Could you please discuss the issues around fish farming and what new laws or policies are in store for the fish farm industry.
There is tremendous pressure from Environmental NGO’s and consumers on the industry to move toward more sustainable practices than the current systems – this means containment systems that eliminate pollution from farms, escapes, pathogen transfers and also reduces the need for fish meals and oils in the feed. Fisheries and Oceans Canada has developed draft legislation with the intent to better govern the industry. While the draft does not indicate that the industry will be forced to change to closed systems, it does leave the door open. The ENGO’s and public pressure will become evident in the comment period and likely the draft will be changed to accommodate the strong sense of the need for change.
I feel very strongly that in order for the BC industry to expand it will need to move to closed systems. This is because the licensing is still subject to First Nations approval and most affected First Nations do not believe that net cages are harmless and are very positive about our efforts to move to cost effective sustainable closed containment.
Do you work together with these organizations?
We are actively working with ENGO’s (Environmental Non-Governmental Organizations) to further the advancement of sustainable aquaculture. Among them are the David Suzuki Foundation, the Coastal Alliance for Aquaculture Reform, Living Oceans Society as well as a number of First Nations. We also work closely with the regulatory agencies. A great deal of our base research and development funding has been provided through grants from the Gordon and Betty Moore Foundation and from SDTC, Sustainable Development Technology Canada.
How can AgriMarine’s technology contribute to the profitability a fish farm?
AgriMarine’s technology enables much more control over the management of fish stocks. For instance, control over incoming water depth allows the farm to avoid toxic algae blooms; control over oxygen supplementation allows the farm to avoid low dissolved oxygen events. Both of these naturally occurring events have caused millions of cultured fish to perish over the years. The technology captures solid waste – this waste may become a profit centre when treated appropriately and sold as soil amendments. Waste capture also eliminates build up of solids on the sea floor around a farm, which eliminates both the negative effect of nutrient enhancement and the attractant of sea life, which in turn attracts marine mammals which would typically attack the fish held within net cages. Eliminating escapes keeps the fish population stable and reduces fish stress, which can have negative health effects. Fish feed is the single largest cost input – typically net cage operations lose up to 5% of feed either through drift (water currents carrying the feed out of the nets) or through uneaten feed leaving the bottom of the net. Contained systems control the loss of feed through real-time feedback systems that tell the farmer when to stop feeding.
Our pro forma calculations indicate that operating costs are at least equivalent and likely better than a net cage operation. The capital costs are somewhat higher; however, the equipment is built to last far longer and may therefore be amortized over a longer period, thus reducing the impact on net income.
Why did you focus on China?
We were introduced to the opportunities in China through connections we had made here in Canada. The Chinese have been looking for ways to provide a greater quantity of locally supplied food to their population, but they wanted to ensure that the food production systems were environmentally responsible and sustainable. Our technology was attractive because of the large number of fresh water reservoirs available. These reservoirs were for energy, flood control and potable water, thus any use of them had to be non-polluting. Our CEO, Richard Buchanan, was invited to China to discuss the potential uses for our technology, and from there he discovered a strong willingness on the part of the Chinese to help AgriMarine develop a business model. A government-owned hatchery was made available, and introductions were made to people in the Benxi Water Bureau. The BWB was very interested and helped to expedite the regulatory process. There are many other reservoirs within the country that could be used for cultured fish operations. The willingness of the Chinese to accept our technology made the decision an easy one. While there, Mr. Buchanan found fabricators that were able to produce the solid-wall tanks to our specifications for substantially less than the cost estimates from North America. Thus, we were able to develop solid working relationships with several companies and will be exporting the tanks to our Canadian operations. China is also the world’s largest aquaculture market and consumer of fish by far and this market continues to grow particularly in our target market for higher value fin fish.
You mentioned that a hatchery was made available in China. Can you discuss this?
The Hatchery we bought in Benxi County was another key aspect of our initial development in China. It represented a unique foundational asset for our growth since it was once the largest state owned trout hatchery in China and has a natural ground water source that is so significant that it is listed on a register for significant geological features in China. One of our hatchery specialists has remarked that in 30 years of visiting hatchery sites around the world, he has never seen a better hatchery water source. We have already begun improvements and expansion in the hatchery en route to taking output from the hatchery to 5 million fingerlings per year and beyond. I have built hatcheries at that scale before and the replacement cost for just the tanks and water systems at those hatcheries were up to $10 million dollars without the land or the water. Including these components, the Benxi hatchery is a very valuable asset to the company.
How many tanks have you installed?
We currently have two solid wall tanks in operation in the Guanmenshan Reservoir in Benxi Province, China. Two more will be installed this fall, with one already prepared for final delivery and installation and the other already well into production. Trout will be harvested from this operation beginning in September 2010. Plans are in place for continuous farm expansion through the regular delivery of new tanks to the current farm and soon to be developed new farm sites and we already have the fish in the hatchery pipeline to bring them in to active commercial production as soon as they are delivered. The first ocean tank has already been manufactured and will be installed in Canada this fall, and Chinook salmon will be grown in it.
Where are the tanks produced?
The tanks will be produced in China and shipped to wherever our operations are. The fabrication facilities are highly skilled with vacuum infused resin products, having much experience with high tensile strength requirements in their field of operation. The tank engineering specifications stressed that we required a field life of 25 years minimum. The ocean based tanks were engineered for a high energy site in Canada and used 50 year storm statistics to model the tank. This allows us to confidently predict long service life cycles and related amortization rates for our tanks. We have also been refining our other life support systems for many years so our overall system efficiency is improving all the time to enhance our competitiveness and profitability.
How do you maintain the tanks and how do you deal with the energy demands?
The tanks are quite easy to work with because of their built-in wide walkways, and control over the rearing environment. Aside from the daily feeding regimen, farm staff will monitor in-tank water quality through real-time life support monitoring systems. Maintenance will involve daily inspections of life support systems, including pumps, oxygen supply, and waste collection.
Our system was designed to be installed where there was available three-phase power. Typically this would be closer to markets, which has the added benefit of a reduction in transport related carbon footprint. We do not intend to install in remote areas where the only power available is from a generator. In future, we hope to be able to use new technologies for solar and tidal systems to either supplement or provide total power for our farms.
What kind of fish can be farmed in your tanks?
Any finfish could be grown within the AgriMarine system, however due to the cost of initial farm capital, it makes the most sense to grow high-valued fish species such as salmon or tuna. The salmon market is vast and continues to grow around the world. Sustainabilty problems with traditional net cage farming and related consumer pressure for change in the industry have opened up unprecedented potential for growth for us. Tuna is very popular in Asia and Europe, and is also becoming more popular in North America and pressures on the wild stocks are limiting traditional sources of this valuable fish, therefore opening up fantastic opportunities for growth for advanced sustainable aquaculture companies like AgriMarine.