{"id":9577,"date":"2016-11-04T07:57:40","date_gmt":"2016-11-04T11:57:40","guid":{"rendered":"https:\/\/digital.hbs.edu\/platform-rctom\/submission\/are-greenhouse-gasses-good-for-greenland\/"},"modified":"2016-11-07T17:59:13","modified_gmt":"2016-11-07T22:59:13","slug":"arrival-of-the-mackerel","status":"publish","type":"hck-submission","link":"https:\/\/d3.harvard.edu\/platform-rctom\/submission\/arrival-of-the-mackerel\/","title":{"rendered":"Arrival of the Mackerel"},"content":{"rendered":"

Until just a few years ago, the mackerel had never visited the Greenland waters. In 2011, record-high temperatures were measured off the Greenland coast and the first mackerel was caught. Only three years later, in 2014, mackerel fishing had grown to 23% of national exports [1].<\/p>\n

\n

“The mackerel’s arrival in Greenland is the most extreme example of how climate change can impact the economy of an entire nation”\u00a0<\/em>–\u00a0<\/em>Senior Researcher Teunis Jansen, DTU Aqua and the Greenland Institute of Natural Resources\u00a0[1]<\/p>\n<\/blockquote>\n

\n

As climate change\u00a0warms up the oceans, the ideal water temperature for fish species shift and and the fish will either drop in numbers or move to different areas with more suitable temperatures. In the midst of this shift is state-owned Royal Greenland, the largest fishery in Greenland.<\/p>\n


\nSo … is climate change good for Greenland? Profits would say “yes!”<\/strong><\/p>\n

If we look at the financial statements of Royal Greenland, the answer might be a resounding … “yes!”: from 2010 to 2015, profit dollars increased by 40% [4]. This increase was driven in part by our new visitor, the mackerel, but also by sales of Royal Greenland’s core product, the cold water shrimp. Shrimp sales, however, have not surged because of more shrimp visiting the Greenland waters, but because of an 80% price hike since\u00a02010 [5]. But … wait, why’s shrimp becoming so expensive?<\/p>\n

While mackerel loves the warmer temperatures in Greenland, shrimp does not: it\u00a0cause their food supply to decline, their number of predators to increase, and ocean acidification impacts their shell development. Hence, quotas dropped and we saw catches almost cut in half from 60,000 tonnes in 2011 to 34,000 tonnes in 2015 [5] and this limited supply pushed up prices more than covering from the volume drop.<\/p>\n

\"Source:<\/a>
Source: Statistics Greenland (Nov 2016) [5]<\/figcaption><\/figure>\n

For now, business has been good. However, there is no guarantee that consumers will continue to support high price levels or that a new temperature-friendly fish will come in and cover for the dwindling shrimp catch. In fact, the mackerel might not even be here to stay – catches plunged from 78,000 tonnes in 2014 to 31,000 tonnes in 2015 [5]. To stay in business, Royal Greenland will need to consider to\u00a0adjust its operating model to deal with this new world in the face of climate change.<\/p>\n

So what does this mean for Royal Greenland?\u00a0Agile operating model<\/strong><\/p>\n

Royal Greenland has recognized these needs and has launched its “The North Atlantic Champion” strategy of which a centre-piece is to diversify its fishing grounds to alternative areas in northern Greenland, Svalbard, and the Barents Sea. However, Royal Green land still wholly owns its\u00a0ocean-going trawler fleet and\u00a0processing plants. In the new world impacted by climate change, these plants will either need to undergo dramatic change in agility to accommodate changing raw material types and quantities shipped or have to be licensed out altogether.<\/p>\n

Royal Greenland will have several strategic challenges to consider in its next board meetings:<\/span><\/p>\n

    \n
  • Highly variable inputs: <\/strong>With huge swings in inputs caused by fish stock movements and quota restrictions, operations will need to be flexible enough that its operations can quickly turn to processing of other fish types and alternating quantities to keep utilization high<\/li>\n
  • Diversify fishing areas:\u00a0<\/strong>As global warming moves fishing stock geographically, new fishing grounds will be needed<\/li>\n
  • Selective (shrimp) farming:<\/strong>\u00a0<\/em>Other fish stock like Cod and Salmon are often farmed – could Royal Greenland invest in research to farm shrimp?<\/li>\n
  • Increased importance of marine monitoring:\u00a0<\/strong>To better plan for future fish stock movements, marine monitoring is likely to become an increasingly important function<\/li>\n
  • Agile supply chain:<\/strong>\u00a0<\/em>Large capital investments will become risky for a vertically integrated fishery\u00a0– to the extent possible, the risk of holding on to shrimp trawlers in a shrimp downturn could be assumed by third parties\u00a0and stock would be bought on auction<\/li>\n
  • Clear disaster risk management process:<\/strong>\u00a0<\/em>With large swings in inputs, fisheries need to prepare for a world where plan is often not actuals<\/li>\n<\/ul>\n

    (word count: 690)<\/p>\n

     <\/p>\n

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

    [1] ScienceDaily June 2016: “Surprising new business opportunities for Greenland” (https:\/\/www.sciencedaily.com\/releases\/2016\/06\/160615102230.htm)<\/p>\n

    [2, picture rights] National Geographic\u00a0“How Melting Ice Changes One Country’s Way of Life” http:\/\/ngm.nationalgeographic.com\/2015\/11\/climate-change\/greenland-melting-away-text<\/p>\n

    [3] CIA World Factbook “North America: Greenland” 2015 statistics (https:\/\/www.cia.gov\/library\/publications\/the-world-factbook\/geos\/print_gl.html)<\/p>\n

    [4] Royal Greenland annual reports (http:\/\/www.royalgreenland.com\/royal-greenland\/about-royal-greenland\/facts-and-figures)<\/p>\n

    [5] Statistics Greenland (http:\/\/www.stat.gl\/?lang=en)<\/p>\n","protected":false},"excerpt":{"rendered":"

    Greenland welcomes the Mackerel and says goodbye to the shrimp. What does the warming of the world’s oceans mean for a country where fishing accounts for 91% of exports?<\/p>\n","protected":false},"author":2456,"featured_media":11183,"comment_status":"open","ping_status":"closed","template":"","categories":[1218,1484,1226,1483],"class_list":["post-9577","hck-submission","type-hck-submission","status-publish","has-post-thumbnail","hentry","category-climate-change","category-fishing","category-global-warming","category-greenland"],"connected_submission_link":"https:\/\/d3.harvard.edu\/platform-rctom\/assignment\/climate-change-challenge-2016\/","yoast_head":"\nArrival of the Mackerel - 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\/arrival-of-the-mackerel\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Arrival of the Mackerel - Technology and Operations Management\" \/>\n<meta property=\"og:description\" content=\"Greenland welcomes the Mackerel and says goodbye to the shrimp. 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