A.

World industry and market

- Fishmeal
- Fish oil
 World Fishing Industry – Fish Production
 Fishing is an activity that involves the capture of wild fish and raising fish through aquaculture. Capture
activity can be performed in both marine and freshwater fishing areas.
 According to the FAO, world production trends in capture fisheries have been stable since 2000. The global
total capture fishery were regularly producing between 90 and 95 million tonnes each year, while
aquaculture production rapidly grew, from 44.3 million tonnes in 2005 o 73.8 million tonnes in 2014.
 The contribution from aquaculture to total global fish production (both capture and aquaculture) increased
from 26% in 2000 to 44% in 2014.

Average annual
growth rate1

5.8% increase

0.8% increase

Source: The state of world fisheries and aquaculture 2016, FAO

1
Fishery and aquaculture statistics, 2014 Yearbook, FAO
 World Fishing Industry – Fish Consumption
 Fisheries and aquaculture remain important sources of food, nutrition, income and livelihoods for
hundreds of millions of people around the world. World per capita fish supply reached a new record high
of 20 kg in 2014, thanks to vigorous growth in aquaculture, which now provides almost half of all fish for
human consumption.
 Given that wild catch fishing has been essentially flat on a global scale, principally due to overfishing and
limitations on catch, this rise in demand will have to be met by aquaculture. Products derived from
aquaculture will contribute to an increasing share of global fishery production, growing from
approximately 30% in 1990 to exceed total capture in volume in 2023, according to OECD-FAO.

 Aquaculture is expected to continue

to increase significantly in order to
meet the increasing demand for
fish and fish products.
 World Fishing industry - Fishmeal
 Fishmeal is mostly used as protein and energy sources for fish and animal feed. According to OECD and
FAO, in 2015 the aquaculture industry was the main consumer of fishmeal accounting for 72% of the
total world demand of fishmeal. Demand from aquaculture for fishmeal is principally driven by
increasing global demand for fish.

Use of global fishmeal production

Future growth
Pig Farming
22%
Aquaculture, pig and poultry
farming will be high growth
Poultry farming areas for animal protein
6% production - all are feed
Aquaculture
72%
dependent

Other
2%

Fishmeal constitutes approx. 15% of aquaculture feed,

5-10% of poultry feed and 3-10% of pig feed

Source: IFFO’s “Statistical Yearbook” 2016 version

 Fishmeal World Production
 According to the FAO, approximately 25 million
tonnes of the total world fish production are Fishmeal World Production - Share
destined for non-food products (12%), of which (Average 2010 - 2015)
75% corresponds to fishmeal and fish oil. The rest
being utilized for different purposes including as Peru
20%
raw material for direct feeding in aquaculture.
 World annual fishmeal production is approximately Others
38%
5 million MT.
China
 Peru annual fishmeal production is approximately 10%
1.2 to 1.5 million MT and is the largest fishmeal
producer country.
Thailand
Japan 9%
 CFG-Copeinca Company Share
4%
production represents CFG- COPE 21% Chile
TASA 23% Vietnam U.S.A 9%
approximately 20% of DIAMANTE 11% 5% 5%
the total Peruvian AUSTRAL 9%

production. HAYDUK 9%
Source: IFFO’s “Statistical Yearbook” s from the corresponding years
EXALMAR 10%
Others 17%
 World Fishing industry – Fish oil
 Fish oil is a by-product of the fishmeal production process and it is used as an important input in
aquaculture feed, as well as for the preparation of Omega-3 fortified foods and Omega-3 supplements
in the pharmaceutical industry.

 Fish oil provides Omega-3 fatty acids containing DHA and EPA, acids which are considered valuable
compounds for rapid animal growth and are increasingly marketed for direct human consumption as
nutraceuticals for their health and medical benefits.

Use of global fish oil production

The volume of fish oil
Direct Human obtained from the
Consumption anchovy will variable
21% depending on the fat
percentage composition
Aquaculture
Other on the raw material.
6%
73%

Source: IFFO’s “Statistical Yearbook” 2015 version

 Fish Oil World Production
 World annual fish oil production is approximately
1 million MT. Fish oil World Production - Share
(Average 2010 - 2015)
 Peru annual fish oil production is approximately
0.2 to 0.3 million MT. Peru
20%
 Anchovy’s fish oil is the richest product in content Others
of EPA and DHA, hence its long chain omega-3 32%
polyunsaturated essential fatty acid makes it very
attractive:
Chile
• As a raw material for the feed industry, resulting 13%
also in a high performance in feed diets; China
5% U.S.A
• As for direct human consumption, especially for
Iceland 8%
the markets of supplements and functional, 5%
offering health benefits as of cardio protective Japan
Norway Denmark
functions and antioxidant actions (EPA) and in the 6%
5% 6%
proper functioning of the nervous system (DHA).
Source: IFFO’s “Statistical Yearbook” s from the corresponding years
B. Peruvian industry (IHC)
- Regulations
- Sustainability
- Competition
 Peruvian Anchovy
 The anchovy (Engraulis Ringens) is a pelagic fish in the
southeastern Pacific Ocean and its habitat covers all the coastline
of Peru and Chile mainly within 60 miles of coast but occasionally
as far out as 100 miles. Jan – Apr – Aug – Nov –
Mar Jul Oct Dec
 Dimensions:
 06 Months – 08 cm. North/Center
 12 Months – 12 cm. Zone
 18 Months – 15 cm
 This species prefers waters at temperatures between 17 and 22°C
 Entirely dependent on the rich plankton of the highly productive Parallel 16°
coastal upwelling caused by the Peru or Humboldt current.
 The Peruvian coastline is divided into two clearly defined fishing South Zone
zones (stocks):
Jan – Mar – Aug-Dec
 The North/Center Zone goes from the northern tip of the coastline Feb Jul
to parallel 16. The usual fishing months for this area are April to
July (1st season) and November to December (2nd season).
 The South Zone goes from parallel 16 to the southern tip of the
Fishing season
coastline (stock shared with Chile). Fishing is carried out during Closure season
the whole year with some period of concentration .
 History of the Peruvian Anchovy Fishery
1950s • Private firms began to specialize in processing anchovy to produce fishmeal and fish oil. Improved fishing technology and
increased demand for livestock feed propel fishmeal as a valuable global commodity.
• Peruvian fishing fleet became equipped with sonar equipment to locate fish shoals. Lightweight nylon nets introduced to fishing
industry to replace less efficient cotton nets. Anchovy accounted for about half of the world’s fishmeal production.

1960s • Peru became the world’s leading fishery in terms of volume. In 1964, Peru harvested 18% of total world fish catch, and produced
about 40% of total world supply of fishmeal. Fish products accounted for 25% to 30% of total export earnings, and became the
leading export sector.
• In 1964 IMARPE was created. Signs of overfishing on North Centre coasts appeared in the mid-60s.
• Anchovy accounted for 99% of Peru’s fishmeal production. Fishing fleets began to explore untapped fishing grounds of the south
coast. Fishing companies remained competitive by increasing investment in new, larger fishing boats.
• Fishmeal processing plants peaked at 154 plants. Fishery industry could process 16 million tons of anchovy annually.

1970s • FAO (Food and Agriculture Organization of United Nations) issued warning that maximum sustainable catch for anchovies could
not exceed 9.5 million tons annually. Anchovy catch rose above 12 million tons in 1970, and 10 million in 1971.
• Annual catch of anchovies fell to 4 million in 1972 and 1.3 million in 1973. Numbers of seabirds also greatly fell.
• The Peruvian Anchovy industry struggled economically.

1980s • The anchovy population remained low for most of the decade. The biomass of other pelagic species such as sardines increased.
• Anchovy catch dropped further at the start of the decade, with an all-time low of only 22,000 metric tons in 1984 following a
strong El Niño.
• Government and the fishery industry cooperated to bring about a recovery of the stocks to provide a viable fishery.

1990s • Extensive research was conducted into the anchovy population and strict quotas were introduced, as well as closed seasons to
allow for spawning. Leading to a fall in the numbers of juveniles caught and stocks began to recover.
• One of the strongest El Niño ever was recorded in 1997/1998, resulting in a sharp decline in the biomass.
• Control measures ensured a rapid recovery.

2000s • Despite another El Niño in 2002/2003 the biomass remains healthy.

• Maximum Catch Limits per Vessel (MCLV) introduced. Improved protection of artisanal fishing and the environment.
• Ecosystem based approach to stock management initiated.
 National Catch System
 Under Olympic System the fishing companies race to catch as much anchovy as possible within pre defined total quota for the
industry as a whole.
 In 2009, the Peruvian government introduced an industry-wide quota system referred to as the Individual Total Quota system,
or ITQ system. The goal was to enhance protection of the environment, preservation of the biomass of anchovies, and promote
clean technologies and develop the sustainable use of marine resources.
 The adoption of the ITQ system was intended to increase the operational efficiency of the fleet in Peruvian waters, improve the
distribution of fishing efforts throughout the fishing seasons and reduce any stress on the stock. Further objectives are to
promote artisan fishing, increase safety and the quality of fishmeal and reduce the environmental impact of industrial fishing
to ensure long-term sustainability of the resource, the preservation. The regulations are also designed to promote investment
and competitiveness and increased supply for human consumption.

MM
National Discharge (MT) South Discharge
North Discharge
10
9 OLYMPIC RACE QUOTA SYSTEM
8
7
6
5
4
3
2
1
-
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
 National Catch System – Quota System

OLYMPIC RACE QUOTA SYSTEM

 Fishing is concentrated in few days (50 days per year).
 High catch per day (120,000 MT).
 Excess installed capacity of the plants.
 Low production of prime fishmeal.
 The fishmeal producers have a better negotiating
position with respect to the ship owners.
 High level of pollution.
 Extension of fishing days (160 days per year)
 Lower catch per day (50,000 MT).
 Better production planning and fleet reduction.
 High production of prime and super prime fishmeal.
 The ship owners have higher negotiation power to
define the price of fish.
 Lower level of pollution.

Legal Framework
 Individual anchovy capture limits per vessel:
 40% based on capacity / 60% based on historical catch for 2004-2007.

 Quota accumulation allowed to other vessels within the same company and third parties.
 Quotas can only be sold to third parties together with the corresponding vessel
 Wood fleet exemption
 100% of limit based on historical catch for 2004-2007

 May not accumulate quota within wooden fleet (vikings) and steel fleet.

 Fishing Legal Stability agreements with the government for 10 years.

 Peruvian Regulatory Framework
 Government control of fisheries in Peru
is managed by the Ministry of Production
and the Vice-Ministry of Fisheries.
 They are kept informed and advised on
fisheries in Peruvian waters by the
marine research institute IMARPE which
is recognized as a world class authority
by the FAO, UNESCO, ICES and IATTC.
 IMARPE cooperates with the Chilean
Fishery Research and Development
Institute, IFOP, to monitor the southern
fishery that straddles the Peru–Chile
border. Both administrations use this
data for coordinated management of the
shared resource.
Regulatory Authorities
Ministry  Guarantee the sustainable management of fishing
Production resources
(PRODUCE) and  Determine starting date of each fishing season,
Vice Ministry of total allowable catch, and maximum duration
Fisheries Supervise compliance of fishing regulation

 Evaluates and monitors biomass constantly
Instituto del Mar
del Peru (IMARPE)  Provides Ministry of Production with scientific
information and recommendations about fishing
seasons and allowable quotas
Surveillance  Third-party world class surveyors
Agency  Supervises the unloading of fish
 Supervises compliance with navigation regulations
Peruvian Navy
 Function is executed through the Coast Guard
 Well-Managed Sustainable Fishery (1)
 IMARPE conducts acoustic surveys to assess the
fish population three times a year; plankton
surveys to estimate fish abundance based on egg
and larvae density and oceanographic and
plankton productivity in situ.
 Based on the spawning cycle, the concept of
“Biological year” has been established to manage
Peruvian Anchovy. It starts in October of one year
and ends in September of the next year.
 The strong emphasis on biomass conservation
and sustainable fishing by the Peruvian
government has led to the Peruvian fisheries
earning top marks for their sustainability. In 2008,
a study performed by IFFO which ranked maritime
countries by the sustainability of their fisheries,
Peru ranked first globally, with a score of 6.42 (the * Peru was recognized by
second place earned a score of 5.1) British Columbia University
for its sustainable fishing
model
 Well-Managed Sustainable Fishery (2)
 Since 1998, the vessel monitoring system includes 100% of national fleet.

Daily sampling covers all the landing points, and 10% of the active fishing
fleet, at least.
 Stock Size and Health (1)
 Main Characteristics of the Peruvian Sea: Dynamics and
productivity at different time scales1 Biogeographical Regions of the
Eastern Pacific Ocean
• Large volumes of transported waters offshore;
• High nutrient concentration because of high volumes of upwelled
waters;
• High larval retention inshore, because of low speed of a wide and
deep layer of transported waters HIGH
BIODIVERSITY
(Low Abundance)

PER
Northern Peruvian Upwelling LOW
Boundary BIODIVERSITY

U
Ecosystem is the only one located at
(High Abundance)
very low latitudes… and in the area
with the highest varibility

“Tropical belt”

Source: BRACK, 1986

1
(From: Bakun, 1996)

 The anchovy stock in the waters off Peru (and Chile) is the world's largest fishery.
It dependents on the rich plankton of upwelling caused by the exceptionally
productive Humboldt Large Marine Ecosystem.
 Stock Size and Health (2)
– Humboldt Current
 The Humboldt Current is a deep cold-water current and as it meets the coast it rises to the surface, replacing the
surface waters and bringing with it nitrates and phosphates from the seabed. The result is nutrient-rich waters
bathed in strong sunlight and in these conditions the phytoplankton proliferates rapidly, providing the basis of a
highly productive food chain that leads to substantial fish populations (18-20% of the total worldwide marine
fish catch).
 Normally, the trade winds and strong equatorial currents flows towards the west. At the same time, an intensive
Peruvian current causes upwelling of cold water along the coast of South America.
 Stock Size and Health (3)
– Influence of El Niño
 El Niño is a natural disturbance of normal weather patterns and brings warm waters and heavy rain along the
equator to the coast of Peru. During an El Niño, the water temperatures along the Peruvian coast can be as high as
28–29 °C, compared with a normal 14–23 °C, and the interface with colder water can be pushed down to a depth of
some 200 metres.
 Upon the advent of an ENSO event, the pressure over the eastern and western Pacific flip-flops. This causes the
trade winds to diminish, leading to an eastward movement of warm water along the equator. As a result, the surface
waters of the central and eastern Pacific warm, with far reaching consequences to weather patterns.
 The upwelling of deeper waters continues, but they are warmer and nutrient poor. The nutrient-rich waters of the
Humboldt Current are trapped and do not reach the surface. As a result, the phytoplankton is greatly diminished
which have impacts on the rest of the fish food chain.
 El Niño Effect
 In normal years, the annual catch volume is 5.1 million tons for the north-center zone.
 El Nino event affected Peruvian fishing from 2014 through early 2016.
 Since July 2011, the prior Presidential administration began setting lower TACs. The new administration, started in
2016, stated his intention to support Peru’s commercial anchovy fishing industry.

MM North/Central Discharge (MT)

10

4
El Niño
3

-
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

CFG began COPEINCA is

operation acquired

 As a result of these positive changes and the end of the El Nino, the fishmeal companies and the
Peruvian fishing industry are expecting return to normal anchovy harvesting in 2017.
 North - Centre
YEAR Biomass
TAC TAC / Actual Catch Actual Catch / Conditions
(Season I & II) (MT)
(MT) Biomass (MT) TAC

2001 11,103,000 7,000,000 63% 6,797,263 97% Normal

2002 9,793,300 6,000,000 61% 6,585,308 110% Normal

2003 7,002,000 6,500,000 93% 5,337,312 82% Niño Effect

2004 10,223,000 7,500,000 73% 7,865,631 105% Normal

2005 10,537,000 7,000,000 66% 7,570,204 108% Normal

Ni ña Effect /
2006 7,613,300 4,250,000 56% 4,998,485 118%
High % of juveni les

2007 7,690,000 5,300,000 69% 5,135,555 97% Normal

2008 9,840,000 5,000,000 51% 5,296,006 106% Normal

2009 7,600,000 5,500,000 72% 5,380,828 98% Normal

2010 6,500,000 4,570,000 70% 3,245,602 71% Normal

2011 10,500,000 6,175,000 59% 6,078,764 98% Normal

2012 8,880,000 3,510,000 40% 3,344,945 95% Normal

2013 11,948,000 4,354,000 36% 4,229,792 97% Normal

2014 9,770,000 2,530,000 26% 1,677,547 66% Niño Effect

2015 9,400,000 3,690,000 39% 3,591,252 97% Niño Effect

2016 4,420,000 3,800,000 86% 2,876,860 76% Niño Effect

2017 - I 7,780,000 2,800,000 36% 2,372,098 85% Normal

 Peruvian Industry - COMPETITION
 The Peruvian fish meal and fish oil industry is highly concentrated in a few large players which produce both
fish meal and fish oil. Under the ITQ system, the national catch is limited to percentage of the maximum
allowable catch set for that year.
 Companies wishing to process more than their allowable catch as set forth by the ITQ system may buy raw
material from third party vendors to process in their own facilities. The price of third party catch is usually
negotiated as a percentage of the market price of fish meal, thus limiting the upside potential.
 The anchovy fish quota is divided into two regions, North and South, and quotas are assigned for the
respective region.

QUOTA
COMPANY COMMENTS
NORTH SOUTH
CFG/COPEINCA 16.9% 14.8%
TASA 14.0% 17.1% Bresia Group
DIAMANTE 8.5% 8.4% Family group
AUSTRAL 6.9% 3.6% Subsidiary of Austevoll Seafood ASA
EXALMAR 6.7% 4.4% Listed in Lima Stock Exchange
HAYDUK 6.6% 2.9% Family group
TOTAL MAIN PRODUCERS 59.5% 51.3%
OTHERS 20.9% 40.8%
VIKINGS 19.6% 7.9% Includes wooden vessels (capacity less than 110 m3)
TOTAL NATIONAL FLEET 100.0% 100.0%

Source: Ministry of Production, 2017 : 1st Fishing Season N&C region

 Peruvian Industry - Fishing fleet
Vessel Refrigeration Capacity Of Industry
 Peruvian industry fleet by company considering their licenses to catch Anchovy (IHC) and mackerel (DHC)
With IHC Quota With DHC licenses RSW CONV
MPANY N° vessels Capacity (m3) N° vessels Capacity (m3) COMPANY m3 % m3 %
G/COPEINCA 49 20,077 13 7,244 CFG/COPEINCA 10,638 53% 9,439 47%
A 48 19,670 14 7,740 TASA 8,654 44% 11,015 56%
MANTE 26 10,799 13 5,842 DIAMANTE 5,244 49% 5,555 51%
STRAL 21 10,825 9 5,420 AUSTRAL 6,683 62% 4,142 38%
ALMAR 20 7,009 6 2,590 EXALMAR 1,285 18% 5,724 82%
YDUK 19 8,970 12 6,509 HAYDUK 7,409 83% 1,561 17%
ers 654 77,645 TOTAL 39,914 26% 37,435 24%
TAL 837 154,995 67 35,345
*RSW: Vessels with Refrigerated Sea Water systems on board
*CONV: Conventional Vessels
Vessel Refrigeration Capacity Of Industry
* Total fleet with valid fishing license to season north 2017-I

With IHC Quota With DHC licenses RSW CONV

NY N° vessels Capacity (m3) N° vessels Capacity (m3) COMPANY m3 % m3 %
 Peruvian industry’s fleet with refrigeration capacity (main companies)
PEINCA 49 20,077 13 7,244 CFG/COPEINCA 10,638 53% 9,439 47%
48 19,670 14 7,740 TASA 8,654 44% 11,015 56%
*RSW: With Refrigerated Sea Water systems on board
TE 26 10,799 13 5,842 DIAMANTE
*CONV: Conventional Vessels5,244 49% 5,555 51%
21 10,825 9 5,420 AUSTRAL 6,683 62% 4,142 38%
R 20 7,009 6 2,590 EXALMAR 1,285 18% 5,724 82%
19 8,970 12 6,509 HAYDUK 7,409 83% 1,561 17%
654 77,645 TOTAL 39,914 26% 37,435 24%
837 154,995 67 35,345
*RSW: Vessels with Refrigerated
COMPANY RSWSea WaterCONV
(m3) systems
(m3)on board
Total (m3) RSW (%) CON
*CONV: Conventional Vessels 10,638
CFG/COPEINCA 9,439 20,077 53% 47
TASA 8,654 11,015 19,670 44% 56
DIAMANTE 5,244 5,555 10,799 49% 51
AUSTRAL 6,683 4,142 10,825 62% 38
 Peruvian Industry - Operating plants
 Number of plants and its corresponding processing capacity per Company (main 6 producers)

MAIN PRODUCERS N° Plants Capacity (mt/hr)

NORTH 33 4,373
TASA 9 1,290
COPEINCA - CFG * 8 1,180
DIAMANTE 4 620
HAYDUK 4 553
EXALMAR 5 420
AUSTRAL 3 310
SOUTH 7 810
TASA 3 415
COPEINCA - CFG 1 145
DIAMANTE 1 80
HAYDUK 1 80
AUSTRAL 1 90

* Includes Tambo de Mora with 140 MT of processing capacity

** Companies information gathered from our personnel in each ports.
 Fish catch flow chart:

Decision of return to the port

for fish discharge

Search Vessel travels loaded

CALA
CALA
Search

CALA

School

Route to fishing zone

Fishmeal and fishoil flow chart:
B. Monitoring and Technology
Catch and discharge control

 SISESAT: Satellite tracking system that determinates

the geographic location of the vessels through a
beacon. The vessels positions are sent to PRODUCE and
MGP (SIMTRAC) for monitoring and fiscalization of the
fishing operation of the fleet. This prevent the vessels
operates in closed zones.

 Fishing Report: System that allows to

report the fishing operation in real time
to PRODUCE. It's used to monitoring the
% of juveniles (biometric information) in
the fishing areas and, if a risk is
identified, to suspend the catch in a
zone in the shortest period and thus
assure the sustainability of the
resource.
 Catch and discharge control
 Discharge Control Programme (DCP): Applicable to all companies operating in the fishmeal business, the
DCP is a contractually binding government quota. Inspectors on barges and in processing plants verify
compliance and all information gathered is sent to PRODUCE in real time. This enables the government to
control and protect both the biomass and the environment.

1st Inspection - BARGE 2nd Inspection - WEIGHING HOPPER

The inspector register general The inspector supervises the fish discharge:
information from the vessel - Anchovy size (% juvenile)
(plate, owner, license, fish - Certificate of scale's calibration
volume reported) - Correct operation of safety elements Discharge
weighing
The information
registered in the
electronic
weighing hopper
is automatically
sent to PRODUCE

The anchovy is
transported
(pumped) to the
processing plant
Fishing Management

 Sisfish / Pesca 6: Softwares for satellite-vessel

monitoring that provides information that we use to
locate probable fishing zones, distances calculations,
monitoring in closed areas and others.

 Themis: Software of oceanographic variables that

allows us to see the current sea conditions and weather,
to make projection about them and to propose
probable fishing zones.

 Further data flowing in for analysis from the satellite or in situ monitoring
includes information on the spatial distribution, size structure and school depth
of the fish and water temperature.
PLANTS- Processing Management and
Quality Assurance
 In-line production control: The use of NIR technology
(near infrared) allows us to control in real time the main
parameters of fishmeal process control. Likewise, we have
gas chromatographs located in the main ports for the
control the content of Omegas 3 and optimize the fish oil
storage according to the profiles demanded by the market.

 Treatment of effluents: We have pumping water treatment

systems for raw material, cleaning waters and domestic
waters to ensure the compliance of permissible maximum
limits (PML).

 Three stages for drying process: It allows a heat treatment

to not degrade the protein and preserve a high digestibility
of the fishmeal.
Environmental Compliance
 Treatment of effluents: We have technology that allow to
make the most of the residual vapors of the production
process as well as to mitigate emissions to the air. The
company comply with PML.

 Monitoring and control: We have a plan for environmental

monitoring and surveillance in effluents, emissions, noise,
solid waste and soils as well as an external system (Peruvian
State) to control the oversee legal compliance and our
environmental commitments.

 Positive impacts on the environment: We have recovered

green areas and ecosystems thanks to the reuse of treated
water from our domestic effluent systems.
Certifications held by the Company

Friend of the Sea

Business Global Standard
(FOS)
for Responsible
Alliance for Management system
Supply (IFFO RS)
Secure of good fishing
Commerce practices

ISO 14001 OHSAS 18001 The Global

Environmental Occupational Health Compact
Management and Safety Sustainability
Management

GMP+B2 (Production of feed ingredients),

GMP+B3 (Trade, collection and storage &
transshipment)
Feed Safety
III. COMMERCIAL MARKET
A. Products
- Fishmeal
- Fish oil
 FISHMEAL - Specifications
 Given its high quantities of digestible protein content, fishmeal provides an almost perfect nutrient balance,
promoting health and wellness for fish in aquaculture systems.

FISHMEAL QUALITIES
Super
PARAMETERS Prime
Prime Taiwan Thailand Standard

Protein % min. 68 67 67 67 65
FFA % max. 7.5 10 10 10 -
TVN mg/100g max. 100 120 120 150 -
Histamine Ppm max. 500 1000 - - -
Fat % max. 10 10 10 10 10
Moisture % max. 10 10 10 10 10
Salt + sand % max. 4 5 5 5 5
Sand % max. 1 2 2 2 2
Antioxidant ppm min. 150 150 150 150 150
FISHMEAL- Company’s Qualities Sold
Quality Shipped
Season Super Prime Prime Taiwan Thailand Standard
2010-I 36% 38% 12% 3% 11%
2010-II 61% 26% 5% 6% 2%
2011-I 28% 40% 16% 7% 9%
2011-II 34% 37% 10% 4% 15%
2012-I 31% 30% 11% 10% 19%
2012-II 47% 30% 3% 17% 4%
2013-I 57% 30% 8% 2% 2%
2013-II 39% 38% 6% 12% 4%
2014-I 34% 36% 10% 11% 9%
2015-I 29% 31% 10% 13% 18%
2015-II 31% 42% 7% 13% 7%
2016-I 52% 33% 6% 6% 2%
2016-II 41% 32% 10% 12% 6%
Average 37% 35% 10% 9% 10%
Source: Internal Information (% for volumes sold)
 FISHOIL- Specifications
 The most plentiful source of Omega-3 naturally occurs in oily fish which are the most commonly used raw
material in the manufacturing of Omega-3 products. Omega-3 EPA / DHA are fatty acids that are considered
nutritionally essential. Essential nutrients are molecules that are vital for normal cellular metabolism but
cannot be synthesized by the human body and therefore must be consumed.
 FISH OIL – Company’s Qualities Sold
Quality
Season Food (Omega) Feed (Aqua) Omega Parameters
2010-I 25% 75% EPA+DHA≥28%
2010-II 29% 71% EPA+DHA≥29% Omega level for the
2011-I 17% 83% EPA+DHA≥29% food industry is usually
min 30% (EPA+DHA)
2011-II 49% 51% EPA+DHA≥29%
2012-I 14% 86% EPA+DHA≥30%
2012-II 53% 47% EPA+DHA≥30%
2013-I 17% 83% EPA+DHA≥30% The most commercial
2013-II 15% 85% EPA+DHA≥30% profile requested for the
food industry is
2014-I 14% 86% EPA+DHA≥29%
min EPA 18% and DHA 12%
2015-I 24% 76% EPA+DHA≥30% = omega 30%
2015-II 16% 84% EPA+DHA≥29%
2016-I 8% 92% EPA+DHA≥30%
2016-II 11% 89% EPA+DHA≥28%
Average 21% 79%

 Levels of omega depend exclusively on the raw material.

 Depending on omega level obtained, the food industry can consider to buy lower levels as
28% or 29%, depending on the content of EPA, that usually is requested as minimun 18%.

Source: Internal Information

B. World Markets

- Fishmeal
- Fish oil
 Fishmeal Market
 Peru annual fishmeal production is
approximately 1.2 to 1.5 million tonnes
and is the largest fishmeal producing
country and is also the largest exporter of
fishmeal with 34% of total.
 China is the largest importer (4.75 times
larger than #2), driven primarily by China:
aquaculture growth and consumer 34% of world imports
trends.
Peru:
34% of world exports

Fishmeal World Production Fishmeal World Exports Fishmeal World Imports

Peru
20%
Others Peru China
36% 34% Others 34%
Others 37%
38%

China
10%

Thailand
Thailand 4% Chile
9% Denmark Japan
Japan 9% 8%
3%
4%
Chi le U.S.A Denmark Norway
Germany Taiwan
Vietnam U.S.A 9% 5% 6% 5% 7%
6% Germany
5% 5% 6%

Source: IFFO, Fishmeal and Fish Oil Statistical Books (Average 2010-2015)
 Fishmeal World Prices
 The fishmeal price depends to an extent on its quality and various commercial specifications.
 Fishmeal prices drivers:
o Restrictions on the catch of anchovy as a marine resource which has limited the production
o Increased demand for fishmeal, largely driven by the aquaculture industry, in order to meet global demand for
fish.
o Preference for fishmeal in the production of certain animals (fish, swine and beef)
o Growth in aquaculture in order to meet global demand for fish
o Demand for prime qualities of fishmeal as key ingredient in aquaculture feed

World's Average Fishmeal Prices 2008-2017

2,400

2,200

2,000
FOB PERU US$ /MT

1,800

1,600

1,400

1,200

1,000

800

600
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

Fishmeal Super Prime FOB US$/TM Peru Fishmeal Prime FOB US$/TM Peru Fishmeal Standard FOB US$/TM Peru

* Source: IFFO
 Fish Oil Market
Norway and Denmark:
 Peru annual fish oil production is 34% of world imports
approximately 0.2 to 0.3 million MT
and is the largest fish oil producing
country, followed by Chile 0.1 million
tonnes. Also Peru is the largest
exporter of fish oil with 23% of total.
 Norway and Denmark are the largest
importers as main entrance ports for
the European market.
Peru:
23% of world exports

Fish oil World Production Fish oil World Exports Fish oil World Imports
Peru
Others Peru Norway
20%
Others 24% 23% 21%
32% Others
32%

Chile Morocco
Denmark
13% 4% 13%

Iceland Denmark
China 5% 16% France
5% 4%
U.S.A
8% Vietnam Greece
Iceland Chile
5% 4%
5% 7%
Japan U.S.A Norway Taiwan China
Norway Denmark 8% Turkey
6% 7% Chile 4% Canada 6%
5% 6% 4% 5%
8%

Source: IFFO, Fishmeal and Fish Oil Statistical Books (Average 2010-2015)
 Fish Oil Prices
 Due to the greater use of fish oil in aquaculture, the demand for fish oil has increased steadily.
 Fish oil that meets a certain profile of EPA and DHA contents has commanded higher prices in the market.
According to the Global Organization for EPA and DHA, or GOED, the Omega-3 market has grown more
than 25% annually since 2004 and is expected to continue to grow in the future.
 Fish oil price drivers
o Lower production in Chile, Peru and Scandinavia
o Strong demand from aquaculture in China
o Strong demand for Omega-3 oil for direct human consumption

World's Average Fish oil Prices 2008-2017

3500

3000
FOB PERU US$ /MT

2500

2000

1500

1000

500

0
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

Aqua Grade Omega 3 Grade

* IFFO
C. Company’s Market

- Sales destinations
- China importance
- Eel market potential
 COMPANY’S MAIN MARKETS
FISHMEAL FISHOIL
Average Sales 2013-2016 Average Sales 2013-2016

FISH OIL
FISHMEAL Average Sales 2013-2016
Average Sales 2013-2016
2% 1%
3%
2% 3% 7%
2% 4%
DENMARK
CHINA
4% 5% LOCAL SALES
33%
GERMANY
CHILE
7% JAPAN
13% BELGIUM
LOCAL SALES
AUSTRALIA
VIETNAM
NORWAY
TAIWAN
CHINA
CHILE 17% OTHERS
78% OTHERS 19%

 China is the larger fishmeal market for CFG –  During 2014, sales to Chile were significant.
COPEINCA increasing its share in recent years.  Denmark has been increasing its purchases
 Germany and Japan are also important market but while local sales remain stable.
the latter has been decreasing in importance in the
last 2 years due to the replacement of fishmeal in
the feed formula.

Source: Company information

 FISHMEAL: China Market

Average total imports

in the past 5 years:
1’064,544 MT.

While Peruvian market share to China has increased in the past two years, exports in MT from Peru to the same
country have decreased due to the low offer. We expect to recover the volume export to China, as well to other
countries, due to the recover of the offer.

Source: Custom of Peru

 Fish Oil- Markets for Feed and Food
 Denmark and Belgium are our most important  Local market had the main share of sales during the past
destinations. years due to the presence of traders and local refined and
semi refined producers .
 During 2015, Chile and Local Sales had a very strong
 Europe and Japan decrease its share due to the lack of offer,
participation , although Chile has decreased its
specially in terms of high omega profiles as 18/10 or 20/10.
consumption compares to 2014.

Fish oil market - Feed Grade Fish oil market - Food Grade
(Average 2010 - 2016) (Average 2010 - 2016)

1% 1% 3% 6%
3% LOCAL SALES
2% 1% DENMARK
3% 4% JAPAN
BELGIUM
NORWAY
LOCAL SALES
7% CHINA
CHILE
38% DENMARK
14% AUSTRALIA 45%
7% BELGIUM
CANADA
CHILE
JAPAN
8% HOLLAND
NORWAY
18%
OTHERS
CHINA
9%
OTHERS
19% 11%

Source: Internal Information

 The Eel Market
JAPAN:
 In the past years, Japan industry has started to consider the use of Japan: Eel feed production (in MT)
anchovy fishmeal in replacement of traditional Chilean jack mackerel
Specie 2013 2014 2015 2016
meal (good stickness) and white fishmeal from USA/Russia due to the
poor supply, specially of the first one. Eel 19,940 28,290 29,667 28,890

 Eel production volumes hasn’t change in the past years, keeping very
stable. The fishmeal rate in aqua feed, including eel feed, is around 40%.
 Two main areas of EEL production: Quantity of Eels (in MT)*
 Kyushu Island (western of Japan) - 60% of total production *
 Near to Nagoya Port - 30% of total production.
 The main area of FEED production is located near to Nagoya Port with
about 80% of the eel feed production.
 Japan pays an extra fee for Super Prime fishmeal from Peru (approx. +
US$100/MT) when it is destined to the eel industry. However, the
tonnage of fishmeal consumed is lower than in China. * Until April 2017

CHINA China (Fujian): Eel feed production ( in MT)


 Fujian province is the main area of growing, feed production and 
2016
Jan-March 2017
consumption of eel.
 Production of eel feed in Fujian has increased in 3.8% with a total
production of 8,156 mt in April 2017.
 Fishmeal rate in eel feed is between 55% and 65% from which 2/3
are Super Prime quality and 1/3 is White fishmeal.

Source: IFFO / Client’s information