Aquaculture production is predicted to increase to 181 million tonnes by 2022, a rise of 35 percent from 2011, according to a recent report published by the United Nations’ Food and Agriculture Organisation (FAO).
And as demand for fresh fish grows globally, the agri investment community is starting to take a closer look.
“Fish as a supply of protein is often quite overlooked,” Torsten Böhler, managing director at investment banking group Abacus EM, told Agri Investor. “But, very much like agri, it has a wide spectrum of opportunity from production technology to different fish species, so we have actually found it a very exciting sector.”
FAO’s predictions will be closely linked with the application of technological advancements that will drive down fish feed costs and improve production methods despite challenges such as water scarcity and higher general input costs, says the FAO report.
Source: Food and Agriculture Organisation
The logistics of getting fish products to the market is another interesting part of the value chain, added Böhler.
“I think there are opportunities for investors in various stages of the value chain,” he said. “Some of the businesses we are working with have successfully mastered certain biological tasks. For instance, one business is now spawning fish all year round when previously it was only sporadically. Other opportunities exist in re-circulation technology and equally there are opportunities further down the value chain in processing.”
Abacus is particularly interested in the opportunities presented for fish farms in Kazakhstan, a land-locked country in Central Asia that once had a booming fish farm market. “The industry almost disappeared despite the strong domestic demand,” said Böhler. The country is also well positioned to access 500 million people across various neighbouring countries such as China, Russia and Ukraine, he added.
Fish farming in general is re-emerging as a good source of fish elsewhere in the globe as consumers become more concerned about sourcing sustainable fish and not depleting global supplies even further.
In the north-east US region, for example, there are going to be big efforts to rebuild stocks of wild, migratory fish such as salmon and also to build up farmed fish production presenting lots of opportunity for growth, according to a source at an impact private equity firm operating in the region; aquaculture will be one pillar of the firm’s food and agriculture investment strategy.
“There is clearly insatiable demand for fresh seafood,” she told Agri Investor.
Other private equity firms to tap the aquaculture market include Paine & Partners, the agribusiness PE firm, which has invested into ICICLE Seafoods, a Seattle-based seafood producer and ScanBio, a Norwegian producer of fish protein concentrate. And Nigeria’s Verod Capital, a Lagos-based private equity firm, invested into a catfish and tilapia fisheries facility in its first agribusiness investment in May.
Cuna Del Mar is a dedicated aquaculture private equity firm based in San Diego that is invested in five separate businesses so far, according to its website. The firm has not responded to requests for comment.
China is by far the largest aquaculture producer, accounting for 65 percent of the world’s production in 2011, according to the FAO. Other key producers include India, Vietnam, Indonesia and Bangladesh, according to the report.