MONOPOLY MATTERS

Big Ag Eyes Big Aquaculture

by Claire Kelloway

The world is eating more farmed fish, and global grain traders intend to control the fish feeding business much as they control the feeding of other farm animals.

Earlier this month, the world’s second-largest food commodity trader, Archer Daniels Midland (ADM), completed a $1.8 billion acquisition of pet food and fish feed maker, Neovia, ADM’s largest takeover since 2014. The deal follows in the wake of Cargill’s acquisition of fish feed company, EWOS, for $1.5 billion in 2015, marking that trader’s second-largest merger deal ever. Cargill, which is the world’s largest privately held corporation, is also considering startingits own fish farms.

As the fastest growing segment of animal farming, aquaculture represents a massive economic opportunity for agribusinesses to sell farmers fish feed made from commodities they buy, like soy. Depending on how the sector develops, American aquaculture could become a relatively sustainable source of protein and an economic opportunity for rural and coastal communities, or an environmentally destructive industry that threatens independent fishers and seafood farmers.

ADM and Cargill’s aquaculture investments and recent lobbying efforts raise concerns that this burgeoning industry will follow the latter path. As agribusiness looks to take a dominant role in fish feed and potentially fish farming, the future of aquaculture risks falling into the same trajectory of industrial livestock production, providing windfalls to a few corporations at the expense of small and independent producers and the environment. 

“There’s plenty of examples … of folks [in aquaculture] who are figuring out a way to do what looks pretty sustainable. But can they get those fish to market if they’re being undercut by … Big Feed players dealing with Big Aquaculture players dealing with Big Processing players, who are maybe vertically integrated into one player?” says Patty Lovera, Assistant Director of Food & Water Watch. “We learned those lessons the hard way in the food system on land and we don’t want to repeat those mistakes.”

Over the last four decades, aquaculture has been the fastest growing form of food production in the world, according to the UN Food and Agriculture Organization. For the first time in 2014, more of the world’s fish came from aquaculture than wild harvests. As wild fish stocks decline, experts increasingly look to farm-raised fish to fill growing global demand for seafood.

Large corporations are well aware of this opportunity. In an interview for Undercurrent News, former President of Cargill Aqua Nutrition, Einar Wathne, said of the corporation’s aquaculture ambitions, “we have preferences for having a controlling position over time.”

Providing feed for all these fish will be big business. Feed represents anywhere from 40 to 50 percent of aquaculture costs, and the global aquafeed market is expected to more than double in value from $64.9 billion in 2015 to $156 billion by 2022.

Dominant livestock feed providers like ADM and Cargill have a vested interest in growing aquaculture as a new outlet for commodities like soy. Cargill executives also note that a leading position in fish feed allows the corporation to understand the wider aquaculture industry and more easily vertically integrate into fish production.

As these corporations’ dominance in aquaculture grows, they will likely have greater power to influence how aquaculture is regulated, as agribusiness has done in other sectors. In fact, Cargill is already actively involved in aquaculture lobbying.

Cargill employee leads a coalition alongside Sysco, Red Lobster, seafood processors, and large fish farmers called Stronger America Through Seafood. The coalition aims to “increase efficiency of existing aquaculture regulations” and promote the AQUAA Act which would lift a ban on open ocean aquaculture in federal waters.

Open ocean aquaculture, which involves raising large concentrations of fish in floating nets and pens, poses several environmental risks. These fish farms can pollute marine environments with high volumes of fish waste, antibiotics, and other medicines. They also pose risks when farm fish escape, carrying diseases and competing or breeding with native fish, altering wild fish stocks. Net pens also create a physical barrier to fishing boats and could effectively privatize parts of the ocean.

Stronger America Through Seafood argues that opening federal waters to net pen aquaculture is necessary to grow a domestic supply of seafood and compete with global fish farms, who supply roughly 45 percent of US seafood consumption. But some advocates argue that there are other ways to grow America’s seafood industry that better protect the environment and generate opportunity in rural and coastal communities.

“I think there is a healthy model of fish farming that is totally different from the offshore factory farms that are proposed,” says Rosanna Marie Neil, Policy Council for the Northwest Atlantic Marine Alliance. “I don’t think most small-scale fish farmers will have access to the offshore fish farming market, because it is a very expensive and resource intensive kind of operation. It will take a large amount of capital to set up offshore fish farms.”

Neil points to other modes of aquaculture that are considered more environmentally-sound, including certain shellfish cultures and land-based tanks that recirculate water. Some Midwestern farmers are experimenting with adding recirculating seafood tanks to their operations as a diverse source of income.

Sustainable land-based aquaculture systems present an opportunity to create a more regional seafood supply chain across the country that could complement community-based fisheries. But this growth could be hindered if a handful of large players control critical steps in the supply chain, such as feed and processing, or worse still, vertically integrate in the model of modern livestock production.