1. Chile Report: Salmon Farming
At the beginning of 2019, we took the opportunity to visit salmon farming operations in the Chilean summer.
Fishing companies can reduce their environmental impact on the climate and oceans, thus ensuring a prosperous long-term business which provides millions of people with healthy, sustainable fishery products. The industry is committed to improving its sustainability efforts. Industry meetings such as the North Atlantic Seafood Forum (NASF) tackle ongoing issues such as the carbon footprint in logistics, feed optimisation and new technologies to monitor fish welfare. In general, it can be said that this youthful industry is taking great strides forward. Companies are diversifying their business all along the value chain, thus improving their process monitoring and increasing efficiency.
Cheerful, collegial atmosphere
In June we attended the NASF in Bergen. ‘The North Atlantic Seafood Forum has become the most important fish & seafood conference worldwide’. These were the opening words of Mowi CEO Ivan Vindheim’s presentation at the NASF Investor Forum. After a two-year break due to the coronavirus pandemic, it was a pleasure to meet industry representatives in person once again. As soon as we arrived, we noticed the collegial atmosphere – everyone knew each other and people were happily exchanging ideas on a range of topics. We Bonafide representatives felt truly enriched to be a part of it.
Varied programme
Four days, 16 different seminars, eight one-to-one meetings and six company visits. A varied and exciting programme for Bonafide’s employees. Topics discussed at the meetings included:
- Global challenges in the transportation of fish & seafood products
- Post-COVID consumer behaviour
- Climate change and decarbonisation of the industry
- Challenges in the feed industry
- Future of the oceans
We were particularly struck by the good mood throughout the event. And it’s no wonder: the United Nations (UN) predicts that by 2050 we will need a 70% increase in current food production levels to feed the world. There is no single solution to this challenge, but it is spurring people to think in innovative ways which could fundamentally change the way we feed ourselves. And aquaculture is part of that. There was a lot of discussion about how to further optimise farming methods, what new technologies could be used and which species could be farmed. Many innovative tech start-ups were in attendance to present their latest developments to companies in the industry. The farming of marine animals has changed fundamentally since the 1990s, and for the better. The industry has learned lessons from its initial mistakes. And when it comes to farming methods, Norway is leading the way.
“I entered into this to address the problems I find most pressing, which are threats to food security and the environmental cost of beef production.”
Professor Mark Post, PhD, University of Maastricht
On the ground with companies
We used our time in Norway to visit local companies on site. It is exciting to see how certain companies are conducting experiments to improve their farming through simple means. Nowadays, fish excrement can be collected and processed into bio-fertiliser for agriculture. This is just one example of many current innovations. Interacting with the people in charge at the plants gives us an even better understanding of the opportunities and challenges facing the industry. Their passion for fish as living beings and their respect for nature are palpable. And everyone agrees on one thing – we have to think long-term and manage our resources sustainably to be successful. After all, many company owners want to pass on their aquaculture businesses to their children and grandchildren in good condition.
Networking
During the conference, we also had time to network and meet new people. With over 700 delegates in attendance from 400 different companies and 37 countries, the choice of conversational partners was diverse. On the second day, we were invited for post-seminar drinks overlooking the fjord. This was a meeting of financial experts from the fish & seafood sector. The consensus was clear: there are a range of investment opportunities in this fast-growing industry. The question remains, however, as to which projects and ventures will be among the most successful in the coming years. The world is changing, new issues such as ESG have come to the fore and new global economic challenges are constantly emerging. On the one hand, this concerns companies from an environmental perspective, and on the other, it also concerns us as active investors. Thanks to our many years of experience in the sector and sound company analyses, we are in a position to offer our investors added value and optimal risk management.
Fishing is Norway’s second largest economic sector
Thanks to the country's long coastline with wide seabeds and favourable climatic conditions, Norway’s fishing industry has grown steadily over the past 40 years. Today, fishing is the second largest contributor to the Norwegian economy after oil and gas.
The West is beset by a growing wealth gap, a shrinking middle class and polarised societies. This is a familiar phenomenon, but what if there was another side to the story?
Norway tops the WEF's Inclusive Economies Index, a study of the countries best able to achieve long-lasting, cross-sector growth which creates jobs for a large majority of the population and reduces poverty. This small Scandinavian country of 5 million people does things differently. It has the lowest income inequality in the world, supported by a mix of policies that promote education and innovation. In addition, the world's largest sovereign wealth fund, which manages the country's oil and gas revenues, is invested in long-term economic planning.
Norway is also getting a lot of things right in the aquaculture industry. And we are particularly delighted to see that other countries are adapting to Norwegian standards and also improving their production processes.
Next stop, Chile
The world offers many other exciting regions for the fisheries industry besides Norway. This is why our funds stand for global, diversified investment in different species and along the entire value chain. Chile is one of the most interesting countries from our perspective, with our fund allocation currently standing at 15%. In Bergen, we met the management team from Chilean company Multi X and talked about the country's political challenges, among other things. In November 2022, our analysts will travel to Chile, visit some companies on site and get a first-hand impression of the seafood industry and the mood in the country. Our last visit to Chile was in early 2019. You can read more about our experiences in our Chile blogs (part 1 and part 2). We will also be happy to inform you about our impressions from this autumn/winter.
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