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INSIGHT: Tightening Rules on Fat Ingredients Disrupts Microalgae Ingredient Sector in US

02 November 2018- The US has many things going for it as a place to launch large-scale microalgae production for feed. There’s a large supply of cheap corn-based sugars which can be used as a substrate for heterotrophic algae production. There’s a strong innovative culture, supported by research and investment from the federal Department of Energy’s bioenergy program, the USDA, and the private sector. And the sheer size of the US feed market is significant. These factors surely explain why many industry leaders from Veramaris to ADM have either themselves been based in the US or sought to locate production there.

Unfortunately, much work remains in terms of establishing a regulatory framework for the use of these ingredients in the US itself. The emerging category was dealt a blow in early 2017 when the Association of American Feed Control Officials (AAFCO) eliminated a catch-all feed ingredients category known as Fat Products, Feed Grade under which many algal ingredients, rich in oil, had been classified.
As explained by the FDA, this decision was made because of concerns about the abuse of the category by feed ingredients other than algae. The issue came to a head in 2015 when an oil product that was unfit for animal food resulted in the death of 57,700 turkeys and the contamination of the feed of 35,900 swine, says an FDA spokesperson. AAFCO, while not a regulatory authority, is an industry association which discusses and publishes model regulations that individual states may choose to adopt in part or in whole, and responding to the FDA’s urging, decided to eliminate the Fat Products, Feed Grade category in January 2016 and to establish new, more specific feed ingredient definitions. An interim definition meant to prevent disruption in the feed industry was enacted, which expired in January 2017.
Dr. Matt Carr of the Algae Biomass Organization calls algae “the baby that got swept out with the bathwater.” Although algae was not the target of this action, there does not seem to have been concern on the part of the regulators about interrupting access to algae oil or whole-cell products; as the FDA told Feedinfo, “the Fat Product, Feed Grade ingredient definition was never intended to be used for the marketing of algal ingredients.”
However, as witnessed by aqua feed consultant Dr. Rick Barrows of Aquatic Feed Technologies, by that time, algae products high in fat were provided by several different companies* and were used commercially, albeit on a very small scale, by niche producers interested in fishmeal-free feed. He recounts that he had been working for a trout farm using such a product when the AAFCO decision’s implementation made it unavailable. “They contacted AAFCO, and tried different things, and had to include fish oil [which was] against their philosophy,” he explains. “They were looking at producing in Mexico—you could feed this in Mexico and import the fish.” However, ultimately a state-level authorization made the ingredient once more available to this particular user.
There appears to be widespread recognition that no algae-specific safety concerns would prevent the ingredient’s reauthorization. “In all of our communications with AAFCO and with the FDA’s Center for Veterinary Medicine, another regulatory body, they have expressed a recognition of the value and the demand and the likely safety and efficacy of algae ingredients ever since and have been very open and willing to work with the industry,” said Dr. Carr. However, leadership on this must come from the industry, insists the FDA. “If they see the use of algae and algal products in animal food as a priority, we welcome them to provide FDA-CVM or AAFCO with information sufficient to establish the safe use of algae and algal products in animal food.  A framework has existed for firms to seek a food additive regulation, seek an AAFCO feed ingredient definition, or follow the provisions of the GRAS final rule.”
Unfortunately, as Dr. Carr points out, regulatory approval is “not a cheap or quick process”. Indeed, as far as we can tell, the only recent movement in terms of authorizing microalgae-based ingredients in the US has been an approval obtained by DSM to use a microalgae ingredient in dog food—based on a petition filed all the way back in 2014. Meanwhile, this development is believed to have caused even some of the more well-established players to re-think their plans. Big or small, all actors championing the use of algae in feed are at a point where cost competitiveness is a major struggle—in the words of Dr. Barrows, “extracted oil or whole cell microalgae is a very good nutritional product, but at $ 8,000 a ton it’s not going to fly.” Risk-tolerant investors might have counted on large-scale production to drive down those costs, but the possibility of waiting months or years to resolve the regulatory status of the products surely weighs on any calculations of profitability in the US market.
And yet, there is hope that the setback will not be a fatal handicap to the development of the algae feed ingredients sector in the US. A series of business announcements over the last 18 months show that algae producers remain quite committed to this concept. This is evident most notably in the DSM and Evonik joint venture Veramaris, whose production site in Nebraska proceeds apace. “We’re continuing to see growth and I think that’s because there’s such strong demand for this product overseas,” says Dr. Carr. “So despite the regulatory uncertainty domestically, there’s still very strong demand driving sector growth. My hope is that [a resolution of this issue] is going to unlock further growth because of the opportunities that it opens up in the domestic market.”

*Rather counterintuitively, some algae ingredients can be used in human nutrition products, even in the highly regulated infant nutrition sector, while qualitatively similar products from the same companies are now in many cases unavailable for use in feed (at least for fish), observes Dr. Barrows.

 

Product approval processes from across North, Central and South America and how to drive efficiencies in regulation processes will be discussed at our Feed Additives Americas event from 12th – 13th December in Miami

More information about how to book tickets can be found here.

By |2018-11-02T15:28:05+00:00November 2nd, 2018|