Editedby SueKeller
Proceedingsof the InternationalConference onFish By-Products Anchorage,Alaska - April25-27, 1990
MMAlaekaSeaGrant College Program 1990Report No. 90-07 Rgb-lii -9Q -QQ I C2. LOANCOPY ONLy MAKING PRORTS .u~. Editedby SueKeller Proceedingsof the InternationalConference onFish By-Products Anchorage,Alaska - April 25-27, 1990 PeterMoore, Conference Chairman BrendaMelteff, Conference Coordinator AlaskaSea Grant College Program UniversityofAlaska Fairbanks ~138 Irving II Fairbanks,AK 99775-5040 Telephone 907! 474-7086 ~Fax 907!474-6285 AK-SG-90-07 1990 Price$1 0.00 Elmer E. RasmusonLibrary Cataloging-in-PublicationData. InternationalConference on Fish By-Products 990: Anchorage! Makingprofits out of seafoodwastes: Proceedings of theInternational Conference on Fish By-Products. AK-SG-90-07! 1.Fishery products Congresses. I. Keller,Sue II. AlaskaSea Grant CollegeProgram. III. Title. IV. SeriesV. Series:Alaska Sea Grant report; no. 90-07. SH335.8.I58 1990 About This Publication Thisbook was produced by theAlaska Sea Grant College Program and the AlaskaFisheries Development Foundation, primary sponsor of theconference. TheAlaska Sea Grant College Program is cooperativelysupported by theU.S. Departmentof Commerce,NOAA Officeof SeaGrant and Extramural Programs, undergrant number NA90AA-D-SG066, project numbers A/75-01; and by the University of Alaska with funds appropriatedby the state. Coverdesign and graphics are by SusanBurroughs and text formattingis by Lisa Sporleder.John Doyle and Stephen Sparrow, University of AlaskaFairbanks, helpededit two contributions.Question and answer sessions were recorded and transcribedby GeminiReporting Services. Printed on recycledpaper. SueKeller, editor of theseproceedings, has edited numerous publications during thethree years she has worked at AlaskaSea Grant. Herexperience in science :. editinguglltde a sciencejournal and several proceedings, technical reports, annualreports, and catalogs, Her background is in biology. Membersof theorganizing committee and sponsors of theconference, Making Profits Out of Seafood Waste: Alaska's Billion Pounds of Protein, are listed in PeterMoore's Opening Remarks contribution. This information wasproduced with funds providedthrough the Saltonstall-Kennedy programadministered by theNational Marine FisheriesService under cooperative agreement NA-89-ABH-00008. TABLE OF CONTENTS Introduction Welcome ...... Robert G. Poe Opening Remarks .. Peter J. Moore The Raven, the Blackfish, and the Future of Alaska Mel Monsen Clinging to the Food Web: The Politics and Penaltiesof Wasteand the Sea Bradford Matsen Market Overview Worldwide Protein Market Development 15 K.R. Ellis Past, Present, and Future Markets in the United States for Fish Meal, Fish Oil, and Fish Solubles 21 Thomas J. Starkey Historic and Potential Production and Utilization of Alaskan Marine By-Products 31 Michael J. Meehan, Fredric M. Husby, Carl Rosier, and Roberta L. King Intrinsic Quality and Species of North Pacific Fish 39 Jerry K. Babbitt OverlookedOpportunities: A CreativeApproach to SeafoodUtilization 45 Rae McFarland Product and Market Opportunities Animal, Poultry, and Marine Protein: A Cooperative Market Approach. . 47 Frank A. Burnham World Market Opportunitiesfor Fish Meal, Fish Oil, and BoneMeal 51 Joel Cowger U.S. Demand for Fish Meal . 57 Brad Crowder Chitin and Chitosan: Crustacean Biopolymers with Potential . 61 Qyvind Skaugrudand Gordon Sargent Utilization of SelectedFish By-Productsin Iceland: Past,Present, and Future . 71 Grimur Valdimarsson The Productionof Silagefrom Wasteand Industrial Fish: The IcelandicExperience Sigurjon Arason, Gudmundur Thoroddsson, and Grimur Valdimarsson Creamy Fish Protein . 87 Yoshikazu Shoji Bio-Fish Flour . 95 Yasuzo Uchida, Haruo Hukuhara, Yoichi Shirakawa, and Yoshikazu Shoji TheAquatic Leather Industry: Opportunities for SmallManufacturers in Alaska 101 Roger V. Lewis Market Specifications Effects of ProcessParameters and Raw Material Freshnesson Fish Meal Quality 105 Bjorn Marki Specificationsfor MarineBy-Products for Aquaculture. 109 Ronald W. Hardy and Toshiro Masumoto Utilization of Marine By-Productsin Pet Foods .. 121 Tom Willard QualityFish Meal: Specittcations and Use in Aquacultureand Fur Farming 127 Nils Chr. Jensen NewProducts, Processing Possibilities, and Markets for FishOil 131 Baldur Hjaltason Regulations and Economics WhatDo I Needto Knowabout Getting a Permitto DischargeSeafood Processing Wastes in Alaska?... 143 Valerie J. Haney Exportand Foreign Investment Opportunities for AlaskanProcessors... 149 Ron Miller Economicsof FishBy-Product Utilization for SmallProcessors in Alaska . 151 Erik Hansen ProductDevelopment and Research An IntegratedApproach to Recoveryand Utilization of Louisiana Crawfish Processing Wastes. . 161 S.P.Meyers, H.M. Chen,H.K. No,and K.S. Lee ProductRecovery from Surimi WashWater . 173 Leo D. Pedersen StructureFormation during Productionof Food Analogs.. 177 Ye.V. Yakush and L.N. Rol CompostingSeafood Processing By-products: Solutions for the90s 183 William F. Brinton Use of Marine By-Productson Agricultural Crops . 187 Bruce Wyatt and Glenn McGourty SeafoodFlavorants Produced by EnzymaticHydrolysis . 197 Thaddee In HydrolysisandFermentation ofFishery By-Products: Costs and Benefits ofSome Processing Variables . 203 SusanH. Goldhor,Robert A. Curren,Oddvar Solstad, Robert E. Levin, and David Nichols BiologicalFish Meal: Bio-Proteus' Approach to Fish-WasteUtilization 209 EnriqueV. Bertullo,John F. Bingaman,and Donald G. Snyder A Systemto RecoverUnderutilized Portions of Groundfish 215 David M. Wells By-Productsand the Future Future of the Resource in Alaska's Offshore Waters 219 Brian Bigler Trends for the Future 225 John S. Kilpatrick Closing Remarks 231 Peter J. Moore Participants 233 International By-Products Conference April I 990,Anchorage, Alaska WELCOME Robert G. Poe Governor's Office of International Trade Anchorage, Alaska I appreciatethe opportunityto speakwith you Express,to UPS,and to Flying Tigers. Now we have today. GovernorCowper was not ableto be with you FederalExpress's world cargo hub. UPShas an impor- because he needs to be in Juneau with only 12 days left tant applicationin for a new Japaneseroute, and is in this legislativesession. The Governorhas taken a alreadyserving Seoul and Hong Kong through Anchor- strongposition on internationaltrade, and on sup- age. FederalExpress bought Flying Tigers, so the portingthe kind of developmentwe' re talking about impactof FlyingTigers in theairport is muchstronger today. today.We believe this will continue,and we could see Since 1986, the dollar value of exports from muchmore export of value-addedproducts as a result. Alaska has doubled. In terms of fish exports, in 1989 the Havingthose boxes get off theairplane also means that value amounted to 1.096 billion dollars. That number Alaskans and businessesfrom all around the country can doestry to accountfor someof the seafoodleaving takeadvantage of cargomoving through the port just as throughother ports. So some of theAlaska seafood that HongKong, New York, Chicago, and San Francisco did leavesthrough Seattle is includedin thatnumber. Al- in their history as ports. most all of this went to Asia. Alaska is one of two states In timber, Chugach Alaska has recently built a in the nation that has a positive balanceof trade with largekiln-dried lumber mill in Seward,Alaska. And Japan.The important thing about this number is thatthe right now a Koreanfirm is lookingvery seriouslyat values increasedat a disproportionatelevel to the in- usingthe chipsthat wouldbe producedfrom rejected crease in volume. That shows an increase in value of the logs from that mill to producemedium-density fiber product.The Japanese ycn did increasein its strength, board for musical instruments. Those are value-added but not as much as the value increase. products.In thepast, Alaska cut down the logs and sent New markets are opening up before our very eyes, themto Japanso that somebody else could cut them into especiallyin Taiwanand Korea. This year you' ll seea lumber, or make them into particle board, or pulp. big drop in the import restrictions in Korea over Today, we' re starting to do that ourselves. salmon,fresh cod, and other kinds of seafoodproducts. I'm not an expert on fish, but I understanda large All thesepoint to increasedvalue activities. And that is amountof proteinis goingright over the side down into what this conferenceis really all about. Exporting the fishing grounds. In somecases, I supposeit feeds value-addedproducts is good for Alaskans. It means other fish. In other cases, it's an overload, and the more Alaskanswork; they help producethese products. systemprobably can't handle it. I thinkthe opportunity Most of the moneystays in our state,which strengthens to look at value-addedproducts, and to look at the ourability to competeon theworld market. But value- benefitsof usingour resourcesthrough a value-added addedproducts can be found in somepretty unlikely processmeans more dollars, more profits for your places. We shouldopen up our minds during this companies, and less waste. conferenceand take a close look at possibilities for The opportunities for value-addedproducts are value-added products. staring you right in the face. You really need to open In 1987 the AnchorageInternational Airport was yourminds to thinkwhy not? Why couldn't that be an alreadyone of the two busiestcargo airports in the opportunity? I suggestthat as you hearthe various world in terms of landedweight. The Anchorageair- speakersduring the conference, and you hear about the port behavedmore like a biggas station than it did any different innovations, try not to say, "Well, that will kind of world cargohub. But 90% of all air cargogoing never work," or "I can't see how I'm going to make a from Asia to Europe,and 70% of all air cargogoing from profit there,"or "I can't seethat market's really open." Asia to the lower 48 United States went from Anchor- But look at the potential. Everyonesaid we couldn't get age,Alaska. That's a lot. We marketedto Federal Federal Express, and we got it! International By-ProductsConference 3 April I990, Anchorage,Alaska OPENING REMARKS Peter J. Moore Alaska FisheriesDevelopment Foundation Anchorage, Alaska Good morning. I am conferencechairman and an PeterJ. Moore, Alaska FisheriesDevelopment Founda- AlaskaFisheries Development Foundation staffer. You tion, Anchorage ConferenceChair! are probablyaware that anotherfisheries meeting is Carl Rosier, Chief of Industry Services,National Ma- underway in Anchoragethis week. TheNorth Pacific rine Fisheries Service Alaska Region, Juneau FisheryManagement Council is deliberatingover the allocationand exploration of the groundfishstocks in We havebeen blessed with the generosityof many Alaska's 200-mile Exclusive Economic Zone. I rec- individuals and companieswho willingly sponsored ommendthat you all takean interestin thosediscus- thisconference. These sponsors contributed speakers' sions, now and in the future, becausetheir decisions travel and meetingexpenses, donated seafood and bev- will directly affect you. eragesfor our receptionsand buffet, and gave us cash Ourgathering of innovatorsand interested seafood for unrestricteduse in supportingthe conference: processorsrepresents a hopeful counterpointto the allocationbattles being wagedat the council. Full Alaska FisheriesDevelopment Foundation utilization of the harvested resource will be a chal- Alaska Fresh Seafoods, Inc. lenginggoal to achieve,but it is oneall of us in this Alaska Pacific Seafoods industrymust strive for. Otherwise,we will seetremen- douspolitical pressure exerted on the council to increase Alaskan Gourmet Seafoods, Inc. the harvestquotas, with potentially dire consequences All Alaskan Seafoods, Inc. for thefish stocks.We havea glaringand tragic example Atlas Industries USA, Inc. of that in the New Englandand eastern Canadian fishery rightnow. Yourminds, attitudes, and work are in great H.J. Baker & Bro., Inc. demandto help solvethis pervasiveproblem also a Flohr Metal Fabricators promisingopportunity. Allow me to makesome brief General Communications Incorporated introductions and some acknowledgments. Icicle Seafoods,Inc. By-ProductsDivision This conference has been in the planning stage sinceMay 1988.Our first planningcommittee meeting National Marine Fisheries Service was held in December 1988. The committee is made OceanBeauty Seafoods,Inc. up of the following individuals: Pacific Rim Marine Products Inc. ChuckCrapo, Seafood Quality Specialist, Fishery In- Stord International dustrial Technology Center, University of Alaska Fairbanks UAF!, Kodiak TROU W International FredHusby, Associate Professor, Agricultural and For- UniSea, Inc. estryExperiment Station, UAF, Fairbanks University of Alaska Fairbanks BrendaMelteff, Coordinator,Alaska SeaGrant College Agriculturaland Forestry Experiment Station Program,UAF, Fairbanks Conference Coordina- Alaska Marine Advisory Program tor! Alaska Sea Grant College Program Mike Meehan,By-Products Manager, Icicle Seafoods, Seward Wards Cove Packing Company International By-Products Conference 5 April1990, Anchorage, Alaska THE RAVEN, THE BLACKFISH, AND THE FUTURE OF ALASKA Mel Monsen Alaska Fisheries Development Foundation Anchorage, Alaska We hope this important gatheringwill be the first spearheadand told him to be careful. stepon the pathtoward full andefficient useof Alaska's The Raven walked quietly up the road to the fish resources. I begin by telling you an Alaskan story. smokehouse, but the Crane saw him. Cranes had short There is a legend among the local Chugach Indians beaksthen, but they were good watchmen. The Crane about the Raven, who was a hero of many Indian tales in startedto attack,but the Ravenpulled out the spearhead. Alaska. He said to the Crane, "I will give you this gift if you let Oneday the Raven was out fishing with his wife and me in the smokehouse." The Crane was very happy to they cameupon a Blackfish. The Blackfish washungry have the spearhead,and the Raven was very happy to and asked the Raven and his wife for something to eat. find his wife. That is why, to this day, cranes have The Ravengave him a codwhich hehad just caught.The long, spear-likebeaks. And every winter, the ravensof Blackfish, who was very clever, said, "Thank you for this region comedown to the sea some saythey come this cod, but I don't know how to eat it." The Raven said, to look for the lost wife of the Raven. "Here's how you eat cod fish you take a bigbite, then This legendis a little bit like fisheriesdevelopment you close your eyes and chew." And the Raventook a in Alaska. Like the Raven, we too often have to start at bite and closed his eyes, to demonstrate. the bottom and work our way up through a problem. At But while he had his eyes closed the Blackfish stole the foundation we' ve learned you can't develop one the Raven's wife and dived with her deep into the ocean. fishery without hearingfrom another. It seemsthat we The Ravenwas full of grief, andhe vowed to get his wife will never find the answer to our fishery problems until back. Shortly he found a little songbird,who lifted up we considerevery speciesof fish in the water. And, like the edgeof the oceanso the Ravencould crawl underthe the Raven tried to tell the Blackfish, sometimes the only sea to look for his wife. At the bottom of the sea, the way to begin is to close your eyesand take a big bite. Raven met the Halibut. He told the Halibut the Black- With this story, I hopeto introduceyou not only to fish had stolen his wife and dove with her into the sea. a bit of local lore, but also to Alaska Fisheries Devel- Then the Halibut told the Raven to follow the road opment Foundation. I'd like to tell you about who we that led up from the bottom of the seabecause, he said, are, how we may help you in the future, and how you can that's whereall good things comefrom. So that is what get involved. The foundation is a non-profit industry- the Raven did. He climbed up to a kelp bed where a built organizationthat sponsorsprojects and studiesto Greenling was resting on a kelp leaf. He told the aid in domesticdevelopment of Alaska's fisheries. A Greenling that he was looking for his wife, who had group of fishermen and processorsstarted the Alaska been stolen from him. The Greenling said, "She was Fisheries Development Foundation 12 years ago as a hereyesterday. Follow this roadup the hill andyou will local clearinghousefor federal seafoodindustry devel- find her." opment grants. And so the Raven followed the road from the The foundation started by helping to fund construc- bottom of the seaup the water column, and each fish tion of the largest white fish processing plant on told him that he was catching up with his wife, and Alaska's shores, now a very successful producer in would soon find where the Blackfish had hidden her. Akutan. Most of our projects for the first few years Finally the Ravenmet the Black Bass,who reachedonto focusedon developingnew harvestingtechnologies to her roof where shekept a string of minnows. She fed help make U.S. fishermen more competitive in the minnows to the Raven and told him that the Blackfish groundfish fisheries, which then were dominated by was hiding his wife in a smokehouse on the shore, and foreign fishing companies. was being guardedby a Crane. She gave the Raven a The fishermenof this region quickly developedthe 6 Introduction capacityto harvestnearly all the total allowable catch, discard the entire body of the fish, fillet and all, into the and the foundation shifted its focus to the processing grinder. sector. The furor that has arisen over roe stripping in the Our first big processingeffort was the Surimi In- last year or so hascaused the Alaska industry to take a dustry DevelopmentProject. For five yearswe studied hardlook at all of its processingpractices. The industry surimi production techniques and investigated new is asking itself, is 20% to 40% an acceptableyield for food processingtechnologies that could be applied to fish processing?Even if we areproducing meal and oil, improve the surimi process. During that time, AFDF is it wasteful to grind into meal products like livers, fundedthe start-upof the first commercial-scalesurimi cheeks,tongues, and stomachsthat can be made into plant in the United States,at Alaska Pacific Seafoodsin more valuable items? These questions form the structure Kodiak. There are now five shore-based surimi plants of this by-productsconference. Much of the future of in Alaska, and 18 at-seaprocessors producing surimi. Alaska seafoodprocessing will have its roots in this Last year the industry produced100,000 metric tons of meeting. surimi. This is a turning point in the history of Alaska From surimi we moved on to our flatfish demon- seafoodprocessing. From thesedays forward, we have strationproject, which is now in its third year. Our goal the opportunityto becomea majorsource of the world' s here is to learn how to efficiently process and market the valuable fisheries by-products. With our bountiful millions of metric tons of flounder and sole within our resources,our globally centeredlocation, and our his- 200-mile limit, most of which previously were ignored tory of cooperation with other fishing nations of the or discarded. As Northwest Atlantic flounder species world, we can help turn our fisheries into an even greater diminish, the potential for a profitable Alaska flatfish treasure for the future. industry improves. AFDF has been working with Eagle I invite you to becomeinvolved in the future of the Fisheries, All Alaskan Seafoods, Baader North America, North Pacific by participating in the Alaska Fisheries TRIO, and several other companies to improve process- DevelopmentFoundation. AFDF is a membershipor- ing technologies,quality control, andmarket conditions ganizationmade up of more than 100companies from for Alaska's flatfish. Alaska, the United States, and around the world. Our The foundation has also sponsored a project to help member companieshelp guide the foundation's proj- upgradethe ratherobsolete meal andoil plant at Kodiak ects,design its goals,target funding sources,and make Island a longstruggle that continueseven now well connections for the foundation's growing network. after our involvement. We are also involved in projects The AFDF Board of Directors is made up of 13 to developnew end-productsusing surimi, mincedpink members from the harvesting, processing, and supporting salmon,minced pollock, andother underutilized species sectorsof the industry. The Board of Directors meets or product forms. three times a year and is very active in setting the The driving force behind all of our projects is the direction of the foundation. industry's desire to make the best use of the fishery Projectsare administered by the AFDF staff. Right products in Alaska's waters. The fishermen and pro- now there are five staff members two project man- cessors of this region are dedicated to finding the bal- agers, a controller, our secretary, and myself. Together ance between conservative fishing practices and we work with the companies and contractors who con- aggressiveprocessing techniques. The industry that duct AFDF development projects, and we disseminate supports this foundation is now most interested in information learned from those projects to the industry. learning how to processand market the fish materials Our communications efforts are part of AFDF's that previouslywere discarded, and that's why 250 of us strengthin the industry. Through newsletters,videos, gathered for this symposium. reports, and conferencessuch as this one, we try to To the people of the North Pacific, the oceanhas create a forum for the free exchange of information. In alwaysbeen a providerof plenty plenty of fish, plenty this way, AFDF actsas a catalystbetween suppliers and of room for everyone,and plenty of time for harvests. buyers, between producers and product developers, Very recently we have begun to learn a hard lesson: betweenthe potential of an industry and its fulfillment. That even in the North Pacific, plenty is not enough. By helping sponsorthis international by-products Our harvestingtechnology has exceeded even nature' s conference,we hopeto createthe samekind of activity. bounty. Our factory shipsand trawl fleets are scooping We hope that here, companies can gain from each up the available harvest so fast, processors can't even other's knowledge, discover solutions to our emerging keep up with the flow of fish. This has led to cost problems, and find hope in the tangle of ecological, effective but wasteful practices like roe stripping economical, and ethical issues that we are facing in this where processors strip roe from spawning pollock and industry. We in Alaska are dedicatedto finding the International By-ProductsConference 7 methodsnot just to make more moneyfrom the sea,but learning about the fish resourcesthat abound in these to act respectfullytoward it so the oceancan continue to waters,we will find our way toward our desires. And feed us, and to feed our children. like the Raven who longed for his wife, they believed The Chugach Indian legend I told you a few that by following the paththat leadsfrom the bottom of moments ago tells us somethingimportant about the the seathey would discover somethingas preciousas Natives who have lived in this region for thousandsof life itself. I welcome you to Alaska and to the interna- years. They believed there were great treasuresin the tional by-productsconference: Making Profits out of sea. They believed that by diving into the oceanand Seafood Waste: Alaska's Billion Pounds of Protein. International By-ProductsConference 9 Apri l l990, Anchorage,Alaska CLINGING TO THE FOOD WEB: THE POLITICS AND PENALTIES OF WASTE AND THE SEA Bradford Matsen National Fisherman Seattle, Washington Thissymposium is partof anattempt to takeone of couldbe foodat a profitaren't getting to market.The the most negative wrinkles in our business waste- foundation has become an institution whose job is to andtry to setit right,which seems to bewhat the Alaska foster creative impulses that don't immediately pro- FisheriesDevelopment Foundation is all about. I first duce bottom line results for fishermen, processors, or caughtwind of the foundationat a fishermen'spoker consumers,but give us breathingroom to try something gamein Ketchikanin 1980:one of thosemid-winter different. Now, with that same kind of creative boost, gatheringsof oceanhunters, with a partygoing on in part all of youare taking a shotat one of themost nagging and of the houseand the card gamein the kitchen. At some critical piecesof miseryin food productionfrom the pointin theevening, one of theplayers mentioned that sea: waste. I applaud the foundation for sponsoring she and some other people were pushing to spring the symposium,and all of you for being here. moneyout of theNational Marine Fisheries Service into Thevery idea of wasteis repugnantto everyone of regionalfoundations that would useit to developthe us, and it is beginningto operateas a kind of speed fisheries off their own coasts. bumpin mainstreamcommerce in ourhurtling culture. At the time, the stateof Alaska had just commis- When the earth was supporting half a million, or a sioneda studyof thepotential of theoffshore fisheries billion, or even two billion people, we could literally and declared that we had a billion-dollar bottomfish hide all our waste,but no more. It's right out there in dreamto pursue.So we pumped some petro-bucks into plain view, andour collectiveself-esteem is suffering a varietyof agenciesto encouragethe developmentof becausewe now suspectwe arethe destroyers, though renewable resources, to counter the uneasiness just ourmyth structure celebrates creation. For mostof us, abouteverybody felt aboutdependence on oil andthe one of the earliest moral absolutes of childhood was: pipeline. Don't waste food. As individuals we cherish that sen- At first, I was skeptical of the value of a fisheries sibility. I haveheard endless variations on why this developmentfoundation because it lookedfor all the groupor thatgroup of fishermenor processorsshould world like anothergovernment pocket just waiting to geta breakon anallocation or a seasonor a regulation, be picked, My skepticismwas short-lived,though, but everyoneunanimously condemns waste, even the since even the somewhat controversial and not entirely peoplemost intimately involvedwith its practiceand successful demonstration projects of the early years outcome. taughtus a lotabout production and dead ends. In fairly If youtalk to a fishermanabout wasteful conduct in short order, the foundation had a bottomfish factory up the fisheries, he' ll tell you he wouldn't do it if his andrunning in Kodiak,and another in the Aleutians, competitionwouldn't do it. Thoughwe continueto both in partnershipwith fledgling white fish com- operatelike the wastechampions of earth, we are panies. One of the companiessurvived, the other awakeningto the truth of a finite ecosystemand the didn' t. The foundation also stimulated the development certaintythat we must be responsible custodians of our of fishingtechnology in at-seaprojects, and woke us up homeplanet. It is badenough that we produce a horror to one of the toughestgames of all, marketing. show of toxins in the mere processof living and con- Througha substantialpart of its existence,the suming,but we also wastewhat we could useor re-use. foundation concentrated on introducing Americans to And perhapsmost consequential, we arewasting food. the surimi miracle until that point a truly mysterious I havehad the privilege of writingabout fishing and part of the globalseafood repertoire. Right now, the seafoodunder the coversof a coupleof fine magazines foundation is putting a lot of time into finding ways to for a dozenyears. We' ve all enjoyedthe pleasuresof a makeflatfish pay anotherpuzzle. Lots of flatfishthat decadeof relatively uninterruptedprosperity, at leaston 10 Introduction the Pacific. Another part of my good fortune is that I likewise beyondour ability to deal with it. have been tolerated for a long time without laying any Commerce, with its emphasis on short term returns, real moneydown to back an idea in seafoodcommerce. certainlyisn't going to respond realistically to the global So I'm a little uneasy discussing a topic that translates food crisis until a lot of bad things are happening. into hard dollars in the profit and loss statementsof Large-scaleharvesting of seafooddid not begin until many of you. the 1950s,when we were taking just 20 million tons of As a journalist, I am basically in the businessof food from the sea, coincidentally the same amount we accumulatingthoughts, ideas. and tall tales from other estimate we are wasting now. The first distant water people and passing them on. I am, therefore, in a fishing ship capableof catching and processingwas a constant state of indebtedness along those lines. I'm converted British whaler called the Fair Try, which grateful to quite a few of you and othersfor loaning me startedfishing just 35 years ago. She beganthe shift your good ideason the politics and penaltiesof waste from essentially artisanal fisheries to industrial and the sea, but I also take full responsibility for the fishing, of which we are all a parttoday. way I string my purloined ideastogether. The title of From the 1950s to the 1970s, we increased the this symposium,Alaska's Billion Poundsof Protein, is world fish catch from 20 million tons to a phenomenal an understatementjust beggingfor elaboration. 70 million tons at a rate that easily exceeded that of Here are some numbers: A billion pounds of protein population growth. Fat city, right? Wrong. Catches is 500,000 metric tons; that's half a million. Our annual leveledoff andthe populationcontinued to explode. On catch off Alaska is about three million tons. On a world that sideof the equation,it is valuableto note that when scale, however, we land about 100 million tons of I was born only two and a half billion earthlings were protein from the sea each year, and by all the best around. Now we are double that number, and by the estimates, 20 million tons fully a fifth that could years2030, we'll doubleagain to around11 billion. become food is wasted one way or the other. This is Right about the time we got our first look at the important,because just abouteverybody agrees that we earthfrom an Apollo moonship asthe 1970sbegan, and will not see much more than a hundred million pounds sawthat the big blue marbleis a one-timeoffer, the myth of protein annuallyfrom the world's oceans,ever. In all of endless food from the sea had begun to unravel like a likelihood, we will harvest less because of the general cheaprug. Catchesleveled off, humansproved to be destruction we are visiting on the seas. not only voracious food consumersbut destroyersof Without the truth that ocean resources are finite, the the habitat upon which we dependfor that food. If that notion of waste would be abstract and practically 100 million tons we take from the sea each year is all meaninglessdespite our moral prohibitions. I'm always we' ll ever get, we can't waste much and still have a amazed when the revelation that the ecosystem is finite chance at survival. A few days before I came to startles us again and again. Until about IS years ago, Anchorage,I askedmy daughter,Laara, who is 16,what just about everybody figured that food from the sea I should tell you about the ocean. After a long pause, would banish the conclusions of Malthus and the others she said, "Tell them that the ocean is our strongest who stumbled across the grim mathematics of popula- mother and our most fragile child." tion growth in the nineteenthcentury. He demonstrated So what, in the context of a robust but limited convincingly that, unchecked,the earth's populationis ocean ecosystem,is waste? First, I propose that our quickly outrunningour ability to produceenough food definition acknowledge that every food or energy to sustain that population. That is to say that sooner or systemwith which we interact is going to produce at later, we will experiencefamine of hideousproportions least some waste no matter how good our intentions. and other grim remindersthat the earth doesnot exist Furthermore, we have to consider that somefood potential just for us. returned in proper portions to the ecosystemis called But like pilgrims, we put our faith in the sea to fertilizer. How much waste we or the oceans can provide after discovering the amazing bounty of its tolerate though, is anotherquestion. We wouldn't be higher,edible animals. Until 1975or so,things looked here on this fine spring evening if we had the answer or pretty good, and the myth of the inexhaustibleoceans if we didn't suspectwe are already wasting too much took hold. A major human shortcoming seemsto be our food to suit our moral and business sensibilities. inability to considerlong rangethreats to existenceas It seems to me that we are participating in unac- anything but abstractionsthat cannot be incorporated ceptable waste production in three ways. Though a into the daily routinesof life. After all, the certainthreat solution to each lies within the responsibility of a of a catastrophic earthquake has not kept us from specific sector of our industry or culture, we should building a megalopolis on the California coast, and the approach them as common challenges rather than as threat of starvation five or ten generations hence is targets for blame or indignation First, and probably International By-ProductsConference 11 mostapproachable, is the waste we produce by failing to limitless is quite understandable.We didn't even run useeverything but the splashof the fish we actually out of free land until our grandparents'generation. And catch. This is most specifically a consideration for what's more, the real threat is not so much to the seas, processorsand marketers who must not only find ways which will survive an enormous measure of abuse and to extractthe protein in palatableform, but then sell it to still recover;it is we humanswho will not survive if the consumers who are used to salmon steaks, cod fillets, oceans are destroyed as a food source. and the like. It is tough becauseyou' re asking the So what do we know about the sea?Not much. One consumersto not only start eating seafoodthat isn' t marinebiologist I knowis fondof sayingthat we know absolutelyterrific, but to stop,eating seafood that is. less about the earth's oceans than we do about the Typicalsamples of thistype of wasteare before us each surfaceof the moon. He is given to hyperbole,but his seasonin the roe stripping of herring, pollock, rock exaggerationis not far off. We do know a fewthings sole,and other species, and in thehigh-grading of fillets about the seas,though understandinghow the oceans and loins. work is roughlyakin to trying to figure out how that Second, we waste millions of tons of food because magnificentelectrical organ, the humanbrain, works. ourchoice of non-selective,high-volume fishing methods We can come up with a few facts, but no real answers. force us to catch creatures we do not intend to catch, First, fish and other marine organismshave dem- don't havethe ability to process,and in many casesare onstrated a remarkable ability to adapt to the ecosystem prohibitedfrom catchingby law. We haveto throw of theplanet earth, or moreaccurately, planet ocean, as them back into the sea, dead or alive. This is most water forms seven-eighthsof everything we know. specificallya considerationfor fishermenand fisheries Over 90% of all vertebrates are fish, the most successful managers.It is thefamed collection of ongoingdebates classof creatures,and they havethrived in every body that we lump togetheras the Bycatch Dilemma. of water on the globe. All of you who havelabored through a decadeof The fishes are the creatures most synchronized attemptsto solvethe bycatch dilemma are participating with the earth's rhythms. Since most living things are in a uniqueand noble effort, despite the frustration and more water than not, it is advantageousto live in an anxiety. Neverbefore has a fishingnation tried to set environment such as the sea in which an animal does not policiesto mitigateinterference with the total ecosys- haveto expendmuch energy to conserveor produce tem. The artisanal and largely unregulatedfisheries, water. This harmony with water, the nature of water that existed before the industrial fleets, faced none of itself, andthe characteristicsof water in greatquantities the complexitiesof bycatchmanagement. Artisanal like the oceans offer a framework onto which we can fishermentake everything they catchand sell it or eat it; graft bits of knowledge. if the fishingfalls off, theyjust move. Most modern We do have some idea of how the marine ecosystem industrial fishermen take what will produce the most works and how marine organismshave adaptedto life profit, andnow we don't havethe option of movingon. on theocean planet. The governing generalities of the In thesefirst two categoriesof waste,we also have systemare a productof nutrients,light, andcirculation. to acknowledgethe dominant role of theconsumer and Every living creatureis bothpredator and prey, con- the political force of economicsin the puzzle. Until sumer and food. The forms that make up the marine now,society has basically condoned waste in favor of food web have adaptedto span levels of complexity lowerprices. Squeezing the last bit of consumablefood from single-celledorganisms to theintricate systems of from ocean,field, or orchardcosts money, which must the blue marlin, for instance,that include heating tis- show an effect in the market. For example,the cost of sue,a brain, and a sophisticateddigestive tract. picking 99% of the world's peachesrather than just Manyocean species participate in thenourishment 90% would drive the price of a singlepeach from, say, cycle in differentways at differentlevels of their de- 25 cents to 50 cents. So far, though, at least in the velopmentfrom egg to adult.At somepoint in theirlife developednations, we havenever had to worry about cycles,the higher animals are more prey than predator. runningout of peachesand getting down to eatingthe Because of these stages of vulnerability, the more pits and maybethe bark off the trees. complexan organism, the longer it takesto replaceit in Third, and mostconsequential in our consideration the sea. Phytoplankton,the microscopicplants that of waste,is the destructionof the ocean'svery ability forma hugepart of themarine nutrient web, can double to producefood. Thekey fisheriesissues from here on in numberin a day. Replacinga deadmature marlin, are going to turn more on protectingregional and however,requires good genes, many years, and a lotof globalenvironments and less on limitationof our ex- good luck. traction of the resources. Thepredator-prey dance that accounts so profoundly The fact that we once perceived the oceans as for adaptationin the nutrientcycle is performedin a I2 Introduction saline soup,the sea,so the condition of the seaitself is says, "And another thing: I look down, and I don' t critical. Only certain things can happen in cold water, believe the filth; using rivers for toilets; poisoning my other thingsin warm water,and so forth throughvarious fishes. You want a miracle, make a fish from scratch. conditions of temperature, salinity, and levels of light. You can' t. You think that only God can make a tree? Circulation of water and its nutrient packages can be Try coming up with a mackerel.And when the last one vertical asin the daily movementstimulated by heatand is gone,that will be that. Eighty-six on the fishes,good- light, or horizontalas in theocean currents and upwellings bye sky, so long world. Over and out." over subsurface terrain. I don't know whether George Burns has ever caught Most photosynthesis that produces the lower tro- a fish, but the message in that speech buried in some phic ordersof the marinefood web like planktonsand light entertainment in 1974 rings louder and clearer as krill occurs in the sea's top 300 feet where light can time passes. We all have to summonenthusiasm for penetratethe water. Without both horizontal and verti- what we do every day, whether it is writing my hundredth cal circulation, the ocean below that top layer would story on fish politics or running a packing company, and be virtually inert exceptfor sinking organic matter that it is good to be remindedthat we are involved in mat- is pulled by gravity to the bottom. Nothing like the ters of consequence that demand the best in us. earth's fertile seas would exist without circulation. Especially those of us who take from finite re- Though we humansare conversantwith the broad sources for our own needs and pleasures. So what do concepts of ocean dynamics and the food web, the we do about waste and the sea? Well, in the matter of variables are so complex as to be classed as mysteries. the generalcondition of the oceans,we shouldwork for That complexity means that the oceans able to produce global policies that protect them. The recent agree- foods for humans are very fragile, despite their magni- ments on marine debris are a good example. We are tude, especially when juxtaposed with waste producers moving into an era of truly international perspectives on like humans. fisheries and the seas, probably because 15 years ago Most of what has emerged from several hundred we and other maritime nations claimed 200 mile zones years of systematic study of the sea tells us only that off our coasts. Before then, you didn't have to get along our interactions with marine systems will have conse- with anybodyto gain accessto the fish; you just sailed quencesthat extend far beyond our ability to predict in, took it, and left. It is now true that we cannot manage them. We can, however, observe the condition of the fisheries from a United States or Russian or Japanese sea and its ability to produce food as an indicator of the point of view in the long run; we have to managefrom overall health of the big blue marble. a North Pacific point of view. Whether we are in the marine food web as preda- We should insist on more scientific inquiry and tors, or just living in our urban clusters on the ocean bolster our paltry understanding of the marine eco- shores, the critters of the seasare like mine shaft canaries system. And we should remember that whatever we do for humans and our continued existence. Miners bring to the sea might not be undone. We might be able to canaries or other singing birds with them into the shafts increase the net food tonnage from the sea by because the more fragile birds expire sooner than hu- harvestingthe lower tiers of the food web like krill, but mans if the subterranean air becomes unbreathable. we had better not mess around there until we know for When the birds stop singing, the miners beat it for the surewhat's going on throughoutthe system. We don' t surface if they can. want to make a wrong move in the lower trophic orders. In the late 1970s, a profound message on the ocean In the matter of bycatch, the destruction of critters was delivered to millions of people in a very unlikely bit we don't intend to eat, we' re just going to have to of Hollywood fluff, a movie called Oh, God. George shake down our politics so we' re not always thinking Burns plays the title role as a charming, acid-tongued with our wallets. We have a system now in which those wit, wearing a white fishing hat with a marlin in outside the law can do better than those inside the law; mid-leap emblazoned on a patch on the crown. At a we are all uneasy with the gap between our moral particularly critical point in the movie, George tries to prohibitions against wasting food and the economic convince a producemanager named Jerry, played by validation of actually doing it. As efficient as our John Denver, that he really is who he says he is- bottom line mentality is in some things, it is playing hell God and that Jerry should carry a message to the with the condition of our home planet and our vision of world. They play the scene in Jerry's bathroom, where ourselves. Jerry in the shower listens to God in his marlin hat And finally, in the matter of using everything but say that everything people need to make a paradise is the splashfrom what we catch and process,the iron, as here on earth and it's up to us to take care of the details. we say, is hot. The very fact that a conference like this Then George Burns stabs a finger at Jerry and takes place is a note of optimism. We can also look International By-ProductsConference 13 forward to a new era of selling what we produce to thetanker's skipper Saint Hazelwood of theReef, des- consumerswho will respondto ecological positivism. ignating him as an ecologicalmartyr hoping that Last year, whenI spenta few weeksas a witnessto others like us would acceptresponsibility for the spill. the aftermath of the Exxon Valdez spill, I joined the So thanks to Saint Hazelwood of the Reef and ranks of the walking woundedin Valdez after sleepless dolphinsand drift nets,American consumers are wide daysand nights on thesound. A minormiracle brought opento ecologicalmarketing. You can't watch a couple me a hotel room and I slept in a depressedhaze for of hours of television without hearing the words envi- about 48 hours. When I finally got up, I went to the ronment or ecology a dozentimes. It shouldn't be too coffeeshop where I ran into a friendwho happened to hardto find waysto marketfish chunksor mealpatties be working at the otter hospital. or otherby-products by sellingtheir consistencywith We sat down, and the first thing we did to relieve sound environmental practices. our emotionaltension was laugh. Then we talked, and I' ll borrow my last words for you tonight from the agreedthat thoughJoe Hazelwoodand Exxon had old foodgatherer, Chief Seattle, who lived in a simpler someconsequences due for theirnegligence, ultimately world when it was probably easierto understandthis: everyone of us whohad ever put pedalto themetal or Buy low, sell high. turnedup a housefire wasto blamefor consumptive Not really. What he said is this, "The earth does abuse. The only way out of the grim vision of our- notbelong to man;man belongs to theearth. All things selves as destroyers was to envision the spill as a are connected like the blood that unites us all. Man did wake-upcall, alertingour entire culture to thepotential not weave the web of life, he is merely a strandin it. disasterat handunless we cleanup our acts. We dubbed Whatever he does to the web, he does to himself." International By-ProductsConference 15 April 1990,Anchorage, Alaska WORLDWIDE PROTEIN MARKET DEVELOPMENT K.R. Ellis South Pasadena, California INTRODUCTION tion has more than doubled. How does this balance with demand'?In 1989 the price averagefor soybeanmeal Thisreports on the development of theinternational wasthe highest in at least20 years.And soybeanmeal proteinsituation the supply,demand, prices, and dy- representsover 62% of the total world productionof namicsthat havean impact on the market. The proteins vegetable,or oilseed,meals. coveredare the majorvegetable meals, fish meal,and The combined world production total of protein othermajor animal meals. In the vegetablecategory are mealsis 124.6million tonsfor this crop year. Only 3.5% soybeanmeal, cottonseed meal, rapeseed meal, sun- of this is anticipatedto be in inventoryat theend of the flower seedmeal, peanut meal, copra meal, linseed year. This indicatesa healthydemand. meal,and palm kernel meal. The major animal proteins Theprotein supply has doubled in thepast 20 years, are meat and bone meal, poultry by-product meal, and andafter adding Alaska's billion pounds, we have a total feather meal. of over 125 million tons. This does not include grains, A numberof thesemeals are by-productsand their cereals,concentrates, or liquids. This 125million tons productionis governedby supplyand demand for the is all protein. mainproduct. Examplesof this areall of the animal proteinmeals and cottonseed meal. The other proteins mentioned result from the cultivation of oilseeds for POPULATION INCREASE their meal and oil. Populationincrease is oneof themany forces that Alaska's billion poundsof protein is a largequan- has an impacton the supplyand demandof protein. tity of specializedproduct that will haveto find its place Thirty yearsago the total populationwas 3 billion in the world market. Perhapsthe information that people.In 1990the estimate is 5.25billion, andin the followswill providean indication of therelative ease or year2000 the forecastis for over6 billion. In the 40 difficulty of accomplishingthis task. In orderto be yearsfrom 1960to 2000the world will haveadded 3 consistent we have converted the billion pounds to billionpeople, which means population will havedoubled metric tons; 453,600metric tons is equal to one billion in those40 years.In thelate 1960sand early 1970sthe pounds. rate of increasewas fairly steadyat 2% per year. In The world productionof fish meal for 1990is recentyears the rate has slowed to 1.6%and is expected estimatedat 6.67 million tons, up from 4.8 million just to decline further to about 1.3% in another 15 years. 10years ago. The fish meal production in 1960was just However, even with the lower rates,the estimateis for under 2.0 million tons. Alaska's billion pounds of the world to add another one billion people between proteinis 6.8%of the 1990world production estimate. 2000 and 2010 for a total of 7 billion. Productionof animal proteins for 1990is forecast Such an expandedpopulation requiresgreatly ex- to be 6.87 million tons. These meals are meat and bone pandedfood and feed supplies. The main use for meal, poultry by-productsmeal, and feathermeal. vegetable,animal, and marineproteins is to produce Thesefigures do not includeblood meal, bone meal, or meat, milk, and eggs for the human population. The hoof and horn meal as there are no data available on expandedsupplies of proteinhave been able to keep theseproducts. It is interestingto compareworld animal pacewith the demandsof an increasingpopulation. proteinoutput with Alaska's billion pounds of protein. Althoughthere has been severe famine in someareas of Thevegetable protein production estimate for 1990 the world, surplusesof food have existed at the same is 111 million tons, comparedwith 88 million tons in time in producercountries. The problemis proper 1980 and 51 million tons in 1970. In 20 years produc- distribution rather than inadequateproduction. You areprobably familiar with therecent mountain of butter in theEuropean Economic Community, and the sale of Author's address: 1229Blair, South Pasadena,CA 91030. over 150,000tons to the USSR at $.12 per pound. 16 Market Overview GOVERNMENT PROGRAMS treesbegin producingthree or four yearsafter planting and continue to produce for another 30 years. Natural Government programs are in place in abundance in rainfall is adequate and the application of fertilizer is the all major crop producing countries. We have subsidies only action that requires labor other than the harvesting to encourage production, intervention prices to help the of the fruit. less efficient producer in the EEC!, licensing proce- From production of only 431,000 metric tons in dures to control exports, and export promotion arrange- 1970, output tripled to 1,258,000 tons in 1975. Malaysia ments to move out surplus stocks, to name a few. hit the jackpot as pricesfor vegetableoils tripled in the The United States and the USSR recently signed an sametime span. Productioncosts were reported at $100 agreement that allows the USSR to buy 10 million tons per ton and palm oil was selling on the world market as a yearof grain, soybeans,and soybeanmeal. This is a high as $600 per ton. Buoyedby this successMalaysia five-year agreement replacing the old one that allowed rapidly expanded the cultivation of the oil palm, and the purchaseof 9 million tons per year. While most of palmoil productionrose from 431,000tons in 1970to an the new agreement covers wheat, corn, and barley, 2 estimated 5.9 million tons for 1990. With production million tons per year can cover soybeans and soybean also increasing in Indonesia and Nigeria, this year' s meal along with wheat and grains. The USSR is expected world production is forecast at 10 million tons. An to buy 4.3 million tons of soybean meal in 1990, in additional 1.4 million tons of palm kernel oil is expected addition to 2.0 million tons of other meals. Consider- this year. For producersof protein it is fortunatethat the ation is being given to extend credit to the USSR, which oil palm produces a flesh fruit, similar to a large grape should be welcome to them given the current state of with very little meal protein! content. If the oil palm their economy. had the same oil and meal content as the soybean, we Brazil, the second largest producer of soybeans would be facing over 40 million tons of additional after the United States, uses export registrations to protein meal to affect the world market. balance its need for soybean oil with its need for foreign The growth of the oil palm complex has produced exchange. When Brazil closes its registrations for a surplus of oil, evident in the fact that Malaysian palm export, we can usually expect an immediate price in- oil delivers to the West Coastfor only $.15 per pound. crease for our beans and products. A change in existing This growth will also result in a relative deficit of government programs, or new ones, by major producers protein meal. Much of the increasein demandfor fats or consumers usually has an effect on world protein and oils will be covered by palm oil and palm kernel oil. prices. The oil palm produces 10 times as much oil per acre than One of our country's programs is the sunflower soybeans. The oil palm producesfor 30 years, while seed oil assistance program, also known as SOAP. soybeans have to be planted each year. As a result, oil Under this program a bonus is paid in pounds of sun- palm growing is moreprofitable than soybeangrowing, flower seed oil per ton of exports. A total of 100,000 and expansion of palm oil production probably can meet metric tons to Egypt and Algeria was announced and increases in world demand for oil. over 60,000 tons has been sold and shipped. One sale to However South America, in particular Brazil and Egypt was for 10,000 tons, and for each ton sold Egypt Argentina, has sharply increased its soybean pro- received a bonus of 730 pounds. This amounted to an duction over the last 20 years. Brazil's production in additional 3,311 metric ton bonus. This is in addition to 1970 was 764,000 metric tons of soybean meal com- our vegetable oil export enhancement program that has pared to this year's forecast of over 12 million tons, 765,000 metric tons registered and 525,000 tons shipped. over 75% of which will be exported. Argentina pro- duced 15,000 tons of soybean meal in 1970 vs. the PALM OIL PRODUCTION estimated 5.8 million tons for 1990. Of this, over 90% will be exported. These increases in production The largest producer of palm oil in the world is resulted in additional quantities of oil on the world Malaysia. About 20 years ago Malaysia was faced with market. a sharpdecline in export earningsfor two of their main Any oversupply of oil results in less incentive to products,natural rubber and tin. The developmentof increase soybean production, unless producers can get synthetic rubber had cut deeply into their sales, and the more money for the meal. With a steadily rising future for natural rubber sales was not good. The demand for meal protein!, meal prices probably will International Tin Agreement was beginning to come rise. Meal prices last year were at a 20-year high. While apart and tin prices were declining. Malaysia decided protein prices at this time are below those of a year ago, that the oil palm would be ideal to replace the rubber the oilseed production already in place should favor plantations. They have the acreage and the climate. The meal producers in the long run. International By-ProductsConference I 7 POLITICAL CHANGES WEATHER In reviewinginformation for this presentation,I Weathercan be a majordeterminant of crop prices, cameacross some forecasts prepared a fewyears ago by mainly when the weatheris abnormal. The most recent anorganization that collects data on oilseeds,meal, and abnormalitywas the drought of 1988,which cut grain oil. One of the primary assumptionswas that the andcorn production by about25%. In the3-1/2 months beforethe expiration of theJuly 1988contract, the price existingfree marketeconomies and centrally planned perbushel of soybeansincreased from $6.25 to $10.40, economieswould changelittle. The eventsof the last and corn increased from $2.10 to $3.30 per bushel. In few monthsin easternEurope has voided that assump- 1973 above-normal rainfall resulted in a sharp decline tion. Manyof thosecountries will be movingfrom a in production,and the pricefor soybeanmeal doubled strongcentrally plannedand controlled economy to one from the year before. with market incentives. Only 10 years ago the USSR Agriculturistscontinue to look for accuratefore- was a netexporter of oils and meals. Today they are a castsof weatherbut havebeen largely unsuccessful.Dr. net importerof meals,and as mentionedearlier, are IbenBrowning, speaking before a feedindustry group in expectedto import6.3 million tonsof proteinmeals this March 1986, predicted plentiful rainfall and bumper year. cropsin 1986.USDA figures show total oil seedproduc- Countries in Eastern Europe can be expectedto tion thatyear to beover 65 million tons,the highest on importmore protein to producefood for their people. recordand well abovethe 59 million tons predictedfor Thequantities of importswill dependon theamount of this year. Dr. Browningalso forecast reduced water moneyavailable and the availability of creditor govern- suppliesfor thenext five years.As far asCalifornia is ment programsfrom exportercountries. There are concerned,he was right on. Among his further predic- manycommunist-socialist countries that have low prof- tions are that by the year 2010 Canadawill grow no itability in their agriculturalsector, low yields, and grainbecause the climate will betoo cold,and that the underutilization of resources. These countries represent growingseason in theCorn Belt will shrinkto 110 115 fully one-halftoday's world population. Obviously days. This is in directcontrast to the reportsof global thereis great opportunity to provide these countries with warming that we hear today. theprotein they need. Their inabilityto producein the El Nino, which is the periodic warming of the pasthas provided great opportunities for increasedpro- watersalong the northwestcoast of SouthAmerica, is duction of oils and meal by the United States,Brazil, blamed for abnormal weather conditions. The last intense El Nino was in 1982-1983 and was responsible Argentina, and Malaysia. for additional moisture that producedbumper crops in Brazil. At the same time Southeast Asia experienced a severedrought that reduced production of palmoil and CURRENCY CHANGES coconut oil in Malaysia and the Philippines as well as lowercorn output in Thailand.A USDAmeteorologist Currencychanges of the importingand exporting notesthat the period 1955through the early 1970swas countries also affect the movement of protein. The uniquein this century,one in which weatherwas un- recent decline of the U.S. dollar has made the purchase usuallystable. In the 1980sthere have been three major of American products less expensive,and thus more droughtsin the United Stateswhile Floridahas had attractive. Currencychanges can be quick andextreme. seven freezes that affected its citrus crops. An exampleof an extremechange over time is the The reasonsfor the higher highs, lower lows in Mexicanpeso. About 20 years ago one dollar would buy temperature,more droughts, and moreflooding'? No 25 pesos.Today one dollar will buy 2,788pesos. In concretereasons, only theories,to explain the abnormal spiteof this decline,last year Mexico was the number weather. one customer for U.S. animal protein, as well as the number one customer for lard, edible tallow, and ined- l. This extremeweather may be a returnto the type of ible tallow. Governmentprograms did have a handin weatherexperienced between 1930 and 1955. That theorystates that this period was "normal" weather, this volume. as contrasted to 1955 to the early 1970s which was Brazil had a 12% devaluation of their currency last described as "unusually stable." yearand an additional devaluation is expected,perhaps as much as 30%. Brazil has serious economic problems 2. El Nino has beenfairly frequent and has strongly andits currencyis not quoted. Last year,soybean prices affcctcd the weather in the subtropics, but also has rose 850% but inflation rose almost 1,800%. had an effect in the mid-latitudes. l 8 Market Overvi ew 3. A gradual warming of the earth's climate has re- Exports of poultry are expandingwith 15,000tons ceived much publicity recently. of broilers shippedto Romaniathis year, in addition to 60,000 tons to Russia. Poultry is a relatively inexpen- 4. An increase in volcanic activity affects climate by sive product to produce as well as being quick. In propelling tons of debris into the atmosphere.Of contrast to the seven week production time for broilers, the earth's 70,000 volcanos, 3% to 5% may be steersrequire five to six monthsin the feed lot alone. A active at any time. After a 1982 eruption in the rangefed steerwould require even more time. Yucatan, Hawaii lost 30% of its sunlight through The use of concentrates in the United States in 1987 the summer becauseof the resulting volcanic cloud. was 203.7 million tons at a cost of $15.6 billion dollars. Weatheris a majorfactor in determiningcrop yield Due to the drought in 1988 the use declined 11% to and therefore prices. Unfortunately weather is very 181.6 million tons at a cost of $20.6 billion dollars. difficult to predict,particularly long term. Until predic- Obviously animal producersare very sensitiveto any tion becomes more accurate, producers of crops will major changes in their feed costs. continue to be victim or beneficiary of weather changes. At this time very few high-protein ingredients are being used in cattle feed. There is a possibility that animal protein usewill increasein cattle feedingdue to ANIMAL PRODUCTION AND PROFITABILITY their bypass characteristics. Animal production and profitability is a key item An expanding industry is aquaculture, which uses for the producersof protein sincean increasein animal the high-protein feeds. In the southwesternUnited productionrequires an increasein feed. The useof feed States,aquaculture is expandingat the rate of 25% per concentrates in the United States alone this year is year. expectedto exceed200 million tons. Feedconcentrates include fish meal, oilseed meal, animal protein, and HEALTH AND DIET CONSIDERATIONS feedgrains. Keepin mind that total world productionof protein mealswas put at about 125million tons. Health and diet are becoming more important to A major consumer of protein is the poultry industry, many people. One of the reasonsfor the increasein which includes the producersof broilers, turkeys, lay- poultry consumptionand the decline in beef consump- ers, ducks, etc. The U.S. production of turkeys was up tion is that peopleperceive poultry meat asbeing more 91% in 1989 compared with 1979, and broiler produc- healthful than red meat. The main issue here is the tion was up 58%. In contrast, beef production was up saturated fat and cholesterol associated with red meat. only 8% and pork 3%. The large expansionin poultry The increase in demand for poultry products works in was due mainly to price and health considerations. favor of the protein producer since poultry feeding Broiler and turkey prices are considered a good value in requiresa greatdeal more protein fish meal, soybean relation to beef prices. Right or wrong, more people meal, etc.l than does cattle feeding. consider red meat unhealthful, and as a result are From its high point in 1976, consumption of beef switching to poultry and fish. has declined from 94.4 pounds per capita to an estimated Poultry is an efficient converter of feed to finished 67.5 poundsthis year. Over the sameperiod, per capita product. Broilers require only two poundsof feed for consumptionof chickenhas increased from 42.8 pounds every poundof gain. And broilers reachmarket weight to 66.1 pounds. As previously mentioned,broiler pro- in only seven weeks for the most efficient producers. duction is expectedto continue to increasesteadily for Turkeys require 2.5 poundsof feed for eachpound of the next few years. gain and reacha 30 pound market weight in 18 weeks. Another aspectof the health questionis the useof Production this year of broilers is expected to be slightly tropical oils in food products in the United States. over 5.5 billion birds, about one-third of the world' s Perhapsyou will note more advertising stating "no production. Turkey production is estimatedto be 267 tropical oils" or "no animal fats" in the product. The million birds. tropical oils include coconut, palm, and palm kernel As important as the volume produced is the profit- oils. Before this became an issue, the United States ability of the industry. Broilers have been particularly imported as much as 424,000 metric tons of palm oil profitable in the pastyear, which explainsthe continued alone 975-1976!. This year probably no more than expansion.Production in 1994is forecastto be up 36% 150,000 tons will be imported. In 1975-1976 we im- over the 1989 output of 5.3 billion birds. Turkey ported 566,000 tons of coconut oil, and this year' s profitability has been spotty over the last few years, but imports will be less than half that estimated260,000 turkey growers are optimistic about the future and plan metric tons!. The reduction in U.S. imports of palm oil to expand production. will be madeup by increasedimports by India, China, InternationalBy-Products Conference 19 Pakistan, and Russia. As they are able to produceor buy poultry or fish, they As mentionedearlier, the large increasein palm oil will have an impact on the demandfor protein. productiondoes have an effect on the productionof All of the items discussedwill by themselvesand oilseedswith a high meal content suchas soybeans. jointly raisethe demandfor all protein fish, animal, andvegetable. With the world droppingpolitical bar- riers while trying to improvethe standardof living PER CAPITA INCOME amongits people,a substantialincrease in thedemand As countriesincrease their per capita income,they for feedstuffsin general,and protein in particular,should becomemore able to improve the diet of their people. be the positive result. International By-ProductsConference 21 April 1990,Anchorage, Alaska PAST,PRESENT, AND FUTURE MARKETS IN THEUNITED STATESFOR FISH MEAL, FISH OIL, AND FISH SOLUBLES Thomas J. Starkey H.J. Baker 8z Bro., Inc. New York, New York H.J. Baker has been involved in the marine protein 50 industrysince its foundingin 1850.In theearly years, the firm was activelyinvolved in the distributionof organicfertilizer products, one of whichwas fish meal. to 40 t: Wecarried cargoes of sardinefish mealin sailingships 0 from California to the East Coast. Baker was also one of the earliest investors in Peru, and at one time pro- 30 duced fish meal in two fish meal plants for world M distribution.At presentwe import fish meal; in fact,we 0 are one of the nation's largestconsumers of fish meal. 20 We use it in Propak, a protein concentratewe manu- 0 facture. We' re also exporting fish meal from Peru, Ecuador,Chile, Canada,and Alaska to consumersin the 10 world markets. Baker is still a major distributor of fertilizer products,as well as a producerof prilled sulfur. We're alsoimporting food productsincluding canned and frozen fish, beef, and fruits. 1968 1988 This reportis an overviewof the U.S.market for proteins,with special emphasis on marine by-products M Broiler LayerMTurkey includingfish meal,fish oil, andfish solubles. Figure1. U.S.poultry feed volume, 1968 and 1988. PROTEIN USE 1968-1988 Althoughthis report covers recent history, it begins with a comparisonof the demand base for proteinsfrom 1988.Why is this? Backin 1968,we had a completely thepoultry sector to demonstrategrowth from 1968to differentscenario to justify theheavy use of fish meal. 1988.Poultry in 1968was responsible for about80% of Fish meal waslooked at by the nutritionists for its UGF, all fish mealuse Figure I!. We producedabout 24 or unknowngrowth factors. Selenium content was also million short tons in 1968compared to a little over 40 an important consideration. It was not uncommonto million tons in 1988 an increase of two thirds. In the find poultry feed with 12% 15% fish meal content evolution of fish mealconsumption in the United States, basedmainly on the mystiqueof UGF. Fish meal 1968 was a key year. producers,importers, and traders in 1968experienced The availablesupply of fish meal in the United thepeak fish meal demand that the United States could States,both domesticand imported,was 1,127,224 offer, as far as percentageof feed formula was con- short tons in 1968and 510,415short tons in 1988. We cerned. But times have changed. A growing animal had abouttwice as much fish meal in 1968as we did in feedingindustry outgrew a stagnatingsupply of fish 1988,but only 60% of thepoultry feed was produced in meal in the yearsthat followed. Since 1968,world productionof soybeanmeal has grown by 176%,but fish mealsupplies have increased only 27%. Between Author's address:H.J. Baker St Bro., Inc., 100East 42nd St., now and the year 2000, fish meal production probably New York, NY 10017. will declineabout 5% andsoybean meal production will 22 Market Overview 1,200 1,000 C 0 800 0 CO 600 400 0 I- 200 1968 1970 1972 1974 1976 1978 1980 1982 1984 1986 1988 ~ Domestic fishmeal Imported fish meal Figure 2. Total U.S. fish meal supply, l968-l988. increase by another 37%. product proteins over the last couple of years. Figure 4 Figure 2 shows the total supplies of fish meal is a comparisonbetween menhaden fish meal prices at during the 20 years since 1968. Our overall supply has the Gulf of Mexico and Chicago Board of Trade soy rangedfrom a low of 425,000tons in 1973to a high of prices basedon the nearestoption. Figure 5 compares 1,127,000 tons in 1968. About 32% of the total supply delivered northwest Arkansas prices for fish meal and was imported, mostly from South America. During the 48% protein soybean meal, which is used by the poultry last 10 years, we' ve averaged 547,000 short tons of fish industry. Arkansas is the number one broiler-producing meal supplies per year with little or no growth over that state. And Figure 6 compares delivered northwest period. Arkansas prices for fish meal, meat, bone meal, blood meal, and soybean meal. Among the figures we have some very neat alignments certainly between meat and CURRENT USE OF PROTEINS bone meal, fish meal and soy, and to a lesser extent Let's return to the present and take a look at the between blood meal and soy. overall usage of proteins for the animal, fish feed, and This kind of information is important to intelligent pet food industries in the United States. Figure 3 shows buying decisions, because we have a very direct trend the total usage of major proteins in the United States by relationship between the price of soybean meal and type for 1988-89,in metric tons. The dominantprotein those of other marine and animal proteins. source is soybean meal, far in excess of all the other In order to make a proper judgment, and to make a proteins combined. It's no secret to the feed industry, or correct buying decision, all we have to do is guess right to the traders and distributors, that the direction of on the price direction for soy. Then using historical protein prices is driven almost solely by the price trend price relationshipsbetween soy, meat meal, fish meal, of soybean meal. and blood meal we can arrive at the proper value for To illustrate this point, Figures 4 6 give a compari- other by-products. Of course, this is a lot easier said than sonof pricesbetween soybean meal and other major by- done. It is not all that easy to judge the price of soy. International By-Products Conference 23 25 20 th C I- 15 Q X V 0c 10 I Wheat mill Cotton oultry Fish and feeds seed solubles Figure3. Majorsupplies of proteinfor U.S.feeds. FISH MEAL such as fish meal, allow the fish feederto pay more for eachton of fish mealto meetfeed requirements. In other In 1989,the U.S. Departmentof Commerceesti- words,as aquacultureexpands, it is graduallybuying mateda totalusage of fish mealin theUnited States at awaysupplies from the poultry sector. Aquaculturists about350,000 metric tons. For fish meal,1989 was a usefish meal becauseit fills protein needsand because high-pricedyear because of poorfishing in theUnited high-qualityfish mealsare well utilizedby the fish Statesand strikesin Peruover a periodof eight weeks. comparedwith cheaperplant or animalprotein. Of The fish mealto soybeanmeal price ratio wasabout considerableconcern to the aquacultureindustry is a 2.0 2.2,which is onthe high side. Our best guess on the possiblecost-price squeeze, as fish meal consumption variouspercentages used in feedswould be 60%in increasesand world supplies decline. The end result is poultry,30% in aquaculture,and the balancein pet a higherprice for thefish meal portion of theformula. foods and specialtyfeeds for swine and ruminants. Figure7 illustratesthe phenomenal growth of U.S. Althoughpoultry is still the largest user of fishmeal, the aquaculturalproduction, led by catfish,with about trendis definitelyaway from poultry, which represents 150,000tons in 1988. Catfishproduction showed a a moreelastic, or pricesensitive, demand. That means sixfold increase from 1980 to 1988. thecomputer no longer sympathizes with UGF, and will Anotherinteresting opportunity for fish~~ removefish meal from the formula unlessit's economi- dairyfeeds. We' ve seensome studies from Cornell cally pricedrelative to its aminoacids, energy, and Universityand a dairyresearch center in Wisconsinthat vitamin and mineral contributions. indicatesignificant increases in milk productionwhen Increasinguse is foundmore in specialsituations or fish mealwas used. Apparently,fish mealholds up very in elasticareas, such as fish feedsand pet foods. Poultry well asit passesthe rumen providing the cow with more feedsonly require about 21% protein, but a typicalfish digestiblenutrients. The feeds that were used contained feed formula such as trout requires almost twice as from 1.5% to 3% fish meal. National production of muchprotein. Thereforehigh-quality protein sources, dairyfeeds is about 29,500,000 tons, so at a 1.5%usage 24 Market Overview 650 600 550 500 450 I- 400 350 300 250 200 150 Jan Each Wed.! Jan Each Wed.! Jan 88 89 90