SunCoast Tilapia engineering a US-raised “Volkswagen of whitefish”
SunCoast Tilapia is a nascent project looking to scale up a land-based farm in Clewiston, Florida, U.S.A., to grow and market domestically raised tilapia for the U.S. retail and foodservice market.
The project is being led by CEO J. Michael Mogollon – a veteran aquaculturist – and Chief Financial Officer Tamas Doffek, who were both previously involved in American Fresh Fillets, a now-defunct entity that initiated tilapia-farming on the 250-acre property now owned by SunCoast Tilapia.
“The SunCoast Tilapia concept came out of American Fresh Fillets,” Mogollon said. “Things were looking fairly promising through our first round of financing, and more than one group did due diligence, then COVID hit and the whole thing was put on ice until people got a sense of how bad it was for their other investments. After a year-plus, some of that enthusiasm fizzled out. Recently, we pitched the same concept under a different name to an advisory group that will be handling our fundraising, and they’re excited and so are we.”
SunCoast Tilapia is seeking to raise USD 20 million (EUR 17.7 million) to support the first phase of its development project, which involves the construction of tilapia greenhouses and a processing plant. Phase two will include additional greenhouses and a feed mill, and will require an additional USD 15 million (EUR 13.3 million). Doffek said he expects the first round of fundraising to be closed by this summer, and construction to begin in Q3 2022. Ideally, the second phase of the project would begin six months after the completion of phase one, Doffek said, as it would bring the project to a much higher output total for fillets – an estimated five million pounds of annual production – and gives the farm the ability to make its own specialty organic feed. A planned third phase of the project involves the construction of a nursery and juvenile grow-out tanks.
“Whether we get an organic stamp on it or not, we’ll see. Once we get to that point, we’ll weigh how advantageous it may be and what price-points are acceptable in an organic fillet. It will also depend on whether organic regulations are out, which is a big ‘if’ at this point,” Doffek said.
While the U.S. market for tilapia is currently dominated by foreign producers, Doffek and Mogollon are confident their U.S.-raised and -processed, antibiotic-free, chemical-free fresh fillets will find a niche in the retail sector.
“The goal is to produce a fillet people can trust, made under FDA and USDA standards, that has attributes perfect for people who want to eat healthy, at a competitive price-point that we think will fit every budget of household in the U.S.,” Doffek said. “We feel that we have the right vision for the right moment – the market is ready for fresh American-made tilapia fillets.”
Doffek said fresh tilapia currently sells for USD 7.00 to USD 12.00 (EUR 6.19 to EUR 10.60) per pound around the U.S.
“But 99 percent of that is coming from abroad,” he said. “Tilapia is the perfect fish for most American households because of its affordability. We can sell our product for not very much more than imported tilapia. For more or less the same price range, American consumers will be able to buy local, naturally-raised, Florida-grown tilapia fillets that are always traceable, where they can visit our farm if they want to. We’ve had several potential foodservice customers, including Whole Foods and Costco, taste our fish and they just love the idea they can put out our tilapia fillet with an American flag next to it. So there’s very good momentum in the market, and we think trends toward more American consumers wanting to eat healthier and knowing where their food came from gives us a strong business rationale.”
Doffek said SunCoast Tilapia hopes to get at least USD 1.00 (EUR 0.88) per pound as a premium for its U.S.-flagged and chemical-free product, but said that will still make its fish more affordable than most other fresh fish sold at retail. With prices rising across the grocery store, including across the seafood segment, Mogollon said tilapia could become an option for customers looking to continue to buy seafood, but at a reasonable price.
“Buyers are all eager for us to bring them a solution. The tilapia market will get much bigger because of its price-point. Everyone is at least somewhat conscious of what they’re paying at the supermarket. When barramundi is USD 14.00 [EUR 12.37] per pound and tilapia is USD 8.00 [EUR 7.14], some people are going to switch. And they’ll find out the taste is great,” Mogollon said. “Our goal is to create a premium idea of the product but not a premium price. We’re creating the Volkswagen of whitefish fillets – something everyone can buy and is good for them. We think that will give us national appeal and then we’re going to back that up with great quality. So we think market’s going to be a lot bigger than currently is. But it’s already a big market, with 55 million to 60 million pounds being sold in the U.S. annually right now. We’ve seen this opportunity for a few years, we think finally we can be there with a solution with a better product that can be verified with transparency, traceability, and a face-to-face relationship.”
One of SunCoast’s biggest challenges will be producing enough to satisfy the large national buyers while keeping production costs down, Doffek said. They key, he said, is Mogollon’s innovative land-based farming technique, which incorporates a process he has dubbed “biologically efficient aquaculture systems technology,” or BEAST. Mogollon, who has worked professionally in aquaculture in the U.S. and Latin America for 35 years has been operating a pilot farm on the future site of SunCoast Tilapia’s farm raising 300,000 pounds of fish per year, and over the past six years, he has perfected the BEAST system, which he said allows for minimal maintenance and a high degree of automation, removing one of the greatest threats to land-based aquaculture systems – human error.
“It’s a technology that I developed over a number of years,” he said. “The secret sauce from that natural perspective is that it’s highly reliant on natural biological processes that take care of bacteria and algae. I’ve always tried to stay true to doing things in the stream of biology and not against the biological nature of the species I cultivate. This method involves essentially putting the tilapia in a water environment that’s very close to what tilapia evolved to make use of, containing phytoplankton, zooplankton, and other elements to create a water environment where fish can express everything they’ve evolved naturally to express.”
The BEAST technology incorporates “ecological processes that transfer energy from inorganic into organic forms that make their way into the tilapia food chain of tilapia,” Mogollon said.
“It makes it a very efficient way of finding their nutrition,” he said. “You get tilapia that can perform over and above what you would find in other cultured scenarios, because tilapia has evolved to find nutrition from these sources. We try and do as much as possible through natural biology. We end up with extremely healthy fish, but also fish that tastes a lot better than others that are out there.”
Mogollon said the BEST technology relies on natural processes, incorporating sunlight and microorganisms that do the work otherwise performed by pumps, machines, and filters in recirculating aquaculture system (RAS) set-ups. The planned farm will have no sensors for oxygen, ammonia, but will rely on automation for supplemental pellet feeding and mechanized fish transfer through the use of ducts into the yet-to-be-built processing plant.
“We’re planning to manage the facility with a high output but with very low manpower. The genius is how to build it so it can be simple to run and not create too much operational sophistication. The plan is robust on science but short on overengineering,” Mogollon said. “RAS systems are trying to do everything with machines rather than letting nature do most of the work. But we’ve found nature can do almost all of it. It does create a limit on your yields, but it puts us in a cost profile very close to operations outside of the U.S., which allows us to price our product essentially at the same price as imports.”
The microclimate in Clewiston, which borders Lake Okeechobee and is a little more than an hour’s drive away from Fort Myers and 1.5 hours from Miami, is optimal for raising tilapia, Mogollon said, with an overabundance of groundwater containing a slightly acidic nature required by the BEAST system, and plenty of sunshine that makes it easy and cheap keep the farm’s greenhouses at 80 degrees Fahrenheit year-round. Additionally, the labor market in South Florida and the farm’s easy access to major warehouses operated by big food distribution companies are major assets for SunCoast Tilapia, Doffek said. And there’s a livestock feed market in Florida that will be an eager customer for fishmeal made from the company’s byproducts, he said.
After two years of delays due to the COVID pandemic, Mogollon and Doffek said they are eager to get started on the project.
“We have customers awaiting, we just need equity, but we hope it will just be a matter of months. We can’t produce enough fish for the orders I’ve got. People love the quality and the taste. We’ve given it to chefs all over and everybody raves about it. Half the people don’t believe it’s tilapia,” Doffek said. “If we didn’t have a great-tasting fish, this would be much harder story to tell, but if you got a great-testing fish, there’s plenty you can do with it.”
Doffek said he’d like SunCoast Tilapia to eventually begin producing value-added products focused on convenience, and said he’d also like to target new markets in the U.S. that might be interested in a mild whitefish that has SunCoast’s bona fides when it comes to sourcing.
“Traditionally, seafood has been eaten more in coastal areas in the U.S., but we actually would like to be part of the process of changing that. We have been talking to large retailers in the Midwest, some of whom have been at the forefront of establishing sustainable souring policies and who are eager to change the mindset of their customers in their willingness to buy quality seafood,” Doffek said. “We have a very good chance of becoming part of the sustainable seafood revolution. The sustainability of our product is very strong and the product is very presentable. I’m confident SunCoast Tilapia is going to be very high on the list of seafood buyers all over the country.”
Photo courtesy of SunCoast Tilapia