mill. tonnes in Catch for fishmeal Catch for human consum. Aquaculture Population Source: FAO, Kontali Analyse AS

7 Market forces will allocate resources to aquaculture Carbon Footprint Feed Conversion Herring Mackerel Chicken Salmon Cod Haddock Pork Beef Salmon Poultry Pigs Beef cattle kgco2 /kg edible product FCR Consumption of animal source foods is growing fast Farmed Fish can eat the same raw materials as land animals converts the feed more effectively than land animals is healthier than meat is environmentally sustainable We believe that the market allocates the raw materials to the most efficient production AND FISH, IS THE WINNER

8 Approach Introduction to EWOS Challenge Feed requirement Feed prices Summary

9 What fish is farmed? 97%

10 Feed volume requirement We expect non-carnivore and carnivore farmed fish to grow at the same rate, i.e. 3,5% annually We can expect percentage of non-carnivore fish «on feed» to increase from 50% in 2010 to 80% in CAGR Feed for non-carnivore fish ,8% Feed for carnivore fish 2,6 5,2 3,5% (Based on FAO 2001)

11 Approach Introduction to EWOS Challenge Feed requirement Limiting raw materials/nutrients? Summary

12 Limitations Fish farming use same vegetable raw materials as livestock production. Fish farming outperforms livestock in feed utilisation and environmental sustainability Marine proteins can, to a large extent, be substituted by vegetable proteins Only obvious limitation is marine oils(epa/dha).

13 Marine oil usage. A fantastic sustainability story Fish oil applications '000 tonnes Total oil production For salmonid feed Hardening/technical (est)

14 Destiny of essential fatty acids? Friday, February 24, 2012 Fish Oil Biodiesel Research Supported by Gov't CANADA - The Centre for Aquaculture and Seafood Development will establish a demonstration bio-refinery that will convert fish oils into biodiesel with support from the Provincial Government.

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16 Opportunities to improve marine raw material availability More to harvest 47% of the world s primary carbon production happens in the oceans, yet only 3% of our food is seafood (calorie basis). Huge unexploited resources Better utilization 7,3 mill. tons of fish is discarded annually (FAO) 2,5 times the world wide salmon industry s usage of FM/FO Of 90 mill. tons of food fish caught annually, 36 million tons is trimmings Huge reserve both from wild and farmed fish Lower inclusion rates in feed Inclusion rates have fallen steadily We now have the technical capability to grow salmon on zero marine raw material. At present this is not commercially viable.

17 The Omega-3 challenge Multiple health benefits are well docomented Supply of fish oil is limited. The low hanging fruit is: Bringing discard and trimmings into the food chain Next steps? GMO vegetable oils Omega-3 producing micro organisms Harvesting oceans down the chain.

18 Approach Introduction to EWOS Challenges Feed requirement Feed prices Summary

19 Conclusion Fish is superior to land animals when it comes to FCR Fish will compete favorably with land animals particularly when raw material prices increase Doubling of fish farming volumes is not likely to trigger substantial price increases of raw materials and feed Marine raw materials are microscopic in the big picture and we are capable of using substitutes We have enough raw material to cover expected growth in a sustainable manner Increased distibution of marine Omega-3 oils require changes in fishing regulations and new initiatives in R&D.

20 Thank you for your attention Knowledge makes the difference EWOS 2011