Kjell Bjordal - Head Ewos Group/COO Feed Cermaq - Status and development in salmonid feed production 2012
1. Status and development in
salmonid feed production 2012
Havbrukskonferansen 22. November 2011
Kjell Bjordal
Head EWOS Group/COO Feed Cermaq
2. Agenda
• Intro to Cermaq and EWOS
• Status & Outlook in feed- and
raw material markets
• The value of growth
– Use of functional feed in a low Photograph: Tom Haga
salmon price market
Photograph: Ragge Strand
3. This is Cermaq
A global leader in the aquaculture industry
Two business units; EWOS and Mainstream
EWOS: The world’s 2nd largest producer of salmonid feed
– market share of app. 35 %
Sales 2010: 876.000 tons
Sales 2011E: > 1 mill tons
Mainstream: A leading salmon farming company
Sales 2010: 97.000 tons (gwe)
Sales 2011E: 105.000 tons (gwe)
Total EBIT 2010 NOK mill 1.439
Approx 3.500 employees
Operations in Norway, Chile, Canada , Scotland and
Vietnam
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4. • Operations in Norway, Canada, Chile, Scotland, Vietnam
– 7 factories globally; 875 employees
– 21 feed production lines
• Increased attention on functional feeds
– Ensure healthy fish and improved growth
• Extensive R&D through Ewos Innovation
– Fish nutrition, Raw materials, Fish performance and health
– 3 locations, 80 People, NOK 80 mill per year in R&D
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thousand tonnes
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EWOS NorAqua /FK
9. General vegetable market trends
• We expect stable and sufficient supply of soy, both for GM and non-
GM qualities
• Speculators seem to withdraw cash from traded commodities
• Use of biofuel will influence total world demand, will subsidies for non
fossil fuel be withdrawn in current financial markets?
• Fish feed is a price taker for vegetable raw materials
• Advanced formulation capabilities for feed, make feed manufacturers
less and less susceptible for price fluctuations on individual raw
materials
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10. Conclusion: Less volatility in and more stable
raw material pricing expected for the next
quarters
Raw Material Prices
(USD/tonne)
• Fish quotas already set in Peru, fish meal
2000 production is expected to stabilize on 2,5
1800 mill tons, significantly higher than 2010
1600
1400 • Chinese demand drive markets, but the
1200
1000
Chinese users seem to have established
800 a substitution competence balancing
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400
growth in demand
200 • In conclusion; fish meal prices stable or
0
2008 2009 2010 2011
slightly downwards
Fishmeal Peru, FOB Soymeal extracted, FOB
• Vegetable proteins expected to maintain
Fish Oil Scandinavia, CIF Vegetable Oil, FOB stable or slightly downward prices in 2012
unless extreme weather conditions occur
• Vegetable oils: Crops have been good –
importance of substitutes for rape oil as
biodiesel have been significant. Uncertain
Main uncertainty is currency development trend, but no dramatic price changes
expected
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11. The value of growth
Use of functional feed in a
low salmon price market
Faster growth / more resistant fish
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12. Functional feed improve fish performance
– EWOS adapt – designed for fish to cope with transition from FW to SW;
functional components to increase the ability to handle new pathogens in a
new environment and fatty acid profile to benefit a good/even smoltification
– EWOS robust – strengthens and optimises immune response of the fish.
Contains a functional component which makes salmon less attractive to
sea lice by masking the salmon host odors and a powerful immune
stimulant and boost to prepare the fish against pathogens
– EWOS synergy – new base for medicated feed
– EWOS alpha – clinical diet for fish suffering from Pancreas disease
– EWOS opal 120 with boost-contains boost and prebiotica to strengthen
the fish
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13. Value of growth
• Feed contributes to almost 50 % of salmon production cost
• Choice of feed determines not only feed cost, but also growth rate
• Advanced feed is here a Functional feed, low cost a reformulated feed
Cost distribution for 5.5 kilo live Growth patterns for advanced,
weight salmon fed on standard standard and low cost feed
feed
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14. What is the value of growth?
Our model use following input parameters
• Production parameters (feed dependent)
– Growth rate and size distribution
– Production time
– Mortality
– Feed conversion ratio (FCR)
• Economical parameters
– Smolt cost
– Feed cost
– Salmon price per size interval
– Cost of transport, slaughting & packing
– Capital interests – capital cost
– Other variable costs
– Fixed costs
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15. At low salmon prices;
will EWOS functional grower feeds still be more beneficial
than standard feeds?
• Currently many salmon
farms see productions
costs about 25 NOK/kg
• Benefit of increasing
production volume by
using EWOS functional
grower feeds is
maintained for prices
far below break even
costs (25-13nok/kg), as
higher sales volumes
increases the cash flow
to cover fixed costs
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16. Benefits of using EWOS functional health feeds
• Additional cost of using EWOS suggested functional feed
program through a life cycle approximates 250
KNOK/production site (MTB)
• Such additional cost will be covered by reducing the need
of medicated de-licing with only one treatment
(approximate costs from 300 – 1,000 KNOK/site,
depending on method)
• -or by improving survival by only 2% at salmon prices of
22 NOK/kg)
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18. Are we living as we preach?
• Continued significant
use of EWOS
MS Norway* Functional Feed in
Mainstream following
Salmon price reduction
Functional Feed
Standard Feed
MS Chile**
Functional Feed
Standard Feed
* Aug – Oct 2011 (Atlantic)
** YTD Oct 2011 (Atlantic)
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19. EWOS outlook
• Continued growth in Chile from increased
salmon production
– Market growth 2011 maintained at 45 %
– Reduced growth rate for 2012
Bilde
• Focus on fish performance and fish
health expected to support continued
large share of value added feed
• High raw material volatility to continue,
but limited changes expected in Q4 2011
• Investments in all plants in Norway to
increase capacity with 75 000 tonnes in
time for peak season 2012
• Full year EBIT margin of 5-7 %
maintained