News analysis
Ÿnsect, a French insect farm, has just raised $125 million in startup capital to mark the biggest agtech funding deal in European history, according to AgFunder News.com.
And half a world away in Alaska anyone should care why?
Chaos theory maybe. A butterfly flaps its wings in New Mexico and causes a hurricane in China.
The hurricane or snowpaclypse or whatever the fallout coming from Ÿnsect, if the company proves as successful as its investors hope, is in this case aimed smack at Alaska’s commercial salmon fishing industry, the oldest segment of the 49th state’s traditional economy and still the state’s second-largest employer even if most of the jobs are highly seasonal and require a lot of imported labor.
As the company name Ÿnsect suggests, Ÿnsect is in the business of farming insects, mealworms to be specific. And what do meal worms have to do with Alaska fisheries?
They are, as AgFunder reports, “ingredients for fish feed” and part of Ÿnsect’s “effort to capture some of the $500 billion animal feed market. The startup is one of 50 insect farming groups that have collectively raised $480 million to-date, according to the International Platform of Insects for Food and Feed (IPIFF), an EU-based association for the industry. In 2018, members of the association produced 6,000 tonnes of insects in 20 countries.”
Insect-based feedstock is the second wave of a fish farming juggernaut that has already taken over global salmon markets and appears destined to make wild salmon an ever smaller player in the marketplace.
Alaskans can comfort themselves all they want with suggestions of how wild fish are “better” than farmed fish, but better without demonstrable differences to the consumer is a hard sell, especially when the competition comes in the form of bigger and bigger businesses with more money to finance their own promotional campaigns.
Tidal wave
Farmed salmon already control the price paid for wild salmon with competition certain to constrain prices in the farmed sector going forward. Once industrial agriculture gets rolling its productivity capabilities are hard to believe.
Alaska wild fish markets are increasingly up against the unstoppable power of technological innovation.
The conclusion was not unreasonable at the time. A global death rate that had been falling steadily since the start of the 1960s ticked upward in 1964, and though it resumed its descent in the years that followed, it seemed only logical that food production couldn’t keep pace with population growth.
As it turned out, however, the Ehrlichs’ prediction was badly wrong. The so-called Green Revolution that began in the 1950s exploded into the 1960s and global agricultural production suddenly began outpacing population growth.
“The developing world witnessed an extraordinary period of food crop productivity growth over the past 50 years, despite increasing land scarcity and rising land values,” Prabhu L. Pingali of the Bill and Melinda Gates Foundation wrote in a history published by the Proceedings of the National Academies of Science of the United States of America in 2012. “Although populations had more than doubled, the production of cereal crops tripled during this period, with only a 30 percent increase in land area cultivated. Dire predictions of a Malthusian famine were belied, and much of the developing world was able to overcome its chronic food deficits.”
In that paper titled “Green Revolution: Impacts, limits, and the path ahead,” Pingali also took a shot at assessing “Green Revolution 2.0.”
“By 2050, global population is projected to increase by about one-third, which will require a 70 percent increase in food production,” he wrote. “Harnessing the best of scientific knowledge and technological breakthroughs is crucial for GR 2.0 as we attempt to reestablish agricultural innovation and production systems to meet today’s complex challenges.”
Pingali didn’t use the words “Blue Revolution,” but there seems be one on the horizon with Atlantic Sapphire’s “Bluehouse” salmon farm soon to come online in Florida, and Nordic Aquafarms planning similar, on-land, recirculating aquaculture systems (RAS) to raise salmon in Maine and California.
Where mealworms undermine the complaint that salmon farms ecourage overfishing of bait fish, RAS systems eliminate complaints that salmon farms could pollute coastal waters, although the Monterey Bay Aquarium Seafood Watch, which had once been leading the fight against farmed salmon, has already concluded a lot of those problems have been resolved.
Farmed salmon now top the Watch’s list of “Best Choice” salmon recommendations.
Future world
Commercial fishing isn’t going the way of market hunting any time soon, but it will slowly head in that direction. Not because of the decimation of the wild resource – science-based management has made it possible to both use and conserve wild resources – but because of market economics.
Unless, of course, wild-fish harvesters evolve their operations.
Technology; it’s all about technology, and Alaska – sad to say – is on the wrong side of the technological curve. Alaska commercial fisheries use outdated gear in outdated ways to harvest fish in wholly inefficient ways.
Most of this is by design and cemented in place by state regulation. It was a wonderful system when the resource was valuable and spreading the harvest among as many fishermen as possible created good-paying jobs for many.
It will become increasingly bad as it creates poor-paying jobs for just about all. Cook Inlet is already home to a salmon fishery unprofitable for most commercial fishermen. That is likely to become the norm in most other fisheries other than the seine fisheries for pink salmon.
Seiners in Southeast Alaska have already managed to put together a permit buyback program that reduced the size of the fleet, thereby ensuring fewer fishermen to share the catch. They thus make up for falling prices per pound with higher volumes.
But going forward, the seiners have more than that going for them. For one thing, they are one of the most efficient Alaska fisheries. For another, they are fishing a species of salmon on which the price has likely bottomed out.
Pink salmon flesh is unlikely to get much more valuable in the future than it is now – unless maybe someone comes up with a salmon patty the world will actually eat in volumes – but pink salmon roe will remain a hugely valuable commodity because it is a product the farmers do not produce now and likely will never be able to produce efficiently.
Efficiency is the issue here. Markets reward efficiency, and efficiency is the name of the game for fish farmers. As the BBC reported only last week, salmon farmers “are turning to lasers, automation and artificial intelligence to boost production and cut costs.”
“How do you know if farmed salmon have had enough to eat?” the story asked. “Well, according to Lingalaks fish farms in Norway, which produce nearly three million salmon each year, the fish make less noise once the feeding frenzy is over.”
Lingalaks believes it can use hydroaucostic listening devices to determine when the fish are satiated and feed that information back to already computerized feeding systems to tell them to turn off the food supply.
It is believed the system could save Norwegian fish farms more than $100 million per year on wasted feed. And if the system works in Norway, there is little doubt it will soon be everywhere.
Adapt or die
Competition is a wonderful thing. It also has a bad habit of playing havoc with existing markets. When exactly was the last time you rented a video from Blockbuster, once a $6 billion a year company that rose to number 366 on the Fortune 500 list of the top U.S. businesses before simply fading away?
For someone in the journalism business, the fishery tech problem hits very close to home. Newspapers, radio and television once owned the information market in this country.
No more.
Their product didn’t change. News is still news. What changed was the method of delivery.
Newspapers, radio and TV were and are costly to produce. The internet is cheap. The internet radically shifted the economics of production at the same time it fragmented the product model.
Old media are now only bit players in a market dominated by various forms of social media. Quora with its often inane questions about nothing – “why is the sky blue?” or maybe even better, “why is there a sky?” – attracts almost as many eyeballs as the New York Times, the top-ranked news site in the country.
Markets are fluid. They flow toward profit. Alaska salmon fisheries are a place where there was money to be made in the past. Salmon farms, on the other hand, represent a place where there is money to be made today.
One can adapt to this or become Blockbuster.
“Aquaculture will be more able to take advantage of technology than wild fisheries,” he said then.
Day by day, it only becomes more obvious he was right. Anyone who has any doubts can simply follow the money. The investment is flowing to farmed fish and the technology that supports them.
Anyone who thinks simple “quality” can compete with this is naive. The biggest restaurant company in the world is McDonald’s. It isn’t selling the world’s best food. It’s selling a relatively tasty product at a relatively low price point.
So are the salmon farmers.
Categories: Commentary, News
Here is an attempt to get shellfish hatcheries in AK: https://www.ktoo.org/2019/03/02/researchers-hope-bill-could-help-efforts-to-revitalize-shellfish/
Here is some current issues with SE salmon hatcheries involving their needs for fresh water and the recent lack of it (water): https://www.ktoo.org/2019/03/02/hatcheries-the-canary-in-the-coal-mine-as-drought-extends-across-southeast-alaska/
maybe they need a RAS system….
but i’m confused. there cumulative 2018-2019 (1 Sept. to Aug. 31) looks to be 33/34 inches while normal is at 38 or 39: http://climate.gi.alaska.edu/stations/juneau
can 5 or 6 inches make that much difference? is a less than 20 percent decrease enough to “cause serious hydrologic imbalance?”
Much of the article is talking about further South than Juneau that is experiencing more serious drought. However, DIPAC is getting their water from ? I doubt they are getting it from city water so they could be getting it from Salmon Creek that’s coming from one reservoir that has been drawn down. They also have a smaller operation on Douglas Island that is also on a creek just across Juneau-Douglas bridge.
This is pretty serious for them to have already moved those fish to ocean net pens. I remember when the water line for Main Bay red hatchery in PWS broke and the decision was to release those fry into the ocean, knowing they would not survive. They must not have had net pens to move them to 15-20 years ago. At any rate those fish didn’t return but nobody expected them to.
Here’s another look at global fisheries and what’s up: https://www.cnn.com/2019/02/28/world/climate-change-fishing-oceans-global-warming-intl/index.html
Well, we all know we are going to die in 12yrs. More bad news? Interesting read along a more real scenario.
https://oceana.org/blog/chile%E2%80%99s-salmon-farms-may-use-more-antibiotics-any-other-meat-industry-%E2%80%99s-big-problem
yet another problem RAS solves, Bryan. the story did give me second thoughts about eating pork.
yes, but please note that the study does not include North Pacific salmon which are at all time record numbers. and the authors say that it’s hard to sort out how much of this 4 percent decline is actual climate caused and how much of it is related to over-fished fisheries being unable to respond to climate changes.
Alaska harvests decline a couple percent in the Gulf and increase slightly in the Bering Sea. the changes are so small is to be lost in the statistical noise of annual variability.
but there’s no doubt tropical fisheries are in trouble for a whole lot of reasons. the study itself is an interesting read.
When the James Beard Foundation, the Oscar of Foods, has a sponsor, Skuna Bay Vancouver Island “Craft raised Salmon” you know it is mainstream.
It might be mainstream, though First Nation has the money and political clout, to help influence change. Salmon water farms are old technology, which are mostly a toxic mess of sewage. The West Coast of the Pacific Ocean is sick. The salmon farms add pollution to Puget Sound. Part of the reason, that the farm’s days are numbered.
The farms will still exist in Chile, Norway and soon to be China, because they need the seafood and the money generated.
State of WA has banned salmon farms is Washington waters. They will all be gone by 2020.
First Nation in BC has filed suit with Canadian gov, to shut down 10 salmon farms. They better hurry up and get to land.
I would be more concerned with all the state employees, who will lose a their job to our Gov’s new budget axer.
Also, the world supply of seafood cannot keep up with the demand. I do not see that changing anytime soon. So, do not concern yourself with the AK comm fleet, they are making it.
The knuckle draggers supporting this Gov. will be having fits watching his budget get killed in Legislature (especially when their budget guy shows himself). Like Senator Micciche (finance committee member) said recently, we have a choice to make-whether to live like cavemen or not.
I meant to say “still” supporting this Gov..
Bill, I would like to be a fly on the wall, in Juneau, as our legislators try to make sense of the Gov’s budget director, Donna Arduin’s budget recommendations.
Some fun time in Juneau, hopefully the negative energy will not all invade DI.
James
Arduin’s only argument for most of her budget cuts are that they are necessary to balance it. No economic arguments at all until their economics guy (Ed King) shows up-nobody yet knows when that will be but it will be a hoot when he attempts to show what this does to Alaska’s economy.
These are amateurs and will get demolished by the numbers of folks pissed off as well as the economics IMO.
What is the DI?
ROE, one item that farmed salmon do not have since they are sterile.
The value of roe and fish oil keep climbing. The Not to worry,
The ex vessel salmon price has a good future.
Warren Buffet’s Berkshire had a hiccup, when Kraft/Heinz lost 27% recently. It seems the millennials are not buying the Oscar Meyer/Velveeta processed food. Macdonald’s themselves took a recent hit in the market. Like Coca Cola, it is not the powerhouse it once was. Sugar, flavored caffeinated carbonated water. Not doing as well as it used to.
I think you are on to something James !
I have said it before. Why not combine the two? A more balanced, trimmer approach to wild salmon and a free-for-all on farm raised salmon. Alaska can certainly do and profit off both.
Douglas Island.
I was hoping that the negativity coming out of Juneau, would not spell over onto the Island.
My opinion James, is that the negativity is coming from the entire State (even DI). Heheh! The only folks (knuckle-draggers) still supporting this Gov. are those wanting a windfall PFD with no skin in the game (no kids in public school, not on a road or marine hwy. system, nobody needing healthcare or social services, etc.).
Like Senator Micciche says, we have a choice to decide whether/not we want to live like cavemen. Even those on DI don’t want to go back to cavemen status.
Well Bill, that is why we have separation of powers. In Juneau we have the Gov, House & Senate members.
It helps if they are all on the same path toward a balanced budget. Like our National level, the pendulum swings all the way around sometimes, before it gets balanced.
James, I’m sure you remember Gene Rosellini “Mayor of Hippie Cove” who showed everyone in Cordova what it was like to live like a “caveman.” Very few others have any idea of what it’s like.
And even Gene wasn’t able to handle it, in the end.
When these pols get through with budget things, it’s my guess that fishing permits will be going up as there won’t be construction and many other things going on for a few years. Just my opinion.
It should be very interesting on how the reps & senators come up with their different budgets, and then try to mesh together with the Govs, during the session. Throw in a few lobbyists and we’ll get er done!
Is that not how participatory democracy actually works? Ain’t life grand!
Yes, I remember Gene. The person I have met, who would load up his back pack with 30-40 lbs of rocks, and then walk out to the glacier and back. One of a kind!
Just my opinion James, but I suspect that Legislature will not even attempt to mesh their eventual budget with Dunleavy’s. The Gov. has the last word with his line-item veto power so any budget items not having a veto-proof backing would be fair game. My guess is that there will be few items like that but could be a few entered in any meshing of House and Senate budgets.
Statutory PFD will be reduced by whatever cuts are deemed unpalatable by this participatory democracy to make the budget balance. And there will be lobbyists who will earn their money IMO.
I actually, for a moment, had Hammond interested in my maggot farm idea using fish waste.
which would have been a good idea at the time. now most of it gets ground up into fish meal, which is a good thing. then a bunch of the fish meals gets shipped to China. after that, who knows? the Chinese process it into a cheap fish food to sell to Norwegians salmon framers to help under cut Alaska prices?
At the time I was arguing for terrestrial livestock, chickens etc., as the ban was on for fish.
Lovely