When AgriMarine Holdings Inc. (TSX-V:FSH) staff transferred 56,000 chinook salmon smolts into a 3,000,000-litre closed-containment tank in Middle Bay near Campbell River on January 28, the event marked a significant development in the rise of closed-containment salmon farming in B.C.
Earlier this month, AgriMarine executives schmoozed with international seafood retailers and other delegates attending the SeaWeb Seafood Summit at the Westin Bayshore.
Many of the retailers are keen to sell AgriMarine’s closed-containment Pacific salmon when the company harvests the fish in spring 2012, AgriMarine vice-president Rob Walker told Business in Vancouver.
Unlike its competitors, who raise salmon in land-based tanks, AgriMarine farms its fish in closed-containment tanks in the ocean. Competitors also rely on other revenue sources to survive.
Virtually all the fish in B.C.’s $400 million fish-farming sector are raised in the ocean in open-net pens, which environmental activists say have adversely affected wild salmon stocks.
There are other closed-containment pioneers.
Swift Aquaculture co-owner Bruce Swift farms a small amount of salmon in land-based closed-containment tanks in Agassiz and sells most of those fish to restaurants such as C, Nu and the Raincity Grill.
He supplements fish-farming revenue by growing wasabi, watercress and other crops, which are fertilized with fish farm waste.
Swift’s production is small, however. Overwaitea Food Group therefore sources supplies of closed-containment salmon from Washington state-based SweetSpring.
But SweetSpring owner Per Heggelund earns less than half of his revenue from selling fish to Overwaitea.
The balance is generated by providing training programs for saving endangered fish species in the U.S. and selling fish eggs.
AgriMarine’s main business is closed-containment aquaculture.
For more than a year, it has been rearing steelhead trout in two tanks in China’s Liaoning province. The trout was sold in China after being harvested last fall.
It’s now raising chinook salmon in a third tank in China and plans to harvest them in spring 2012.
Walker said a fourth tank being assembled in the Asian country will also be used to raise chinook.
“We’re firm believers that we have to protect our marine environment. It’s pretty clear that there’s an influence on the localized marine environment from open nets.”
Walker added that, more than simply being a sustainable option, farming salmon in closed tanks in the water instead of open-net pens is also good business.
“It makes sense to control your rearing environment. There’s an old saying, ‘You can’t manage what you can’t control.’”
Walker added that algae blooms wipe out millions of fish each year. But water for AgriMarine’s fibreglass and metal tanks is drawn from depths that reduce the likelihood of such blooms.
“We control the internal rearing environment so we supplement with oxygen as well so if there’s low dissolved oxygen then we don’t suffer from that,” he said.
AgriMarine lost $2.1 million in the six months that ended September 30, when it had a $14.6 million accumulated deficit.
It’s unclear how far the company is from achieving profitability. However, Walker told BIV that, unlike other companies’ past closed-containment experiments, which were done on land, AgriMarine’s water-based operation is scalable. That’s an important consideration in a sector where economies of scale often dictate profit.
“Land-based systems will be quite a bit more expensive – by orders of magnitude,” he said. “It’s a completely different technology. When a lot of people say closed containment is too expensive, they’re referring to land-based closed containment.”
Vancouver
CEO: Richard Buchanan
Employees: N/A
Market cap: $40.4m
P/E ratio: N/A
EPS: ($0.09)
Sources: Stockwatch, TSX, Globe Investor