Black-market anchovies: Report details Peru's illegal fish meal industry
by Michelle Carrere on 21 January 2020 | Adapted by Claire Storey
Peru is the world's leading producer of fish meal, made from anchovetas (Engraulis ringens) and used primarily as feed for aquaculture and livestock.
It's unclear precisely how much of the substance it makes because a sizeable portion appears to be off the books.
Some 22,000 tons of fish meal are produced annually by illegal factories located in the Pisco province of southern Peru, according to a report by the NGO Oceana.
The report identified three illegal mechanisms currently operating in Peru to produce fish meal for export and domestic use.
Peru is the world's leading producer of fish meal, but it's unclear precisely how much of the substance it makes, given that a sizeable portion appears to be off the books. The industry is based on the anchoveta (Engraulis ringens), a silvery little member of the anchovy family that teems in massive schools in Peruvian waters. The fish, subject to natural boom-and-bust population cycles compounded by overfishing, support on their tiny backs the world's largest single-species fishery, Peru's $1.5 billion fish meal industry and tens of thousands of jobs.
Official figures showing that Peru exports more fish meal than it produces hint at the fishy production. The country exported 867,000 tons but produced just 800,000 tons, on average, each year between 2012 and 2016, according to 2016's Fisheries and Aquaculture Statistical Yearbook, put out by the Ministry of Production (PRODUCE).
The scale of this illegal trade is substantial: Recently, producers in Peru have each year churned out around 90,000 tons of fish meal worth $130 million, according to a report by Apoyo Consultoría, a Lima-based consulting firm, for the country's National Bank and Insurance Inspectorate.
"Since much of the harvest used in this way is not declared, even though the volume in relation to the anchoveta population isn't very big, it does represent an important distortion to the monitoring and biological management of this species," Juan Carlos Sueiro, director of fisheries for the Peruvian branch of the international marine conservation NGO Oceana, told Mongabay via email.
Sueiro co-authored an investigation for Oceana released in February 2019 that identified three illegal mechanisms currently operating in Peru to produce fish meal for export and domestic use. These are factories operating without installation permits or appropriate operating licenses; businesses that claim to produce food for human consumption but instead systematically divert anchovetas to fish meal factories; and drying fields, where anchoveta remains are dried in the sun in a labor-intensive, unsanitary and highly illegal way.
The global market for aquaculture and livestock feed is driving increased production of fish meal and fish oil in places like Peru, West Africa, and India. But critics say the sector encourages the indiscriminate harvest of marine life without regard for ecological impact and takes seafood out of domestic food supplies, often in very poor and food-insecure countries. The use of fish meal in aquaculture has drawn particular fire as an inefficient use of marine resources.
The aquaculture industry counters that there is little demand for wild forage fish like Peruvian anchoveta, so it makes sense to feed them to more marketable fish like salmon. Numerous efforts are afoot to develop alternative feeds and markets for species, such as tilapia, that require less fish in their diets. For the moment, however, global demand for fish meal is only rising.
Mechanism one: Illegal fish meal factories
The Oceana investigation identified 10 illegal fish meal factories in the coastal province of Pisco in southern Peru. With no installation permits or operating licenses, these unmarked factories are located in agricultural areas and are difficult to access. They each process between 10 and 90 tons of mainly fresh anchovetas every day, or other species if necessary.
Illegal fish meal factories in Pisco, according to the marine conservation NGO Oceana. Image courtesy of Oceana.
The fish are brought directly from the artisanal fishing docks in the district of San Andrés and La Puntilla Fishing Complex 11 kilometers (7 miles) to the south, passing through around 10 different intermediaries along the way. "That's where we lose track of them," said Renato Gozzer, a fisheries engineer with the Peruvian NGO REDES and a co-author of the investigation. "The intermediaries' world is pretty closed and dangerous. They are very territorial, dividing up the ports and acting like the Mafia," he said.
Since 2000, industrial fish meal factories have modernized their equipment in line with new environmental norms. The owners sold off the old machinery as scrap. "This equipment hasn't been destroyed; it has been recycled and that's what these illegal factories are using," Gozzer said. Even with out-of-date machinery, the illegal factories can process up to 15 tons of feedstock per hour, three times more than a legal residual fish meal factory (one that processes otherwise unusable fish or fish parts) is authorized to process.
The illegal factories use machinery discarded by the legal factories. Image courtesy of Oceana.
Oceana estimates that each year these plants produce 22,000 tons of high-protein fish meal and 5,000 tons of fish oil with a total value of $32 million. And this is just a portion of Peru's black-market fish meal industry.
Mechanism two: Diverting anchovies
When an anchoveta is caught in Peruvian waters, its destination depends on the type of boat that catches it. If an artisanal fishing vessel catches it, it goes to a factory that handles fish categorized for "direct human consumption" to be processed and preserved by freezing or canning. The head, tail and intestines are removed and only part of its body will end up on the dinner table.
The leftovers, which can legally comprise up to three-quarters of an anchoveta's body, go to the so-called residual fish meal factories. This fish meal is of much lower quality than conventional fish meal made by factories that process whole anchovetas caught by industrial vessels.
Anchoveta-fishing vessels along the Peruvian coast. Image by Andre Baertschi/Oceana.
Oceana's investigation found that whole anchovetas destined for the direct human consumption plants are systematically diverted to the residual fish meal plants. "[A] truck simply enters [an unmarked garage], holds the anchovetas for a while until they are no longer fit for human consumption and must be sent to the fish meal factories," Sueiro said.
A direct human consumption factory suspected of diverting whole anchovetas to residual fish meal plants, which are only supposed to process fish heads, intestines, and other discarded parts. Image courtesy of Oceana.
Oceana compared the official export and production volumes of cured anchovetas, known as curados. Exports were marginal, so most of the production, some 5,200 tons annually, should be available for consumption within Peru. The strange thing, according to Sueiro, is that "in Peru, we don't eat anchovetas; we export them."
Despite the lack of a domestic market to consume the curados that are allegedly available, the number of factories that produce curados has increased recently, from 61 in 2011 to 73 today. Moreover, together only five of them produced nearly half of the country's curado exports over the last five years. For Sueiro, this doesn't make sense, especially given that they did so while possessing less than 6 percent of the total curado-processing capacity. One possible explanation, according to the Oceana report, is that some of the other 68 curado factories "systematically divert fresh anchovetas to factories that make illegal fish meal."
A comparison of catches (orange), production (gray) and exports (yellow) of cured anchovetas known as curados for the Peruvian department of Ancash. Exports of curados are marginal and there is no domestic market that justifies such high production rates. Image by Mongabay Latam based on official data from PRODUCE.
Mongabay Latam asked PRODUCE and the Ancash regional government why they continue to award operating permits to curado factories if there is no market that justifies their production. However, neither organization responded by the time of this story's original publication last February.
According to the report, the residual fish meal factories, when processing complete anchovetas and not the leftovers, produce high-quality fish meal that is mainly sold internationally. The report identified two pathways for these sales: Conventional fish meal plants, the ones that process the catch from the industrial fishing fleet, purchase the fish meal and sell it as their own product. Or the residual fish meal plants, which export it directly through brokers who specialize in taking this fish meal abroad.
A representative of the National Fishing Society (SNP by its Spanish acronym) told Mongabay Latam that it has "ensured that all factories that are associated [with it] comply with the IFFO RS certification so the customer has a guarantee for the traceability and origin of their products." The SNP recommends that buyers only purchase fish meal from factories that hold that certification, one of the most common standards, which was set up by the Marine Ingredients Organisation, a London-based trade group for the fish meal and fish oil industry.
But in Peru, the official records of the quantity of primary material received and the quantity produced from it are based on legal declarations that the factories send to the Ministry for Production. According to the Oceana investigators, that means there is no real-time system of traceability that would allow the correlation between the amount of fish received and the quantity of fish meal produced to be checked against concrete evidence.
Fishing boats. Image by Andre Baertschi/Oceana.
"[T]his weakness in controlling fish production statistics leaves a loophole for the directors of the factories for Direct Human Consumption that are engaged in the illicit diversion of anchovetas to illegal fish meal production to declare fictitious production quantities so the records show they are making the products they are authorized to produce," the report states.
The SNP representative confirmed that the group is aware of the problem and is implementing the Anchoveta Fishing Improvement Project "through which we aim to encourage scientific investigation and the management of this fishery," including improving the traceability of anchoveta fishing by artisanal and small-scale fishers.
Mechanism three: The drying plains
Since the residual fish meal plants are not processing the leftovers from the direct human consumption factories, drying plains have proliferated to fulfill this demand. Here anchoveta leftovers are spread out on the ground to dry in the sun; then they are ground by hand in a process that is both illegal and unsanitary.
The drying plains also receive waste from the local markets and the fishing boats, as well as fish from the artisanal boats that is not accepted by the factories due to its advanced state of decomposition. When there is an excess anchoveta catch they also take fish that the factories lack the capacity to accept. Oceana identified more than 25 drying plains in the departments of Ica, Ancash and Piura.
Fish leftovers drying in the sun on the drying plains. Image courtesy of Oceana.
The product is often sold to residual or illegal factories, which use it to top up their stocks and lower costs. "The quality of the production on the fields is too low to be sold on its own, but if two tons of this fish meal is mixed with 20 tons of a better-quality fish meal, it's fine," Sueiro said.
In Peru, the production of fish, poultry and livestock species that require a balanced diet is growing, and "fish meal is the main ingredient and one of the most important sources of protein in making these foods," according to the Oceana report. However, the legally produced fish meal and the fish oils are almost entirely exported, leaving the growing domestic demand for fish meal unmet and incentivizing illegal production, the report says.
Sueiro outlined to Mongabay several ways the illegal production of fish meal complicates sound management of the Peruvian anchoveta fishery and raises economic and nutritional issues for the country: it prevents managers from knowing the true volume of anchovetas removed from the sea; the illegal businesses pay no taxes and provide only precarious employment; illegal fish meal has no sanitary control, presenting a health risk to the animals that eat it; the sector also inhibits innovation in efforts to encourage people to eat anchoveta directly. The latter, Sueiro said, is something that groups like Oceana are keen to do to improve nutrition and develop more ecologically efficient uses for the fish.
"[N]either the State, nor PRODUCE, nor the NGOs, nor the fisherman know where this is heading," Sueiro said. "[W]hat we have done is shed light on the problem so we can understand how it works. Now the competent bodies need to do their work."
Mongabay Latam sought responses to questions from PRODUCE, but the agency did not respond.
This story was first published in Spanish on Mongabay Latam on Feb. 12, 2019. Additional reporting by Rebecca Kessler.
Correction 2/19/20: This story has been updated to omit an inaccurate figure for the amount of wild fish it takes to produce farmed salmon or shrimp. The figure appeared in the English version of the story only. We regret the error.
Article published by Maria Salazar
Conservation, Environment, Fish, Fishing, Marine Biodiversity, Marine Conservation, Oceans, Overfishing