Seafood

After the commercial fishing and aquaculture industries, Planet Tracker moves one notch down the seafood supply chain to investigate seafood processing companies, positioned half-way between harvesters and consumers. An under-researched industry, seafood processing is carried out by around 4,000 companies globally, which together handle most of the seafood produced globally. This new Report reveals how traceability could align sustainability with profitability issues in the sector.

It is clear that ocean fishing is on an unsustainable course of rising demand and falling supply but could recover if the reset button is pushed. Restrictions on catch, along with a proper debt financing vehicle, would assist in creating a financially viable transition scenario to sustainable oceans. A blue bond provides a more profitable route than the business-as-usual scenario, over the long-term. However, such a financing mechanism requires transparency, traceability and co-ordination. If the will is there, the prize is the ability to feed the world a healthy diet and prevent the deterioration of ocean ecosystems.

Our latest Tracker Report, Loch-ed Profits, shows that while salmon production is fast approaching the practical physical limits permitted by current coastal farming methods, the industry is still some way from moving to more sustainable and cost-effective methods at scale.

Environmental threats such as climate change, disease, sea lice and harmful algal blooms, compounded by issues such as collapsing wild-catch feedstock fisheries, leave the industry and its investors facing growing financial and concentration risk in the face of increased environmental constraint-based losses and price volatility.

Such price volatility is already apparent due to the COVID-19 pandemic, which has reduced demand for farmed Atlantic salmon (the second most commercially valuable farmed aquatic species and accounting for over 92% of total farmed salmon) and resulted in a 14% decline in spot prices in Q1 2020.

Planet Tracker estimates that if historic trends continue and coastal ecological health continues to decline, total production forecasts for coastal farmed Atlantic salmon to 2025 may be 6% to 8% lower than predicted, equivalent to US$4.1 billion.

Rebuilding sustainable stocks of wild-catch fish could transform Japan’s seafood industry, increase profits, preserve its reputation and reduce financial risk to investors, according to a report published by Planet Tracker.

View our Japanese Wild-Catch Seafood Industry dashboard.

This Briefing Paper explains the challenges facing the global shrimp farming industry and warns that investors with a $63 billion exposure to the farmed shrimp sector are unable adequately to assess and compare farmed shrimp financial risks across the 27 leading publicly traded farmed shrimp equities.

Shrimp is the most valuable traded farmed seafood commodity globally. The global shrimp market was worth $45 billion in 2018 distributed across public, private, smallholder and commercial producers. The marine shrimp industry is forecast to continue growing at a Compound Annual Growth Rate (CAGR) of 3.7% to 5.2% between 2019 and 2025.

There is value-at-risk to investors due to known regulatory changes, market shifts and biological constraints that will continue to increase in the mid-term, e.g. by 2025, though the extent of the risk is as yet unknown.

Within the global aquaculture market, Atlantic salmon is the second most financially valuable farmed fish species in the world, with over 2.4 Mt of farmed salmon products produced in 2018 representing a market value of $18 billion.

But, as demand for farmed salmon grows, production volumes and intensity are expected to increase and – as seen in parts of the agriculture sector with the application of fertilisers, pesticides and intensification at all costs – environmental issues such as aquaculture feed supply, disease and waste leakage are forecast to grow in parallel.

This Briefing Paper looks in detail at the prospects for the farmed salmon industry and makes recommendations for investors to protect their investments and help drive the industry towards more sustainable practices.

View our Salmon Aquaculture Industry dashboard.