Reports from Aqua 2018 in Montpellier

‘Alltech has not exited algae'

By Jane Byrne contact

- Last updated on GMT

Photo of researcher working at Alltech's former Winchester, Kentucky algae site © Alltech
Photo of researcher working at Alltech's former Winchester, Kentucky algae site © Alltech
At Aqua 2018 in Montpellier, France FeedNavigator spoke to Patrick Charlton, vice president, Alltech Europe and CEO of the group’s specialist aqua feeds business, Coppens, to get a deeper dive into the reasons behind the shutting down of its US omega-3 algae facility in Winchester, Kentucky.

Alltech originally bought the facility in 2010 from Martek BioSciences and officially opened it in April 2011. The company confirmed the closure​ of that site in January this year but did not disclose much in the way of information about its future algae focused strategy back then.

The animal nutrition and health group just said the move was prompted by the need for more flexibility and less constraint in terms of algae production and that it would continue to deliver its algae solutions to customers through its available stock.

On Monday this week, Charlton told us:

“Alltech has not exited [the] algae [business]. What we have done is taken a position on one factory. When we bought that factory, it had a history of producing algae for Martek for the human side, and it had a very good pilot plant within it for developing algae production. After we bought it, our group there advanced the technology in terms of the levels of docosahexaenoic acid (DHA) in the algae – we increased those by between 30 and 50% - and [boosted] the fat content in the algae. But there is an inherent cost of producing algae; the cost is currently about three times the price of DHA from fish oil."

He acknowledged that there is huge industry demand for alternatives to marine ingredients to meet sustainability objectives. “However, they won’t pay for it.” 

Other players

Companies such as ADM, DSM, Evonik and Corbion are still involved in producing algae derived omega-3 fatty acids as alternatives to fish oil for use in aqua feed.

“There are other players but if you look at market price [for algae derived DHA] today, it is still bouncing around from anywhere between $10 and $20 a kilo, which really puts it into the specialty ingredients area. It is a long way off being a low-cost alternative to fish oil. Part of the reason for that is that fish oil is also delivering a number of other benefits to the diet including energy and palatability. It is not just a case of replacing the DHA, it is a case of replacing all the other things when you take the fish oil out.”

But wasn’t there a huge amount of investment by Alltech in the Winchester plant in the past few years?

“Yes, and, like any business, when a commitment does not work out in quite the way you hoped, you are going to be disappointed. However, we don’t see that as wasted time and effort. We still inherently believe this will come right. It may be in two years or in five years from now. The industry is ultimately going to dictate that.

“And that is why we remain committed to researching it, so we have the technology in place when the market sees there is an absolute requirement for this product.

“And we have a lot of expertise in algae now in-house.

“You look at the wealth of presentations on the use of algae here [at Aqua 2018] – it is still a great story… As I already said, we have not stepped away from it as a technology.”

The company proved it could produce a DHA derived algae product and one that is efficacious in fish and other species, said Charlton.

“We probably had more success in terrestrial species than in fish, in all honesty, where companies were looking to produce DHA enriched eggs, DHA enriched chicken, and DHA enriched milk. You can’t do that by feeding fish oil to those species [due to taste issues].”

A question of volumes

Alltech, he said, would have been supplying the majority of the bulk algae used globally.

“The trouble is that it is still not huge quantities. For DHA algae to really get the volumes needed for efficiencies, the aqua feed industry is going to have to embrace it and companies are going to have to pay a premium for it because I think it will be a long while before algae production is at a level that it is below the fish oil price. Although everyone talks about fishmeal and fish oil prices rising, they do but then they come back again.”

Coppens is still utilizing omega-3 fatty acids derived from algae because it had launched marine free ingredient products with DHA claims such as Neogreen for trout diets.

“We are continuing to use smaller quantities of algae that we would have been using before simply because of availability and costs in the system.”

Summing up, Charlton said the closure of the Winchester site was simply just a painful business decision. “Like any fermentation facility it had to run at capacity to be efficient, and the facility in Winchester simply wasn’t, and we didn’t see that changing at any time in the future.”

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