Industry Spotlight: Salmon
What’s So Fishy?
From the tops of our bagels to the centerpieces of our Friday night dinners, one food has forced its way deep into our diets. Constantly in stock at grocery stores and showing no signs of slowing down: salmon.
Americans’ waistlines continue to expand. So doctors have pushed for fish (in place of meat), specifically salmon, to make up a greater stock of the consumer’s daily diet.
Salmon, Shellfish, and Sushi, Oh My…
A 2015 report by the National Oceanic and Atmospheric Administration estimated that the United States per person yearly consumption of fish and shellfish was 15.5 pounds. This marks a 6% increase from 2014. In 2014, Americans consumed 14.6 pounds per person.
15.5 pounds consumed, roughly 55% was strictly America’s top three seafood choices: shrimp, salmon, and canned tuna. Of those 15.5 pounds, salmon amounted to exactly 2.876 pounds.
The US currently has a population of 326.8 million people. This puts US salmon consumption just under 1 billion pounds per year. That’s a whole lot of sushi rolls! And speaking of sushi, between 2010–2014, sushi consumption in the US grew by 28%! This trend continues a strong positive trajectory today.
Salmon Tech
As more people crave the delectable taste and nutritional value of salmon, suppliers of the world’s favorite fish are preparing for the future. They are doing so with technological advancements to keep the industry growing. Norway, one of the world’s top salmon suppliers, exports roughly $8 billion worth of seafood annually. This amounts to nearly 8% of the country’s total exports. Being such a lucrative business, companies are willing to spend top-dollar to gain an advantage.
One firm in Norway, Lingalaks, is attempting to use hydro-acoustic technology. This tech listens to salmon activity to determine when the fish have had enough to eat. By listening to the peaks and troughs in noise of its countless salmon farms, the firm more accurately feeds its fish. This avoids wasting money on extraneous food.
The CEO of Lingalaks, Erlend Haugervoll, expects the technology to save between $900,000 and $1 million per feeding. In the competitive industry of farmed salmon production, which expects to grow by 9% in the next year, every cost-cutting solution is an important one.
Stringray Salmon?
Another company, Stingray, is attempting to fix the issue of the parasitic sea louse and its harmful effects on salmon. Sea lice attach themselves to the fish and eat away at their flesh. This can lead to the fish becoming inedible for humans or possibly kill it.
Stingray is working on a new technology that roams around the fish without disruption while projecting lasers onto fish’s affected areas. The shots are fatal for the lice; however, fish skin is powerful enough to endure them. This allows the salmon to reflect the laser without harm.
How Plastic Fish May Impact The Stock Market
You don’t need a degree in Finance to know that plastic in fish is a bad thing. Worsening water pollution and our world’s ever-growing reliance on plastic could have detrimental effects to the seafood industry as a whole. According to the World Economic Forum, 12.7 million metric tons of plastic enter the ocean every year.
As a result of this research, the World Economic Forum estimate that there could be more plastic than fish in the sea by 2050.
In 2015, researchers studied Californian and Indonesian fish markets and discovered nearly 25% of fish contained plastic remnants. To date, we have not experienced large-scale, negative health effects of plastic consumption in our seafood. However, marine plastics are already irreparably affecting our oceans and the entire ecosystem that inhabits them.
Rampant pollution is harming our oceans and all the seafood they supply. We are negatively impacting the salmon population. Humans are destroying prime habitats for salmon by moving rivers and blocking others. This disruption makes room for hydroelectric power machines and flood control.
Some human intervention may be well-intentioned — a response to the negative effects of climate change and environmental challenges. Unfortunately, massive changes to water flows can affect entire ecosystems by redirecting the flow of nutrients and food availability. Although adult salmon tend to migrate to the seas, they return back to their fresh water roots to lay eggs. Altering water flows has resulted in massive salmon displacement, rendering them unable to return home to lay eggs. This could cause projected wild salmon stock to stagger.
America’s Stock Trade Roe
Global demand for salmon continues to rise faster than the stock market. America’s new protectionist trade policies in the international community, might be letting salmon slip through its fingers.
In President Trump’s first major political move, Trump pulled out of the Trans-Pacific Partnership (TPP) in his first day in office. Unfortunately, the pact consisted of 12 countries that border the Pacific ocean. They collectively account for nearly 40% of the world’ economic output — and the stock market wasn’t happy.
The wording of the deal would have cut tariffs and ultimately boosted trade growth between the countries involved. Trump made it clear during his campaign that he was against the deal; his actions in office proved exactly that. The US imports over 90% of the seafood we consume. As a result, any rejection of a trade proposal of this scale instantly affects the seafood, and of course, the salmon industry.
Trump’s rejection of the TPP will have implicit effects on our future involvement in the multilateral trade deals. Then again, another country’s action following the breakdown of trade relations will likely prove more worrisome for the US.
Fishy Deal
In July, Japan, one of 12 members of TPP, and the European Union agreed on a massive trade deal. The deal bore similarity to NAFTA: the largest trade deal in the world which has US working with Mexico and Canada.
The deal was announced the night before the G-20 summit in Germany. This was supposedly a slight jab at Trump’s decision to back out of the TPP. Japan’s main objective was to create a trade agreement with the world’s largest economy, the US, rather than the EU. However, once the TPP fell apart, Japan recalculated quickly.
By nature of the countries involved, this deal will have significant ramifications for the U.S. salmon industry. Norway, Ireland, and the United Kingdom are 3 of the top 8 producers of salmon in the world. Japan’s agreement to lower tariffs and boost trade with the EU opened floodgates to the largest global salmon producers.
THE BOTTOM LINE:
The salmon industry and companies’ stocks are growing exponentially with increased demand and quickly-advancing technology. Still, we throw more lox on our bagels and roll more raw fish into our sushi than ever before.
The economic prospects of the lucrative industry are promising;, however, pollution and issues with US trade deals have turned the future of the US salmon industry a bit murky. Dirty oceans could soon make clean, highly sought-after wild salmon an unaffordable delicacy.
Global demand will continue to increase. The farmed salmon industry will likely realize significant growth over the coming years. This growth will likely occur despite challenges of providing sustainable, clean, and wild seafood which is desired in high-affluent markets.
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Originally published at https://blog.rapunzlinvestments.com on March 8, 2018.
