Land-based aquaculture focused on species other than salmon will expand in the years to come, but investors should note that farming of these new species is still early stages of development, according to market participants.
At the IntraFish Seafood Investors Forum in New York this week, an Investing in Seafood panel began with a discussion of salmon, which one panelist described as the “800-pound gorilla” dominating early investment into the seafood sector.
AMERRA managing partner Thor Talseth said that while salmon farming itself has become too crowded to still be an attractive entry point to seafood, his firm is focused on bringing improvements in cost and feed efficiency developed through earlier investments in Norwegian salmon to other regions and species.
Joe McElwee, global sales manager at aquaculture systems and products provider Pentair Aquatic Eco-Systems, stressed that land-based aquaculture is a very young industry, only recently understood as separate from its off-shore counterpart.
McElwee described a current disconnect between large potential investors’ expectations of how quickly they can deploy money into new species – based on their understanding of salmon farming – and the current stage of development for new species.
“They come and say they want to build a $200 million project and we say ‘why?’ and ‘where?’ and they haven’t thought that through. They just have access to these funds,” he said. “We’re still in the infancy of the development of these other species.”
Demonstrating some of the challenges involved with farming new species was an earlier presentation by Malcolm Pye, chief executive officer of Benchmark Holdings, which provides genetic services designed to strengthen product efficiency, disease resistance and product quality across major farmed species. Pye presented his company’s efforts to combat species-specific diseases as an important part of developing new species suitable for aquaculture.
Ensuring that land-based aquaculture projects are located close to sources of demand is also a key consideration in developing new species, according to Ohad Maiman, chief executive officer at Danish land-based yellowtail farm Kingfish Zeeland.
Maiman said that while he also sees growing investor excitement about onshore aquaculture, the challenges that can come along with working in species other than salmon has turned some away and made securing funding an uphill battle.
His company was eventually able to secure funding from Rabobank by focusing its farming efforts on yellowtail, he said, because it had been successfully grown in land-based re-circulation systems and is second only to bluefin tuna in price.
“I’ve heard some presentations on land-based re-circulation claiming you can grow any fish anywhere, but it doesn’t mean you should,” he said. “What I was looking for is which fish makes sense where.”
Yoav Dagan, vice president for Israeli aquaculture business Aqua Maof, identified shrimp and red drum – a type of bass – as species investors would be well-served to endorse, and cast doubt on the idea that large investor would back what he labeled a niche market for yellowtail.
Dagan said heightened investor interest in aquaculture over the past two years has seen his company approached by TPG, Mitsui and others. Dagan counseled fledgling aquaculture companies to use investment banks as intermediaries in dealing with investors, comparing his attempts to do so himself to trying to do business in China in English.
“I cannot get money from the investors unless I speak the same language and I need people to do that for me,” he said.