Land-based salmon aquaculture: a future with potential
Chefs looking to menu salmon outside of the wild salmon season usually turn to salmon farms for their product, and a relatively new trend of land-based salmon farming is beginning to gain ground, with production costs dropping and prices along with them.
Two years since Kuterra began land-based closed containment Atlantic salmon aquaculture on British Columbia’s Vancouver Island, there’s been a 30 percent decrease in capital costs and the company anticipates hitting steady state by March 2016.
“Our first module cost CAD 9 million in capital costs, but we had an overbuild premium then - we were building into the unknown,” said Josephine Mrozewski, communications director. “We had to build a number of things above standard, including heat exchange capacity and seismic standards. Today we can do seismic construction more efficiently, eliminate a quarantine unit, and we know how much heat our fish give off, which means we can refine the heating and cooling system. Now, we can design a system suited precisely for the fish we grow and what they need, so we’re confident any subsequent construction will cost much less than our first module did.”
Kuterra is growing its salmon in a year and anticipates maturity time can be reduced to 11 months down the line. Mrozewski said by March 2016 Kuterra’s operating costs will be comparable to that of traditional Atlantic salmon aquaculture. “This is an industry that’s moving quickly and there are a number of global trends making people around the world look more closely at land-based closed containment,” she noted.
Those trends include the growing global demand for and constraints on supply of Atlantic salmon, increasing consumer expectations of the health, quality and sustainability of their seafood, consumers’ willingness to pay more for seafood that meets their expectations and improvements in technology and knowledge associated with land-based recirculating aquaculture systems (RAS).
In its short lifespan Kuterra, a company owned by the Namgis First Nations, has managed to dispel a number of myths associated with land-based Atlantic salmon aquaculture. Critics have claimed RAS use too much land, water and power and that the technology is bad for fish. Kuterra recycles all its water every 30-to-60 minutes, reusing 99 percent in each cycle. Its facilities were designed using geothermal heating and cooling, insulation and gravity to move most of the water, keeping power costs low. And the company is growing healthy fish in a low-stress environment. “Fish growth and behavior indicates they’re growing on target, proving that in terms of animal husbandry, our method is not bad for fish,” Mrozewski said.
Ocean Wise, SeaChoice and Seafood Watch have all ranked Kuterra as the “Best Choice” sustainability ranking, a first for farmed Atlantic salmon. Sold predominantly at retail for CAD 13.60 to CAD 18 per pound, Kuterra’s salmon has been in high demand, said Guy Dean, VP and chief sustainability officer at Richmond-based Albion fisheries, the exclusive distributor. “One of the advantages of having land-based aquaculture is that we’re not competing as a commodity, so our pricing remains stable. We plan our pricing for an entire year with no fluctuations.” He added that because of big price fluctuations in traditional farmed Atlantic salmon, Kuterra’s price ranges between 15 and 50 percent higher. “Most of our customers have come to us looking for this product and we’ve had to do very little marketing,” he said.
Dean added that Kuterra’s Atlantic salmon, grown in fresh water, has a milder, richer, more buttery taste “without the marine aftertaste associated with salt-water Atlantic salmon. We’ve done multiple taste tests and in the last one, all 14 consumers chose Kuterra salmon.” Still, land-based Atlantic salmon aquaculture is unlikely to ever replace net-pen aquaculture, he noted. “This is a product for a select group of consumers who are concerned about the environment and what they’re putting into their body, but I believe this kind of aquaculture has the ability to be a game changer.”
In Eastern Canada, Sustainable Fish Farming in Nova Scotia has been refining its closed-containment Atlantic salmon aquaculture facility for the past eight years, using and recycling saltwater. Its present facility can produce 100 metric tons (MT) of salmon each year but there are plans to build another production unit with a 500 MT capacity.
Capital costs for this kind of aquaculture are significantly higher than those for cage farms, conceded Kirk Havercroft, CEO of Sustainable Fish Farming. “But I don’t know where the growth is coming from in the cage farming industry, where it’s becoming ever more difficult to get new licenses for cage farm sites. We find our capital costs and returns to be attractive enough that it should be able to attract external investment and we’re satisfied that at the right scale the return on this investment makes the whole project commercially viable.”
Havercroft said his company is able to grow fish much faster than the cage farming industry. His salmon grow from smolt to full adult fish in 10-to-11 months, whereas cage-farmed salmon take 20-to-22 months. That compensates for the power costs associated with regulating the water temperature and pumping water in closed containment aquaculture, he said. “In the last two years we’ve been able to reduce the power footprint on our latest generation of designs by 35 percent.”
“We don’t have the pharmaceutical costs of cage farming, nor the costs of maintaining boats that go out to feed the fish. When you factor in all our costs, ours is a very attractive investment and relatively unlimited in growth potential.”
While he wasn’t at liberty to discuss capital costs at Sustainable Fish Farming, Havercroft said the capital costs per kilo of fish produced will decrease in the future. “The larger the farm you can build, the lower the capital cost per kilogram of fish. This becomes very, very efficient at volumes in excess of 1,000 tons of production. So our premium price today is far more a function of the size of company we are presently than it is a function of a product produced in a closed containment environment. I’d be very surprised if, at the right scale, we were not very close to the production costs of a cage farm.”
Craig Flinn, head chef and owner of Chives Restaurant in Halifax, menued Sustainable Fish Farming’s Atlantic salmon over the summer and estimated the cost per pound was 10-to-15 percent higher than other salmon on the market. Havercroft said he would expect the price of his salmon to be up to 50 percent higher than a cage farmed product. But to date his company has met no resistance to the product price.
“There’s a significant demand for land-based containment,” he noted. “Our research indicates there’s a demand for tens of thousands of tons of premium salmon that’s produced on land in North America – and no supply for that product. I’m surprised by the controversy over the price point of our salmon and I believe consumers will ultimately decide whether land-based containment has a future. So far, they’re telling us this is a product they’ve wanted for a while and one they’re willing to pay more for.”