Fish out of ocean water dampen aquaculture enterprise

Economics of land-based salmon farming not adding up for B.C. fish farmers
Employee Ryan Mitchell at Steve Atkinson’s Little Cedar Falls fish farm, which raises steelhead in land-based tanks | submitted

Some day, it might be possible to raise salmon in land-based closed containment ponds and make a profit.

But that day is still a long way off, and even when it does become economically viable, land-based aquaculture might be like organic farming: an option for consumers willing to pay a premium, but which can’t replace ocean-based salmon farming.

That’s not just the conclusion reached by the BC Salmon Farmers Association (BCSFA), it’s also the opinion of a Nanaimo businessman who owns a land-based fish farm.

“There’s nobody yet that’s made money, including us,” said Steve Atkinson, president of Taste of B.C. Aquafarms in Nanaimo, which raises steelhead at its Little Cedar Falls fish farm.

“As far as transferring the net cage industry into land-based operations, we’re years away, and probably it is not even a viable goal.”

The International Salmon Farmers Association (ISFA) agrees. A recent ISFA study concluded that land-based salmon farming is fine for raising smolts, but faces serious financial and technological limitations when it comes to raising salmon to maturity.

The biggest concern with ocean-based salmon farms is the fear that they might transmit diseases to wild fish, something Atkinson feels is not substantiated by science.

In response to letter writers in the Nanaimo News Bulletin last month that argued for the wholesale removal of salmon farms from the water and onto the land, Atkinson’s letter to the editor stated that “while there is a common perception that the technology currently exists to take the salmon farms out of the ocean and move them on land, it simply is not so.

“Atlantic salmon, which is the most cultured salmon, has simply not been successfully raised at commercial scale on land at a profit anywhere, other than at hatchery stage.

“Land-based salmon farming does have a future in B.C., and our farm is showing that. But, I see land-based salmon farming as a complement to ocean farming, not a replacement.”

B.C. is littered with failed attempts to grow either Pacific or Atlantic salmon in land-based recirculating aquaculture systems (RAS) over the past 20 years.

Kuterra, a land-based salmon farm near Port McNeill, has had some success, but only because of subsidies from government and non-profit organizations. It’s now being sold by its owners, the Namgis First Nation.

The Namgis started raising salmon at the fish farm in March 2013 and began selling its fish one year later. But in June, the Namgis put the facility up for sale.

“The Namgis have run from it,” said BCSFA director Brad Hicks, who last year did a financial analysis of Kuterra that concluded it is seven times more expensive than ocean-based salmon farming.

“They don’t believe in it, from a business perspective. If nobody that’s that close to it will put any money into it, that’s the biggest sign it’s not viable.”

But it’s not that the Namgis don’t believe in the project, said Namgis Chief Don Svanvik. It just needs to scale up to become profitable.

“If the farm is even twice the size it is now, we’d be making money,” Svanvik said.

But the Namgis can’t afford to keep subsidizing the operation and are looking to divest or otherwise attract new investors.

“We ended up having to put a whole bunch of capital into it that originally wasn’t part of the plan,” Svanvik said.

The project’s original capital cost was $8.8 million. It ended up costing $10 million, Kuterra chairman Eric Hobson confirmed. When operating costs are added, he said the total investment in the project thus far is about $15 million.

Canadian taxpayers covered close to half of those costs. The Government of Canada invested $6 million in the project – $5 million from Sustainable Development Technology Canada and $1 million from other federal agencies, including Fisheries and Oceans Canada.

Tides Canada and the Gordon and Betty Moore Foundation provided $4 million through the Sustainable Aquaculture Innovation Fund. Another $1 million came from private donors. The Namgis covered operating costs totalling about $4.5 million – $1.5 million in equity and $3 million in loans. While Kuterra is not yet profitable, Hobson said it is breaking even.

Last month, while defending his minister of agriculture’s threats to shut down a Marine Harvest salmon farm, due to First Nation opposition, Premier John Horgan pointed to Kuterra as an example of the future of fish farming in B.C.

“The facility has proven itself to be effective,” Horgan said. “You can grow fish on land, you can market them and they’re taken up by the market because they say ‘closed containment.’ There’s a bigger appetite for closed-containment Atlantic salmon than there is for open-net fish.”

If that’s true, it fails to explain why grocery stores in B.C. sell farmed salmon from open-net pens, while West Creek Aquaculture can’t find buyers in B.C. for its land-reared coho and sockeye.

“We sell all of our coho everywhere outside of B.C.,” said Don Reed of Willowfield Enterprises, which owns West Creek Aquaculture. “No one in B.C. will buy our fish because it’s farmed fish. Our inability to sell our land-based salmon is directly related to the campaign against farmed salmon.”

Kuterra has been more successful in finding buyers in B.C., some of whom pay a 30% premium over farmed salmon from open net cages. As a technology demonstration project, Kuterra is a success story. It has shown that Atlantic salmon can be grown in land-based closed-containment systems. But that doesn’t mean it will be a profitable business.

“One of my favourite sayings is ‘You can grow wheat in a greenhouse – what’s your point?’” Hicks said.

He pointed out that some of the advocates of land-based fish farms are independently wealthy philanthropists who have not put any of their money into the project.

“It’s all been OPM – other people’s money,” Hicks said. “It’s government money, it’s been money from Tides, it’s been money from the natives. You can’t have an industry that’s dependent on government largesse.

“They’ve lost $16 million, as far as I can tell, and they’re not alone. The world is littered with carcasses of RAS facilities.” 

nbennett@biv.com

@nbennett_biv

comments powered by Disqus

More from Forestry & Fisheries

WorkSafeBC upholds fines for Babine sawmill explosion

Read Article

B.C. forests minister off to China on trade mission

B.C. forests minister leads "largest-ever" trade mission to China and Japan

Read Article

Final softwood lumber duties set in 20% range

U.S. Commerce Department sets anti-dumping and countervailing duties against Canadian softwood lumber exports.

Read Article

Japanese conglomerate buys 48% share in B.C. wood-pellet producer

Pacific BioEnergy employs about 55 people and manufactures 550,000 tonnes of wood pellets a year

Read Article

Horgan's tone on salmon farming 'unsettling': Marine Harvest

Marine Harvest put on notice it could lose one of its tenures, due to First Nation opposition

Read Article

Subscribe to our mailing lists

You may withdraw your consent at any time.

* indicates required

Newsletters

* You can modify your newsletter subscriptions at the bottom of any newsletter you receive.
Business in Vancouver Media Group
303 West 5th Avenue, Vancouver, British Columbia
V5Y 1J6 · Canada
604-688-2398
×