* Concerns about climate, overfishing grow
* Peru is world's top fishmeal exporter
LIMA Oct 31 Peru has slashed its commercial fishing quota as warmer water temperatures and controversial practices deplete stocks of anchovy in one of the world's richest fisheries.
The government cut its quota for this summer's anchovy season by 68 percent to 810,000 tonnes, the smallest allowance in 25 years. Anchovy is rarely eaten fresh, but is instead dried, ground up and exported as a protein-rich feed for livestock and farmed fish.
The stricter quota will allow just enough anchovy to swim into spawning season, reproduce, and keep the size of the fishery more or less stable, according to a report by the government marine institute IMARPE.
"Technically we should have said the quota is zero. That's how bleak the panorama is," Production Minister Gladys Trevino told reporters late on Tuesday.
The anchovy population has shrunk 41 percent since last summer and is 28 percent smaller than the average of the past 12 years, IMARPE says.
The quota for the November to February fishing season could push the price of fishmeal up even further. The price of the commodity has more than doubled over the past decade, and rose some 20 percent in the past year, according to data from the World Bank.
Peru is the world's top fishmeal exporter, producing about a third of worldwide supply. Last year it shipped abroad more than $2 billion in fishmeal and fish oil.
The anchovy pulled from Peru's Pacific Ocean is sold as fishmeal that feeds pigs in China and farmed salmon in Europe. It's also squeezed into increasingly popular Omega-3 supplements.
The government could impose additional restrictions if the warmer waters that IMARPE predicts reach Peru in coming months.
Anchovy prefer the cold waters of the nutrient-rich Humboldt current, which is home to a fifth of the world's fish stocks and flows northward from Chile to Peru.
IMARPE said Peru is experiencing the effects of a mild "El Nino" and that the warm waters that the climatological phenomenon brings produced a mass die-off of anchovy earlier this year. El Nino phenomena have been linked to extreme weather globally.
Three Kelvin waves - the warm equatorial swells that stretch hundreds of miles across - shored up on Peru's coast between May and September, the institute said, and it predicts two more by the end of the year. Kelvin waves signal El Nino seasons and make landfall on the western coast of South America.
"But we can't just blame what's going on in the environment," said Arturo Gonzales, director of the sustainable fishing advocacy group CeDePesca. "There are a lot of questions about how much this is driven by the industry's discarded catches, and that's something we can control."
IMARPE says that industrial fishermen at times return young fish they catch unintentionally back to the sea to avoid fines the government has set to try to protect them. The fish are already dead by the time they are thrown back into the water.
The fishing interest group, the National Fishery Society, was unavailable to comment on the new quota, but the industry had already been bracing for reduced catches and has set a new rule that pushes large vessels 10 miles from shore.
The regulation, designed to protect shallow-water spawning, reserves the first five miles from the coast for smaller fishermen and the five-10 mile zone for medium-sized boats.
That would cut Peru's anchovy exports by about $300 million, the National Fishery Society has said. (Reporting By Mitra Taj and Teresa Cespedes; Editing by Terry Wade; and Peter Galloway)