The global anchovy crisis

The supply of one of the world’s “hottest commodities” is suffering a “huge disruption”, said Javier Blas in Bloomberg: the “humble anchovy”. The tiny fish may sound “utterly mundane”, but it’s at “the bottom of a crucial supply chain”.

Anchovies are the main ingredient in fishmeal, used to feed farmed seafood like salmon and prawns. But a drop in the catch has caused global fishmeal production to plummet an estimated 40% in a year. Prices are now up 80% since last year to “an all-time high”, threatening a knock-on effect on the global aquaculture industry – and food prices. The culprit? This year’s El Niño.

The ‘Saudi Arabia’ of anchovies

Most of the tinned anchovies we buy in Britain come from Mediterranean fisheries. But fishmeal is primarily made with the South American species, anchoveta. Peru is “the Saudi Arabia of anchovies”, said Blas. Combined with Ecuador and Chile, the catch accounts for nearly a third of the world’s fishmeal production.

Around Peru, the “unusually warm waters” in the Pacific, linked to El Niño, have dramatically reduced the population, said The Times. The naturally occurring weather pattern “reduces the nutrient-rich upwellings on which the fish depend”.

“It’s easy to say, ‘Oh, well, anchovies, who cares? I don’t particularly like them,’” food economist Mike von Massow said on Global News. But they are “a critical part” of the global food supply chain. About two-thirds of the fish and seafood we consume is farmed using fishmeal.

Manufacturers are trying to substitute anchovies with plant-based proteins, like soy or insect protein. “The problem is the profile of that protein isn’t the same,” said Von Massow. It “changes the nutritional makeup of the feed”, and therefore, the fish that consume it. We can do “small degrees of replacement”, but yields are lower, with lower levels of omega-3. It’s not “the same kind of fish product”.

The interconnected supply chains

Peru has imposed increasingly severe restrictions on anchovy fishing this year to protect the remaining population and allow the stocks to recover. That has caused the “unprecedented surge” in the price of fishmeal, said The Times, as buyers “compete for dwindling supplies”. Producers are “trying to absorb” some of the hikes, but “analysts say the pressure is building”. The “real impact” will likely be felt “much higher up the food chain”, on supermarket favourites such as salmon. If shortages continue, companies “may have little choice but to pass on higher costs to retailers”.

Industry executives are “tight-lipped about how much prices could increase”, said Blas, but 20% to 25% seems a “reasonable expectation”. Once, this would have been “a first-world problem”. But since the last powerful El Niño in 1997-1998, the aquaculture industry has “exploded”. The average fish consumption per capita has also “jumped” to nearly double the levels of the 1990s. So fishmeal is “crucial”. And because El Niño typically “peaks” at the end of the year, the problem is “likely to get worse before it gets better”.

The “anchovy crisis” is a reminder of “the surprising ways in which the world is wired today”, in which weather in Peru can increase fish costs in European supermarkets. It’s also “a warning sign that El Niño will have significant impacts on global food prices – far greater than those from the war in Iran”.