The price of fishmeal, the key feedstuff for salmon and shrimp aquaculture, has surged to an all-time high after an earthquake wiped out processing plants in Chile, the world's second- biggest exporter of the commodity, this year.
The blow comes as the industry battles a supply squeeze caused by the El Niño weather phenomenon, which is hitting fish catches in Peru, the world's biggest fishmeal exporter.
The problems are likely to filter into fish and meat prices as the commodity is used to feed the multibillion-dollar fish farming industry as well as pigs and poultry.
The production disruption comes amid double-digit growth in global aquaculture production due to the rapid expansion of the industry in China. According to the United Nations' Food and Agriculture Organisation, aquaculture accounts for nearly 40 per cent of fish for human consumption, up from 6.5 per cent in 1980. The FAO yesterday said that fish trade had gone global and was "one of the world's most hotly traded food commodities" with exports valued at $102bn in 2008.
The fishmeal industry transforms catches of fish such as herring, sardines and anchovies into meal for animal consumption. The FAO, based in Rome, estimates that a third of fish caught worldwide in recent years has been converted into animal feed products.
The cost of the benchmark fishmeal surged last week to a record $1,937 a tonne, up 85 per cent in the past year, because of strong demand coupled with supply disruptions. The rise is a dramatic turnround after the economic crisis cut demand for the commodity in 2008, sending prices in Rotterdam to $1,000 a tonne.
"The global financial crisis saw an important drop in prices," said José Sarmiento Madueño, president of Peru's committee of fishmeal producers. "By the end of 2008 and early 2009 we were starting to recuperate. And then the earthquake has pushed prices to . . . the highest in history," he told the Financial Times.
The industry is now watching catches in Peru, the world's top fishmeal exporter, due to concerns about the impact of El Niño. Normally the deep, cold water Humboldt current off Peru's Pacific coast creates nutrient-rich waters that are ideal for anchovies, but an El Niño brings warm waters, reducing fish stocks.
"A severe El Niño can cause a dramatic drop in anchovy numbers," said Mr Sarmiento Madueño. "The last one was in 1998 when we saw an 80 per cent drop in fish stocks." But meteorologists say that El Niño is dissipating.
Because the fishmeal industry's main production centre is Latin America, far from Chinese and European consumption centres, fishmeal is one of the world's most internationally traded commodities. The International Fishmeal and Fish Oil Association, the trade body, estimates that each tonne of fishmeal travels an average of 5,000 kilometres to reach its end-user in the aquaculture industry.
Higher fishmeal prices are supporting the soya meal market, in spite of a looming large soya crop, as some farmers can switch between the two.