A Perfect Storm: Rising Costs of Fish Oil and the Confluence of Geopolitics, Climate Change, and Market Dynamics
The rising costs of fish oil globally have been making headlines, and with good reason. The costs have been escalating due to a combination of geopolitical events, changing weather patterns, and market trends. This confluence of factors affects not just the industry but also the consumers who rely on this critical dietary supplement.
Ukraine's Conflict: A Ripple Effect on the Fish Oil Industry
One significant driver is the war in Ukraine, which has indirectly impacted the fish oil industry. Ukraine, a significant producer of vegetable oil, has seen its production disrupted due to the conflict, leading to skyrocketing vegetable oil prices worldwide. Vegetable oil is often used as a preservative in fish meal, which is used in the aquaculture or agriculture industries. The impact on the fish oil industry stems from how the industry calculates the price of fish meal and crude fish oil using a blended margin approach. This method factors in the costs of different types of oils, including vegetable oil, in the finished product costs. Consequently, the rise in vegetable oil costs has triggered a parallel increase in the price of crude fish oil.
Weathering the Storm: The Impact of El Niño on Fishing Practices
Compounding the issue is the ongoing climatic phenomenon known as El Niño. This naturally occurring event results in warmer ocean surface temperatures, which have led to a decline in fishing quality. The Fish have been staying in deeper waters, and combined with harsher weather, has made the fishing more difficult. There's an increased occurrence of juvenile fish being caught, which, owing to their size, provide less yield. Particularly affected is the anchovy population, a species renowned for its high oil content. The warmer weather has led to a reduction in the fat yield of these fish, further straining the crude fish oil supply.
Decreased Yield, Increased Strain: The Anchovy Crisis and Crude Fish Oil Supply
The global demand for crude fish oil currently stands at over 3 million tons. However, the unfortunate mix of geopolitical and environmental factors is predicted to limit this year's yield to half of that, or perhaps even less. This significant reduction in availability has triggered market predictions that crude fish oil prices could rise by at least 20% again this summer
Market Volatility: Uncertain Times for Fish Oil Prices
For us at AquaOmega, these price increases pose a significant challenge. However, due to our direct sourcing approach and our value proposition based on both quality and potency, AquaOmega has been able to mitigate some of the impact. We have been working closely with supply partners, engaging in strategic forecasting and extending our buying to lock in prices and shield consumers from the brunt of these increases for as long as possible.
AquaOmega's Strategies: Tackling Rising Costs Head-on
The situation undoubtedly poses challenges for the industry and consumers alike. However, the industry's resilience, strategic planning, and consumer understanding will be pivotal in navigating these turbulent waters. As the industry grapples with these challenges, we at AquaOmega extend our appreciation for the continued support and understanding of its retailers and consumers.
We would also like to take the time to underscore that the rising costs of fish oil globally greatly demonstrates the interconnectedness of our world, from geopolitical events to climate change and market dynamics. As we navigate these challenges, it's a stark reminder of the need for sustainable practices, robust supply chains, and strategic planning in our industries.