Could El Niño trigger aquaculture’s shift to algal oil?

El Niño and Peru’s anchoveta fishery 

The onset of a strong El Niño affects global aquaculture by undermining the largest global producer of fishmeal and fish oil: Peru’s anchoveta (anchovy) fishery. Smallholder aquaculture producers, particularly in developing contexts, are especially vulnerable to feed price volatility, since feed is typically a farmer’s highest operational cost. That exposure is one reason for growing interest in alternatives such as algal oil.

Since Peru alone supplies around 20 per cent of global fishmeal and fish oil production, disruption to this single fishery can have an outsized effect on the global aquaculture industry, worth roughly US$500 billion annually. This geographical concentration creates a structural vulnerability in the aquaculture supply chain. By diversifying the sources of omega-3s used in aquafeed, algal oil could contribute to a more resilient feed supply by reducing reliance on a small number of geographically concentrated, climate-sensitive fisheries. Wider adoption of algal oil could thereby support more predictable feed costs, helping to strengthen the resilience of smallholder livelihoods over time.

The importance of the Humboldt Current

The Humboldt Current is the world’s largest upwelling system and fuels blooms of phytoplankton to support the most biologically productive marine ecosystem on Earth. During an El Niño, however, this upwelling weakens, and nutrient-rich deep water remains below the surface. This leads to declining plankton populations and lower food availability for anchovies and other forage fish, ultimately affecting global seafood production and increasing consumer prices. Local fishers, too, face real economic and livelihood consequences.

What is algal oil?

Algal oil is an eicosapentaenoic acid (EPA) and docosahexaenoic (DHA)-rich omega-3 oil produced from cultivated microalgae rather than extracted from fish. Algae are the original source of marine omega-3s: fish accumulate EPA and DHA by consuming algae directly or indirectly through the marine food web. Because microalgae are grown in controlled systems, producing algal oil bypasses the need to harvest forage fish, decoupling aquaculture’s omega-3 supply from wild marine ecosystems.

According to the Centre for Feed Innovation’s (CFI) ‘Algal Oil 2025 State of the Industry Report’, global production of algal oil is projected to increase by around 80 per cent between 2025 and 2030. Over the same period, the global fish oil deficit is projected to increase fivefold, from 20,000 metric tonnes to 100,000 metric tonnes. Despite this growth, cost has remained algal oil’s biggest barrier to widespread adoption.

The price parity moment

The CFI estimates algal oil prices at USD 6,000 and 15,000 per metric tonne, making it only competitive with fish oil when fish oil prices are high. During periods of fish oil scarcity and price volatility, such as the conditions created by El Niño, rising fish oil prices narrow this cost gap and improve algal oil’s competitiveness. 

This can encourage the following technological transition:

Falling production costs are reinforcing this shift, irrespective of El Niño. Advances in photobioreactor, fermentation and cultivation technologies are making algal oil increasingly cost-competitive.

Why algal oil matters beyond price

Around three quarters of the global forage fish catch is currently processed into fishmeal and fish oil, despite roughly 90 per cent of these species being nutritionally suitable for direct human consumption. A significant share of these fish are caught off the coasts of countries where food insecurity and malnutrition remain challenges. Reducing demand for fish oil through alternatives such as algal oil could alleviate competition between aquafeed and food uses, potentially contributing to greater food security.

Fish oil production relies on harvesting forage fish such as anchoveta, which sit near the bottom of marine food webs and provide food for larger predatory fish, seabirds and marine mammals. Substituting fish oil with algal oil reduces dependence on wild-caught forage fish, easing pressure on marine ecosystems already under strain from climate change and overexploitation. This ecosystem benefit was quantified by the CFI: one tonne of algal oil can replace the DHA obtained from approximately 40 tonnes of wild-caught fish. Diversifying omega-3 production beyond wild fisheries can also improve sector resilience and reduce vulnerability to climate-driven supply risks. Life-cycle assessments further suggest that algal oil can have 30 to 40 per cent lower climate impacts than fish oil, depending on feedstock and production methods.

The bottom line

The current El Niño underscores that diversifying away from fish oil is not only an environmental opportunity but also a way to strengthen omega-3 supply security and aquaculture’s resilience to climate shocks. Algal oil is one promising route towards a more secure omega-3 supply, and continued advances in technology, production capacity and market development could help make its wider adoption increasingly feasible. Whether this El Niño becomes another temporary supply shock or a trigger for algal oil adoption will depend on how feed manufacturers, investors and policymakers respond. If the current price window helps algal oil overcome its biggest barrier—price competitiveness with fish oil—El Niño could accelerate progress towards a more resilient and sustainable omega-3 supply for aquaculture.

Read more: Fish Farmers Intervention: We Need to Scale Up Climate Innovations for Aquaculture Resilience

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