Industry demand sees TerraVia and Bunge ramping up DHA algae production

Yesterday (February 8) saw TerraVia and Bunge announce the expansion of their distribution agreement with Danish fish feed company, BioMar, for AlgaPrime DHA. 

“AlgaPrime DHA will play a critical role for us in 2017 and beyond. The expanded distribution agreement with BioMar that we announced today sets the stage with an anchor customer with broad global reach. Since scaling and making initial deliveries of our DHA product in mid-2016 marketplace interest and momentum have developed quickly.”​

“In the second half of 2016, we rapidly moved from successful feed trials to large commercial adoption across BioMar’s customer base,”​ said TerraVia CEO, Apu Mody, on a conference call with analysts.

Mody said the widening of the distribution deal allows “us not only, certainly, to sell to all of the farmers that BioMar services, but it also allows them to continue to use the product and to sell the product to others in the aquaculture industry. And, so, it really just broadened our alignment with BioMar and also broadened sort of the scope of where we can both collectively work together.”​

The stage is set for broader market penetration:

“AlgaPrime DHA is going to be a major source of growth. We have strong margins on that product and based on the initial responses we've got from the aquaculture market and, specifically, BioMar as well as some of our other partners, I expect that to ramp [up] quite rapidly.”​

He said that compared to competitors in this space, referencing the DSM and Evonik algae oil development announcement also made yesterday​​ TerraVia and Bunge are producing a fish oil alternative at scale, and that they are already shipping to customers. 

Norwegian salmon giants are reportedly already using the algae ingredient in their feeds. However, a spokesperson for BioMar said the company is not able to disclose information regarding its customers. She told us: "During the past six months, BioMar has delivered 40,000 tons of feed to farmers in Norway, UK and Chile within the salmon sector [in which the algae ingredient was incorporated]. So we are already operating at a true commercial scale. ​

"For now, we are targeting the salmon market but we do see a potential of including algae meal as a sustainable raw material in feed for other species as well." ​

Market wide R&D efforts​

Up until very recently, almost 70% of fish oil in salmon diets was being replaced by vegetable derived oils such as rapeseed oil, or with poultry oil in the case of the Americas and Asia. But a huge amount of investigation has been underway in the past few years in the area of microalgae derived eicosapentaenoic acid (EPA) and DHA sources.

Agribusiness giants like Bunge but also Cargill and ADM are looking to innovative to help them diversify away from bulk trading of raw materials as a result of the massive oversupply of grain commodities in the past four years. All three companies are involved in developing fish oil substitutes.

Archer Daniels Midland (ADM) also launched a 'DHA rich' alternative to fish oil​​ sourced long chain omega-3 in June 2016. The initial target for DHA Natur is the aquaculture industry and the move is part of an effort to increase ADM’s presence in that sector, Peter Bergstrom, international business manager for ADM Animal Nutrition, told this publication previously.

The algae biomass needed to produce DHA Natur is being generated through a heterotrophic fermentation process at the company’s facility in Clinton, Iowa, he explained. That plant has in built production flexibility, allowing for capacity expansion depending on global demand.

“As a sustainably produced DHA source that is derived from algae, DHA Natur provides an important solution for the aquaculture industry, and we see a lot of growth potential in this market,”​ he said.

He said the product could, potentially, also be used with other species including poultry and swine or dairy cattle.   

The product includes about 17-20% DHA mixed with a meal product, said the company.

“Our strain of DHA compares well with various types of fish oil,” ​said Bergstrom. “The product contains high consistent levels of DHA, which is a benefit. It is also plant-based and made in a sustainable manufacturing process.”  ​ 

Cargill looks to canola 

Cargill is also developing omega-3 fatty acids from canola plants​​ targeted at the aquaculture sector.

Though it will likely be several years before such products will be commercialized, said Einar Wathne, president of Cargill Animal Nutrition’s aquaculture business.

The company is cultivating canola crops producing the EPA and DHA fatty acids in a closed loop system.

Cargill’s work on the omega-3 generating canola started as a joint effort with Germany-based BASF Plant Science in 2011, Wathne told us.  

The canola in question is being field tested in Montana, and will be managed through a Cargill research facility in the same area.

“Cargill has just begun construction on a research station near Great Falls, Montana, to support plant breeding, agronomy and closed loop crop production for EPA/DHA canola,” ​he added.

The partnership between Cargill and BASF includes an agreement to collaborate on commercializing the omega-3 producing canola plants in 2020, he said.