Problems recorded at recirculating aquaculture system (RAS) facilities and a sudden drop in investor interest in RAS projects are opening an opportunity for alternative land-based systems, such as the proprietary system employed by SunCoast Tilapia, according to the start-up’s CEO, Michael Mogollon.
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 to the U.S. retail and foodservice market. Nearby, Atlantic Sapphire has employed a RAS system at its land-based farm in Miami, Florida, but has suffered numerous setbacks, which led to its release of Billund Aquaculture from the project.
“RAS is a technology that’s still being developed. It has an expensive learning curve and maybe the folks at Atlantic Sapphire are pioneers, but they’re still trying to tweak things that have been overlooked or fix a design that was ill-conceived,” Mogollon told SeafoodSource. “Our system is precisely not a RAS. We don’t need RAS to do what we do. It adds a whole lot of capex that makes the initial investment much higher. We have a huge advantage in that sense – our investment is a lot less and the risk involved is a lot lower. We also have six years of operation behind us that shows improvements in production, not failures. We have much simpler technology that’s much cheaper to build and a proven record behind it.”
Mogollon said he doesn’t even like SunCoast Tilapia to be lumped into the land-based category in general, since he views his technology, the “biologically efficient aquaculture systems technology” (BEAST) system, which is reliant upon natural biological processes, including the use of algae, as fundamentally different.
“The world has seen a lot of RAS failures. It’s hard to do and when you try to do it in a climate that’s working against you, it’s even harder. When you talk about putting a salmon operation in South Florida, from the beginning, it sounds like a very uphill battle, just like if I was going to grow tilapia in Alaska, I’d probably have a hard time doing it,” he said. “I wish Atlantic Sapphire success, but extreme environmental differences add all kinds of cost and sophistication into an RAS system that I’m glad I’m not dealing with.”
Some of that cost comes in the form of increased maintenance and labor requirements, Mogollon said.
“The maintenance of an RAS facility can be as high as 40 percent of its operational cost, and in addition to finding the skilled labor needed to run the operation, the risk of human error causing a problem with the system is much higher. Atlantic Sapphire has had huge losses related to operational hiccups or screwups, where something failed, so after seeing that, I’m glad to have deliberately designed away from RAS.”
Additionally, “most of the product coming out of RAS farms actually doesn't taste that good,” Mogollon said.
“I know salmon and barramundi coming out of RAS need some help on the taste profile. I’m not sure they know why, but it’s just a fact,” he said. “RAS operators have to fight uphill on so many issues that [they] create some high odds against [them].”
Nevertheless, Mogollon is heartened by the fact that Atlantic Sapphire has been able to garner over USD 100 million (EUR 88.5 million) in financing, and that other land-based projects around the country have also secured funding.
“There are at least half a dozen new projects raising hundreds of millions of dollars to grow land-based salmon. That’s a lot of money on the table in terms of people wanting to invest in high-quality seafood, and you’re seeing some branching out into other species as well,” Mogollon said. “We and other land-based aquaculture projects will benefit from it. And investors who are pioneering this will see some very nice returns and very prosperous projects coming out of this.”
Mogollon said he’s noticed investors are also becoming savvier to the intricacies of land-based fish farming, which he said is helping the industry mature.
“Investors are becoming much more sophisticated compared to five years ago. We’re having much more on-point discussions about what we do and how we want to achieve it,” he said. “They’re also aware of a change in consumer behavior favoring sustainable locally grown proteins. So overall, the [financial] environment for land-based projects is improving a lot.”
Mogollon said he believes there has been a pullback in investor interest recently because land-based fish-farming projects are still being lumped together to some extent, which has made fundraising for his project more difficult. He said he hopes U.S. land-based aquaculture companies continue to emphasize “doing things the right way” as a means to restore investor confidence.
Nevertheless, in his investor pitch, Mogollon is clear about how he views his own project as distinct.
“We think our model is completely different from RAS. We can explain a different story that requires a lower investment and lower operational cost, but with the result of delivering great-tasting fish to an eager market,” he said. “But people will see that from the supermarket to the stock exchange, this space is creating value. I’m quite optimistic this is going in the right direction.”
Photo courtesy of SunCoast Tilapia
