Yesterday, Four Corners exposed allegedly unsustainable practices perpetrated by Australia's biggest salmon farmer, Tassal Group Limited (ASX:TGR).
In an interesting twist, the key whistleblower in this case was a director of competitor Huon Aquaculture Group (ASX:HUO), Frances Bender, who is concerned that the high level of fish stock in Macquarie Harbour is unsustainable.
Arguably, this is a case of short term interests versus long term interests.
It is highly likely that the full consequences of potential overstocking will not be felt until several years in the future, long after Tassal CEO, Mark Ryan's, 'long term' performance rights vest in 2018. Meanwhile, Frances and Peter Bender are acting in a way that may limit short term profits, with a view to safeguarding the sustainability of salmon farming in Macquarie Harbour, Tasmania.
Sadly, it seems Australia's premier ethical investment fund, Australian Ethical Investments (ASX:AEF) missed the memo when it comes to Tassal, still listing it as an ethical investment. This is understandable, because salmon farming does reduce the need to deplete wild salmon stocks, and does bring much needed employment to remote areas of Tasmania. However, some ethical investors had already sold their shares by April, due to the environmental concerns in Macquarie Harbour.
In any event, Tassal shareholders should really be questioning whether maximising volumes right now is in the best long term interests of the company. Simple logic holds that if you increase fish populations in Macquarie Harbour to a certain level, the extensive excrement will begin to have health effects on the salmon.
Laura Kelly, the Strategic Director of Environment Tasmania, says that the narrow entrance to Macquarie Harbour, Hell's Gate, makes it hard for the harbour to clear of excrement. Dr Tim Dempster, of Melbourne University Aquaculture Lab, says that some of the conditions in Macquarie Harbour are "almost unseen in salmon aquaculture elsewhere". He says that at times the salmon are "swimming around with their mouths open… essentially in a survival mode." He adds that based on his studies in February, it is "ill-advised to have more fish in the harbour, going through these conditions."
Now, the Tasmanian government has recently given approval for even higher stock levels in Macquarie Harbour, and Tassal supports that move. It would be extremely naive to simply discard the concerns of scientists, activists, locals and indeed a director of Huon, simply because Tassal has replied to the exposé. Especially when that reply does not even mention the key issue of fish excrement build-up.
Many Australians, myself included, are pleased to see the development of aquaculture in Tasmania. But in order to preserve this hard-won industry for the long term, the companies involved are better off observing the precautionary principle, and erring on the side of caution when it comes to stock levels.
If they don't, today's gain could be tomorrow's loss.
