The Future of Fish – The Investment Case for Sustainable Fisheries

bksrus/iStock via Getty Images

Overfishing and commercial fishing practices depleting fish populations. Farmed fish has come under intense scrutiny over the years as intensive production, including increased use of antibiotics, results in reduced product quality and raises key questions about the sustainability. Overfishing threatens global ecosystems have economic implications and environmental immeasurable negative. Meanwhile, ocean pollution, mainly plastics and heavy metals, increasing concern over consumers and authorities. The future of fish and sustainability depend on the evolution of patterns of production and consumption, supported by regulatory initiatives. Alternatives to fish natural proteins, such as fish production cell based, continued.

World fish production has increased as the global protein demand has been growing. This is becoming increasingly unsustainable as global wild fish stocks are depleted and intensive fish farming contributes to increased disease and reduced perceived quality. In an industry considered worth more than $400 billion, farmed fish is now valued at more than half of global fish production.

Table 1: World fish production, fisheries and aquaculture (in millions of metric tons)

Source: Statista, Food and Agriculture Organization of the United Nations (FAO). Note: * Estimate.

The world’s largest producers of fish are found in Asia, which also represents the world’s largest market in terms of consumption (China), and four of the top five markets, with high consumption also in Japan, India and Indonesia. The United States rounds out the top five global markets.

…just like the number of fishermen and fish farmers

The total number of fishers and fish farmers in the world has followed an upward trend as more and more people living in coastal areas turn to fishing and aquaculture to support themselves.

Figure 2: Total number of fishers and aquaculturists in the world (M)

Source: Statista, FAO

What are the alternatives to preserve sustainability?

The fish space includes both private and listed companies. Mitsubishi Corp. (MSBHF) is active in the fishing industry but, as a conglomerate, only part of its value can be attributed to its fish business (which is part of its food division).

While investors are thinking about how to invest in industries engaged in sustainability and measure increasing the environmental, social and governance (ESG), they are likely to focus on the industry elements of food production that offer alternatives. The plant foods proliferate (as discussed in our note on meat substitutes) and aquaculture, there are many approaches. These include energy conservation, environmental improvement measures and improved agricultural practices. New scientific approaches such as the production of farmed fish and seafood are also under development. Cellular fish (production cell based) could solve many environmental and sustainability issues, but its three main challenges are: (1) the viability of the technology on a commercial scale; (2) cost and (3) acceptance by consumers and the regulatory environment.

A number of companies are looking to launch new fish and seafood products, such as BlueNalu and Shiok Meats on the cell side and Nestlé (NSRGY) and New Wave Foods are looking to launch seafood alternatives herbal.

Environmental regulatory support

The sustainability of the fishing industry and movements towards research and production of alternative sources are underpinned by global and regional environmental guidelines such as the United Nations SDG (Sustainable Development Goals) 14, to “conserve and sustainable use of the oceans, seas and marine resources”.

Table 3: Largest fishing companies, by market capitalization (US$m)

Source: Refinitiv, priced August 3, 2021. Note: Mitsubishi Fish activity in its food division

An effective source of protein

Fish is a relatively efficient source of protein, as feed conversion ratio is lower than that of a traditional farmed meat. Livestock is the most inefficient source of protein, as it takes a significant amount of food and water (and land) for each kilogram of meat or calories. Also, it takes a long time to rear the animals before they can be slaughtered. In this regard, fish is more effective.

Table 4: Overall food conversion rate of selected meats and fish

Source: Statista, Mowi, Salmon Farming Industry Handbook 2021. Note: Feed conversion rate defined as the kilogram of feed needed to increase the body weight of the animal by 1 kg. *Range of 4 to 10.

Sustainability is important to consumers

Environmental concerns have come to the fore over the past decade and consumers are demanding more sustainable products. Fishing is no exception, with consumers now trying to avoid species that are endangered and fish that are not sustainably caught or farmed. This should contribute to the effect of lasting changes within the industry, as suppliers adapt to meet growing consumer concerns.

Table 5: Perceived importance of sustainable fishing worldwide 2019

Source: Statista Ipsos

General disclaimer and copyright

This report was commissioned by prepared and published by Edison. Edison Investment Research’s standard fee is £49,500 per year for the production and wide distribution of a detailed note (Outlook) followed by regular update notes (usually quarterly). Fees are prepaid in cash without recourse. Edison may charge additional fees for providing roadshows and related IR services for the client, but is not compensated for any investment banking services. We never take payment in shares, options or bonds for our services.

Accuracy of content: all information used in the publication of this report were compiled from publicly available sources that are considered reliable, but we do not warrant the accuracy or completeness of this report and have not sought to ensure that this information be independently verified. . The opinions contained in this report are those of the research department of Edison at the time of publication. The information or forward-looking statements in this report contain information based on assumptions, forecasts of future results, estimates of amounts not yet determinable and therefore involve known and unknown risks, uncertainties and other factors that may cause actual results, performance or achievements of them to differ materially from current expectations.

Exclusion of Liability: To the fullest extent permitted by law, Edison shall not be liable for any direct, indirect or consequential losses, lost profits, damages, costs or expenses incurred or suffered by you arising out of or in connection with access to, use of or reliance on any information contained in this notice.

No personal advice: The information we provide should in no way be construed as personal advice. Further, the information provided by us should not be construed by any subscriber or potential subscriber as a solicitation by Edison to effect or attempt to effect any transaction in any security. The securities described in the report may not be eligible for sale in all jurisdictions or to certain classes of investors.

Investment in Securities Mentioned: Edison has a restrictive policy regarding personal dealings and conflicts of interest. Edison Group does not engage in any investment activity and therefore does not hold positions in the securities mentioned in this report. However, directors, officers, employees and contractors of Edison may hold any position or related titles mentioned in this report, subject to Edison’s policies regarding personal dealings and conflicts of interest.

Copyright: Copyright 2020 Edison Investment Research Limited (Edison).

Original post

Editor’s note: The summary bullets for this article were chosen by Alpha Research Editors.

Previous What is the healthiest fish to eat? The best choices for you and the planet
Next Marine protected area status can increase fish populations by up to 400%