COVID-19, Recession & Climate Change and the Effects on the Fishing Industry

Jun 20, 2021

A cartoon that went viral on Twitter showing the approaching big waves of recession and climate change in the aftermath of theCOVID-19 waves was the baseline of the panel discussion with moderator Chris Brow and his for guests, all experts in their field in the special edition of the virtual BAADER ID which first aired during the 16th North Atlantic Seafood Forum and is now available for on demand streaming on www.baader-id.com.

Chris Brow is joined by John Connelly, the Presidentof the National Fisheries Institute of the USA, the Global Strategist on consumer foods from Dutch Rabobank, Cyrille Filott, the Economist and Director of the German Economic Institute, IW Köln, Professor Doctor Michael Hüther, andthe Environmentalist, Documentary Filmmaker and Author of the bestseller “On Time & Water”, Andri Snaer Magnason.

Viral cartoon: the three waves of COVID-19, recession and climate change

The impact of COVID-19 on the seafood industry

The impact COVID-19 has had on the seafood industry differs by its different areas, as John Connelly points out. On the production side, there were no significant reductions in fish farmed or caught, so the supply of raw materials stayed relatively stable. Minor disruptions in this area, however, were caused by a shortage of labour as a result of the lockdown. Getting workers on and off fishing boats and trawlers proved to be more difficult under COVID-rules.

The processing side, on the other hand, felt a much greater impact of these labour issues. Because many people were either not allowed or too afraid to go to work, there was a significant reduction in processing capabilities. The pandemic furthermore highlighted the risks of over-concentration in that sector and of over-reliance on a single supply chain.

Closing of boarders: Exposure of the fragility of the global supply chain

For the sales side of the seafood industry, “it was a mixed bag”, as Connelly puts it. The closing of restaurants led to plummeting sales in this area, while retail sales skyrocketed because people had no other choice but to eat at home. Also, e-commerce sales grew during the pandemic, especially for shelf, staple or frozen seafood, however less so for fresh seafood. Most people simply prefer to see and touch their fresh food before buying it.

Which effects of the pandemic will remain?

According to Cyrille Filott, we saw “a step-change in the use of e-commerce in many European countries. It is now 10% of all grocery sales.” Although the easing of the COVID rules and people going out again led to a slight decline in e-commerce, the investment that had gone into it, paired with people having gotten more used to purchasing online, suggests this to be a structural change. For the seafood industry, this change brings along the need for innovation in terms of packaging among others, to ensure best-quality fresh seafood also for takeaway, so consumers feel comfortable buying it.

Structural change: e-commerce now counts for 10% of all grocery sales

The pandemic also highlighted the need for diversification of the supply chains and showed how vulnerable that sector is due to concentration. Going along with that will be increased automation in processing plants to not rely as much on individual workers any more, according to Connelly.

Another effect likely to remain is the blurring of the lines between retail and food service. During the pandemic, restaurants began selling raw fish to customers, providing them with all the ingredients they need to cook a high-quality meal at home. At the same time, retailers were increasingly offering fully, or semi-prepared healthy meals, and they will need to, according to Filott, expand their product portfolio to convenient meals. Because the trend towards working from home, which was substantially accelerated by COVID-19, is expected to continue. Rabobank expects people working from home at least one day a week, “so we will see a move of the eating occasions away from business districts to the suburban areas”, Filott explains. And this will change customers’ needs, which is both a big challenge and a great opportunity for retailers and the seafood industry to serve these new demands.

New business model: restaurants offering uncooked meals for take away

Economic & Environmental Challenges

During the first lockdown, the standstill economy was a symmetric shock to the economic system and put a halt to globalization, as Professor Michael Hüther explains. But over the summer last year, it has changed from asymmetric to an asymmetric shock. The manufacturing sector opened up again in June 2020 and has been robust ever since, although supply chain issues and other structural challenges underline the need for innovation in this sector, too. On the other hand, the social consumption sector remains closed, which is largely based in urban areas. Though people want to interact and will feel a need for compensation after the lockdown, some trends that have been affecting the city centres for some time now, such as online shopping, are set to continue, so “the re-design, or the reorganization, of urban areas will be one of the interesting cases”. One of these trends is remote work, another the shortage of skilled labour, which forces employers to make the workplace attractive in order to succeed in the so-called “war for talents”.  

Working from home will call for a reorganization of the urban areas

We might enter the “Roaring Twenties” after the pandemic, when we all just want to celebrate, go out and meet people. It will almost be “like graduating from high school”, says Andri Magnason, but “real life begins after the party”, with climate change as the big challenge. RisingCO2 levels in the atmosphere have caused the biggest drop in the ocean’s pH-levels in 50 million years, which “could disrupt the whole chain of the biomass of the world’s oceans”. Whether it will shift or reduce cannot be predicted yet, however, shell-building animals at the bottom of the food chain become under-saturated and therefore their numbers could decrease. Hence, “the fisheries, in their interest, have to be quite activist on carbon neutrality because fisheries and the oceans have been kind of neglected in the climate talks in the last 10, 20 years”.

Fridays for future: for the climate anxious generation, CO2 transparency is their low-hanging fruit

The younger generation in particular will increasingly push for carbon neutrality and CO2 transparency to have clarity on the carbon footprint of the products they buy. During the pandemic, they experienced“Draconian governmental interventions” and will thus be “fierce in removingCO2”. Hence, Magnason expects a paradigm shift over the next ten years that will disrupt those industries proving to be environmentally damaging. To tackle climate change, governments need to set the right incentives, says Hüther, the best one being a single CO2 price giving “all the relevant information to investors, to consumers, in which way they should adapt”. Retailers could play a key role enforcing this transparency towards the consumer.

Is the Seafood Industry Doing Enough?

The seafood industry is welcoming today’s more holistic definition of sustainability, which includes packaging, transportation and the product’s entire life cycle assessment. However, CO2 transparency and increased scrutiny on the ecological footprint of products will challenge those sectors with the biggest environmental impact. Highly carbon intensive fishing sectors will be increasingly challenged by customers and legislators, whereas those that are more environmentally friendly, also compared with other protein sources, will not only prevail but possibly thrive. What the economy needs now, including the fishing industry, is certainty: “we have to define the framework, we have to define the rules and procedures to this system, and … the states have to do it more consistently. The challenge for climate policy is that we have to do it on a global scale.”

Ocean acidification: the global warming’s evil twin

As a reaction to consumer demands and depleting resources, cell-based seafood created in the lab could become a viable option. However, at the moment, it is both too carbon-intensive and too expensive to be competitive on the market for at least the next decade. Generally, consumers are becoming more food conscious, not just in terms of health but also regarding the ecological footprint of what they are eating. In both respects, the fishing industry fares comparably well in relation to other protein sources, such as beef or pork, which does not mean there is no need for innovation.

Advice to the Seafood Industry

To round it all up, the panellists give some advice to the seafood industry on how to be optimally prepared for the storm waves ahead. First and foremost, the fisheries should focus on sustainability because customers throughout the food value chain expect it. In one way or another, they will force the industry to change practices, so it is necessary to be prepared. Also, the “licence” for companies to operate has changed, nowadays, they need to have a purpose, which is where the fisheries have a slight advantage already. But in order to maintain or increase this advantage, climate science has to be taken very seriously and people should be made aware of what is at stake in the oceans.

Watch the entire recording of the BAADER ID Special panel discussion on www.baader-id.comand stay tuned for further updates such as additional individual interviews with the speaker and more.

Featured Speaker

John Connelly President National Fisheries Institute
National Fisheries Institute

John Connelly is the President of the National Fisheries Institute, a role he has served in since 2003.  NFI is the United States industry trade group representing the seafood industry. He has a master’s in business administration from George Mason University. Connelly has served as Chairman of the International Coalition of Fisheries and helped found the International Coalition of Aquaculture Associations. He also serves on the Marine Stewardship Council and the International Seafood Sustainability Foundation–the global tuna industry’s sustainability organization.  

Cyrille Filott
Global Strategist Consumer Foods, Rabobank

Cyrille Filott is a global strategist for Consumer Foods at Rabobank. Rabobank is a cooperative bank focusing on international business and rural activities as well as the food and agriculture sector. Filott has a master’s in financial business economics from the Erasmus University of Rotterdam. As a business economist, he has a wealth of experience in fund management and equity research. He joined Rabobank’s Research Food and Agribusiness in 2008. As of early 2014, Cyrille Filott has served as a strategist in the consumer foods sector. 

Prof Dr Michael Hüther
Director German Economic Institute (IW Köln)

Professor Michael Hüther is an economist who has since 2004 served as Director of the German Economic Institute, a private economic research institute in Germany that promotes liberal economic and social order.

Prof Hüther has a Ph.D. from the Justus-Liebig-University in Giessen, where he studied Economics and History and is an honorary professor at the European Business School. Awarded the Order of Merit of the Federal Republic of Germany by the President of the Republic, he has previously held several important positions in research, teaching, and banking, including at Stanford University, the German Council of Economic Advisers, and DekaBank

Andri Snær Magnason
Author, Documentary Film Maker

Andri Snær Magnason is an Icelandic author, environmentalistand documentary film director whose work has been translated into 40languages. As an environmentalist, Magnason has been active in thepreservation of the Icelandic highlands. He has also organized various events toraise awareness of the detrimental effects of global warming on theenvironment, community and culture.  

 

He has a bachelor’s in literature from the University of Iceland and hisbook “On Time and Water” is currently shortlisted for the Nordic CouncilsLiterary Prize of 2021. Andri Snær Magnason was a candidatefor the 2016 Icelandic presidential election.  

© Picture Credits:

mackaycartoons; Shutterstock; unsplash: Mika Baumeister, Marek Okon

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