This is part 1 of a 4-part series intended to invite conversations in advance of our planned end market demand analysis for groundfish in California. The larger goal is to provide quantified end market data to inform profitable value chain investments that will positively impact harvesters, local communities and the ocean. Read more
Impact and philanthropic investors have an interest in participating in sustainable fisheries to enable effective management, to generate market share and price premiums and to ensure that harvesters are rewarded for and incentivised by sustainable practices. What tools do we have to determine when sustainable fisheries products gain market share and trigger changes in seafood pricing? Certain certified and ecolabeled seafood products have price premiums in the market. Can certification serve as a sound metric for good investment decisions in sustainable seafood? Studies thus far have demonstrated varying price premiums in certified products. These include:
MSC products do not always guarantee price premiums nor do they ensure long-term sustainability and economic gains for the harvester. Noted benefits for harvesters include access to new markets and processing opportunities for value added products, but not a trickle back from price premiums. A price premium found on a product in a retail chain or region does not mean the premium is globally ubiquitous. MSC notes that harvesters or chain of custody operators seeking certification do so to achieve sustainability outcomes, to gain clout and to improve negotiating capacity with large institutions. The goal of certification, therefore, is not always to attain price premiums or increased market share.
In addition, MSC does not collect market data prior to certification and thus does not measure changes in price. Over 10% of wild-capture seafood products are certified by the MSC. There are over 15 ecolabels for certified wild-capture or aquaculture seafood products, all of which have different metrics for certification and none of which measure if higher income from increased market share and price premiums reach the harvester. While MSC and other certifications can generate price premiums and seem to open market access, they are not yet a proven smart investments for all sustainable fisheries.
WHAT?
“What do you do?”
The big picture, easily digestible, non-jargon answer: We’re trying to figure out how to make it possible for impact investors to work with fishermen to continue catching fish from our oceans, make money doing so, and still have enough fish for future generations.
The buzzword, jargon answer: We’re using value chain based analysis to determine constraints preventing impact capital from flowing to triple-bottom line SMEs in fisheries.
After that question has been settled with a degree of satisfaction, the natural follow-up question is, “Yes, but WHAT do you do?”
The big picture, simple answer: We use readily available data to give us an idea of how big a fishery is in terms of volume and value and what the important markets are for the fishery. This way we can figure out the most important parts of the fishery and focus our efforts there.
The more in-depth answer: We use readily available data to characterize the value chain flows, and we use interviews, scientific papers, and previously published reports to identify opportunities and constraints within the value chain.
WHY?
Not often asked directly, is the question of “Why?” Why are you doing this? Why is it important?
Millions of people rely on fish as their primary source of protein, and billions more benefit from having fish in their diet. A healthy ocean is a great asset to all of us.
We also think it’s a great challenge. How do you quantify risk for a resource you can’t see and where the capriciousness of weather dictates when you can and can’t fish? The multitude of stakeholders adds another layer of challenge: harvesters, processors, distributors, retailers, restaurants, consumers, multiple levels of government plus the local communities, NGOs, and more. Considering the nature of fisheries and the plethora of stakeholders, it’s no wonder that this sector can be overwhelming for financial institutions to explore.
Finally, and perhaps most importantly, we want to see fisheries investments done well. No one benefits from short-sighted projects that may do more harm than good. If the fishery isn’t properly managed, improving the logistics of the supply chain will just lead to overfishing. We know that ensuring appropriate management safeguards are implemented is one of the keys to sustainable fisheries.
