Aquaculture to Bring Sustainable, Profitable Investment to MexicoBy Sofía Hanna | Mon, 10/11/2021 - 18:31
Q: Why should investors see aquaculture as a reliable and profitable investment opportunity and how does your company promote this?
A: Demand for food is set to increase by 50 percent by 2030 so it is only natural that food production will also increase. Furthermore, the climate is changing, making consistent good production a challenge and placing more pressure than ever on our food systems.
Aquaculture is the fastest-growing food sector in the world because it produces more protein than beef or wild seafood. Our oceans represent 70 percent of the biosphere and have been feeding people for millennia. The shift from the wild catch is motivated by a need for a consistent supply; unlike fishing, aquaculture or sea ranching is much more reliable and will be further relied upon as a consistent and sustainable food source. Consumer trends have leaned toward sustainability as a major focus as consumers become more aware of the impact of buying choices on the environment; they want quality and sustainability. Aquaculture checks these boxes and can lead to a greater market share and greater revenue generation.
We ensure that investors are putting their money in the right place. There are numerous projects floating around but they have major issues related to organization or farm operations. We use our 25 years of experience to evaluate an investment’s expected production under current conditions and can recommend capital allocation for improvements. We promote sustainably raised, high-value products that maximize profitability with fewer resources.
Q: How important is aquaculture in Mexico and how has it supported the country’s economic development?
A: Mexico is in a strategic location that offers healthy coastlines, a skilled workforce and access to foreign markets. There is great potential for to industry to expand and grow. The country has the potential to become a leader in sustainable food production on the world stage. Aquaculture leverages natural resources in a responsible manner and provides opportunities to remote areas of the country, where reliable jobs often are not available. Aquaculture also impacts eight out of the 17 sustainable development goals set by UNESCO for 2030.
Q: What further investments do you see impacting the sector?
A: New technologies will improve farm conditions and ultimately increase production. There have been three types of development in the industry. The first are those sponsored by academic institutions. The second are community-based investments from fisheries, cooperatives and livestock producers that have seen the potential and shifted to aquaculture. Finally, foreign investors that have identified the opportunities that Mexico offers. Out of these three, foreign investors most commonly prioritize technology, while community-based projects focus on labor-intensive operations instead of technology and lose a great deal of productivity along the way. The programs promoted by academic institutions do acknowledge the importance of technology but often lack adequate management to use it to its full potential. We will likely see technology from other parts of the world begin to converge in Mexico. Further down the line, we will see recirculating aquaculture systems (RAS) once the technology has matured in other regions.
Q: What is Aquaculture Advisory’s role in keeping aquaculture financially and environmentally sustainable?
A: Sustainability is linked to production and profitability; an unhealthy environment limits production and increases costs. It boils down to making smart investment choices, allocating capital in the right places and abiding by proven management practices. An environmentally sustainable farmed product is a financially sustainable and profitable business. Our role is to make sure that projects have the right structure to achieve this.
Q: What values does Aquaculture Advisory consider when doing a financial valuation to eliminate doubt among investors?
A: Primarily, we model the investment from a husbandry concept first and finalize it with a company valuation. We determine achievable results through COGS, in-depth market appraisals and apply financial and biological models based on the farm site’s production potential. Our 25 years of experience in farm management and international corporate experience gives us the ability to project actual profit margins and predict the variables that a prospectus or routine financial due diligence may not uncover.
Q: Which countries can help Mexico develop this market and what is needed to generate these alliances?
A: Mexico’s northern neighbor is the world’s largest seafood importer. Having this large market so close, and given Mexico’s many binational agreements, opens great opportunities. Investment can come from anywhere in the world; it is just a question of boosting investor confidence through outreach and education on the unique opportunities that Mexico offers, including the pristine waters of the Pacific and the Sea of Cortez and favorable regulations.
There are many species that are in high demand in the American market that would work in Mexico. We need to connect the money with the knowledge. Transparency through government protocols, ownership and the approval of farming leases are the keys to attracting multinational investment. We continually network and build relationships with local, state and federal entities to bridge the gap between investors and government.
Q: Aquaculture Advisory says that aquaculture is at the crossroads between applied science and business. Why is that the case?
A: Aquaculture is an early adopter of technology. Most other food production sectors like livestock are not as quick to pick up on new technologies. But aquaculture is a new industry, commercially speaking, that was born during a technological boom. It thrives on technology. There are numerous strategic partnerships between academic institutions and aquaculture farms around the world, which is important to the industry because it would be too costly for investors to do the research production, illness prevention, genetic engineering, or alternative feed. At the end of the day, a more productive farm is better for communities.
Q: Between financial assessment, infrastructure design, recruitment and farm management, which represents the biggest challenge?
A: All these impact productivity and profitability but can be managed for optimal production with the correct investment strategy and economic modeling. Challenges arise when a farm site location lacks strategic advantages like reliable and convenient access to processing and distribution centers or a skilled labor force. Our objective is to help the industry grow and to connect profitable projects with the right investors. For that, the only challenges are delays in licensing approvals but we leverage our network with government institutions to ease the process along.
Q: What technologies have been developed to improve aquaculture?
A: Farms use technology to manage their production potential and lower costs through a repetitive and analytical understanding of their tasks. We have seen innovative pen designs such as offshore farming and alternative feeds, which increase capacity. Monitoring systems help anticipate contingencies. Mexico would see a considerable increase in outputs if it implemented this technology into its current projects and planned future investments with it in mind as an asset and not as a liability. Further down the line, we will see automation and RAS systems come into play in Mexico with lower electrical and production costs.