308 Georg Baunach - More than half of the fish you eat is farmed: basics, potential and risks of investing in aquaculture

A conversation with Georg Baunach, managing partner and co-founder of Hatch Blue, a knowledge-driven aquaculture and alternative seafood specialist. We discuss what aquaculture is and why it is important; what, where, and how to farm; what are the potential and challenges of regenerative aquaculture, and why is it important to look into it. We end with the risks and challenges of aquaculture, the feed conversion ratio and why it is important, the role of algae, waste, medicines, microplastics, and more.

This episode is part of the Regenerative Aquaculture series, supported by The Nest, a family office dedicated to building a more resilient food system through supporting natural solutions and innovative technologies that change the way we produce food.

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Transcript

Speaker 1: 0:00

They've run many accelerators and have over 100 million under management, and they're operating the leading fish farming aquaculture news site globally. So I couldn't wish for a better first guest to set the stage of the Regen Aquaculture series. What is aquaculture and why should investors and entrepreneurs care deeply about this space, and why has it been neglected for such a long time? Plus, what does it mean when we apply regenerative principles to water-based farming? So get ready for a literal deep dive into the fascinating world of farming underwater. Take a deep breath, and another one. Every second breath we take comes from the oceans, and over half of the fish we eat is farmed. That's why we dedicate a series to explore the potential of regeneration. Underwater Oceans and other water bodies cover most of our planet and have stored most of the excess heat so far and, at the same time, have some of the best opportunities to produce healthy food, mostly protein, store carbon, create materials, fuel, biosimulants and much, much more. Plus, create a lot of jobs in coastal communities. We have largely ignored the water-based farming aquaculture industry in this podcast until now. In these conversations we explore why aquaculture is so important for the future of our planet. If we get this wrong, we have a serious problem. What are the risks and challenges with feed, the reliance on soy pests yes, there are pests underwater antibiotics, microplastics, etc. What does it mean when you apply regenerative principles to aquaculture? What can soil-based agriculture learn from aquaculture and visa versa? And what should investors really know about water-based farming and what the potential is of regenerative aquaculture?

Speaker 1: 1:47

A series of interviews with the people putting money to work entrepreneurs and investors in this crucial and often overlooked sector. We're grateful for the support of the Nest family office in order to make this series. The Nest is a family office dedicated to building a more resilient food system through supporting natural solutions and innovative technologies that change the way we produce food. You can find out more on the nest fo, that is, the nestfocom, or in the links below. Welcome to another episode Today, the first one in the Regen Aquaculture so aquaculture, not agriculture series, and I'm very happy to have the managing partner and co-founder of HatchBlue, a knowledge-driven aquaculture and alternative seafood specialist. Welcome, george.

Speaker 2: 2:45

Thanks very much. Thanks for having me. I'm a big fan of the show and excited to be here.

Speaker 1: 2:48

That's amazing. Yeah, we have been talking about this series for a while and we're very happy to kick it off with a lot of insights that you have collected over a while now into the seafood space, the aquaculture space, into, let's say, life below water. I think it's an under or neglected piece of the space, of the food space in general, and we're going to try to unpack it in this series and we're going to try to unpack it also in this episode. Why is it important? What is aquaculture, why should we pay attention to it? And all of those good things. But let's start with a personal question we always like to start with at the beginning is why do you spend, or how come you spend, most of your, let's say, awake hours, in this case not focusing on soil, but indirectly, actually, with aquaculture, do that? But focusing on sea or water? How come you spend most of your awake time looking at that and working in that, investing in that, etc I think it's really twofold.

Speaker 2: 3:47

One is is, it's, it's close to my heart, it's, um, it's my passion. I grew up uh, unfortunately in landlocked germany, but I was always a big fan of, uh, of, of fishing and and keeping pet fish, and that really was. That was it for me as a kid, really, like until I hit puberty or so. That was really all I, all I thought about, and um, I I always, you know, connected to, to that I'm, I'm a big fan of the ocean. I love, um, love, being on the water, being underwater, um, so that's the passion piece. And then, on the other hand, I think the aquaculture industry plays an important role as any food system in the global climate change situation and the crisis we are facing, and so for me, it's really an environmental motivation connected to biodiversity, connected to the changing climate, that makes me work in this field and let's unpack a bit your, your background in the in the space.

Speaker 1: 4:55

and, uh, what, what is hatch blue? Um, background, actually, I met your co-founder, karsten, a long time ago, when he was interning at aquaspark back in the day, which we'll talk about as well. So I have a background in the aquaculture space, but more than 10 years ago. So I'm looking forward to take a deep dive pun intended back into the space and see the importance and the potential. But what is Hatch? Because shortly after, I think, karsten co-founded Hatch Blue. So what is Hatch Blue Great name, by the way, of course, hatch Blue, which I'll put in the show notes below as well.

Speaker 2: 5:36

So we are, as you already mentioned in the introduction, a knowledge-driven firm in the aquaculture and alternative seafood space, with four main business activities. We invest, so we have three different funds or vehicles that that we manage. Two of them are actively investing right now. Our total aum is is around 100 million euros. Second, we provide consulting services, mostly to the industry and big corporates and investors. And thirdly, we run various startup programs across the globe, usually in partnership with governments, or sometimes also with industry or philanthropic organizations, where we really try to build the capacity within the ecosystem around building companies. And then, lastly, we operate a platform called thefishsitecom, which is a news and media agency.

Speaker 1: 6:41

And when did it start and how recent this is. I think the 100 million is an amazing accomplishment, especially in a sector that still feels very early but is very big, but I think in the general public not very well known. I think you just closed a 75 million fund recently, so congrats with that. But how long has this journey, let's say, been unfolding?

Speaker 2: 7:09

Now since 2017. And, as you said, carsten, who worked at AquaSpark and where you met by the way, he's saying hello he left AquaSpark back then to start his own firm called Alimentos Ventures. The idea really was to invest in a few different aquaculture related early stage projects, from IP licensing to just VC investments, and one of the projects he had been working on was an accelerator for the aquaculture industry. He had been working on was an accelerator for the aquaculture industry. I, through my own thinking, got to the conclusion that there should be something like an accelerator in in the in specifically focusing on aquaculture. And yeah, we we met via linkedin and uh had the same ideas and shortly after, met in person and and decided that we would work together. Then we also onboarded another Irish guy called Wayne Murphy. He really had the accelerator expertise and that was in 2017.

Speaker 2: 8:17

And then we launched in early 2018 with an accelerator for the industry, because it was the first one that I think it got a, got good attention and we got started from all over, all over the world to join the program and from there we really built uh hedge blue, we we added um fund funds into into it so that we have more capacity to invest in these companies. Going through the um, through the programs we offered, offered more programs. We professionalized our consulting work that we had already been doing since the very beginning, and then we also acquired the fish side from Benchmark when they were looking to sell it.

Speaker 1: 9:00

And so why the fund side of things, the investment side next to an accelerator, makes sense, I think, from an investment perspective, because you get early access to this stuff. But also did you feel there wasn't enough money flowing into the space yet and did you see the companies you were working with were, quote unquote, struggling to raise and you said this is, this is a shame, like what was the reasoning to start, yeah, to start funds in the space. Beyond that, it makes financial sense if you're so close to companies yeah, no, definitely we.

Speaker 2: 9:35

we felt there was a lack of educated capital dedicated to to the space. There were investors that overlapped with it in the food and egg space, but they they really only occasionally took a look and had one or two portfolio firms that were actually active in aquaculture and back then there weren't any success cases necessarily of of larger and companies or exits. There weren on the big names, like nowadays, like large um global investors like Sequoia or Demasek or so, really invested in in in some of these companies, but back then that wasn't the case and it was fairly niche and we felt like we need to professionalize that and give more choice to the entrepreneurs also where they, where they raised, uh, capital from and and so the million dollar question, like how difficult was it to get investors into your funds, like how much education, explaining etc.

Speaker 1: 10:41

Did it take? Especially the first one. I mean, this is different now, we're in a different world, but how, how was that journey with the first one?

Speaker 2: 10:49

funnily enough, I think the first one was almost a bit easier because it was a fairly small fund. You would probably call it a micro fund of 8.4 million dollars, so really not a large vehicle. We got mostly high net worth individuals and and one or two strategics into the fund and the fundraising still took some time and it wasn't easy because, indeed, yeah, you really have to educate investors on the space. What, what is aquaculture? Ah, fisheries? No, it's not fisheries, is it? Is it, um, the blue economy? Yeah, you, you can call it that if you want to. Is it food and egg? Yes, if you want to look at it this way, for sure. But I think, really, the second fund because we then went from the 8.4 million to targeting a 75 million euro fund.

Speaker 2: 11:45

That was a huge step up and it also required us to raise from a different investor base. We had to change the way we were set up, who we were approaching, and then in the last one or two years also, the fundraising environment changed not to the better years also, the fundraising environment, uh, changed not not to the better. So that really was a very long period of fundraising where, yeah, I, I personally learned a lot about how to how to fundraise for a fund, um, where to where to raise from, like what our value proposition is to those investors. And we still have a very mixed bag of LPs. So we have LPs that are your classic high net worth individual. They have some connection to the industry, up to institutional investors investing 20 million euros in the fund. So the wide range, including family offices, foundations, um, strategic, so industry players and I think ultimately that's that's not a good thing.

Speaker 1: 12:54

It just shows that you need to go to very various different sources to raise, raise a fund in in this space and so what made you choose to go to, to go for like basically almost 10 times the original one, like 75 is a lot of money in this, uh, in these circumstances, the last two years, um, what? What was the thinking and reasoning behind it? Of course you have access to, you have the deal flow, otherwise you wouldn't raise that amount, but it's quite a step up from 8.4, 8.6 yeah, we, we, first of all, we we changed the model slightly.

Speaker 2: 13:32

So for this larger fund, we didn't invest through the accelerator model anymore that is still another vehicle that we have that does that but we really felt like we want to be able to not only invest a few hundred thousand into these companies, but but a few million euros.

Speaker 2: 13:50

And then, if you look at this, you need to, you need to have a different level of due diligence when the companies come into the fund. You need to have a different middle and back office of how you manage the fund and you essentially need to professionalize around that. And so there's, I would say, some sort of minimum fund size that you, that you need to have, and, on the other hand, I we felt like we could even deploy way more than what we, what we currently have, because it's a fairly large industry. There are not many dedicated funds there and once you figure out that something is working, you can deploy quite a lot into them. So I would call it a conscious decision to go to larger fund size, but it was, I would say, also natural evolution of what we were doing.

Speaker 1: 14:49

So now let's unpack the industry of what you mentioned and unpack what is aquaculture. Why is it important? Why are we talking about it on a podcast on the region Food I mean, of course, the food piece but just to paint a mental picture and a visual image and to get us on the same page when we talk about this huge industry which but has been, um, not really talked about enough, nor invested in enough, nor like enough entrepreneurs, etc. It feels a bit like region ag, but at least in the region ag space you can always talk about agriculture that everybody knows. In this case, most people, uh, don't, don't even know where, where most of the fish comes from. So what? What is aquaculture?

Speaker 2: 15:30

when you have to explain that, let's say at a at a dinner party party in berlin then I would just tell them that, whether salmon or whether shrimp comes from, is most likely aquaculture. So aquaculture is the farming of aquatic species like salmon, like shrimp, like oysters or seaweed, and mostly it goes into human food. So there are a few cases where aquaculture products are not directly for human food. For example, some seaweeds go into the pharmaceutical or nutraceutical or some chemical industries, but for the most part it's really a food production sector and it is, as you mentioned, pretty large. It's estimated to be at 260 billion globally in terms of value, over 120 million tons of total production.

Speaker 2: 16:28

And the reasons to me are also quite clear why it's not as commonly known as agriculture, for example. It generally occurs in remote places, because it's important what water quality you have to farm these animals, and it's also a much younger industry altogether. It really grew over the last 50 years. Much younger industry altogether. It really grew over the last 50 years. So it managed to grow from really being a niche substitute to wild fisheries yeah, to to catching wild produced animals to a I would say, true alternative to it, where it surpassed the total production volume of fisheries already. And that's the. But still, 50 years in terms of the human, human population is not not a whole lot, because we're doing agriculture for, I don't know, 10 000 years or probably even longer than that and, and so I mean you mentioned that in a sort of a side sentence a fundamental piece like this is big.

Speaker 1: 17:36

This is as big and actually bigger and more, um, than we fish worldwide. So more than half of what we eat in terms of fish or aquatic animals is actually farmed, and in many species it's most of it, um, and it doesn't. It doesn't seems to be slowing down for different reasons, um, a big one is that the oceans are under a lot of pressure. Uh, the fisheries are under a lot of pressure. We see collapse left and right, um, even in in mainstream media, um, we see, we see those images and um. So, and and it also feels I always remember at aqu, at Aquaspark, it feels like this transition of hunter-gatherers to farming, which we've done. We can discuss if that was a good thing or not, but it has happened.

Speaker 1: 18:22

Most of what we eat has been farmed now and is not hunted, and somehow we still do that in the sea and in the oceans, with detrimental effect in many cases. Yes, there are sustainably managed fisheries, I know, but just look at deep sea trawling. Google that for a second if you want to see some horrific effects. And we see, even on the carbon side and on the sea, disturbance, like that's basically plowing a rainforest to harvest a few sardines, if you want to compare it to agriculture, to to agriculture. So the trends are very strong.

Speaker 1: 18:58

And then there's a sector that's been blossoming for the last 50 years, with a lot of issues we'll talk about that but a huge amount of opportunities as well. So at least we should all know about it so we can have a, we can act on it as as consumers, as citizens, as as eaters, but also definitely as investors and entrepreneurs. So just to paint a bit on the farming you say, it's often remote. Can you walk us through or dive us through? Sorry, these pun intended ones are going to get old very soon. But to a few different systems like what should we imagine when you talk fish farming and also seaweed farming? Like what do we mentally should imagine when we we're listening to this, I don't know driving, cooking, uh, commuting, and whatever listeners are doing now?

Speaker 2: 19:41

while you're cooking your your piece of salmon, um, yeah, in in. So there are a few main categories of how these animals are farmed. One is the net pen aquaculture. So this is really your picture a off near the shore, but, yeah, obviously in the water, a most of the time circular ring and it has a net below it. This is where the young animals get, get stocked into and then fed until they are harvested, and that's the predominant production system.

Speaker 2: 20:20

For example, for salmon production in in in norway or in chile, in the case of salmon, it's really, really important that the water quality is is right, but also, of course, that you have the right temperature. So this is why salmon is produced in these countries with a long coastline, cold water, high water quality and also a lot of protected sheltered areas, because these net pens are not able to be in open rough water with with high um, high currents or high waves. So that's one form of of aquaculture production, the. The second one is pond-based aquaculture, and that is is usually near the coast and it is a it is built pond, so sometimes they're pure earthen ponds and sometimes they're lined with with plastic to to increase a little bit the control on over the environment and those are filled with water often it is seawater, but it can also be fresh water and then the animals are stocked into into these production systems and harvested afterwards.

Speaker 2: 21:34

This is, for example, the predominant production system of shrimp aquaculture. You couldn't put a shrimp in a net pen. They really would not, would not like that, and people don't, um, don't do that. So net pen aquaculture and pond aquaculture are the dominant production systems. And then there are various forms of additional, often, let's say, more sophisticated ways of producing it, some of which are around or have been around for a long time, and some of which are really just being developed over the last couple of years, and often in order to address some of the challenges of the existing production systems and and where are I mean?

Speaker 1: 22:19

you mentioned salmon, which I think is the most, at least in the, let's say, the global north, and the most known piece, not the fish that's most farmed, absolutely there's. Also there's there's a lot of questions and discussions around why we we started farming salmon, but that's mostly chile and norway and a bit ireland, I think, in scotland. Um, and and but in general, what are the big, let's say, hot spots for aquaculture in general?

Speaker 2: 22:43

um, of course, species dependent yeah, really most of it is in asia, and specifically east and southeast asia, and that's, I would say, a feature of this industry. That makes for this, in a sense, lack of transparency towards investors, towards entrepreneurs, towards consumers, that a lot of the production occurs where at least the Western consumer really is not very knowledgeable. So all these warm water species would be farmed in in in these regions. For example, a shrimp or tilapia. You would find a lot of production in asia. Then there are a few more local hot spots, and so in south america, chile is, as you already mentioned, farming a significant amount of salmon. Ecuador, for example, is producing a lot of shrimp. In norway there's a lot of salmon. In egypt there's a lot of tilapia production. Brazil is an up and up and coming aquaculture producer, scaling actually pretty, pretty quickly. But if you take a, if you take a map and and really place the largest aquaculture producers there, it would be China and other Southeast Asian and Asian countries and then the rest of the world.

Speaker 1: 24:04

So I think in the top 20 producing countries, really only a few are outside of Asia outside of asia, and and how does that reflect, let's say, the work you do at hatch blue and and how does that shape that, that reality of that? Most of it is, um, most of it is already out of sight, basically because it's underwater or it's in ponds. It's not very visible, we're not sort of used to it because we still think fisheries, we put a, um, we, we put a fishing rod and that's how we get fish, and it's sort of romantic idea, like, but how does it shape your, your, uh, your work and uh and your focus that most of it is in southeast asia predominantly? Let's say yeah.

Speaker 2: 24:46

So we, when we started, we were quite clear that we, despite being a small and young organization, we had to be global in in that, in our activities. And so we went and opened an office in singapore. That was really within the first year, because we knew we had to be close to that industry. We also, for ourselves, really try to be on the ground, really go to these producers, go to the countries. We have published a few interesting reports that try to help people understand the reality of the farming side of things. So, for example, for the shrimp agriculture industry, there's, on shrimpfarmtech, a good overview of of the industry there. Or for the seaweed industry, on seaweedinsightscom, we visited over 100 producers and really took a lot of pictures and a lot of videos and really tried to make it tangible.

Speaker 2: 25:50

And for us, as you already mentioned, on the on the investor side, we have to do an educational piece.

Speaker 2: 25:59

Of course there are investors super, super knowledgeable, but for most parts, the global investing community is not knowledgeable. On the second and it's changing, but it's changing slowly. And then on the entrepreneurial side, what we, probably more than other VCs, see is that you have a lot of innovation coming out of the well-funded regions like the US, canada, europe that are probably. They have good IP, they have strong capacities, but they don't really have the connection to the industry and so we serve as a bridge for them to. We bring the problem statements often from the industry closer to them and we help them then go into these markets to, to, to sell their, their offering there, and from a portfolio construction perspective, it's quite interesting because we need to balance these different type of entrepreneurs and these different business models, and it has been very interesting to see over the last seven, eight years like which ones are working and which ones are are not working. And I guess this, this can could fill the whole podcast, uh, which which probably is not the the best idea, but I'm curious go ahead.

Speaker 2: 27:24

uh, just, for example, we, the the asian industry with its scale is um is, of course, a prime target for for v VC, investable business models where you can bring a lot of users on the platform. But the companies that have been successful in doing that have been companies that were headquartered and founded there. So there were attempts of, let's say, western companies to roll out their solutions in Asia, but the ones that succeeded like, for example, a fishery or, in our portfolio, an Aqua Connect or a Jala they were all local entrepreneurs.

Speaker 1: 28:07

I think e-fishery is like the first unicorn right.

Speaker 2: 28:10

Absolutely In this space. Yeah, exactly, and that is due to the scale of the industry. But in order to grow these companies, you need the cultural knowledge and the understanding of of the markets you're operating in. And then there were a few examples of companies that try to do very similar things but but did struggle when they were not founded there. So that's one learning. But because it's also a B2B industry that we're operating in, most of the businesses that we invest in don't sell directly to a consumer. There are large players, the big agricultural commodity companies like Cargill or ADM, that are present in these markets, and so if you have the right innovation, if you have a good offering, you don't necessarily need to go directly to, to the, to the, to the farmers. Um, yeah, often you can. You can sell it to to the feed companies in particular, and they are present in these markets.

Speaker 1: 29:14

It's a fascinating insight and I feel similar to the ag, like the agricultural land base. Let's say agriculture space, the ag tech space. We've seen a lot of excitement, investments, etc. Often not really connected to farmers on the ground, even though the farmers might be a few hundred miles or less away and somehow often in this case, it's actually literally on the other side of the planet. But that doesn't give you a free out-of-jail card, that you shouldn't really understand your customers and we often see ag tech failing at that. Farmers are not interested, uh, don't have the capacity to buy it or don't want to to complex all these kind of like. The amount of money burned in ag tech, uh, over the last decade, um is is immense because of that issue of not being, you're saying, the successful ones actually were homegrown and locally, culturally based and and were able to pull it off, which is a similar thing I think we see on the land-based side.

Speaker 1: 30:17

You mentioned feed, um. So coming back to our virtual uh, to our mental picture, uh, feed is, uh, an absolutely fundamental piece of of aquaculture and of course not the seaweed side, because they they eat as well, but they manage themselves also the bifalves, muscles, oysters, etc. You don't need to feed, but everything else needs feed. Um, just to start a conversation on feed, how do we introduce the topic of feed into to our audience.

Speaker 2: 30:47

So it's, it's definitely the most important input into aquaculture, except for, as you already said, those species that that are not being fed. Um, you know, there's a seaweed also, the bi-wealths like the oysters or all the mussels. They don't need feeding, they feed naturally on on plankton in the water, and then there are some species that you can choose to feed, but they also do fine if there's enough natural, um natural life in the ponds, like a carp or tilapia. So most of the industry, though, is fed and and fed, uh, or the the.

Speaker 2: 31:24

The feed has a huge impact on, on the profitability of the business. In some cases is even 60 or 70 percent of of the costs of of farming, and in in salmon it would be a little bit less because you have other costs, but still 40, 50 percent of of the total cost of farming. And secondly, and maybe even more importantly, it has a huge impact on the footprint of the of the product, because the feed ingredients that go into the feed and, to explain it maybe here quickly, the way it works is the feed companies have fairly large feed production plants where they source different ingredients, and that could be up to 80 different ingredients into one, into one feed product, then they mix it and they run it through an extruder or a pelleting machine and get one small pellet out on the other end and those are backed up and shipped to the farms. And then I mentioned the ponds or the net pans. This is then where, uh, where, they would feed these pellets um to to the animals and what goes into the.

Speaker 2: 32:38

The feed is is hugely important and there, historically, has been a lot of usage of, of fish meal and fish oil, for example, because fish eat fish. This is that's the, the reality, and they need these high protein ingredients in there. But of course, that is is is not good, and so reducing the reliance on fish meal and fish why?

Speaker 1: 33:04

is that not good? Just just to yeah. Where does fish meal and fish?

Speaker 2: 33:08

oil come from. It's a it's it's wild harvested um and often it's it's it's in countries that that we don't have a whole lot of an understanding on what is happening there. Of course, msc certified fish meal fisheries in in europe and in other parts of the world, but there's also a big portion of fish meal that comes from sources that we don't understand and ideally I personally would love to see a world in which we don't rely on any wild resources anymore to to to farm our food, but I don't think it is realistic at the moment. Yeah, because the, the, the aquaculture animals. They require certain nutrient profile and um.

Speaker 2: 33:55

That's really hard to replace. But, as an example, the, the usage of fish meal in the in the salmon industry has gone from about 30 percent of of a feed um to down to 11 percent and has been gradually replaced through other ingredients, which also are not not not perfect, and the industry as a whole has grown. So, overall, not less fish meal is being used, but the trend is clear that people are trying to phase out the use of these marine ingredients in aquaculture yeah, so just to double click on that and to to underline the the, not the romantic image.

Speaker 1: 34:41

But we make this transition from the hunter gatherers to farming and and then we don't rely on fisheries anymore. That that's not the case yet, or it's not the case. Um, a lot of the especially smaller animals, smaller fishes, are being harvested and grinded into fish meal, which is more powder like or the oil side, because we were farming species that eat other fish and they need those protein levels and they need those qualities. So there's actually, um, you could say part of the aquaculture space is also driving part of the fishery space, so they're intimately connected. And there's an argument to make like why don't we eat those fishes directly instead of feeding it through a salmon or another species? But feed is a hot topic. It's a fundamental topic from the environmental and the climate space because it doesn't help your efficiency if you have to go out and fish a lot of fish oil and fish meal and, of course, from a fisheries and oceans perspective, it's a big lever. That is there, and so the replacement.

Speaker 1: 35:49

Then there are a lot of other ingredients, up to 80, you mentioned also. Has you wanted to go there? And then I interrupted you to double click on the fish meal, fish oil piece. Lot of other ingredients, up to 80. You mentioned um also. Has you want to go there? Then I interrupted you to double click on the fish meal, fish oil piece. Also the other ingredients. You say, oh great, we, we replaced it with other things. It went from 30 to 11 in salmon, but also the other ones. Uh, of course you don't get a. There are no free lunches.

Speaker 2: 36:07

Also they have their challenges yeah, absolutely, and and maybe just before we go there, it's important to note that, um, there are many different aquaculture species and naturally because of their biology, they have very different efficiencies in converting their feed into, into then the, the harvested product, and some of those are are really efficient and you don't require a lot of, or not even any, marine ingredients to produce product, and some are really inefficient and you definitely can argue that we should not even be eating those and that that concept is called the feed conversion ratio, probably in agriculture, a very similar thing, and it took us it took us 37 minutes to get to fcr, but it's a fundamental piece.

Speaker 1: 37:02

Like you see, that index. I remember from aquaspark the decks of what's the fcr, what? How much feed goes in to get a kilo of, etc. Etc. Which we, of course, in agriculture and land-based agriculture also use, um in terms of, uh, the dairy sector, but predominantly the chicken, and it's always compared to chicken and beef etc. And um, so it's a fundamental piece. People remember fcr, a feed conversion ratio and and, but they're the species selects. The species selection is is key because some, as you said, are way, way more efficient, need way less or no marine. And then you suddenly get a very interesting protein source, because why it's so important we're growing protein here. It's not that you can do everything plants-based. Many people are dependent on protein and fish might be one of the most or is one of the most effective ones there. Plus they float, so they don't need a lot of energy to keep them moving because they are in in water and so fcr people.

Speaker 2: 38:02

Very important feed conversion ratio very important, and then you can, of course, dive much deeper from there into things like a fish in, fish out ratio and getting really more specific around the, the, the usage of these ingredients, but it's overall, yeah, fcr is super important and, just as an example, I was, or we are, in a due diligence on a land-based producer. So in our world, land-based means that there's actually a land-based production system and maybe we can go to that in a in a second, but we were doing due diligence on them and we really requested, over a few weeks, even more and more information on the fcr, because to us is such an important indicator on, on the performance, and it can range between the species. It can range within the, within the species, between the production systems or and based on husbandry, based on the engineering of the system and based on the on the genetics. So, um, I would say this is probably the efcr. So the economic fcr, which also factors in the mortalities, um that occur during the production cycle, is is definitely the most important indicator within, within aquaculture and you, you, you, you ask like, okay, now we're replacing fish meal and fish oil. Um, yeah, and what are we replacing it with? And and that really is is an issue because we are moving away from marine proteins and oils to terrestrially produced, agriculturally produced proteins and oils.

Speaker 2: 39:43

So soy became a really important part of the diet, either soy meal or soy protein concentrate, which is a huge global commodity, going into, obviously, also many other protein production sectors or directly into human consumption. But they go into aquaculture at large volumes and I probably don't need to tell the audience here from from investing in in regenerative agriculture. Why? Why we have issues with with soy and why we are also actively looking for alternatives to soy protein concentrate. But really we we have been or I think the industry has been struggling with adopting other ingredients for the last couple of years. I mean when, when we started we were like, okay, great, and then we're going to invest in insect proteins and algae proteins and you know, soon we will not have any fish meal anymore.

Speaker 2: 40:41

And the reality is that we're trying to compete, in the case of fish meal, with a commodity that is not pricing in the externalities of um, of of how it's, how it's caught, um, I would argue the same is true for for most of soy protein concentrate and it's a really cheap, um, high quality, really great, it's really great ingredient, yeah, um commodity that we're trying to to outcompete with, and so you can only do that if you have at least the same level of quality and suspects. But you need to almost undercut the cost structure of what you're trying to out compete and that has been, that has been really a a challenge for for many players. So I would say there were or are currently, a few hundred different insect protein producers. They all struggled to maybe now it's not their strategy anymore, not their focus, yeah, but they've all struggled to produce at um at a price that is competitive and, for reference for the audience, a ton of fish meal I would say right now is about 1800 US dollars.

Speaker 2: 42:02

A ton of soy protein concentrate, depending on quality and location, maybe 900 a ton. So producing something that in the case of insect um meal that is not as high quality as a as a fish meal, um, so you're rather looking at the price of of soy that you that you're getting for your product and so producing that under a thousand us dollar ton is is not possible right now. They're selling between three thousand, three thousand, five hundred a ton and that really meant that they were not able to to go into the aquaculture industry at a large scale. There's still applications of it, but it's not a large scale replacement and so, just to to maybe point that out, we have spent a year looking for other alternatives with a colleague of mine, linda the oils, but protein.

Speaker 1: 43:03

They still have to come from agriculture in the future, but we just need to make sure it is a better source than soy protein a very clear connection between the land and the sea and between land-based agriculture and land and sea-based or water-based aquaculture, where a lot of the ingredients coming to to grow these species come from, from farms and we don't have to unpack here.

Speaker 1: 43:49

Why soy is an is an issue, or in many cases, but there's also a huge opportunity there to improve practices. So when we say a lot of it is going to animal feed, which is, I think, a piece we always see when we see land use statistics, actually a chunk of that goes to fish feed, to feeding fish, and not all of it goes to ruminants et cetera, to feeding fish, and not all of it goes to to ruminants etc. Um and and how does just does like, how does a fish um process or or enjoy? Let's say the um enjoys it not a word we should use here or we could use here but like how well um does? Does land-based protein work for an aquatic based animal?

Speaker 2: 44:34

it there. There you're always. At the end of the day, the fish needs nutrients, they don't need the ingredients, and the fish doesn't really, or the shrimp doesn't really care um, where it comes from. Um, but as I, as I mentioned already, the, for example, the amino acid profile, so the, the, the mix of different amino acids within fish meal is is fantastic for growing fish. I mean evolutionary um adopted to to doing that, so that makes makes a lot of sense. The. There are then differences, for example, in the amino acid profiles of different um vegetable proteins.

Speaker 2: 45:15

There, especially for vegetable proteins also, there have been issues with anti-nutritional factors that are probably not only an issue with with fish, but especially in in soy and and some others within the process. You need to make sure to remove them and you probably still have an have an issue. And then there's to your, to your question of what they enjoy there is palatability, so they also need to like it, and, and especially the marine oils and and proteins are liked by the marine ingredients and and so there could be a lack of that for for the terrestrial proteins. And then there are other categories, for example, the single cell proteins, which is really the idea of of growing bacterial biomass in in fermenters at large scale and feeding that to to the to the industry. Those typically don't have an issue with anti-nutritional factors, based on everything we've we've seen so far, but they, they, they might have an issue of not all proteins or nitrogen in there being proteins for them to to, to, to, to use to, to produce muscles. So yeah that.

Speaker 1: 46:33

Those are then the more the specifics that you need to look at when you you consider investing in a company or starting a company in this, in this space, and obviously something that the industry has been doing for, for the feed industry has been doing that for for many, many years always testing the different ingredients, seeing what they, what they can incorporate, um, and and what is what is not working and is there a, an interest or a driver or an incentive, let's say, for quality in that sense, like um, you see a lot of discussion in, of course, the land-based food and agriculture space, on a lot we see in our little bubble um discussion on nutrient quality, nutrient density like you are what you've, what your food ate, um, and that's both true for for vegetables and definitely also for for animals, um, and so we see on grazing on on supplements, but also on chickens. Uh, we just had an interview go live with with dan kittredge where he said basically the bio nutrient food association.

Speaker 1: 47:36

I don't eat pork and chicken anymore because a lot of it is inflammatory because it was fed on a grain fed diet. Even organic grain doesn't really make a huge difference there, unless it's sprouted, unless it's fermented in a certain way, because chickens are not evolved to eat grain that much and and I know it's hit a nerve with some people I saw that the reactions on on linkedin etc. So is that kind of conversation like the quality of the soy or the quality of the protein? Um, how is that happening, if at all, in in the aquaculture space?

Speaker 2: 48:10

The most important one, I would say is the omega-3s, because, from a consumer perspective, they eat the seafood often because of the nutritional benefits of getting omega-3s into their diet. And, as an example, the omega-3 levels in farmed salmon have been have been dropping the. The reason is quite simple they are expensive to put into the feed, so the feed companies would put less into the feed unless the market would demand it. So there's no problem in terms of technically to produce a salmon that has comparable omega-3 levels to a white salmon, but in reality it's, I would say, about half of that and I would expect it to drop further until the consumers again say, hey, we want more omega-3s in there.

Speaker 2: 49:10

And one thing that I often come up against is also, then, people looking at at mercury and and other heavy metals and plastic and and that typically is not an issue with farmed fish because, um, yeah, it's just not this accumulation system that you have within wild fish, so it's, it's, it's not there, but in the consumer or from a perception perspective, it it sometimes comes up. To answer your your question on nutrient density, I it's not a discussion, um, in the in the industry, uh, beyond omega-3s, um, at least that I have not. I've not come across it, but I would think it would.

Speaker 1: 49:53

It will happen eventually and the I would expect that the results are similar to what you see on land would would be my, would be my guess but I think already omega-3, six or omega-3 and omega-6 discussions the fact that we're having them in aquaculture is a huge piece and you're saying many people eat fish because of the health pieces might already be a step ahead, at least in terms of the discussions we're having in land-based.

Speaker 1: 50:29

I still remember the reason why Bleu Blancur in France exists, which is certification for mostly animal protein, but now also going into vegetables, is because they saw the soy coming in for feed for animals and they were wondering what it did to the quality of pigs, pig meat, but also cow and dairy, et cetera, and they started measuring, because omega-6-3 ratio is easy Apparently I don't have a lab so I don't know, but apparently that's an easy indicator of what the animal ate. You can see it very quickly. Um, and it's interesting that it's one of the drivers, or at least a piece of a driver, of the aquaculture space, which is absolutely not in the agriculture space, except for one certification body in in france, and so that that that might be an interesting, at least step ahead, or an interesting because it is a topic. People are in fish, people are talking omega-3, six, wild versus this, that versus that, etc. Etc.

Speaker 2: 51:22

the fatty part is important and all of those, those good things, absolutely, and and there has been more success in replacing the omega-3s or the DHA and the EPA with non-marine sources in the industry than they have been in terms of replacing the protein, because the fermented algaes that especially two companies are selling they have been working out and in in recent months then also there has been a huge change in fish oil price and that gave them an additional boost. But this is something we're definitely seeing some commercial adoption of algae-based alternatives to fish oil, especially for DHA and EPA, which is encouraging.

Speaker 1: 52:16

Sorry, those two acronyms. What do they stand for? Why are they important?

Speaker 2: 52:20

They are the omega-3s. They're the omega-3s and omega-6s. The EPA is the precursor of the DHA, which is the omega-3 that we mostly care about.

Speaker 1: 52:35

Okay now just for the people in the back to keep track of what we're talking here. And so, from an investment perspective, on the feed side and we're going to cover a wide range of companies in the coming months and have deep dives on that but from you like putting your investor hat on what do you look at? What is interesting? You very clearly made a case for insect protein isn't there yet and might never be, but it's, I think, because it's interesting, because that might have been a deck that people also not in the aquaculture space have seen.

Speaker 1: 53:06

You've got like oh, it makes so much sense feeding insects with food waste or with something, and they're so efficient and all of that. And you make a very clear case. Look at the price and look what it replaces. And unless you have an industry that can reach a sub $1,000 per ton, it won't be going anywhere. But then you're mentioning fermented algae that are replacing a very specific piece and of course there you need way less ton and you are doing something else. So, from an investor perspective perspective, what kind of framework, what kind of questions should we, should we think about when we look at the feed side of things, because it seems a fundamental piece of aquaculture?

Speaker 2: 53:41

so I would, I would ask, as you said already, price and cost structure. I think ultimately, when, when prices are then going, going more to the to the lower part of the range, and then where your cost structure is super important, then does it meet the nutritional requirements of the industry? And often those are then proven by feeding trials. There are various different trials you can do. It's fairly straightforward, I would. I would say, and um, typically the, the early stage companies would have maybe done one, yeah, at a small scale and and it's an early indication. Um, there's also literature you can typically use to say, okay, can it, can we expect it to work? Yeah, and then is is a scale and that one is super important um for us, because if you look at producing like 500 tons of feed ingredient, yeah, you're not going to be relevant in the, in the global industry.

Speaker 2: 54:43

So there has been historically this uh benchmark of saying, okay, you need to produce at least 40 000 tons to to be relevant to feeding feed companies.

Speaker 2: 54:54

That's not true. Yeah, that's definitely too much, but you need to show a path of getting to a few hundred, few thousand tons then, and maybe even that you have potential to go beyond that because otherwise it's not a relevant ingredient from the feed company perspective. It's not a relevant ingredient from the feed company perspective and in order to get to scale, of course, like, what's your capex per ton of installed capacity? Yeah, where are you getting your inputs to produce it from? Is that a stable supply of both in terms of the quality but also in terms of the volumes throughout the season? And and is the process in place to, to transform it? If you need a lot of innovative technology to take it from a to b, then you, just as an investor an investor can expect a lot of challenges while the company is is upscaling and you have to take some of these risks, for sure. But this is roughly the framework that I use when I look at these ingredient companies and this is a regenerative aquaculture series.

Speaker 1: 56:12

So so, and we've had conversation about this, we're going to cover it in other episodes as well, but, like the regenerative principles, on diversity, on regeneration, we're opening a whole different area now of the podcast. But when you think about that, when you look into that, what excites you? What do you see in terms of potential in the aquaculture, aquaculture sector, which is very similar but also very different than land-based farming, let's say, soil-based farming what, what do you, what comes to mind when you you think about the principles and and the, the principles of regeneration yeah, so inherently, I think aquaculture is in a good position because we already mentioned that there are some species that don't require feed, such as the bivalves or the mussels and the oysters or the seaweeds.

Speaker 2: 57:09

Most of them are grown in the open ocean. I'm still in protected areas, but really these growing systems provide habitat provisioning services to to the ecosystem. So really it's a. It's a kindergarten for, for the, for the young animals.

Speaker 1: 57:28

It's a protective shelter also for for for biodiversity regeneration perspective, it's best to go in that, that area of the aquaculture space. From a health perspective, like you mentioned, mercury and microplastics how worried should I be with bifiles?

Speaker 2: 57:44

just just asking for myself and family by wells, not so much for mercury, um, and because they are not accumulating over a long period of time, but by wells because their filter feeders can bring harmful algaes and any sort of bacteria or toxin that would be in the waterway. So there is it's important that it's being monitored and it is for, for, for, for um, for the industry and um as a producer. It can be a risk if you, if you have your, let's say, your, um, your muscles growing in a certain area and there is a period of harmful algae blooms, um, yeah, then you can't bring your product to market and I, I can tell you from my personal experience, I, I had some of these uh toxins and it's, it's not pretty um, so, yeah, that that is something. But those were not through aquaculture produced products. I was through my own fault, uh, of eating them from the, from the wild, um, and but in with a good monitoring system, you, you, you definitely um, get, get rid of those issues and then, from a health perspective, generally they're regarded as a healthy source of protein and the, the, the muscles, or the, the oysters, um, I would, I would think there if, if the world would eat more of those, that would be, would be fantastic. But, of course, as an investor, we have to be also realistic and say, yeah, do we expect different markets to increase the consumption of these significantly? No, not, not, not really.

Speaker 2: 59:26

But for seaweed, for example, it's a different story, because a lot of people are working on new markets, um, new applications for seaweed, and they roughly have the same benefits. Um, in the right production systems. Yeah, I think that always needs to be the. The caveat is like, if you just put a lot of seaweed farms, a lot of mussels farm, into one bay, that's also not a good idea. Yeah, as, as, as, as always. So it's always about the right production system. Yeah, for the location, for the species, but then you really can have these benefits of abundance, increase of biodiversity increase that are scientifically um, proven, not easy to prove, but, um, yeah, but, but, but proven and um, when you then, in the case of seaweed, also open up new applications, new markets, there's really a reason for people to, in theory, be excited about seaweed as a regenerative aquaculture investment. And I'm also interested in in some of the other interested in in some of the other um bio species from a regenerative perspective.

Speaker 2: 1:00:37

And maybe, lastly, what people don't really, I think, on on the agricultural side wouldn't really include into um into the definition of regenerative, but it's almost the other side of the of the flow is is the nitrogen and phosphorus and the, the, the seaweed and biowaves. They're great at cleaning up the waterways and often they are in estuaries, there where the rivers go into into the, into the ocean, and there they take out excessive nitrogen as excessive phosphorus and that can be measured, how much they took out, and this is something we include in our definition of regenerative because it has this pollutant removal effect yeah, there's another very intimate connection between land-based, soil-based farming and ocean-based or water-based farming, where the runoff, which we of course need to drastically reduce with different practices.

Speaker 1: 1:01:38

We all know, or we've seen many have seen examples of what happens if you do that differently. But the reality is most farmers haven't, which means there is a lot of runoff and there's a lot of excess nutrients going into waterways and ending up in the ocean and potentially being which, with disastrous consequences for the oceans. Meaning, how do we filter? And we happen to have some amazing uh sources of protein that actually do that for not for free, but you can also sell them. Which is which is interesting or which is a unique piece. And then, beyond that, because we're going to cover seaweed for sure, because it's sort of captivating the minds and hopefully also wallets of some people and there are interesting biostimulants actually for soil. We have some very exciting or farmers that are very excited about seaweed, certain seaweeds somehow as fertilizer, repl replacements or biosimilants and things like that.

Speaker 1: 1:02:34

Of course, there's the seaweed side of things in in ruminants, um, which I don't know we'll cover, but it's the methane discussion. There's seaweed for cosmetics, for health, for a lot of interesting applications, for biofuse. We've seen it all. Um, it seems, uh, definitely interesting to double click on that. But if you go beyond that and say you're saying as well, like, okay, seaweed might be an exception in the sense, like the bivalves, how much we need a cultural change to eat many more of those. So definitely everybody listening contribute to that, but that's not going to change overnight. Seaweed might have that potential because of certain industries and certain certain qualities it has. But if we go to, let's say, the, the animal side of farming of course a mussel is also an animal, but the ones that move more and where do you see like regenerative principles or thinking, how do you apply it there? What should we think about when we approach that part of the sector, which is massive, obviously, compared to bifolves globally?

Speaker 2: 1:03:38

So what the trend is is that we focus more on reducing the harm that those protection systems do to their environment. Yeah, and I think this is. It's very important to also be clear on what the what the downsides are and and how to get a hold of those and and so, for example, for for net pen aquaculture, there's no collection system for for the feces or the, the fat or the feed that was fed too much. Yeah, there's. That then has an impact in terms of nutrient load on the environment. If it's in a high energy, high current zone, then that's probably not such a huge issue, but if it's in a lake or in a in a body of of water where you have less water exchange, it really can have an impact on the benthic environments, on the environment below the cage.

Speaker 2: 1:04:41

In the salmon industry, there's a huge issue of one parasite in particular, the sea lice, which is not killing salmon, but it is going from there to white population and that really is an issue, and therefore there's regulation in place that it's removed from the salmon and the salmon is treated and that in turn, then increases mortality, because all of these treatment events have um increase. The stress on the fish can add wounds to, to, to to some some fish. So there there are these um localized challenges, not like talking about where the fetus is coming from, right, but really what, what, the what the footprint locally is, and the trend there is generally to reduce though the footprint, and the most common currently invested in and pushed forward solutions are to either move it on land yeah, so really it can be near the water, but it can also be really in in in landlocked area and there would be a big production hole and you walk in and it's a bit a bit humid and um, there are big tanks and and and pumps and and filters and uh, the the fish are um I within the in the tanks and either it's fully circulating, um, then it's called a ras system, a recirculating agriculture system, or it's a flow through system, so it's still pumping water from from the ocean, um pumping it through those tanks and then um pumping it back out but allows to control what is what is going in and what is going out. And then there's a trend, especially pushed forward by by norwegian companies in the on the contained system side. So this they are still floating in the water, but now they are closed off, um to various degrees and so there you then have no or almost no issue with sea lice. You can control what what goes out of the system again, but overall they're much more expensive.

Speaker 2: 1:06:55

So, um, they also are have a challenge to scale.

Speaker 2: 1:06:59

And then there are um, some people submerge cages nowadays to really get rid of the sea lice issue in some and and and in some parts of china that's also working well for some species. And then there are these offshore system really the idea of taking it so far offshore that, given the carrying capacity of the environment there, the, the issues are um, are completely um diluted, but they have engineering and operational challenges because we're talking about huge systems in uh, in 10 meters of of waves, um and and gale force, storms, and and of course you need a different type of production system to withstand that and then a different type of operational schedule. So those are broadly the, the, the approaches and um, they, I would say, are not focusing on increasing the regenerative potential of it, but they're more focusing on reducing the harmful effects, like on land it would be something like fertilizer usage or erosion yeah, it's fascinating to see the parallels, to see the parallels with with land-based and and the issues of pesticides, or the issue of pests, sorry and and pesticides and issues of closing.

Speaker 1: 1:08:21

But it's also in a very different space still, because there is so much space in the oceans. Of course, not easy because you're in um, if you're like 10 meter, waves etc will destroy almost everything, um, but there is so much space that also if and it's your soil in this case the water flows through. So, if there's enough of the water and if you're far away enough from from other places, then it doesn't have no effect, obviously, because the amount of feed you throw in and it's not being eaten will go somewhere the amount of feces, of course. But the ocean is so big that there's still a lot of space and time before you hit those walls, and we've had to hit. We've hit those walls with agriculture a long time ago, like there is no other land. We're actually losing the land and we're cutting more forest and rainforest in many places. So there's a whole different tension and dynamic um, where, yeah, there is competing for space and this, of course, also competes for space, because you have certain bays that are perfect, but there is competing for space and this of course, also competes for space, because you have certain bays that are perfect, but there is still a lot of other maneuverability too.

Speaker 1: 1:09:20

But it also has an issue or its potential, like these feces and feet, et cetera. You don't really see it because it's the bottom of the pan. It can take quite a while before this becomes visible and it's probably and this is an industry that's not followed so much as agriculture and that's hardly debated, so it also you can get away, or can get away longer probably, with things than in agriculture, and that will change. I mean locally. Of course there's a lot of protests, there's a lot of pushback to certain systems, and then this whole movement to fully indoor, fully controlled um is is what we see as well, with, with, with plants in in vertical farms and and things like that, just to um, to to get us as close to a fully controlled system where you can do exactly what you want and have the full control which we now. Of course know that never exactly happens, and but as much as control as you, you, you hope you can have and there's certainly then the question of do you really want to move a whole system further in that direction?

Speaker 2: 1:10:21

which, uh, yeah, which, which maybe terrestrial agriculture has also shown where the challenges um are? Yeah, I think there are a couple of interesting um comparables, also really distinct differences between, though the, the land-based um, or the, the terrestrial agriculture, and aquaculture. Yeah, because there's no soil. In that sense, there's a wider body of water yeah, that is really important to to the health, but there's no soil, and therefore I see, in the regenerative agriculture, space investment models that connect to the value of the land over a longer period of time. Within regenerative aquaculture, that's not really possible. The only thing that is valuable in some cases is the license itself. The only thing that is valuable in some cases is the license itself, but really this is only valuable so far in the salmon industry, where there's a limit on the licenses and a huge value from each license, and so there's not this inherent connection for maybe for farmers to take care of their soil, but also these aquatic environments.

Speaker 2: 1:11:36

They move so so quickly. Yeah, with one tide you move. Whatever excuse my language, but whatever shit you put out, you know you move up and down the entire coast, yeah, and so, um, what we have seen is that then, if there are too many farms for, for example, in one area and it goes beyond the carrying capacity of the whole area, then everyone is impacted. And so there are cases farms I visited in Thailand, shrimp farms that say, yeah, we crashed after we had too many farms here and now we have fewer farms because it it it doesn't work. But getting a, a group of farmers to to apply uh different practices is is, I would think, even harder than to getting individual uh farmers to to adopt these uh practices. So I think this, this different character of of regenerative aquaculture, will mean that we cannot transfer all learnings from regenerative agriculture over to regenerative aquaculture, but certainly, as you pointed out, there's some clear similarities, clear similarities and then to be conscious of our time as well.

Speaker 1: 1:12:54

We're going to end with two questions we always like to ask in the general, in the podcast, and of course we're going to we can adjust them slightly to you to slide below water. Let's say, if you, if you had a magic wand and you could change one thing overnight in the, let's say, the food sector, let's, let's make it nice and broad, what would that be?

Speaker 2: 1:13:19

I would. I would definitely change the way we we source the feed for the animals we're producing, and I would keep it broad. Often, aquaculture is actually the place where some of these innovations start, because you have higher price points per ton of feed. But I certainly would would love to see alternatives to especially soil, and we're working on it. Yeah, but it's it's. It's really not an easy, easy game. It's really long-term, slow and and you're competing with a massive industry.

Speaker 1: 1:13:55

Yeah, that sounds like what many listeners are doing. I think in other places it's maybe not the feed industry, but it's the input industry or it's the fossil fuel industry, which is also basically feed or input, but it's definitely very entrenched, and maybe slightly less in aquaculture because it's slightly younger, but also in land-based farming we see the last 50, 60 years in most places at least. Um, the, yeah, the, the intrinsic industrialization and definitely the wrong side of that, um taking taking hold and basically moving all asian sea or power away from farmers and land or sea stewards in general, um, and, and we see the effects now of that. And then, um, you know we raised a significant amount of money, but not not, uh, near, nowhere near the one billion.

Speaker 1: 1:14:48

I always like to ask so, if you had a billion dollars to to put to work, um, would it all go into feed? Uh, alternatively, would it go into I don't know, uh, sea-based tractors for, for seaweed? What would you um focus on if you had complete freedom over time and space? It could be extremely long-term investment. And what would you focus on if you had a lot of money to put to work? I?

Speaker 2: 1:15:11

think I would probably focus on cracking a couple of these chicken and egg problems. Yeah, where um, where you. In the case, for example, of seaweed, yeah, you need the market applications in order for more supply to be there, and my opinion is that you could brute force it with with a lot of capital, which unfortunately, as I said, we we don't yet have. But the same is actually true for feed ingredients too. Yeah, like there are no, most of the time, there are no binding offtake agreements, so that really makes it hard for for the, for the companies, to scale up. But with within enough capital, this, this could be taken care of, and I would, I would put some of it towards the truly, in our opinion, regenerative farming practices like, um, like the seaweeds, for sure, I would, as I mentioned, definitely try to reduce scope three emissions from from feed. So look for better feed ingredients and then put put the the remaining third towards changing the production system itself.

Speaker 1: 1:16:16

Um, yeah, where we from for the existing industry to really move it away from net pen and pond-based aquaculture towards these more um or towards these better solutions of, for example, land-based or contained systems and and do you see, like it's a young industry, always, like the last question leads to other questions, um, but like there's from my time in this space, which was short and and 10 years ago plus um, but it always felt like questions on sustainability, on, of course, now regeneration, but let's say sustainability were important, but it also felt as fast growing industry that could always just point at FCR and say, look, we're way better than beef, we're way better than chicken. Of course, it depends, there's a lot of nuance to that, but sort of that was good enough or that was okay. Has that shifted? Has that changed? Like, is there a deeper conversation on sustainability? Not in the hatch blue offices, of course, but the the field as a sector, which was new and everything seemed to be going to the stars and the moons because it was growing so fast, or he's growing so fast, um, and not hitting the limits.

Speaker 1: 1:17:26

Yet let's say what's? What's the conversation like? Let's say, around these deeper questions, because you don't want to set up a system that is slightly better or significantly better, but still not good enough, and then you'd be left with a lot of infrastructure that is basically got, not stranded but sets you up in a path in a certain direction that we see with transition fuel, like a natural gas which is the best. It's just fossil fuel gas. Let's not call it natural, but it sets it up for a path and we're locked in for another 10, 20 years and certain things that we should just not want. And what? What do you? Very big, open question. But like how, how are those conversations happening if, if, in the in the agriculture space?

Speaker 2: 1:18:09

I would. I would say they're quite prominent, maybe not on this system level, like, really, are we building the wrong system and are then locked in. But I would say the industry is quite aware of its challenges and it's also trying to address those. But very often you would end up with a with a question okay, whose ultimate responsibility is it will? Is it, is it for the consumers to accept a higher price? Uh, for the product, and or is it for the big egg uh, to to to provide different solutions? And we've just basically seen what the reality is, that, at least from perspective, that there is not a big portion of the global population that pays a premium for sustainability and that the big industry will always point to what the market demands, so pushes the responsibility down the supply chain.

Speaker 2: 1:19:14

Of course, there are players that generally try to act differently and really push forward, but those questions are for sure coming up where we then say, okay, let's focus on the things we can do within these boundaries or constraints right now and try to shift, shift, shift that and not focus on on things that are completely outside of um, of our control. But there are certainly also topics that I think are not well enough understood and, um, as you saw, it's actually all connected it's from the land into the sea, back on the land with biostimulants. So I think, because it's complex and because we humans don't like complexity, we try to simplify it and naturally there are certain areas that we have not yet discussed and brought into the dialogue. But my feeling is a little bit that the industry more valuable product than maybe corn or wheat or like soy in itself is and therefore you're a bit closer to some consumers that care and push for that conversation. Or I'm wrong, and it's the same across agriculture and aquaculture.

Speaker 1: 1:20:53

I think it's a perfect end to this, this conversation, this intro. But it's not an intro, it's the basics, the challenges, the opportunities. We only scratched literally, not literally, the surface. There are so many rabbit holes we could, of course, fall into, and we will do that over the next episodes. I want to thank you, george, so much for coming on here, for helping to shape this series, actually for kicking it off, for giving us the idea as well, like how to apply regeneration to aquaculture, what should people know, what should people watch out for. It definitely came from conversations we had, and so I want to thank you so much for being here for the first one and setting the stage and setting people up for probably looking at fish, water and a lot more very differently after, after this episode and the ones to come.

Speaker 2: 1:21:45

Yeah, thank you so much for having me. That was a real, real pleasure, and I'm really glad to see that you're paying more tribute to that industry. I think it's part of the agricultural industry at the end of the day, and I'm super glad that you're fostering this discussion.

Speaker 1: 1:22:09

Thank you so much for listening all the way to the end. For the show notes and links we discussed in this episode, check out our website investinginregenerativeagriculturecom. Forward slash posts. If you liked this episode, why not share it with a friend or give us a rating on Apple Podcasts? That really helps. Thanks again and see you next time. Thank you.