Sustainable Aquaculture: A More Responsible Seafood
Contents
Introduction
An alternative to commercial fishing
Market forces
Facts and Figures
Investment Opportunities and Market Segments
Impact
Carbon footprint and food security
Market movers
Leaders & fast followers
Investors
VC / PE / Funds
Final Thoughts
Regulatory hurdles and considerations
Seafood-as-a-Service
The rising tide of aquaculture
People love seafood, so despite the influence of COVID-19 in 2020, demand reached a new record in 2021. At the same time, according to a report by the United Nations Food and Agriculture Organization (FAO), the use of aquaculture has improved fish availability in regions that otherwise have limited ability to farm other species — and thereby satisfy people’s appetite for seafood while at the same time combating food insecurity.
An alternative to commercial fishing or the harvesting of wild fish, “aquaculture” refers to the controlled cultivation of aquatic organisms — primarily terrestrial production systems that source freshwater and inland-capture fisheries’ products. Aquaculture is a $243.5 billion industry and is growing faster than any other food production system.
General aquacultural systems must address a range of challenges in order to become more sustainable. These include, but are not limited to, the relatively lower quality of its products, high feed-to-conversion ratios, and the threats from pollution. “Sustainable aquaculture” specifically refers to aquaculture practices that focus on environmental, economic, and social sustainability.
Demand for seafood reached a new high in
2021
Market Trends: Facts, Figures, Forces
Market Forces
Governments globally are promoting sustainable aquaculture for their ocean sustainability goals. Both the European Commission and the United States have implemented policies to propel sustainable aquaculture development:
The National Oceanic and Atmospheric Administration (NOAA) in the United States addresses sustainable aquaculture while pledging its support for aquaculture innovation and research in its NOAA Marine Aquaculture Policy. It has also implemented a series of funding mechanisms to assist small businesses in sustainable aquaculture ventures.
The European Commission adopted its new guidelines for sustainable aquaculture in 2021 with the aim of making EU aquaculture a global leader in sustainability by 2030.
According to the Food and Agriculture Organization of the United Nations (FAO), the annual fish food consumption per capita will reach 21.5 kilograms by 2030. The FAO estimates that there will be a 24% increase in the price of farmed fish.
Market Facts
The global fish and seafood market will reach $ 252.6 billion by the end of this year.
In 2018, 178.5 million tons of fish were produced, of which nearly half (82.1 million) tons was from aquaculture.
Global aquaculture production increased 527% from 1990 to 2018.
Market Figures
Investment Opportunities and Market Segments
The sustainable aquaculture industry can be divided into three segments or ecosystems: freshwater, estuarine/brackish, and marine. While investment opportunities lie in feed, genetics, aquaculture farms, equipment for production, and robotics, the most popular investment targets currently are offshore technologies and recirculating aquaculture systems.
Freshwater Aquaculture
Freshwater aquaculture primarily occurs in ponds, reservoirs, lakes, rivers, and other inland waterways (Li et al., 2019). In 2016, freshwater inland aquaculture contributed 51.4 million tons of fish produced for human consumption, or 64.2% of total global farmed fish production. Specific technologies under this segment include freshwater cage technologies, pond technologies, and in-pond raceway systems.
Estuarine/Brackish Aquaculture
Estuarine or brackish water refers to the mixture of seawater and freshwater. Systems within this category are divided according to different levels of input and outcomes, including traditional systems, extensive farming, semi-intensive cultivation, and intensive grow-out systems.
Marine Aquaculture
Marine aquaculture, also known as “mariculture,” occurs in the ocean or in manmade systems. Although the oceans cover more than 70% of the Earth’s surface, marine aquaculture makes up only 2% of global food production, which means the potential for marine aquaculture to lessen the pressure on food security is considerable.
Brackish Aquaculture
Aquaculture occurring in areas with a mix of seawater and freshwater
Impact
According to the FAO, sustainable aquaculture plays a crucial role in global food security, with aquaculture production increasing by 7.5% per year since 1970.
Mariculture products have a smaller carbon footprint than do other forms of livestock farming, requiring less land and freshwater resources.
Sustainable aquaculture significantly contributes to coastal economic development, creating year-round jobs for coastal communities. Per the FAO, more than 20 million people globally are employed in the aquaculture industry. Aquaculture can also propel employment in food processing, feed, and equipment manufacturing.
Aquaculture can enable more people to add seafood to their diet and thereby increase their nutrient intake — seafood is a good source of omega-3 fatty acids, which can benefit heart and brain health.
Market Movers: Current and Future Heavy Hitters
Market Leaders
Mowi, formerly known as Marine Harvest, is the world’s largest producer of Atlantic salmon, processing 25–30% of the global salmon and trout market. The company has invested in sustainable aquaculture innovations such as advanced imaging and intelligent sensors.
Atlantic Sapphire, which operates in North America and Europe and is listed on the Oslo Stock Exchange, focuses on recirculating aquaculture systems. The company is the self-proclaimed world’s leader in onshore aquaculture.
AquaBounty, a Nasdaq-listed company established in 1991 in Massachusetts, focuses on recirculating aquaculture systems, which allows the company to monitor the life cycles of its Atlantic salmon.
BlueNalu is a company whose technology enables it to grow seafood virtually anywhere utilizing fish cells. In January 2021, the company raised $60 million for convertible note financing.
Siemens, the multinational conglomerate based in Germany, brings sustainable technologies to sustainable aquaculture using land-based farming setups in which land and sea-based farming are essentially combined. The company has also invested in aquaculture startups to further expand technologies.
Future Heavy Hitters
Aquabyte is a San Francisco-based company that works to optimize feeding through artificial intelligence. Its platform predicts biomass production, detects fish appetite, anticipates fish activity and size, and even recognizes and counts fish lice. As of January 2022, the company had raised $44.8 million over five rounds of funding.
Umitron is an aquaculture technology provider based in Japan and Singapore. In 2022, in cooperation with the Tokyo Institute of Technology, the company launched a small satellite to gather ocean information for aquaculture. As of the end of 2018, the company had raised $15 million in seed funding.
Palom Aquaculture is a Maine-based company that grows North Atlantic salmon using a recirculatory aquaculture system off the coast of the United States. The company is currently the only farm licensed to grow that specific species using RAS technology on the U.S. coastline.
Manna Fish Farms is a company based in Long Island, New York, that uses a submersible cage and automated feed technology to grow local finfish at depths of 150 feet. The company has secured a $300,000 grant from the state of New York for further development.
ReelData is a Canada-based company that focuses on software solutions for land-based aquaculture using sensors, artificial intelligence, and user-friendly interfaces. In March 2021, the company raised $1.95 million in the seed round.
Venture Capital/PE and Other Fund Investors
Mirova is the impact investment arm of the French banking giant Natixis that has invested in aquaculture innovations all around the globe. It acquired the Althelia Ocean Fund in 2020 for $132 million.
S2G Ventures, a VC firm that focuses on impact investing, has dedicated $100 million to ocean sustainability startups, including aquaculture startups such as ReelData.
Aqua-Spark is a venture capital firm that focuses on sustainable aquaculture. It currently has about $190 million in assets under management, with an investment portfolio that includes a variety of segments under sustainable aquaculture.
Hatch is an investment firm that focuses on sustainable aquaculture startups. With a portfolio that includes aquaculture innovation associated with AI and automation, the company raised $8.4 million in funding in 2020.
Salmon Innovation Fund is an early stage technology fund whose investments include innovations in the fisheries industry.
Final Thoughts
On the flip side of all the positive impacts of sustainable aquaculture, there are a number of potential negative impacts that also need to be considered:
Aquaculture may impact wild fish populations by spreading diseases and parasites.
Aquaculture can pollute water ecosystems through eutrophication and animal waste, which may contain antibiotics, pesticides, and fish feces.
Aquaculture is an under-regulated industry growing exponentially, which may result in improper operations of some practitioners.