Aquaculture
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When you are shopping in the grocery store or picking out dinner in a restaurant, do you insist on wild-caught fish? Do you care if your fish is farm raised? Turns out, most people don’t. According to the United Nations, about 47 percent of the world’s total fish supply comes from aquaculture. This translates to a global aquaculture market that is expected to grow to more than $52.4 billion by 2026.
According to the Food and Agriculture Organization of the United Nations (FAO’s) 2020 report, “The State of World Fisheries and Aquaculture 2020,” per capita fish consumption grew from 9 kilograms in 1961 to 20.5 kilograms in 2018, equating to around 1.5% growth each year. Per the report, in 2017, fish consumption accounted for 17% of the world population’s intake of animal proteins, and 7% of all proteins consumed.
That’s a lot of fish, and a huge opportunity for the aquaculture industry.
The market is responding to huge demand growing fast, with annual fish production expected to expand from 179 million tons in 2018 to 204 million tons by 2030. According to the FAO, aquaculture production specifically is projected to reach 109 million tons in 2030, representing an increase of 32% compared to 2018.
Still, most people might be surprised to learn that the “the number of fish eaten from fish farms is roughly even with the number of wild fish consumed, especially as the demand for fish has grown,” according to UC Santa Cruz researcher Anne Kapuscinski.
Here’s what investors should know about the aquaculture industry.
What Is Aquaculture?
Simply put, aquaculture is the breeding, rearing, and harvesting of fish, shellfish, algae, and other organisms in all types of water environments, according to the National Oceanic and Atmospheric Administration (NOAA).
Aquaculture often takes place in coastal marine waters and the open ocean. Aquaculture in the US produces numerous species including oysters, clams, mussels, shrimp, seaweeds, and fish such as salmon, black sea bass, sablefish, yellowtail, and pompano. In addition to producing food, aquaculture restores habitat, replenishes wild stocks, and rebuilds populations of threatened and endangered species, according to NOAA.
According to the Agricultural Marketing Resource Center, the top five fish producing countries in 2019 were China (63.7 million metric tons), Indonesia (16.6 million metric tons), India (5.7 million metric tons),Vietnam (3.6 million metric tons) and Bangladesh (2.2 million tons). Asia accounted for 89 percent of world aquaculture production by volume, most of which was produced by China.
Why Invest in Aquaculture?
The world’s appetite for fish isn’t anticipated to slow down anytime soon. By 2030, the FAO anticipates that the global human population will eat 30 million tons of fish.
In part, that’s because the world is demanding more protein than ever. Two strong drivers of the growing aquaculture industry include an increasing population growth and protein consumption per capita. Where this growth can potentially leave oceans overfished and depleted, aquaculture offers a creative solution.
According to Forbes, the fish industry “is a decade or more behind all other production animals with respect to innovation — and thus is one of the more attractive opportunities…for agtech investors and startups alike.”
The industry, however, is not without challenges. From bacterial and viral infections among densely populated fish to environmental impacts, aquaculture isn’t perfect.
There is, however, ample opportunity for scientific solutions. For investors, this means investment opportunities in everything from improved vaccines to fish food to genetic engineering of fish that are more resilient and adaptable. According to Global Market Insights, the global aquaculture vaccines market alone will reach $290 million by the year 2025. Even more, supplying nutrients to the aquaculture industry is a $60 billion opportunity.
Investment in fish farming is happening now, and happening here. In November 2020, the company Pure Salmon announced that it will build a large indoor fish-farming operation in Virginia. Pure Salmon will invest about $228 million in the equipment and facility, which according to the news release, would be the “world’s largest vertically integrated indoor aquaculture facility.”
While aquaculture is lauded as more sustainable by comparison to the practice of overfishing, for example, there are some doubts about the ethics of it. To name a few, wild fish are often caught to feed farmed fish, questioning the efficacy of the system. Additionally, fish waste in densely populated open ocean farms can deplete oxygen in the surrounding marine environment. That’s not to mention genetic engineering, the living conditions of farmed fish, or other considerations.
For investors interested in environmental, social and governance (ESG) issues, the Coller FAIRR Protein Producer Index can help. The Coller FAIRR Protein Producer Index is the world’s only comprehensive assessment of the largest animal protein producers on critical ESG issues.
The market demand for fish isn’t expected to slow down. And as such, aquaculture is expected to grow as a crucial industry that helps to feed the world’s population. According to the FAO, “to ensure a food secure future for all, the fisheries and aquaculture sector is key.” This means that there is ample opportunity for investors as the fish farming market continues to grow and develop.
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The information and data are as of the December 21, 2020 (publish date) unless otherwise noted and subject to change. This blog is sponsored by Magnifi.
Precious Metals
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Nicknamed the “crisis commodity,” gold is an investment that people flock to when the world seems uncertain. And it’s no surprise— gold has been long associated with the gods, immortality, and wealth itself.
In the midst of geopolitical and macroeconomic uncertainty, gold also provides portfolio stability. On the more recent historical record, gold has performed well in the worst of times, including the 2008 financial crisis and during the market fluctuations in the 1970s. This is in part because of the fact that, as the value of the dollar drops, the demand for gold tends to increase.
Geopolitical and macroeconomic uncertainty seem to describe 2020 well enough. So, it’s no surprise that these days, the demand for gold and other precious metals is up.
But precious metals like gold are more than old forms of currency or components of jewelry. They are also used in car engines, dental work, our phones, as components of medical equipment and much more. Here’s why you should consider adding precious metals to your portfolio.
What are precious metals?
Metals like gold were historically a form of currency but they also have industrial applications in dentistry and electronics. For example, gold is used in computer memory chips, electronic components for cell phones and other devices, dental filling including crowns and bridges, surgical instruments, medical treatments, telecommunication satellites, and specialized glass.
It might be surprising to learn that while China, Australia and Russia are the world’s major producers of gold, the U.S. is the fourth-largest gold-producing nation. In 2019, the U.S. produced 6.1% of the world’s total gold production for the year coming from states including Nevada, Alaska, Colorado, California, and Arizona.
While gold is the best-known precious metal for investment, it isn’t the only one. Investors should also consider silver,platinum, and palladium.
Like gold, silver has historically functioned as currency. Unlike gold, however, silver tends to play a stronger role as an industrial metal. Whereas only about 10% of the demand for gold is driven by industrial use, about 60% of the annual demand for silver is driven by industrial use. That said, the gold market is larger than that of the silver market.
Silver today is used in batteries, solar panels, cell phones and other electronic devices, nuclear rods, antifreeze, ointments, mirrors, specialized glass, engine bearings, water filtration systems, dental fillings, as well as for silver inputs to industrial items including electrical appliances and medical products.
Platinum, another precious metal, is even more rare than gold, which often drives its prices higher than that of gold. An industrial metal, platinum is most notably used for automotive catalysts. Catalytic converters are exhaust emission control devices that minimize pollutants, and they are in growing demand. The automotive industry is the world’s largest consumer of platinum.
Palladium is an even lesser-known precious metal but it is found in Russia and South Africa, as well as in the U.S. and Canada. Palladium is approximately 30 times as rare as gold. In such high demand that exceeds supply, palladium, like platinum, has exceeded the price of gold in recent years.
Palladium is used for a variety of things, from catalytic converters (like platinum) to dentistry, medicine, chemical applications, jewelry, and groundwater treatment. Increasingly stricter environmental laws and pollution restrictions mean that manufacturers are required to increase the amount of palladium in catalytic converters.
Why invest in precious metals?
Precious metals offer investors much-needed diversification. Because precious metals aren’t very closely correlated with stocks, bonds, or real estate, they help buffer portfolios in times of uncertainty. For this reason, some advisors suggest putting 5 to even 10% of an investor’s portfolio with precious metals, depending on their circumstances and goals.
The performance of precious metals in today’s unpredictable market isn’t disappointing. In August 2020, the price of gold hit an all-time high, up more than 36% from the start of 2020. While it hasn’t held that all-time value, its jump demonstrates that gold is a relatively safe bet when the markets are in flux.
While buying bullion might seem like an obvious and safe bet (the investor owns physical gold or silver), it’s not for every investor. It requires a safe storage site, for example, with investors often choosing to keep their valuables at a bank, which can be costly. It also often entails the seller taking a cut on the sale.
Unlike the markets for gold and silver, the market for palladium is small, with only a handful of companies that offer exposure to palladium. And while treasure chests are great, precious metals (especially in the cases of platinum and palladium) have practical applications that drive their demand.
Investing in precious metals isn’t an end-all, be-all answer, but it is a path for diversification that many investors choose, especially with the world in flux.
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Magnifi is changing the way we shop for investments, with the world’s first semantic search engine for finance that helps users discover, compare and buy investment products such as ETFs, mutual funds and stocks. Open a Magnifi investment account today.
The information and data are as of the December 15, 2020 (publish date) unless otherwise noted and subject to change. This blog is sponsored by Magnifi. This material is provided for informational purposes only and should not be construed as individualized investment advice or an offer or solicitation to buy or sell securities tailored to your needs. This information covers investment and market activity, industry or sector trends, or other broad-based economic or market conditions and should not be construed as investment research or advice. Investors are urged to consult with their financial advisors before buying or selling any securities. Although certain information has been obtained from sources believed to be reliable, we do not guarantee its accuracy, completeness or fairness. Past performance is no guarantee of future results. This content may not be reproduced or distributed to any person in whole or in part without the prior written consent of Magnifi. As a technology company, Magnifi provides access to tools and will be compensated for providing such access. Magnifi does not provide broker-dealer or custodial services.
Discovery
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