Buyer beware!
One of the world’s most popular, profitable and sustainable seafoods is at risk
1st July 2021
Why was an old and unsafe Chinese factory trawler sold for USD 24.5 million in December 2020?
Planet Tracker has investigated.
LONDON, 1 July 2021. Seafood factory trawling is extremely profitable (c.30% EBIT margins globally), almost as much as the tobacco industry. This is particularly the case for walleye pollock because it is sustainably harvested. Walleye pollock is the world’s largest fishery for human consumption — it makes fish fingers, “crab” sticks, surimi or fish burgers – and although it currently remains sustainable and profitable, this could all change.
Financial think tank Planet Tracker warns that profits are now at risk, with key financial, environmental geopolitical and food security implications.
High demand for sustainable seafood in Western markets has been driving ambitious government-led investments in trawler capacity in Russia. Added to this, warming waters in the Pacific are also driving a migration of pollock populations from American waters to Russian waters and to the Arctic Sea. With Russia’s recent opening of commercial fishing in the Arctic Sea, there are serious repercussions on global food security and ultimately these factors could increase geopolitical tensions.
The source of the pollock supply chain is highly concentrated: ten companies own half of the global quotas. Together with fishery agencies in Russia and the US as well as the Marine Stewardship Council that certified three-quarters of pollock catches, they have considerable influence on the industry’s sustainability and profitability.
François Mosnier, Financial Research Analyst at Planet Tracker commented: “Our investigation of a second-hand trawler sale in Russia (a highly profitable transaction) shows that sustainability is a key driver of profitability for fisheries. Ironically though, high demand for sustainable fish coupled with warming waters might well result in lower sustainability and profitability, if no action is taken.”
He added: “Investors and lenders have a unique opportunity now to demand that the capital that funds the ongoing and future renewal of pollock fleets is conditioned to greater sustainability in order to preserve the industry’s long-term profitability.”
Call to action
Pollock producers (particularly the ten largest quota holders) need to ensure the long-term profitability and sustainability of the industry on which they rely, by:
Retiring, writing off and selling for scrap old factory trawlers
Using financing attached to natural capital covenants to finance the fleet renewal
Refraining from bidding for quotas in the Arctic for Russian companies
Implementing robust traceability systems that are compatible across the supply chain.
Publishing actual tonnage of fish harvested by species
Outlining plans to adapt to the climate change-induced change in the distribution of pollock populations.
The full report, “Pollockonomics: What a Single Trawler Purchase Reveals about the Economics of the World’s Largest Source of Palatable Fish” can be found here.
An infographic is available here.
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Notes for editors
ABOUT PLANET TRACKER
Planet Tracker is a non-profit financial think tank aligning capital markets with planetary boundaries. It was created primarily for the investor community to analyse the risk of market failure related to environmental limits which, other than climate change, are often not aligned with investor capital. Planet Tracker generates breakthrough analytics to redefine how financial and environmental data interact with the aim of changing the practices of financial decision makers to help avoid both environmental and financial failure.
Find out more: www.planet-tracker.org
