Aquaculture for all

Could blockchain double seafood processing profits?

Technology & equipment Post-harvest +1 more

Industry-wide implementation of blockchain technology could double the EBIT margin of seafood processors, while reducing investors’ risks, according to a new report.

According to the report only 25 percent of global seafood products are either certified or rated as sustainable, putting these rope-grown Scottish mussels in the minority

The document, published by think tank Planet Tracker, notes that almost 75 percent of seafood sold today is not certified or rated as sustainable. What’s more the authors argue that “even claims of sustainability cannot generally be guaranteed due to a current lack of sea-to-plate traceability, with companies along the supply chain typically unable to reliably identify seafood products, track their locations and any treatments or transformation.”

These are two of the key findings of the report, which is based in the analysis of over 4,000 public and private seafood processing companies, and suggests how traceability could improve the profitability of seafood processing companies, while helping to increase the sustainability of the entire $140 billion industry.

Industry-wide implementation of traceability would not only help verify sustainability claims, but also avoid exposure to illegal, unreported and unregulated fishing and reduce product recalls and investor risks. It could also significantly enhance the profitability of the seafood processing sector, vitally positioned between harvesters and retailers and a key source of traceability gaps.

By implementing a traceability solution that complies with the standards of the Global Dialogue on Seafood Traceability (GDST), the report suggests that the typical seafood processor could double its EBIT margin, which is currently at merely 3 percent, mainly due to lower recall, product waste and legal costs.

“Because industry-wide adoption of GDST standards could significantly advance sea-to-plate traceability, multiple large retailers across the world have already pledged to adopt and implement them. Yet among large, listed seafood producers and processors, only Thai Union has pledged to do the same. Why is this the case?” the authors ask.

Planet Tracker says that its research reveals a stark lack of interoperability between companies due to the current fragmentation of seafood processing supply chains – meaning that traceability is hindered by incompatible systems and poor data capture and management. Additionally, it found the most fragmented markets, notably Japan and China, are among the least profitable for seafood processors.

John Willis, director of research at Planet Tracker, said: “Although the GDST standards leave room for improvement, widespread implementation is a much-needed step for the seafood processing industry to manage its risk, while at the same time improving its sustainability, profitability and accountability”.

“Investors in seafood processing companies are well-placed to engage with corporates and ask vital questions: namely, what traceability initiatives are in place? Is the company GDST compliant? What are the financial benefits and costs of implementing GDST-compliant traceability? Such conversations will be essential for raising the issue to the top of the industry’s agenda and addressing the fragmentation in its supply chains”.

The paper suggests some other questions that investors should explore with management, such as: Is the company’s traceability system compatible with those of suppliers and clients?

How much of the seafood sourced/sold is covered by that traceability system?

Is the company aware of the Global Food Traceability Center calculator to estimate the returns of implementing a traceability solution?

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