Exciting new technologies allow us to track seafood through the supply chain. Fishery managers, retailers, and restaurants want detailed information about where, when, and how fish were caught. So why isn’t more capital investment going into traceability and supply chain technologies by either seafood industry insiders or tech investors? Some might argue that seafood supply chains are too complex and the technology to monitor every step isn’t there yet. But at the recent Ocean Agendaconference at Google, it was clear this isn’t the case. We have electronic tags the size of a pencil tip, bar codes that carry pages of information, mapping systems that translate all this complex data into usable images, and that’s just the tip of the iceberg.
PHOTO BY FISHPEOPLE SEAFOOD
As Kolbeinn Gunnarsson of Trackwell explained, we have all of the pieces needed to track seafood from fishing boat to consumers’ plates. Still, most companies are reluctant to do it. Some businesses have applied tracking to small-scale seafood enterprises or to niche portions of their product lines. Few have brought the pieces together at scale for commodity products such as tuna and shrimp, which make up the bulk of seafood trade. Entrepreneurs developing new ideas in this space struggle to find large-scale investment. Why? I highlighted the missing piece n my presentation at the Google oceans gathering: policy. When we think of oceans policy, we typically think of limits on harmful fishing or protection of important animals and places. Policy also plays an important role in creating a more certain future that businesses and investors can plan around. Policy can make it worth it for them to invest their time, money, and energy in developing business ideas. For technology ventures, the standards and timelines set by policy makers are critical to business development and investment. For example, it’s not clear who should pay for tracking information in the long run, despite the fact that traceability benefits players throughout the supply chain.
Maybe they won’t have to. Maybe someone else will ultimately be required to cover it. In competitive commodity markets like seafood, companies that invest in these technologies too early could find themselves at a disadvantage in negotiations with buyers and lose critical market share. This makes it hard for companies developing traceability technologies to clearly identify their customers or to gauge market size. Without identifying a clear customer for their traceability technologies, entrepreneurs cannot establish strong value propositions for their products and services, or develop products targeted at specific users. Investment value is based on these types of market assessments. As we learned during the finals of the 2013 Fish 2.0 competition, if an entrepreneur cannot convince investors that there is a large, reliable market for their products and that they know their customer well, they are unlikely to attract large-scale investment. Uncertainty around the timing and standards supported by related policies proposed at the state, national, and international level creates additional problems. What if new regulations require a piece of information that could be captured by a competitor’s product, but not yours? What if you’ve designed a business proposition around proprietary data and suddenly new policies require that all of this information be publicly available? These questions make putting money into the sector too risky for many business developers and investors. The following diagram shows how policy, market infrastructure, and technology development must be aligned to drive business development and investment in a sector.
ORIGINAL DIAGRAM BY MANTA CONSULTING INC.
Two of the three elements are in place for large-scale investment and business growth of technology companies focused on seafood traceability. The technology exists. The market infrastructure is in place to connect the technology to users, including retailer demand, internet connectivity and mapping services. What’s missing are government policies that would clarify the standards required, the data rules that apply, and the groups who must meet these requirements. Without this clarity, traceability technologies are likely to get stuck in trial developments that never reach the right scale for industry-wide adoption, or become another government funded service without the benefit of the full creativity and technology advances of the private sector. It may be counter-intuitive, but to see more business-driven innovation in seafood traceability, we must first have stronger policy.