"Aquaculture, not the Internet, represents the most promising investment opportunity of the 21st Century."
- Peter Drucker, Management Expert & Economist
- Peter Drucker, Management Expert & Economist
Niels Alsted backs both onshore, offshore farming for the future
"In a way, it's yes to all options," he said, asked if he sees the future lying with one in particular. "The current activity will continue, but there is a limitation on how much you can put into the sea and feed it, without collecting faeces, fighting diseases, lice, and so on."
versions of classic feed ingredients the way to go
"I think Norway is in a nice position, as it has the offshore knowledge from the oil industry," he noted. "Their industry will move forward in that direction I think. Failures there are very costly, if you don't get it right, you have to be cautious and you need deep pockets."
At the same time, he sees a bright future for recirculating aquaculture systems (RAS). As one of the recent predictions for 2019; Continued investor interest in this technology would be seen.
"If you want fresh salmon - and people do - they'll pay a high price for it," Alsted observed. "In the US and Asia, China, I think RAS will develop there. The logistics give an advantage to RAS. It'll never be cost competitive to net cages in the open sea, but if you add the logistics for fresh fish, it's another story."
In the traditional salmon-farming nations it's now "obvious" that the fish should be brought up to one kilogram in RAS before being put to sea, he added, minimizing the myriad risks to the young. "When people first introduced RAS for smolt, people were very skeptical, but of course it works. Its science, but it's not rocket science."
Again, these are big money investments and the risk of failure in these early stages remains, but the size of the companies which are looking at these developments means we've only just begun down the RAS road, he said.
Change coming in China
One region his advice might be welcome is Southeast Asia and China, on which Alsted has been vocal in the past.
finfish farmers could quadruple output
"Knowledge of how to handle that is going to be completely necessary just to sustain production. To grow it, you have to change practices, I'm sure of it."
"You have two different developments; in the western world technology will bring new opportunities, and in Asia it's a matter of implementing current practices from elsewhere and getting it running."
This means education, new legal frameworks and license-granting systems, he continued. "You can see from the Faroes, that's probably the best example of how to manage an area in the most efficient way."
"They went bankrupt, then said 'no, we must do it better'. Everyone takes care of the common goal. Now it's incredible, it's profitable not just thanks to [salmon] prices but because their costs are lower."
Better management doesn't necessarily require a reduction in the number of players, he said, but needs a strong administering of resources from a central point of view. "I was in China for a year and saw lots of farms," said Alsted.
"Structural change is needed. But if China decides to do something they move fast. There's a need for change, but the potential is huge - they could produce more with less. It's not a lack of knowledge at this point, it's a lack of ability to implement."
The Chinese government has begun steps towards modernizing, he noted, pointing in particular to 2018's crackdown on environmentally unsound operations - something which is set to continue in 2019.
"The water quality on that freshwater side is largely hopeless. Farms are starting to close down and that will initiate a way to show you can produce fish in a much smarter and more efficient way," he said. "I'm sure it will come, it's a matter of when. It can't continue as it is now, it's so inefficient."
Feed firms taking the lead
"The feed firms gave advice to small family units, which then started to grow and eventually became bigger than the feed companies, in salmon."
In China operations are still small, family-owned units, with little knowledge of water chemistry. Knowledge is dictated by farming experience, which works, but will not allow progress, he noted.
"In China, you don't own the land, so how can you invest if you're only guaranteed it for a few years? You don't know if you'll keep it at the next auction. That's what I mean by framework, there needs to be a way to promote development."
He reiterated his confidence that things will begin moving that way soon and backed China to take what works elsewhere and adapt it to life there. "They're good at doing that, we're already seeing it with the offshore farms. There's certainly plenty of money there for these projects.
By the start of 2019, Niels has started his own consulting company
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