“If you like anchovies on your pizza you’d better be careful,” says Mark Livingston, investment director of Fidelity Worldwide Investment.
You would not expect the head of a global asset fund managing ￡138 billion (US$218.18 billion) of pensions and investments to care about the cost of pizza toppings, but the global nature of the food chain means severe storms off the coast of Peru have led to a dramatic jump in the price of the oily fish — which will in turn lead to a spike in Scottish farmed fish, Chinese pigs and even Omega 3 tablets in health-food shops.
“That’s the nature of today’s food business — everything’s connected,” Livingston says. “If you can catch some anchovies, you’ll make some serious money.”
Three years ago, Fidelity spotted the growing importance of the “forgotten fish” and invested in Copeinca, a Norwegian company that owns a fleet of 30 Peruvian anchovy boats and five processing plants.
Just a few years ago, anchovies were lumped together with other unloved fish under the unappetizing label “industrial fish.”
“It covers all the stuff we don’t consume directly,” says Gorjan Nikolik, associate director of animal protein at Rabobank in Utrecht, the Netherlands’ fourth city.
These fish are caught in massive quantities, dried, minced and ground down into fish meal [a brown powder made mostly from fish bones and fish offal] and fish oil.
Nikolik says the price of fish oil has increased from US$1,500 a tonne at the beginning of the year to US$2,000 per tonne this month; fish meal has jumped from US$1,300 a tonne to a record US$1,700.
The price is rising because of the growth in farmed fish (mostly salmon and prawns) that feed on them, and the substitution of fish meal as animal feed because corn has become too expensive: The corn price has hit a record high as a result of the severe drought in the US.
Fish oil has soared even further because a new consumer has emerged: humans.
“Direct consumption in the form of Omega 3 pills has increased to 14 percent [of the global fish oil production] from 2 percent to 3 percent five years ago,” Nikolik says.
Peruvian anchovy fishermen — and their investors — are the biggest beneficiary of the fish-oil spike because, Livingston says, “the Peruvian anchovy is the best fish in the world to produce fish oil, as they have the most calories.”
In any ordinary year, the soaring price of fish oil and meal should force up salmon prices, Nikolik says, but this is no ordinary year. This year, salmon have been hungry.
“In 2012, the water temperature has been a couple of degrees warmer in the north Atlantic than normal,” Nikolik says. “This has had a big affect on the appetite of salmon, which has led to a record growth rate.”
Global salmon production is already up 30 percent in the first half of the year.
“This has led to a dramatic price drop of 35 to 40 percent,” he says.
The price collapse has translated into cheaper prices and promotions in supermarkets across the world.
“The prices are so low that new people are trying salmon — and if they get hooked, producers will have new customers. It’s like a year-long special promotion,” he says.
Nikolik says prices have been so depressed that even hard-pressed consumers have taken to eating more of a once exclusively upmarket fish.
“We’ve seen growth in Portugal, Greece, Spain — places where you would expect recession to have reduced demand,” he says.