Three Reasons Sustainable Seafood will Reach a Tipping Point in 2016

Originally posted on 01 / 18 / 2016, by Anders Lennartsson

Over the past few years, ag tech has emerged as a trend in both the investment and sustainability worlds. The food we eat has such an emotional and practical presence in our everyday lives. In fact, food has become a focal point as we try to improve the systems that make and grow our food.  However, not much has been said about seafood, which is a seven billion dollar global industry with complex and far-ranging supply implications.  Recent scandals and changing consumer preferences have signaled three major demand drivers for safe and sustainably harvested fish and shrimp. 

1. Retailers are looking for sustainable solutions to ugly problems in the seafood supply chain.

Recently, the Associated Press published the results of its investigative reporting that revealed migrant workers and children were being sold into slavery to shrimp peeling factories in Thailand.  Shrimp is the most popular seafood in the U.S., with Americans consuming 1.3 billion pounds every year, or about 4 pounds per person.  Food retailers implicated in the scandal including Costco, Whole Foods, Darden, Ignite and Wal-Mart have condemned this practice and are looking for a solution to source locally, sustainably and with more transparency in the supply chain. Investment in American-based aquaculture development, the farming of aquatic organisms such as fish, crustaceans, mollusks and aquatic plants, is one way to address this complex issue because it’s local, sustainable, and transparent. Aqualife, one of our portfolio companies already has a $118 million offtake agreement in place for its shrimp production. This demonstrates real market demand for sustainable, safe seafood, particularly shrimp.

2. Land-based ag tech investment is soaring. Sustainable aquaculture will follow.

Between 2013 and 2014 Silicon Valley’s interest in backing agriculture and food-related startups caught fire, doubling in terms of deal size, according to data from Cleantech Group. With oceans comprising 2/3 of the earth’s surface and seafood remaining a staple of our diet, ocean cultivation and innovation is ripe for investment.  Most seafood available is farmed or imported.  Wild caught seafood, while healthier, is susceptible to overfishing depleting our natural resources, often includes the wrong species and is not sustainable in the long run. Vertical Indoor Seafood Farms from companies such as Aqualife  that can be located closer to where they ultimately will be consumed is the wave of the future.  For example, the Schäfer family in Germany built a vertical indoor shrimp farm producing close to 500,000 pounds of shrimp each year. Also, called Land-Based Recirculating Farms (LBRF) these highly technical facilities, whose origins stem from Texas A&M University, can produce high-value seafood for healthy living that is locally sourced and branded, as well as a fast and reliable source of supply of organic and non-GMO protein. For example, Aqualife’s facilities, which ultimately will be able to produce 10 million pounds of shrimp each year, will be located at an office park in Imperial Valley, California.  

3. Food safety is of increasing concern to consumers, creating demand for sustainably sourced food.

Brands like Chipotle have been hit hard by the negative impacts of E. coli. In fact, we believe food safety issues will continue to persist in highly complex, hard-to-manage supply chains.  For food brands, health and safety issues - more so than any other factor for purchasing decisions - tend to cause major consumer shifts in attitude that creates mainstream demand for safer, local, more transparent source of ingredients.  However, the U.S. currently imports approximately 91 percent of its seafood. These imports are susceptible to disease, contamination, pollution, pharmaceutical bioaccumulation and a host of other barriers to food safety. According to the Centers for Disease Control, 25 percent of food-borne illness outbreaks caused by imported food from 2005-2010 involved seafood; this is more than any other food commodity. And almost 90% of shrimp imports come from Asian countries such as China, Thailand, Vietnam and India. 

These forces are compelling consumers, brokers, and retailers to search for safer, more sustainable seafood options close to home.  Food and safety concerns, we believe will drive 2016 as the year we see vertical indoor seafood farming, move from the development phase to an accelerated deployment setting the stage to be the market standard and the consumer’s preferred choice.