Around the globe more than 800 million people go to bed hungry every night, according to the World Food Program, and almost 50 million people in dozens of countries are teetering on the edge of famine — and the situation has been exacerbated by sharp increases in food prices during 2022.
One IMF estimates $5 billion to $7 billion in further spending is needed to assist vulnerable households most affected by the higher food, fertilizer import prices. An additional $50 billion is required to end acute food insecurity.
Things could get worse. World population trends suggest 8.5 billion people will inhabit the planet in 2030 and 9.7 billion in 2050, peaking at 10.4 billion during the 2080s, where it will remain until 2100.
AGTECH ON THE BEAT
Feeding that many people in the face of climate change, water shortages, deforestation, dwindling biodiversity and soil pollution present a huge life-and-death challenge. Indeed, the world is expected to lose 250 million crop production acres by 2050, according to estimations from the Food and Agriculture Organization of the United Nations.
With more people to feed, regenerative and sustainability agriculture has received much attention from stakeholders, including producers, policymakers, scientists, academicians, consumers and investors.
Startups creating agricultural technologies are legion and aiming to instigate a fourth agricultural revolution, but short of that the situation can appear dire. Consider that much cropland is devoted to feeding livestock rather than people. By some estimates livestock consume 10-times the food they provide to protein-hungry humans in the developed and developing world.
This has led innovators to seek alternatives to traditional food production, including looking to the planet’s oceans to supplement agriculture with so-called aquaculture to vastly expand the production of fish and other forms of seafood, as well as waterborne plant life.
The concept is not a new one; it dates back ancient China, Egypt and Rome.
TRYING TO MAKE A SPLASH
The seafood and fishing sector is also facing challenges, such as overfishing and environmental damage associated with climate change. Aquaculture can be used to produce food, restore habitats, replenish wild stocks, and rebuild populations of endangered species that can be done in both fresh and marine water.
“The future of food sustainability lies not on land, but in our oceans. So, we need them to thrive forever,” is how Forever Oceans describes its mission.
Hawaii-based Ocean Era, an offshore farm near Mexico, says its goal is to “soften humanity’s footprint on the seas.”
Blue Ocean Mariculture, which raises fish in submersible sea pens near Hawaii, aims to produce “the best-tasting fish without harming the environment.”
The Food and Agriculture Organization of the United Nations says aquaculture is growing faster than other major food-production sectors. Amid the COVID-19 crisis, the global market for aquaculture was estimated at $180 billion in the year 2020 and is projected to reach $245 billion by 2027, or a compounded annual growth rate of 4.4 percent, according to data by ReportLinker, an AI enabled market intelligence platform.
There is growing exploration and innovation for open ocean aquaculture, capable of producing 16.5 billion tons of fish per year. Offshore fish farming, also referred to as industrial ocean fish farming, are fish enclosures such as net pens, pods, cages or other devices floating in open water.
Ocean Farm 1, located in Norway, is one of the world’s first offshore fish farms and was designed in 2018 by salmon farmer SalMar ASA. The organization paid China Shipbuilding Industry Corp. $300 million for six facilities. The pilot system is 220 feet high and 360 feet in diameter, roughly the length of a football field. Its water volume is equivalent to more than 200 Olympic-size swimming pools and is designed to withstand 50-foot waves. Movable submerged valves disperse food to allow fish to live at depths instead of clustering near the surface for feeding. The ocean current helps clear out waste to reduce mortality and breed healthier fish. The facility is expected to produce 12,000 tons of fish per year.
Such sustainable fish production is also expected to capture the attention and investment dollars from venture capital funds, corporate ventures, private equity firms, family offices, infrastructure finance initiatives and institutional investors. Current forecasts suggest producers will need $150 billion to $300 billion in capital expenditures over the next 10 years to build out the infrastructure required to accommodate consumer demand, according to Nature Conservancy’s 2019 report on the subject, titled Towards a Blue Revolution. That’s a far cry from the little more than $3 billion invested during 2022.
“We are poised on the brink of a waterfall of capital coming into the space which will help us to grow a robust and sustainable aquaculture sector,” says Maggie Fried, head of the ocean and aquaculture investor consortium at CREO Syndicate, speaking at the Blue Food Innovation Summit in April 2022, as reported by Seafood Source.
CREO Syndicate is a New York City-based nonprofit working with a network of about 200 global investors, primarily family offices, to invest and catalyze $1 trillion of capital into climate and sustainability solutions toward the decarbonization transition by 2025. Within CREO, the Oceans, Seafood and Aquaculture Investor Consortium is a group of 35 single-family offices and funds collaborating to deploy more than $250 million in investments for decarbonization initiatives, including aquaculture and the blue food sector (animals, plants and algae harvested from freshwater and marine environments) in the Americas and Europe.
“There is a tremendous opportunity in the market for impact investing. We have the privilege of managing capital to really make a difference in the world,” reports S2G Ventures, a VC firm that invests in the space with a goal of improving ocean health, climate resilience and food security while also generating above-average financial returns.
Other players in the space include the Global Seafood Alliance, Aquaculture Stewardship Council and IDH.
The Global Seafood Alliance is an international nongovernmental organization dedicated to advancing responsible seafood practices while meeting global nutrition needs.
The Aquaculture Stewardship Council is a certification program and label for farmed seafood. The nonprofit establishes a protocol on farmed seafood while helping ensure the aquaculture practices used are sustainable.
IDH, which dubs itself “the sustainable trade initiative,” writes that its goal is “to maximize the financial, social and environmental benefits of seafood production.”
A BIG SCHOOL OF THOUGHT
Aquaculture has a massive canvas to work with, as the world’s seas cover more than 70 percent of the Earth’s surface and, in the process, reduces the pressure on limited land-based resources. What’s more, marine aquaculture currently produces only 2 percent of the global food supply.
Driving additional investment and attention toward sustainable forms of aquaculture holds the potential of building a stronger and more diverse global food system for the ever-expanding population.
Done correctly, aquaculture can also become an impact investment rewarding investors on multiple fronts.
Andrea Zander is website content editor at Institutional Real Estate, Inc.