{"id":9029,"date":"2016-11-03T20:10:58","date_gmt":"2016-11-04T00:10:58","guid":{"rendered":"https:\/\/digital.hbs.edu\/platform-rctom\/submission\/marine-harvest-asa-the-8-billion-company-youve-never-heard-of\/"},"modified":"2016-11-03T22:47:03","modified_gmt":"2016-11-04T02:47:03","slug":"marine-harvest-asa-the-8-billion-company-youve-never-heard-of","status":"publish","type":"hck-submission","link":"https:\/\/d3.harvard.edu\/platform-rctom\/submission\/marine-harvest-asa-the-8-billion-company-youve-never-heard-of\/","title":{"rendered":"Marine Harvest ASA \u2013 The $8 billion company you\u2019ve never heard of"},"content":{"rendered":"

\"marine-harvest-final-graph\"<\/a>
\nSource: Data from Yahoo! Finance.[i] Graph created in Excel.<\/em><\/p>\n

Even though you\u2019ve probably never heard of Marine Harvest, you\u2019ve very likely tasted its products. Based in Norway, Marine Harvest (\u201cMH\u201d) is an aquaculture (aka fish farming) company that commands 30% of the global salmon and trout market, the largest share in the world.[ii]\u00a0 Recently, company management has begun to address the pressing issues that climate change poses to its business.<\/p>\n

In its most recent 20-F filing with the SEC, MH cites \u201crising ocean temperatures and ocean acidification\u201d as \u201cthe two main threats\u201d that climate change poses to its ongoing business operations.[iii]\u00a0Additionally, the company faces external threats from price fluctuations in the raw materials of fish feed, which currently accounts for nearly half of COGS.[iv],[v]\u00a0\u00a0<\/span>This risk must be mitigated to ensure consistent future production and avoid future price increases that will be passed to the end consumer. As a New Yorker, I already pay $15 for lox and bagels\u2026 I’m not sure I’m willing to pay much more.<\/p>\n

Why is this important? – global perspective<\/strong><\/p>\n

\"feed-conversion-ratio2\"<\/a>
\nSource: Data from PeakProsperity.com.[vi]\u00a0Chart created in Excel.<\/em><\/p>\n

It’s important to note that climate change will likely necessitate a shift in the proteins humans consume. This is evidenced by the feed conversion ratios above. As you can see, the feed conversion ratio of farmed salmon is vastly superior to that of alternative protein sources. Currently, water covers 70% of the Earth\u2019s surface, but only 2% of our calories are derived from the water.[vii] It\u2019s likely that our society will shift to a more heavily fish-based diet in the future, and MH\u2019s issues are therefore imperative to solve.<\/p>\n

Marine Harvest\u2019s plan \u2013 is it enough?<\/strong>
\nIn response to climate threats, MH has implemented a campaign titled the \u201cBlue Revolution.\u201d Under this plan, MH will invest in R&D to improve fish genetics and harvest efficiency. The company also will invest in state-of-the-art fish feed production facilities.[viii]<\/p>\n

But this is hardly a \u201crevolution,\u201d and I don\u2019t believe it will be enough to counteract the increasingly deleterious effects of climate change on our oceans. MH needs to take the movement further by ending dependence on the ocean, the climate, and traditional feed sources altogether.<\/p>\n

What I would do \u2013 the part you\u2019ve been waiting for!<\/strong><\/p>\n

Invest in climate-agnostic farming techniques:<\/span>
\nAlthough there are a few alternative methods, aquaponics is, in my opinion, the best option. Aquaponics combines fish and produce farming. Nutrients generated by broken-down fish waste are consumed by plants, and the resulting clean water circulates back to the fish. Aquaponics uses 90% less water than traditional farming and requires zero artificial fertilizers or chemical pesticides. From a business perspective, the technology is especially enticing due to its extensive use of low-cost materials, such as PVC piping and plastic drums. With aquaponics, MH could grow duckweed and other high-protein plant materials to supplement the salmon and trout feed–all while using fish waste as fertilizer! Additionally, the isolated fish tanks would ameliorate the serious issues of disease and bacteria outbreaks.[ix]<\/p>\n

For now, aquaponics would coexist with MH\u2019s existing ocean operations. The alternate sources of production would diversify the company\u2019s processes and hedge the effects of unpredictable weather and other variables that would otherwise destroy a year\u2019s harvest.<\/p>\n

Invest in more efficient protein sources:<\/span>
\nAs mentioned earlier, the price of fish meal fluctuates wildly as the changing climate affects crop yields. I propose that MH begin to cultivate black soldier fly larvae (“BSFL”) to feed its hungry fish. BSFL will eat nearly anything and are among the most efficient protein-producers on the planet. In fact, a 2005 study out of the University of Georgia and NC State University definitively concluded that BSFL who ate pig manure<\/em> vastly increased nutrient concentrations and showed extreme promise as animal feed, \u201cparticularly for aquaculture.\u201d[x]<\/p>\n

As a side note, BSFL have already caught on in certain places\u2014even for human consumption! This is a snack I recently enjoyed at Miya\u2019s Sushi in New Haven, CT:
\n\"img_2584\"<\/a><\/p>\n

Look closer:<\/p>\n

\"bsf-larva\"<\/a><\/p>\n

To be honest, they were pretty flavorless (a little salty) and not something I think will be on restaurant menus any time soon. But I do think BSFL will be what our food eats.<\/p>\n

Concluding thoughts \u2013 MH\u2019s issues aren\u2019t unique<\/strong>
\nAquaculture is just one industry among many that climate change will adversely affect. And while Marine Harvest is making an industry-leading push to prepare for what\u2019s coming, I\u2019m still not sure it will be enough to weather the storm.<\/p>\n

(743 words)<\/em><\/p>\n

 <\/p>\n

\n

Sources:<\/span><\/p>\n

[i] Yahoo! Finance, \u201cMarine Harvest ASA (MHG.OL)\u201d, https:\/\/finance.yahoo.com\/quote\/MHG.OL\/history?p=MHG.OL<\/a>, accessed November 2016.<\/p>\n

[ii] Marine Harvest ASA, December 31, 2014 Integrated Annual Report, page 34, http:\/\/www.marineharvest.com\/investor\/annual-reports\/<\/a>, accessed November 2016.<\/p>\n

[iii] Marine Harvest ASA, December 31, 2015 Form 20-F, page 38, http:\/\/www.marineharvest.com\/investor\/annual-reports\/<\/a>, accessed November 2016.<\/p>\n

[iv] Marine Harvest ASA, December 31, 2015 Integrated Annual Report, page 42, http:\/\/www.marineharvest.com\/investor\/annual-reports\/<\/a>, \u00a0accessed November 2016.<\/p>\n

[v] Marine Harvest ASA, December 31, 2015 Integrated Annual Report, page 24, http:\/\/www.marineharvest.com\/investor\/annual-reports\/<\/a>, accessed November 2016.<\/p>\n

[vi] Peak Prosperity, \u201cCan You Feed Your Family With Aquaponics?\u201d, https:\/\/www.peakprosperity.com\/forum\/can-you-feed-your-family-aquaponics\/42669<\/a>, accessed November 2016.<\/p>\n

[vii] Marine Harvest ASA, \u201cMarine Harvest Leading the Blue Revolution,\u201d http:\/\/www.marineharvest.com\/planet\/the-blue-revolution\/<\/a>, accessed November 2016.<\/p>\n

[viii] Marine Harvest ASA, \u201cMarine Harvest Leading the Blue Revolution,\u201d http:\/\/www.marineharvest.com\/planet\/the-blue-revolution\/<\/a>, accessed November 2016.<\/p>\n

[ix] Marine Harvest ASA, December 31, 2015 Integrated Annual Report, page 26, http:\/\/www.marineharvest.com\/investor\/annual-reports\/<\/a>, accessed November 2016.<\/p>\n

[x] Entomology Today, \u201cBlack Soldier Flies as Recyclers of Waste and Possible Livestock Feed,\u201d https:\/\/entomologytoday.org\/2015\/05\/26\/black-soldier-flies-as-recyclers-of-waste-and-possible-livestock-feed\/<\/a>, accessed November 2016.<\/p>\n","protected":false},"excerpt":{"rendered":"

Climate change could make your lox and bagels a lot more expensive.<\/p>\n","protected":false},"author":2205,"featured_media":9080,"comment_status":"open","ping_status":"closed","template":"","categories":[1243,28,1260,1218,1230,33,1242],"class_list":["post-9029","hck-submission","type-hck-submission","status-publish","has-post-thumbnail","hentry","category-agribusiness","category-agriculture","category-aquaculture","category-climate-change","category-fisheries","category-food","category-livestock"],"connected_submission_link":"https:\/\/d3.harvard.edu\/platform-rctom\/assignment\/climate-change-challenge-2016\/","yoast_head":"\nMarine Harvest ASA \u2013 The $8 billion company you\u2019ve never heard of - Technology and Operations Management<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/d3.harvard.edu\/platform-rctom\/submission\/marine-harvest-asa-the-8-billion-company-youve-never-heard-of\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Marine Harvest ASA \u2013 The $8 billion company you\u2019ve never heard of - 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