Sustainable aquaculture surfaces as a target for food investors
The farming of aquatic organisms such as fish, crustaceans and plants is the fastest-growing agriculture sector in the world, valued at over $144 billion, according to the World Wildlife Fund.
And there are ample opportunities in the sustainable aquaculture and fish feed sectors to help solve ocean health and food access problems.
Looking at the strong group of semifinalists in the 2015 Fish 2.0 business competition — which connects sustainable seafood entrepreneurs with investors — I’m struck by the potential for aquaculture businesses to make a real difference in seafood sustainability.
Factors such as global population growth and increasing per-capita demand for seafood from an emerging global middle class already strain the world’s oceans. More than 57 percent of worldwide wild fish stocks are fully exploited, while 30 percent is overharvested — and analysts expect worldwide seafood demand to double by 2050.
Aquaculture is playing a major role in meeting demand: In 2014, the industry overtook wild-caught fish as the world’s leading source of seafood for consumption.
The industry has had its own sustainability issues, largely environmental problems associated with some open-water systems, but this is a highly entrepreneurial area with a lot of activity focused on responsible production.
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About 20 percent of the entrants in Fish 2.0 are building on opportunities in aquaculture.
Many are focused on using land-based systems in markets that do not traditionally have access to freshly produced local seafood, such as Switzerland; the states of New Mexico, Indiana and Missouri; and several small Pacific islands.
Others are creating new technologies to reduce risk and improve the profitability of aquaculture ventures. These include hatcheries using novel technologies and business models to create both environmental and social change, as well as systems that reduce pollutants and coproduce biofuels alongside seafood.
Fishing on dry land?
Land-based aquaculture is among the most promising solutions.
Projected to grow nine-fold over the next 15 years, this segment includes the emerging and rapidly improving technology of self-contained, land-based Recirculating Aquaculture Systems (RAS).
Unlike open-water systems, RAS tanks can operate almost anywhere in the world, including urban and even desert environments.
This extreme flexibility, which enables strategic co-location of RAS production with major markets, distribution centers and transportation hubs, gives RAS a huge potential for expanding sustainable seafood production and delivery worldwide.
RAS technology is already seeing significant adoption in markets including the United States, where virtually all tilapia fish come from RAS operations, and Norway, where one-third of all Atlantic salmon smolts (juvenile fish reared in hatcheries) are RAS-produced.
Yet RAS has certain limiting factors. Costlier to build than open-water farms, land-based systems require more energy to operate, are harder to scale up, and require careful attention to water quality and disease control.
Entrepreneurs are developing solutions in all of these areas, however, and with strategic investment RAS could be an important source of high-quality protein for populations worldwide.
An appetite for innovation
We also see opportunities in the area of fish feed. A term generally describing protein-based pellets formed with a binding agent, fish feed is an integral component of aquaculture, with 46 percent of farmed fish requiring some form of feed to grow.
Fish feed production must increase 8 to10 percent annually to keep pace with aquaculture, even as sources of marine-based proteins, a vital component of fish feed, are diminishing due to overfishing and climate change.
Here again, Fish 2.0 competitors are on the cutting edge. They are developing solutions that include software that allows farmers to optimize feed usage; an integrated aquaculture and feed approach in the South Pacific that uses only raw local ingredients; and alternative feed technologies based on krill, algae and insects.
By 2020, the value of the global aquaculture industry is expected to exceed $200 billion, an increase of 38 percent over today’s value. The global fish feed industry, meanwhile, is projected to grow from its current value of approximately $75 billion to $123 billion by 2019.
Both sectors could have a lasting positive impact on seafood sustainability, and both offer a multitude of investment opportunities — including helping businesses resolve key challenges on the road to success.