Who is accountable? The need for transparency in the feed supply chains

Michiel Fransen, Aquaculture Stewardship Council

Report of slave labor in Asian forage fisheries, illegal deforestation linked to some Brazilian soy production… (aqua)feed and feed manufacturers are becoming more and more exposed to public sustainability concerns. This often comes with reputational risks – both to the companies involved as to the overall industry. As global attention on sustainability issues increases, it is expected that also public scrutiny on feed-related sustainability issues will rise with it. Supply chain engagement, transparency and therefore accountability, are crucial for its actors in meeting societal expectations to address these concerns.

The majority of aquafeed raw material is produced from agricultural crops or animals (aquatic and terrestrial) with the biggest proportion being crop-based (70-75% of the global aquafeed ingredient volume). For decades the aquafeed sustainability discussion has primarily focused on the replacement of marine ingredients with crop-based ingredients. In recent years, this debate has highlighted the need to also focus on social issues in fisheries such as malpractices on fishing vessels, and environmental and social issues linked to poor agricultural practices such as deforestation and community displacement. Given the proportion of feed they already make up, ingredients derived from agriculture are to be considered as additional ingredients, not as alternatives, with respect to sustainability concerns.

As for all products that have long and complex supply chains, it is unrealistic to expect the feed manufacturer to have full insight, or control, on matters occurring further down in the supply chain. Ingredients are sourced from global markets and traders, which in turn source from global raw material producers, often linked to other supply chains and subject to multiple processing steps. This complexity makes product traceability and overall supply chain transparency challenging, and yet, these elements are the “new needs” of supply chains within the wider sustainability discussion.

Service-orientated supply chains see these opportunities and are indeed adapting to meet these new market expectations over time. For example, the global coffee and chocolate industry has leveraged a high degree of transparency, traceability and sustainability information transfer within their supply chains. Are these supply chains thus free of problems regarding, for example, social malpractices? Far from it, but while malpractices still occur, greater transparency means the affected actors are able to respond collectively, and thus more effectively, compared with conventional hidden supply chains. As such, supply chain transparency is a means to an end, not an end in itself.

Within aquafeed, a good example is continuous progress being made in the marine ingredients supply chain. Persistent efforts by key actors (including major feed manufacturers but also fisheries, processors and traders) have resulted in more and more sustainability concerns being addressed and relevant information becoming available to its users. A pre-competitive attitude has been crucial for this success.

Uniquely to the marine ingredients industry is the strong link between marine ingredients manufacturers and aquafeed producers. The same cannot be said with regards “terrestrial” agriculture-derived ingredients. For these commodities, aquafeed is (so-far) a minor part of its end-users. It is thus important to find existing platforms and mechanisms, within these commodities, to collaborate with. Useful examples can be found in the soy and oil palm supply chains for instance.

Vital for this transformation towards more transparent supply chains is the involvement of all key actors. It cannot be driven by the feed manufacturers alone. Traders, processors and primary producers must participate and show leadership. After all, if malpractices within the supply chains are found and exposed, it is usually the reputation of the feed manufacturer that faces most public scrutiny on behalf of the entire supply chain. Faced with this dilemma, feed manufacturers rely on either their suppliers to aid in addressing it – or revert to avoid entire supply chains altogether.

Role of third-party certification schemes

Across many goods and food industries, third-party certification schemes are used as a means to reduce risks in the supply chain. The Aquaculture Stewardship Council (ASC) is no exception to this. We develop and manage robust standards for responsible aquaculture production, supported by Chain of Custody (CoC) certification that assures consumers that ASC labeled seafood has come from farmers that are minimizing their environmental and social impacts. This allows consumers to reward these farmers, encouraging more producers to improve their practices as well.

As part of this program, ASC has developed a separate Feed Standard through a public-facing, multi-stakeholder process. It has taken several years to complete and is expected for release in Spring 2021.

The Standard provides a holistic set of sustainability requirements, from feed mill to raw material production, on both environmental and social key impacts. It reaches beyond marine ingredients, soy and oil palm and progresses into additional crop-based raw materials as well. Of special attention is the requirement for feed mills to publicly commit to work towards deforestation-free supply chains, and publicly report on its progress.

The Standard not only drives forward efforts to address a number of key sustainability issues for the main raw material groups but also requires better practices in supply chain management. This is done via extensive Due Diligence and Raw Material Assessment Process for which key environmental and social risk factors have been defined in the Standard.

Because transformation and ensuring a gradual transition to higher verifiable levels of “responsibility” takes time for such a complex set of global supply chains, the ASC Feed Standard makes a number of requirements incremental. Based on ASC’s ethos for continuous improvement, a “Marine Ingredients Improvement Ladder” (with different sustainability levels and associated timeframes) and a pathway towards deforestation/conversion-free supply chain are for instance inbuilt in the Standard.

A unique core pillar of the overall ASC Programme is transparency, which is central to our efforts to drive up standards and maintain public trust in the seafood industry. For example, all audit reports of all ASCcertified farms are publicly available in full on the ASC website. This aspect is a core element of the ASC Feed Standard as well. Feed manufacturers are required to publicly disclose their supplier Code of Conduct and summaries of Supply Chain Due Diligence outcomes, as well as a number of key parameters, both mill- and ingredient-related. As with the farm audits, feed manufacturers will be subject to independent assessments by accredited and trained auditors with the resulting reports available in-full on the website.

Another core Principle of the ASC is collaboration. The challenges facing the seafood industry, and the wider challenges facing the world around sustainability and food supply can only be solved by working together. In this spirit, the ASC Feed Standard offers a unique opportunity for leading supply chain actors to collaborate with feed manufacturers in advancing transparency within the feed supply chain, leading by example and inspiring public confidence in a vitally important industry.

More information: Michiel Fransen

Director Standards and Science Department Aquaculture Stewardship Council E: michiel.fransen@asc-aqua.org

Regional developments

Gustavo Bozano

Gustavo Bozano is a consultant at Aqua Lagus. E: aqualagus@gmail.com

Feed developments in tropical fish and shrimp in South America

According to FAO data, aquaculture in South America reached a production of 2,716,834 tons in 2018, a growth of almost 80% in the last ten years. Considering the volume produced in that year, 64% corresponds to non-salmonid fish (ten years earlier, this percentage was 57%). Together, Brazil, Ecuador, Chile, Colombia and Peru account for just over 97% of this volume and tilapia, shrimp, mollusks and cachamas correspond to 95% of the species produced by tropical aquaculture on the continent. Two countries stand out for the growth they have been showing in recent years. In 2018, Brazil was already the fifth largest producer of tilapia in the world with 317,080 tons (according to PeixeBr, Brazilian Association of Fish Farming, this number would be just over 400,000 tons) and Ecuador the fifth largest producer of shrimp with 510,000 tons.

But does the success of tilapia production in Brazil and shrimp in Ecuador have anything in common?

In 1998, Ecuadorian shrimp farmers had reason to celebrate. The volume of production, according to FAO data, reached 144,000 tons, double the volume produced ten years earlier. But between 2000 and 2001, with sanitary problems mainly linked to the WSSV - White Spot Syndrome Virus, Ecuador had a drastic reduction in its production volume. A drop of almost 70% of its annual production, with volumes returning to 45,000 tons, reached the same level as 15 years ago. Without a product to sell and with high production costs, producers suffered huge losses. Several companies closed their doors or were bought by investors who believed that they would overcome their difficulties.

In 2016, Brazilian tilapia producers also had a reason to celebrate. According to data from FAO and PeixeBr, with strong domestic demand, the species' production in ten years jumped to just over 70,000 tons, for more than 300,000 tons. Business was going well and many producers, excited by the good news, continued to invest in increasing their production. But in 2017, the scenario changed. An economic/political crisis hit the country. Fish sales prices, in some regions, were below the production costs of that time. Many producers stopped their production or were bought by companies better structured to deal with the crisis.

Both Ecuador and Brazil had their setbacks and, despite different species and problems, found a common denominator for the recovery of their production: the use of nutritional technology to improve zootechnical performance, animal health and the production environment.

In Ecuador, in order to overcome the health problems aggravated in 2000/2001, the monitoring and control of water quality, key to the success of any aquaculture activity, has been intensified. Over time, producers began to adopt protocols for the use of probiotics and enzymes directly in the water to reduce organic material deposited at the bottom of the ponds and prevent pathogenic microorganisms. Ensuring a better quality of the productive environment, they acted indirectly in the food and nutrition of the shrimps through the stability in the primary production that also serves as

Table 1. The five largest fish producers in South America and their production of the most significant aquaculture groups and species (without salmonids), according to FAO Fishery Statistical Collections for 2018.

Group/species Brazil Ecuador Chile Colombia Peru Total

White shrimp

62,000 510,000 0 5,397 29,717 607,114

Tilapia spp. Mollusks

Colossoma and Piaractus

TOTAL

317,080

14,510

157,350

550,940 23,050

10

40

533,100 0

377,939

0

377,939 77,933

0

22,332

105,662 3,075

12,477

2,867

48,136 421,138

404,936

182,589

1,615,777

food for the animals. In addition, the use of additives in shrimp feed has intensified, improving zootechnical results in production, reducing the amount of organic material released into the water and aiding in animal immunity. Probiotics, organic acids, attractants and immunostimulants started to be part of the daily chat of shrimp farmers. Today, Ecuadorian shrimp lead a sustainable and traceable production model that is an example in the world. Less than five years after the 2001 crisis, its annual shrimp production had already reached levels above that of 1998.

In Brazil, during the crisis of 2017, the need to remain competitive in an economically unfavorable scenario was the beginning of a process of intensifying the use of nutrition as a tool to optimize production costs. Brazilian producers were learning that in an environment where the production cycle often lasts more than a year, the permanent adjustment of production strategies to deal with the adversities encountered throughout the cycle was fundamental. Climate, market, political, environmental and social changes require versatility in decision making and oriented nutrition was fundamental for the return to the economic sustainability of the business. Fish production in a country of continental size, with 14 different climatic types, required food producers and manufacturers to structure a nutritional program model that was adaptable to different production systems, in different regions, for different times of the year and with different production goals. It was no longer a matter of designing food only according to the moment of the fish in the cycle (young forms or termination of the animals, or breeding and fry), but a nutritional orientation depending on the particularities of each situation. Concepts related to the benefits of organic acids, probiotics and prebiotics, flavoring and essential oils in fish feed were disseminated and became part of the daily activity. Today, it is difficult to find a tilapia farm in Brazil that does not use two or three different feeding programs during the production cycle. Using these concepts, Brazilian tilapia farmers were able to optimize their production costs and the volume of tilapia produced in the country has grown again at around 8% per year in the last two years.

In 2020, the impact of rising feed costs in aquaculture, due to increases in the prices of the main raw materials used in aquaculture feed, has been a challenge to overcome for producers and feed manufacturers across the continent. Today, aquaculture of tropical species in South America, no matter if it is tilapia in Brazil, shrimp in Ecuador, paiche in Peru or cachama in Colombia, undergo a process of careful evaluation of production costs, which begins with the purchase of the feed. To help producers decide which nutritional program is most effective, some feed manufacturers have been working with spreadsheets to economically simulate the impacts of their different products on production costs and revenues throughout the production cycle. To do so, the understanding of the particularities of each production and the objectives of each producer and the ability to choose the additives that make sense for the feeding strategy, in addition to the knowledge to combine these additives so that there is synergy, without overlapping and nutritional conflicts at a competitive and attractive cost, has been the key for defining the food program to be used and for an assertive orientation.

The experiences of Brazil and Ecuador have shown that adjustments and improvements in the efficiency of production processes are crucial for the success of the activity, especially in times of crisis, and that nutrition has a fundamental role in this matter.