Industry executives speaking at the Blue Food Innovation Summit in London on Tuesday said that despite the current difficult investment climate, farmers using recirculating aquaculture system (RAS) technology remain attractive to an array of investors.
Four seafood executives insisted that the capital-intensive sector still has enough traction and upside for investors to withstand the more challenging investor market. The fact that some investors must tighten their wallets will not likely affect the sector’s long-term growth prospect, the executives said.
Panel members included Erik Tveteraas, investment director at Nutreco Nufrontiers; 8F asset management firm partner Yoram Layani; Swiss Blue Salmon CTO Sune Moeller; and The Kingfish Company CEO Ohad Mainam.
While RAS is indeed a capital extensive method for farming fish, the burden of a land-based farmer’s balance sheet is offset by the fact that conventional fish farming methods can't keep pace with increasing global seafood demand, Tveteraas said.
This, he said, results in continued investor interest despite a volatile macro climate.
Going forward, the land-based sector could particularly see interest from long-term investors, such as sovereign wealth funds and large institutional investors, Layani said during the panel debate.
“In fact, land-based is super aligned with what investors are seeking at the moment; local production, short supply chains, green agendas, food security, and inflation hedging,” Layani said.
“You could almost not find a better story if you looked for it,” he said.
Local food for local people
While current high energy costs affect RAS farmers’ margins, many are less exposed to the steep transport increase costs that conventional fish farmers face.
“The opportunity to produce fish more locally omits the current transport and logistic costs hurdles," Tveteraas said.
Regarding high energy costs, Swiss Blue Salmon CTO Sune Moller argued that there will be increasing scope for RAS farmers to look into energy management to combat certain costs.
The optimal solution for RAS will, however, not be technology based, Layani argued. “It will be about going back to basics,” he said.
“We need to solve the circularity and sustainability issues. Local food for local people, ideally with local feed supply and multitrophic systems that can address waste issues," Layani noted.
Eventually, as scale develops, capex will decrease, which will make it possible for RAS farmers to eventually also consider less high-value species, Layani suggested.
During a more uncertain macro climate, land-based farmers can supply the market with a steady, stable volume of biomass, Maiman said.
In terms of RAS generating enough money to continue to be attractive to investors, RAS famers are better off being physically far away from salmon producing nations, Tveteraas added.
This way, RAS farmers can get a clear competitive advantage in terms of transportation, he said, noting that Japan, China and the US markets are good from this perspective.
“RAS farmers should ideally be as far away from Chile and Norway as possible to get the best competitive edge,” Layani agreed.
And to have a cluster of several RAS farmers in one area is not detrimental for sector growth. There is room for many RAS facilities in the same market, Layani added.
In fact, the demand is big enough to accommodate several RAS farmers across several markets, Moeller agreed.
“And we can learn from each other. There is also good scope for all to collaborate and share information,” Moeller said. The success of the Norwegian aquaculture industry is indeed down to information sharing, Tveteraas agreed.