China's aquaculture industry faces rising feed costs under Canadian tariff impact?

Under the shadow of a trade war, fish feed could become another little-known victim—from the North American prairies to China's vast network of rivers, lakes, and marine aquaculture farms, this supply chain spanning the Pacific Ocean is at risk of disruption.

Shrimp, crabs, carp, and other aquatic products that hold an important place in Chinese cuisine mainly rely on rapeseed meal for feed, and these ingredients are largely produced from Canada's extensive canola fields. However, since China imposed a 100% retaliatory tariff on Canadian canola seeds starting March 10 (in response to Canada’s tariffs on electric vehicles and steel-aluminum products), this trade, expected to reach $780 million in 2024, has become unprofitable.

US Department of Agriculture data shows that China boasts the world's largest aquaculture industry, with an estimated production of nearly 60 million tons of fish and shellfish in 2024. These aquatic products primarily depend on rapeseed meal derived from oilseed pressing, with Canada long occupying the position of China’s largest overseas supplier. Since the implementation of the tariff, the price of rapeseed meal futures in China has only moderately increased by 3%, but if China further imposes taxes on canola seeds themselves (currently under anti-dumping investigation), it may trigger a supply crisis, driving up seafood prices.

Farmers face multiple choices: increase the use of domestic rapeseed (which might further drive up prices); press more imported canola seeds (hoping they won't be taxed); seek alternative exporting countries; or switch to alternative protein sources like soybean meal. Soybean meal, as a more expensive oilseed product typically used for livestock feeding, has a lighter color. Industry insiders pointed out that due to feeding habits or taste preferences, most aquatic products have a stronger appetite for rapeseed meal with a darker color. Some feed companies have already adjusted their formulas, reducing the proportion of rapeseed meal and replacing it with soybean meal. "However, if the trade friction continues to escalate, the additional tax on Canadian canola seeds will be a fatal blow, with difficult-to-find alternative suppliers," he noted. Although Russia and Australia can partially replace, they cannot fully fill the supply gap left by Canada, resulting in a significant rise in the price of rapeseed products.

The latest tariff measures on Canadian rapeseed meal will begin to show supply tension effects from April. Although China's spring rapeseed harvest season arrives in May-June, its yield is neither suitable for feed processing nor sufficient to address the urgent need.

Canada accounts for 68% of China's rapeseed meal imports, and the 100% tariff has raised the landed price from $450/ton to $900/ton, directly increasing the cost ratio of feed (currently around 15-20% of aquaculture feed consists of rapeseed meal).

Currently, the farming cost of Guangdong sea bass has increased to 12.8 yuan/pound (up 9% compared to Q4 2024), with a 20% reduction in stocking density; Zhanjiang Guolian Aquatic Products has shifted to adding algal protein in shrimp feed (cost increases but premium capabilities are limited); it is expected that the wholesale price of live aquatic products will rise by 6-8% in Q2 2025 (common varieties such as crucian carp and grass carp will be affected first).

This "feed war" spanning the Pacific Ocean is reshaping the global agricultural trade pattern. When the golden canola fields of the North American plains interact with the shimmering waters of China's fish ponds, the industrial shockwaves triggered will continue to test the resilience of the supply chain and the wisdom of innovators.

Original source: https://www.toutiao.com/article/1828210717162499/

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