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Will Tassal Group Limited be able to address environmental concerns?

fish

Salmon farmer Tassal Group Limited (ASX: TGR) was unable to pick itself up from its 14-month low even as management moved to reassure investors of its sustainability practices.

The stock was trading flat at $3.35 in afternoon trade as Tassal’s chief executive Mark Ryan accused the media of reporting inaccurate allegations regarding the negative environmental impact of its fish farms in Tasmania.

While the share price reaction may not seem too bad considering that the S&P/ASX 200 (INDEXASX: XJO, ^XJO) is down over 1% today, the stock has been lagging the broader market by nearly 25% over the past 12 months.

There’s nothing to look at here, according to Ryan, who says that the complaints by abalone farmers reported by the Australian Broadcasting Corporation (and highlighted in the Motley Fool) were not new and that the market has known about this since October 2014.

Meanwhile, media coverage of a mussel famer reporting contamination of its farms from waste material produced at a Tassel run facility is misrepresenting the facts, Ryan adds.

The company says it responded quickly to concerns from the one mussel farmer and the Tassal site in question is not used as a main grow out site but a temporary site to hold fish. This site is only sporadically used and is currently empty.

What is not in dispute though is the Tasmanian state government’s backflip on scrapping the independent panel reviewing fish farming licenses in response to environmental concerns from abalone and oyster farmers who believe that effluent from salmon farms are hurting the health of waterways.

Coincidentally, the federal government is also undertaking a senate enquiry into fish farming in Tasmania.

Ryan says he has not been informed about the terms of reference for the senate enquiry but believes this enquiry is unnecessary because “the Tasmanian aquaculture industry is already very well regulated”.

Interestingly, Tassal’s newly listed rival Huon Aquaculture Group Ltd (ASX: HUO) is enjoying a better day with the stock jumping 1.3% to $4.65, although it remains under its initial public offer price of $4.75. Huon debuted on the ASX in October last year.

Until there is greater clarity around the potential new government regulation for fish farming, this issue is likely to weigh on both stocks.

You can read more about the investment dynamics between Tassal and Huon here but if you are looking for a better investment option, sign up for free below to see what our experts are picking as a winner for 2015.

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Motley Fool contributor Brendon Lau does not own shares mentioned in this article. Follow me on Twitter - https://twitter.com/brenlau

We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policyThis article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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