17 Jan Fishing industry puts the green in Greenland
Mikael Thinghuus, CEO, Royal Greenland, details how Greenland’s fishing practices and products are kept to such high standards despite challenges and the importance of implementing sustainable practices in the global fishing community.
Can you give us an overview of Royal Greenland’s significance to the nation?
Royal Greenland is involved in about half the exports out of the country. We are owned by the Greenlandic government but operate as a commercial company. We have 38 factories in Greenland, of which 37 are currently operating. We operate more than 40 factories in Atlantic Canada, Greenland and Germany. There are more than 2,500 fishermen in Greenland and Canada that sell their products to us. We employ around 2,500 full time equivalent staff and twice as many during the fishing season. We are the world’s largest company in terms of fishing and selling cold water shrimp and lumpfish row, primarily eaten in Scandinavia and France. We have a significant position in the snow crab market and minor positions in other products, such as Greenland halibut. The Greenlandic economy is extremely dependent on the success of Royal Greenland. Around a dozen years ago we were in dire straits financially. At the time, management was changed, and it was required by our banks that we professionalize. Since then, we have been making profits and actively created jobs in Greenland. Our average annual sales are around $762 million but are much higher this year. Last year, it was lower because of the impact of the COVID-19 pandemic. For a few years, we have been selling more than 30 percent of our products to Asia. For the past three years we have built a position in North America; we sell about 15 percent of our products into the U.S. The frozen fish sector is not a very branded industry. In Scandinavia, our consumer brand is Royal Greenland. While the food service sector knows Royal Greenland, consumers do not.
What characterizes products made in Greenland and how does the company continue to add value to its commodities?
In Greenland, we benefit tremendously from our high quality of product because we have a particularly difficult infrastructure. Greenland’s 55,000 inhabitants live in almost 70 different settlements with no two settlements connected by road; the infrastructure is extraordinarily complicated. One can only go between towns or villages by boat or —if you are wealthy—by helicopter. Typically, we go by boat. A lot of villages are iced in for three months or more out of the year, and many are in permanent darkness during parts of the winter. Thus, most of our factories up north consist of a relatively small factory with large freezing house next to it. Fishermen fish through holes in the ice during the winter and we then process and freeze the product. When spring or the early summer comes, we take the products out. Over the year the company purchases fish from more than 2,000 independent fishermen—most of which operate boats that are less than six meters long—who employ small and manual processes. From our 38 local factories, fish enter our systems applications and products system to have full traceability. We have excellent traceability because we are vertically integrated. We catch the fish, process it, distributed it and sell it.
Almost all the products we sell are frozen because of the distance from where we harvest the fish to where customers live. A frozen seafood product is best if harvested, processed and frozen rapidly and only frozen once or twice maximum. We need to keep our product in a frozen state as long as possible. A lot of what we do is produced as close to where we harvest as possible, whether on a factory trawler or in our series of factories. Typically, fishermen go out in the morning, deliver the product in the afternoon and it is processed and frozen immediately to ensure a high-quality product. Customers know we produce according to strict safety and hygienic standards equivalent to what you get in the southern part of the Kingdom of Denmark. For us it is an important competitive parameter; people know we harvest and process fish under remarkably extreme conditions with a very difficult infrastructure yet have the same standards as something produced in Jutland or Copenhagen.
Another way we add value is through our workers. It is extremely important to train and motivate staff to ensure they are driven to come in and fillet fish from morning to evening five days a week in a harsh working environment. We maintain very high employee satisfaction; in fact, our blue-collar workers who do the filleting are more satisfied than our management. This is critical. Our industry has suffered from the same problems as agriculture in lack of labor. Most of the fish is harvested on the outskirts of Canada and Europe so there is not a high amount of labor available. We must make sure that staff are trained to the maximum of their potential.
What is the local fishing sector’s relationship with Denmark?
In Greenland, 95 percent of exports are seafood. We have a working tourism sector, and we hope to have a strong mining sector in the future. Right now, Greenland only has two major sources of income: export of seafood and cash transfers from Denmark and the European Union. Denmark has historically been a food producing country; about 25 percent of exports are food or food related. A lot of that is agriculture, with about 15 to 20 percent of food exports being seafood. However, most of this seafood is not captured in Denmark nor harvested by Danish fishermen. Most is purchased elsewhere, processed in Denmark and re-exported to the amount of about $3.8 billion in seafood products. What creates value is in processing, sales and marketing. Local production takes up less than a fifth of total exports and a large source of these exports comes from Greenland. There is only one big ship sailing from Greenland south to Iceland and then to Denmark. Greenlandic companies therefore typically have an export company in Denmark.
Denmark is a successful exporter of food because it has a good reputation for two reasons. The first is a high degree of food safety. Some of that is due to industry, universities and the government working closely together. According to statistics, Denmark, Sweden, Norway and Finland are the happiest countries in the world. The key reason behind this is that individuals have great confidence in each other, which enables close cooperation. Our food safety standards developed from this background. The second is our ability to producing high-quality products. We are exceptionally good at industrial quality; if we say we will produce within certain specifications, we will. The fact that products are safe and one gets what they order has made us a successful food export nation.
How sustainable is Greenland’s fishing industry?
Sustainability has always been an integral part of fishing, both in the positive sense and negative sense. Sustainable fishing provides food that is healthy and comes back every year if one does not fish too much. We work in an industry where one discovers quite rapidly whether our practices are sustainable or not. Since the mid-1950s, there have been systems and methodologies for establishing what is a sustainable level of fishing that is agreed upon between biologists and the industry. Royal Greenland and the greater Greenlandic fishing industry have been very strict in following these criteria; fisheries in Greenland are quite sustainable. We must do what biologists tell us in terms of where, when and how much we fish. While it is easy to have minor conflicts with biologists, the simple principle is that we agree with them. If we disagree with their conclusions, we challenge their numbers but not their methods and models. Following criteria has been crucial in Greenland when the stocks we fish have gone up and gone down. For example, we do not want to increase fishing too quickly when stocks go up because perhaps measurements are not exact.
What impact do the United Nation’s Sustainable Development Goals (SDGs) have on Royal Greenland’s operations?
Of the 17 SDGs, we are focused on two directed towards the planet and two directed towards people. The fourteenth SDG refers to life below the water and underlines biological guidance, which naturally involves fishing companies. The twelfth SDG, which involves responsible production, is equally important. Global wild-caught fishing has been done at an annual level of around 75 million tons for the last 30 years, and there is no reason to believe it will increase. Some stocks rise while others go down. 75 million tons will probably remain the maximum. The key is to use every single kilo of it; what we throw away is very healthy protein. When you filet a fish, the filet itself is only 35 percent of the fish. The challenge is what we do with the remaining 65 percent. If you filet it in Poland or China, it is very easy to use the other 65 percent because other factories are present to transform it for human or animal consumption.
In Greenland it is more difficult. All towns are connected only by airlines and boat. With only two tons of cod liver or cod row it is difficult to viably start production. Transportation is expensive and raises our carbon footprint. We are trying to develop small-scale technologies that can work with the many side streams that come out of fishing. We have been quite successful, especially with cod. We now use a lot more of our cod product in our medium-sized facilities. When peeling shrimp, about 60 percent was not used. We now use it for meal in the form of powder and are currently investigating using the rest of the product for even higher value. We have taken product utilization of around 40 percent to almost a hundred percent. Iceland is a great example of this. They are very developed and do a tremendously good job of utilizing the entire fish. Of course, Iceland has a road that runs across the country and connects all factories. Additionally, the newest generation of trawlers also use more product rather than throwing it away. It is instead transformed into meal and fish oil, even though Greenland is not legally obliged to do so as they are in the EU. Social sustainability counts a lot for Royal Greenland. Greenland is not wealthy, especially when you get outside of Nuuk, the capital. We have quality education and decent work conditions that follow the remaining SDGs. While there is sometimes a dilemma between social and biological sustainability components, there usually is not. We try to educate every employee and many non-employees more every year. The idea is not to make every fisherman into a person with a PhD, but we want to make them more solid and well rounded. It is good for society and good for us because we have a more stable workforce.
What is Royal Greenland’s growth strategy in its various markets around the world?
Given that we only work with sustainable fish stocks, it is difficult for us to plan sales growth. We plan to get the most value out of every single kilo of seafood we harvest or purchase. This means placing it into the markets where people are most interested in our products. In the past, we primarily sold in Europe. Now, we sell more than 30 percent in Asia, with China being our largest market, and about 15 percent in North America. Japan is also a large market for us and has been for 30 years. We will continue to pursue markets where people appreciate our products the most. We have not historically been strong enough in Spanish-speaking markets in both Southern Europe and South America. We have a joint venture in Southern Chile down by Tierra del Fuego. Over time, we will become stronger there. We learned a valuable lesson during the pandemic on dependency. Historically, we sold two products in China. In the U.S. and in the U.K., we sold just one product. It is important we sell more than one or two products in every market otherwise we could be severely impacted by sudden changes. For example, China closed all its harbors just before Chinese New Year due to the pandemic, which hurt us badly. Brexit has also given us difficulties. Our strategy is to establish diverse products in diverse geographical markets.
What major trends are impacting the global fishing industry?
Of the annual 75 tons of tons of wild-caught fish around the globe, we are producing a bigger supply of seafood due to sustainable practices. Another trend relates to the ability of older people to prepare seafood and other foods in general compared to the younger generation. There is a trend towards getting different foodstuffs at the convenience sector, which is challenging for fish and meats because hygienic standards in these areas are more complicated than other food products. We spend a lot of energy making our products attractive to younger and more modern consumers. In our more traditional markets, such as Scandinavia and the U.K., much of our products are consumed by older people. We know that a lot of young people are focused on health and seafood is healthy. The challenge is getting it to them in a shape they feel comfortable with. The largest market is China. If you look at the consumption of shrimp there, a lot of consumers now buy them on the internet. However, they are not going to buy one kilo of shell-on prawns because many do not have a freezer. Consumers want the amount they will be eating with the meal they are ordering it for. A lot of this requires revamps in packaging and distribution chains. In our case, we invested in a company in China that has a connection to consumers and a strong presence on various internet platforms for seafood. The trend has forced us to be much closer to the consumer. We had always talked about the importance of this, but it is now imperative.
What is the most important thing for consumers to consider when buying fish products?
Historically, many Europeans were impacted by bad fishing practices in our oceans by our fishermen. Some people think eating fish is not sustainable, which is inaccurate. Many people currently have the misconception that all fisheries are unsustainable. Obviously taking a massive trawl up and down a coral reef is not a good idea. One must map the bottom of the ocean and know where there are corals and where there is sand and mud. If biologists know where fish breed, they can tell you where not to fish. If the entire industry uses global positioning and automatic tracking systems on all boats, we can make sure everyone avoids destructive areas. If you have well-managed fisheries, it is as close to being free as possible. If you take care of the ocean and only fish the amount recommended by biologists, then wild-caught fish is a superb way of getting sustainable healthy protein.