Chile salmon industry swims against current

Updated 07 July 2017
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Chile salmon industry swims against current

SANTIAGO: Salmon are leaping in their millions from Chilean fish farms to US, Japanese and European dining tables — but surging demand and environmental concerns have Chile wriggling on the hook.
The world’s second-biggest producer of the juicy pink fish after Norway, Chile earned $3.8 billion from farmed salmon last year — but campaigners warn the environment is paying a high cost.
“The demand for salmon is unsustainable,” said Liesbeth van der Meer, director of environmental group Oceana Chile.
“There is an ecological burden that the system can no longer endure. Beyond a certain quantity of salmon, it collapses.”
She calculates that for every 190 grams of salmon produced, a kilo of local fish is used to feed the farmed salmon. To make the industry sustainable, Chile should halve its current salmon production, she said.
Yet the industry estimates that demand for salmon is rising by 10 percent a year. And 70,000 jobs in Chile depend on it.
Last year, red algae infested the waters off southern Chile, killing other sea life. Environmentalists blamed it on waste emissions from fish farms.
The algae wiped out a fifth of Chile’s salmon production in 2016. It fell from 883,000 to 728,000 tons — most of that exported to the US, Europe, Brazil and Japan.
Chile’s size in the market is such that the fall contributed to a 40-percent rise in world salmon prices. Producers are recovering from that blow. But the president of the SalmonChile trade association, Felipe Sandoval, acknowledged they were taking measures to ensure medium- and long-term stability and to reduce costs.
Separately, the industry has been criticized for pumping antibiotics into the salmon, prompting warnings that this could promote drug-resistant super-bacteria.
In 2016 the Chilean salmon industry used 382.5 tons of antibiotics. That was 700 times the amount used in Norway.
The government in 2007 had to reduce the intensity of salmon farming due to an outbreak of infection. Any further health alerts will hit production, warned Eugenio Zamorano, head of aquaculture in the Fisheries Ministry.
But “if the health and environmental parameters are working, the industry can grow,” he told AFP.
New regulations affecting the fish farms will come into force in 2018 in response to weather phenomena in the Pacific that experts suspect are due to climate change. Compared to Chile’s two other major salmon-producing regions, Magallanes — the furthest to the south — has a relatively good level of environmental controls, without too many fish farms close together, the government says.
With cooler waters, farms in Magallanes use less than 1 percent of the antibiotics used in the other two regions, Aysen and Los Lagos.
“Magallanes offers a possibility for sustainable development” in salmon farming, said Zamorano.
The government’s aim, he said, is “to generate sustainable development of an economic activity that generates jobs and revenues.”


Slack primed as latest unicorn to make market debut

Updated 10 min 42 sec ago
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Slack primed as latest unicorn to make market debut

  • Slack is a cloud-based software company that markets online tools for information sharing and workflow management
  • Current customers include Nordstrom, Ford and HSBC and the company has more than 95,000 paid customers overall
NEW YORK: The 2019 parade of big new Wall Street entrants continues this week with the debut of Slack Technologies, underscoring investor hunger for new companies in spite of some high-profile stumbles.
Nearly halfway through the year, US markets are on track for one of the biggest IPO seasons ever in terms of money raised following a stream of offerings from former “unicorns,” private companies worth more than $1 billion.
Yet two of this year’s biggest names — Uber and Lyft — currently trade below their IPO price, along with Snapchat, which has lagged its initial price for most of the time since it went public in March 2017.
Still, there have also been plenty of prominent companies that have risen since their initial public offerings, including jeans company Levi’s, Tradeweb Markets, which builds electronic marketplaces, Zoom Video Communications, and mobile application and software system Pinterest.
The most dramatic jump has been in food company Beyond Meat, which now trades at more than six-fold its entering price.
“The public has a huge interest” in new companies, said JJ Kinahan, chief market strategist at TD Ameritrade, adding that the mixed performance of the 2019 ex-unicorn class is comparable to that of the broader market.
“There aren’t a lot of other choices besides IPOs for investors seeking growth,” said Gregori Volokhine, president of Meeschaert Financial Services, who attributes the rush of funds in part to central bank policies promoting liquidity.
“There’s an excess of underinvested funds worldwide,” he said.
In terms of sheer volume, the number of IPOs in 2019 so far — 93 — is roughly equal to last year’s figure, according to Dealogic.
But the funds raised, $34.5 billion, stand 13.6 percent above last year’s sum and the highest for the comparable period since 2000, according to Dealogic data.

Direct listing
A cloud-based software company that markets online tools for information sharing and workflow management, San Francisco-based Slack parts ways from the other big companies this year by opting for a direct listing instead of an IPO.
This approach, which was also employed by Spotify last year, cuts down on fees to investment bankers in IPOs. Although existing shares can be sold, a direct listing does not issue new shares, averting share dilution but also forgoing the new funds raised in an IPO.
The process can also be riskier in terms of share price volatility compared with an IPO, where underwriters line up investors in advance. In a direct listing, shares are exposed more directly to the open market.
Slack chief executive and co-founder Stewart Butterfield described the company’s technologies as a “brand new category of software” that replaces email in a company.
Current customers include Nordstrom, Ford and HSBC and the company has more than 95,000 paid customers overall.
“It turns email to messages and organizes them into team, project and topic based channels instead of individual in-boxes,” Butterfield said in a June 10 earnings conference call.
“It’s a team-first approach to communication, in contrast to email’s individual first approach. It creates a rich, searchable, permanent body of information that’s widely available across an organization, even for people who just joined the team.”
Unprofitable three years
The company, which is expected to be valued at around $17 billion when it enters the market on Thursday, reported revenues of $134.8 million in the quarter ending April 30, up 66.7 percent from the year-ago period.
But Slack, which has been unprofitable the last three years, reported a $33.3 million loss during the period, 34 percent more than last year’s loss.
Of course, many unprofitable companies have gone public and done well in markets for years. Yet the heavy losses and murky profit outlook at Uber and Lyft have been seen as factors in their lackluster performance since going public.
But investors remain keen on growth stories following the success of Amazon, Facebook and other tech giants that have emerged in recent decades.
A key beneficiary of this desire has been Beyond Meat, which has multiplied in value many times since going public May 3 at $25 and currently is priced at $168.92. The company has been seen as a main beneficiary of the growing alternative protein market, which some analysts think could top $100 billion in the coming decade or so.
Kinahan said in general investors have wised up after the early 2000s Internet bubble but that “it’s just unnatural” for stocks like Beyond Meat to move in an unbroken straight line upwards.
“There’s a healthy bit of skepticism in the market,” he said. “However, certain companies have maybe gotten a little ahead of themselves.”