Why Seaweed Investing Could Have You Seeing Green

Why Seaweed Investing Could Have You Seeing Green
Daniel Johnston

7 months ago5 mins

  • Seaweed is a nutritious food, is relatively easy to grow, and can function as a carbon sink, which means it could be a key solution to a greener future.

  • Businesses and policymakers are starting to catch on to seaweed’s benefits, and that could light a fire under the already bright-burning industry.

  • If you’re looking to invest in seaweed’s growth, the central players today are massive conglomerates. Pure-play seaweed firms are thin on the ground right now – but there might soon be a lot more of them.

Seaweed is a nutritious food, is relatively easy to grow, and can function as a carbon sink, which means it could be a key solution to a greener future.

Businesses and policymakers are starting to catch on to seaweed’s benefits, and that could light a fire under the already bright-burning industry.

If you’re looking to invest in seaweed’s growth, the central players today are massive conglomerates. Pure-play seaweed firms are thin on the ground right now – but there might soon be a lot more of them.

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Worries about the environment, food security, and climate change are all around us these days, and the world’s looking for solutions. But there’s one that could be staring you right in the face at your local sushi restaurant: seaweed. Here’s why this fast-growing ocean plant should have environmentalists – and investors – tangled up in excitement.

What’s so special about seaweed?

It’s more than just a tasty snack: research suggests the market will grow at a rate of 10.5% each year and be worth nearly $50 billion by 2030. In Europe alone, some forecasters say it could become as big as the fishing industry. Here’s why they think so...

It’s a great source of nutrients and easy to grow.

Seaweed’s been a dietary staple in Asia for hundreds of years – but, the fact is, we should all probably be eating more of it. See, the (not necessarily) green stuff is high in a load of vitamins and minerals, as well as protein, and is often touted as a superfood. And the ever-increasing focus on health and well-being nowadays will only support the industry’s growth.

It can also be a game-changer for local communities, both in developed and developing countries – the latter of which tend to have less access to affordable healthy foods. Seaweed is relatively cheap to grow and is fairly low-maintenance when compared to land-grown crops. And that means its production could open doors for job creation (particularly benefiting coastal communities where unemployment tends to be higher), while also leading to healthier locally supplied diets.

It reduces land requirements.

Land that’s capable of actually growing crops is a finite resource, and its supply is dwindling because of soil erosion and pollution. Back in 2015, scientists at the Paris climate change conference presented research that found that as much as a third of that land had been lost in the previous 40 years, and in the eight years since the situation will have only become more dire. Handily, seaweed can be grown in the sea – which covers 70% of the earth's surface – so there’s plenty of growing space to go around. A study published earlier this year estimates that substituting 10% of the world’s diet with seaweed would free up 110 million hectares of land – about twice the land area of France. Now, it’s pretty optimistic that eight billion humans might suddenly embrace seaweed, but the point demonstrates how significant a role seaweed could play as the global population grows and land resources shrink.

It's good for the environment.

Not only is it more sustainable than a lot of current agricultural practices (producing little to no greenhouse gasses) but it also improves current ones: researchers have found adding certain types of seaweed to cattle feed can cut the level of methane they release – a key contributor to global warming.

What’s more, growing seaweed can help combat the effects of climate change by supplying oxygen to waters and taking in carbon dioxide, thus acting as a “carbon sink” and reducing the effects of ocean acidification. It also provides a habitat for fish and marine fauna and the fact there’s no need for fertilizers or pesticides is a big plus too.

It has a load of uses – it’s not just food.

Sure, food is one use for seaweed, but that’s only the beginning. After all, there are over 10,000 species and it’s already found its way into everything from cosmetics to pharmaceuticals and packaging – one of the latter use cases as a biodegradable plastic replacement. Biofuels are on the table too. These uses across a wide array of industries are a good thing and could help maximize efficiency and innovation in the sector, all while replacing other less-green ingredients.

Sure, but what are the downsides?

Nothing’s perfect and neither is seaweed. As with a lot of things, the cost to set up and scale up in new territories is a key consideration. And for seaweed to really catch on with people and businesses, it’ll have to move away from the niche and toward the mainstream. Still, its eco-friendly qualities are starting to make waves, and the industry’s getting some attention from entrepreneurs and investors in the West – opening doors beyond Asia, where a whopping 97% of production is based.

Critically, policymakers are getting on board too. The European Commission recently published a paper backing the industry and calling for support for seaweed startups. That’s a pretty big deal, and just like the push toward vehicle electrification in recent years, the prospect of supportive legislation and subsidies could really propel seaweed forward.

And, sure, there are some gripes about the industry. Some people complain that seaweed farms can reduce the amount of light that reaches the seabed, which could be challenging for other forms of sea life and could potentially damage the delicate ocean ecosystem. Others are concerned about potential pollution from seaweed farm equipment.

But those impacts could be mitigated, potentially by imposing pollution rules and by setting up farms only in areas where local species aren’t sensitive to shading. The truth is, no green solution is perfect. But seaweed, on balance, could be one of the best solutions for a (literally) greener future.

What’s the investing opportunity here?

Looking at the lay of the land right now, the biggest players – including Cargill and DuPont de Nemours – are well-positioned to benefit from the long-term growth in the industry. However, they are massive food and chemical conglomerates, so there’s a whole heap of other stuff that comes with them other than seaweed.

That said, finding a pure-play seaweed stock is a struggle at the moment. One option is UK-based Ocean Harvest Technology, which was listed on the market back in April. The firm currently harvests seaweed for use in animal feed for use across four continents and has seen an impressive 40% sales growth over the past six years. And it’s got plans to produce seaweed-based human supplements and fertilizer.

But you might not have to wait too long for more seaweed investments to crop up. There’s been a boom in seaweed startups in recent years: in Europe alone, the number of firms has tripled over the past ten years. So if you’re a long-term investor, keep an eye on Norway’s Alginor, UK’s Kelpi, and the US’s Blue Ocean Barns (to name just a few), in case they go public in the future. A more comprehensive list of seaweed startups can be found here.

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Disclaimer: These articles are provided for information purposes only. Occasionally, an opinion about whether to buy or sell a specific investment may be provided. The content is not intended to be a personal recommendation to buy or sell any financial instrument or product, or to adopt any investment strategy as it is not provided based on an assessment of your investing knowledge and experience, your financial situation or your investment objectives. The value of your investments, and the income derived from them, may go down as well as up. You may not get back all the money that you invest. The investments referred to in this article may not be suitable for all investors, and if in doubt, an investor should seek advice from a qualified investment advisor.

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