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AgriMarine Holdings Inc.: Vancouver-based company capitalizes on thriving fish farming industry
By Jordan Luy
AgriMarine Holdings Inc. presents at the TSX Venture 50 Spotlight Event in Toronto
AgriMarine Holdings Inc. has been putting a new spin on one of the fastest growing food production sectors in the world.
With the industry set to reach a market cap of $100 billion by 2024, the Vancouver-based company is helping ensure that this rapid movement heads in a sustainable direction by using its technology to solve its current problems.
Named to the top spot in the Clean Technology sector of this year's TSX Venture 50 list, the company saw its share price grow 126% and its market cap jump from about $1.8 million to $23.1 million last year.
Aquaculture, or as it's more commonly known fish farming, is the process of raising fish commercially for the retail and restaurant industry. Species such as salmon, trout, tuna and yellow croaker are kept in net cages, tanks and other enclosures, usually in natural bodies of water, until they're ready to be harvested and sold as food. Overfishing and increasing world demand have made fish farming a necessity. Conventional methods have done an adequate job of doing this but as Sean Wilton, Director, Licensing and Project Joint Ventures of AgriMarine Industries points out, these current practices are not sustainable.
“What the conventional net cage methods have been good at is providing a uniform, fresh product to satisfy the retail and restaurant demand. They're very good at creating a reliable product flow but that growth comes at a cost and quite a lot of negative attention,” he explains.
There is a long list of environmental concerns attached to traditional fish farming methods. One of the main issues surrounds the interaction of the wild fish with the farmed fish. With net cages there is always the chance for smaller fish to swim through the cages which creates the potential for cross-contamination of disease and parasite transfer.
Another issue is the concern over the build-up of solid waste on these farms. This leads to contamination of natural waters as well as infection to both farmed and wild fish. AgriMarine's solution to these problems is a solid-wall closed containment system placed in inter-tidal regions or fresh water bodies. Its enclosed nature prevents fish from escaping and wild fish from entering the farm. Additionally, the solid waste is captured, further preventing contamination.
The company began developing the technology in 2000, when it was selected by the British Columbia Government to study land-based closed containment. “We started out with research and development where it's sort of a theoretical notional idea to being able to deliver on that promise. Having done our first commercial harvest at our farm in China, we actually prove it at a commercial scale.” That first commercial farm in Benxi, China launched in late 2009. Earlier this year, the company launched its first full scale commercial tanks in Campbell River, BC, the first of its kind in Canada.
With salmon farming alone at about an 11 billion dollar industry, Wilton says there is increasing pressure on the push side from regulators and NGOs looking to limit the expansion of the industry in its conventional way. The increasing opposition towards open-net-fish-farming has not gone unheard as major players in the seafood industry continue to formally declare support for eco-friendly aquaculture.
Under pressure from Greenpeace, Costco recently revised its seafood and sustainability policy. It will eliminate 12 species from its shelves that are currently threatened by current fishing practices. It says it won't begin reselling them until harvesting methods are deemed sustainable. Also outlined in the updated policy is a firm commitment to support sustainable aquaculture in general. Loblaws, one of the country's largest buyers and sellers of seafood, has also begun the process of applying standards to the types of fish sold in its stores. Recently, it reaffirmed its commitment to have only sustainable seafood available on shelves by 2013.
“We've got the demand side pressure from consumers saying they're not interested in supporting net cage aquaculture any longer,” says Wilton while listing other examples of industry leaders and grocery stores following trend.
Another factor of success for AgriMarine was its decision to penetrate the Chinese market by establishing the Benxi farm. At $30 billion, the Chinese aquaculture industry is the largest in the world as well as the fastest growing. Ideal water locations and strong government support for clean technologies are some of the reasons why Wilton calls China a very exciting market to be in. He also points to a strategic national initiative to increase the amount of protein in the Chinese diet. This coupled with a growing middle class is changing the structure of the food market there and dramatically increasing the demand for fish like salmon.
“We have a unique structural advantage where we can do year-round aquaculture there and deliver fresh products same day to the local markets which no one else can do. It gives us a three dollar per kilogram advantage in the market and that's a huge advantage so we're very excited about our farms there.”
As for challenges, Wilton says the biggest one thus far has been making the transition between the research and commercial production levels. Moving forward, the company's expansion plan is to capitalize on growth areas of the industry. It's working on building a second facility in China, in Jilin Province and also just recently launched its technology in Norway, which is another world centre of salmon and trout production.
“Our long-term vision is to take an ever-increasing share of the salmon market but also move into other species,” he says. “We're doing some exciting work with yellow croaker and looking at possibilities of using our technology in the production of tuna which is a species at risk.”
The adoption of new, clean technology to replace existing practices such as fish farming, tends to involve long transition periods. Typical challenges are often higher costs, as consumers have to pay more as a trade-off for the environmental benefits, and difficulties in convincing the industry to embrace new standards. Neither seems to be a major concern in the fish farming industry as the markets have already shown willingness, if not determination to immediately adopt a more sustainable model. As for higher costs, Wilton says this is not the case and that the company can address the environmental issues while being a competitive economic alternative. “It's not a pie in the sky, environmental green solution that no one can afford. We can actually demonstrate that we can be as good or better on a straight up cost for cost basis.”
Remaining in the forefront of sustainability exercises in fish production will serve as the company's challenge and motivation going forward.
“We're addressing a very real need in a very large industry that's growing rapidly. We're advancing on many fronts to continue our growth as a company solving the demand need for sustainably produced fish.”
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