Saturday, May 30, 5.49 p.m EST
Invest in aquaculture? Think long term
During the first panel discussion on emerging salmon frontiers, the question was asked, Who in this room is an impact investor with your main concern being sustainability and social responsibility? One person raised his hand.
Most seafood investors ask, "where is the big money going to be made, how are you going to scale this?" Kampachi Farms CEO and Co-founder Neil Anthony Sims said.
He added that it is challenging to articulate aquaculture to investors "because it's farming, not fishing. There are no immediate tangible results."
"Farming requires a long term perspective," Sims said.
Sims said his Kampachi project intertwines the two notions. With open ocean aquaculture, "as you move into deeper water, farther offshore, you're reducing the environmental footprint and improving the overall health of the fish." But you're also able to scale operations with "oceans making up 70 percent of the planet, you can expand blue horizon opportunities. you're not limited by availability associated with land based, near shore operations."
Verlasso Director Scott Nichols believes "there's a wealth in innovation ... breeding programs for fish are not nearly the programs that exist for other proteins, I think there's opportunity there to invest in a way that doesn't sit directly on the farm."
Sims added that there "has been a lot of work on genetics being done in aquaculture. There is tremendous opportunity to replicate" models in other proteins, such as poultry. "Not genetically modified fish, but identify each of the genomes of fish."
Seafarms Group Ltd Chairman Ian Trahar pulled parallels from Seafarms' project in northern Australia.
"We will get disease at some point ... if we do, can we quarantine it (in large scale operations)? What are the lessons from other production models?" particularly from those operations in Asia.
Traher said, "the expectation is that we will get disease, so how do we design and engineer around it?"
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Saturday, May 30, 4.17 p.m EST
Going offshore, farther, deeper
Kampachi Farms's motto is farther, deeper, said CEO and Co-founder Neil Anthony Sims.
His company is exploring experimental technologies with off shore, deep water farming, "focused on a high value species" raised in drifter cages, called aquapods, near Hawaii.
Kampachi is similar to Japanese yellowtail and a "sustainable alternative to blue fin tuna. When we look at the opportunities for this high-revenue species, we think the key is do this in open ocean where there is virtually unlimited expansion opportunities" and gets away from near shore operations, which come with permit restrictions and conflicts with other user groups.
His operation requires manpower once a week when a "crew goes out to top off the feed and fuel in the generator."
Sims said the rest of the operation is run through the cloud, a wireless link and he can literally feed his fish remotely from a smartphone.
However, the technology and project are quite new and the aquapod's capacity is 3,000 cubic meters.
"That's a very small pen. that's not what we want when we're trying to scale." Other challenges include predicting where the aquapods will drift, streamlining and minimizing drag on the cage and developing satellite communications with on-shore operations."
Despite this, he feels there is great potential because the Kampachi's biological performance has far exceeded those raised in net pens. Their growth rate is doubled, the feed conversion ratio is 30 percent better and mortality rate is about 98 percent.
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Friday, May 29, 9.30 p.m EST
Farming or manufacturing?
Seafarms Group Ltd Chairman Ian Trahar is looking to "take farming and make it a manufacturing business not a farming business."
Seafarms Group is a small 1,500-1,600 ton farm-grown shrimp producer in Australia that serves as a pilot project for an industrial scale shrimp farm operation being constructed in northern Australia.
"We see enormous opportunity in the industry to industrialize and drive down the cost curve" of farming shrimp as well as the science behind "domestication and breeding". They hope to expand the 1,000 hectares, which produces about 12,000 metric tons, to 10,000 hectares.
The pilot project allows Seafarms to "establish brand presence in retail channels, merchandising and transition effectively our international operations team," which the company "recruited extensively throughout the world."
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Friday, May 29, 5.56 p.m EST
Omega 3 alternative
"Salmon get the omega 3s in their diet from fish oil. The fish oil comes from fish that are rendered and those rendered fish are being harvested up to their sustainable limits, so what we have is a worldwide cap on availability of the omega 3s that comes from fish oil," Verlasso Director Scott E. Nichols said.
His company offers an alternative source, although more pricey at the moment.
"If salmon is to be an expanding industry, something has be done to solve that issue." Verlasso makes omega 3 in yeast, which will "reduce pressure on wild fisheries."
Verlasso's method is "and will remain more expensive than omega 3 from fish oil for the foreseeable future," however, economies of scale and time will help mitigate that."
Despite the higher costs, Nichols feels this is necessary for the future because "we have a finite amt of omega 3 available to us ... If there's going to be an expanding salmon industry, there's going to have to be new and different sources of omega 3s."
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Friday, May 29, 5.01 p.m EST
Feed: traditional or new?
Calysta CEO Alan Shaw spoke of an emerging alternative to fishmeal that is almost identical, but more cost-effective and uses biotechnology to convert methane into a fishmeal-like protein product.
Pesquera Exalmar CEO Rossana Ortiz Rodriguez however, feels traditional is the way to go and fishmeal isn't going anywhere.
"Fish eat fish, it's the natural way for fish to grow," she said. "We offer ... assurance of a sustainable anchovy biomass that we protect to make this sustainable for fish meal and fish oil."
However, she added that "maybe in the future if there is not enough fishmeal, then the market may divide between two different salmon" based off which diet they receive.
Marine Harvest CEO Alf-Helge Aarskog supported both sides saying, "I think the way to mitigate it is not a revolution but mitigating what has been done."
Over time as more information becomes available about nutrition and requirements for fishmeal, the fishmeal has been replaced by vegetable sources, such as soy concentrate, sunseed flour, corn, wheat and beans, he said.
"I think this will continue and we will know more and more in terms of what requirements there are for amino acids for a healthy fish," Aarskog said.
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Friday, May 29, 3.24 p.m EST
Changing the face of feed
US-based biotechnology firm Calysta is developing sustainable nutrition using a biological process to convert readily available, low cost methane into a product "almost identical to fishmeal. It's 71 percent protein, 10 percent fat," said Calysta CEO Alan Shaw.
The product is not new. It was created in the early 2000s and is already approved, but "it never achiveved market penetration because" methane was five times more expensive in 2000. With methane being cheaper today, Shaw feels this is a cost-effective opportunity to replace fishmeal.
"This is a huge potential to introduce innovation into this industry on the back of a sustainable product," Shaw said. "Our product is non gmo, non vegetable based, non animal based, uses no land, and is a net producer of water."
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Thursday, May 28, 11.48 p.m EST
Peruvian anchovy industry recovers
Rossana Ortiz Rodriguez, CEO at Pesquera Exalmar, touched on the last three years in Peru and how the anchovy industry faced struggles such as El Nino and political changes. The country has been looking to bounce back and the market has been more stable.
"Anchovy is the most important species for Peru" and these challenges impact production volume, which in turn impacts the fishmeal industry globally. At the end of last year, Peru’s ministry of production confirmed there will be no second anchovy fishing season due to negative environmental factors from El Nino and kelvin waves.
Pesquera focused on impacts of El Nino in 2014 along with DHC growth. Despite a season with zero quota, the company reported growth in 2014, said Rodriguez.
The company's revenue rose from $183 million (€167.78 million) in 2010 to $217 million (€198.95 million) in 2012 and then to $221 million (€202.62 million) in 2014, a 21 percent jump in the 4-year span. Goals for her company going forward include extending and building relationships with independent fishermen as well as "develop new products and diversify value added products."
"We are creating and developing new markets with our own brand to sell directly to the supermarkets."
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Thursday, May 28, 11.15 p.m EST
Ocean vs. land farming
With investments in the 21st century, "we should be able to figure out how to use technology to feed ourselves" while being mindful of the environment, said Robert Orr, CEO at Cuna del Mar, adding he feels there are investment opportunities in ocean-based farming and "putting fish back in their natural habitat."
"It's not that land-based systems will have their place, but I don't see them producing large scale," he said.
Pareto Securities Seafood Analyst Henning Lund agreed saying "at some point, sea based farming will be very profitable."
"I'm not a big advocate of land-based farming," Glenn Cooke, CEO at Cooke Aquaculture, said.
"I think farming in the sea can be sustainable and if developed further, has potential. For land base, the technology may be there but the cost effectiveness of that technology is not there."
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Thursday, May 28, 10.42 p.m EST
Private equity investors
Glenn Cooke, CEO at Cooke Aquaculture, said when it comes to private equity partners, "it's a strong commitment" because the industry comes with unpredictable factors such as weather and disease.
Cuna del Mar CEO Robert Orr said "money always follows good ideas and the people capable of executing" successfully. However, in early stage companies, one challenge is the need for "higher leadership capacity in those companies.
Ejnar Knudsen, managing member at AGR Partners, said one major challenge is that private equity firms think they can own it like a manufacturing plant.
"it all comes back to payback," Cooke said. "For Cooke ... we need fast payback to keep our company growing and profitable."
However, he added that the "key is being involved and living your business; we breath it, we see it everyday and we stay on top of it ... for private equity, it's going to be very challenging because they're not going to breath it."
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Thursday, May 28, 5.52 p.m EST
Leroy launches sushi in Spain, Finland
Last year, Oslo-listed Leroy Seafood Group announced plans to start production of fresh sushi at the company's new facility in Madrid, Spain, in the spring of 2014.
That has come to fruition, and is beginning to see big uptake.
"We launched sushi in Spain with the largest retailer there two weeks ago and we launched sushi with the largest retailer in Finland this week," Sjur Malm, CFO at Leroy, said.
He also discussed his company's path toward developing its pre-packaged oven-ready boneless portions.
The company looked into products that provided a higher price tag, but also came with the "willingness of consumers to pay for it, so we need to make better products than we used to."
"It's not easy to make people pay more and more for whole fish so we launched fillets" produced out of the company's Oslo-based plant. "This is the first time our product competed with frozen pizza."
It was launched in Norway in 2006 and took two to three years for the marketplace to grasp the product's concept "and then it took off."
The company packaged the same fillets in plastic allowed a range of retailers, from local ones to fish mongers, to carry fresh fish.
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Thursday, May 28, 3.03 p.m EST
Chilean bankers need to feed their 'collateral'
"Chile is the region that everyone's eyes are on to see what's going to happen next," Glenn Cooke, CEO at salmon farmer Cooke Aquaculture, said, adding he feels there needs to be consolidation.
Ejnar Knudsen, managing member at AGR Partners, has long been looking for acquisitions in the sector, but said, "it's hard to deploy capital in Chile ... government regulations still need to be realigned."
He added typically if a banker lending to a salmon farmer has a distressed loan, it's concerned -- "because it's your collateral and it needs to be fed."
"In Chile the bankers go on holiday and they don't worry about the fish getting fed," which is one of the reasons Knudsen feels the country's aquaculture sector runs the risk of "just perpetually extending" its bad debt.
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Thursday, May 28, 1.51 p.m EST
Chile bouncing back from ISA
Cristián Garcia-Huidobro, CFO at Multiexport, said there is no doubt that the Chilean salmon industry is recovering and learned from the ISA disease crisis, which knocked the industry down.
"We stood up from that and we're moving forward," he said.
To keep improving, the government and industry needs to work together, Garcia-Huidobro added.
Among pending initiatives in the industry, the issue of removing over-regulation has been identified and the government has agreed with industry officials on certain solutions. Relocating concessions hit a 5-year delay, which in turn delays solutions for sanitary sea pathways.
However, there are results from efforts within the industry.
"Biomass is at a record high level and we have been able to keep sea lice at low levels," Garcia-Huidobro said, adding that mortality rates have normalized as well as harvest weight, both of which impacts the yield.
Looking forward, he said the question that needs answering is "what is the real capacity of Chile" in terms of granted concessions.
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Thursday, May 28, 1.39 p.m EST
Millennials, social media and seafood
Kyle Kraus, executive VP at The Food Group, stressed social media's influence on food purchasing trends today, and how it will impact the seafood sector.
Social media's impact "started with Millennials, but has transcended all the way up to the boomers," he said. "People want to know about their food, they want clean labels."
There is also a local and hyper-local trend in which buyers have a desire to learn about the farmer, whether its a farm nearby or halfway around the world, he said. Then, Millennials will often share these stories through social media and the web.
Jason Horn, sourcing specialist at Disneyland Resort, said, "wild caught fish, as long as the product has a story, it does well." Premium-caught wild fish are geared toward Disney's white table cloth dining locations as these consumers tend to want more knowledge of their food's origin.
"There are a lot of bloggers out there that report on Disney daily. People read it and it affects the way we do business and challenges our chefs to be more innovative," Horn said. "We're always looking for something creative, outside the box and cutting edge for our business."
"It's the world of social" and influencers vary from the American Association of Retired Persons (AARP) to someone on Yelp talking about the health benefits of seafood, said Kraus.
The issue with understanding Millenials is that they fall into several sub-categories, such as green and clean, anti Millenials and hipsters, Kraus said, adding there are a few key factors to this demographic.
"They don't want to eat yesterday's food ... they will spend the money if you give them what they want," he said. adding that they're looking for new, creative flavor profiles, such as chimichurri and sriracha. "If you give them that profile, they will pay for it and share it and proliferate it."
Buzz Billik, director of sales at Acme Smoked Fish Corp., added he's seen the "growing difference between boomers and Millennials."
Boomers are "very traditional and consistent in buying habits and tastes ... the current phase or trend we're catering to for Millennials is an evolving menu of new and different flavors -- we introduced half a dozen new flavors and spices for this bracket of customers," Billik said.
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Thursday, May 28, 12.41 p.m EST
Can we produce food in the ocean?
Marine Harvest CEO Alf-Helge Aarskog touched on the growing importance of producing more and more food in the ocean, which makes up 70 percent of world's surface.
"Only 2 percent of food production is done in the ocean, obviously there is tremendous potential," he said, adding that it's a highly efficient way to produce. Fish have the same body temperature as the ocean, there is high energy efficiency and low emission in food production.
The world's population has surpassed the 7 billion mark, and of that 3 billion are in the middle class.
"We know we're going to grow. We know the middle class wants more protein," and Marine Harvest looks to lead the blue revolution, especially with salmon being 10 times better than beef in terms of feed quantity, carbon emissions and fresh water usage.
Aarskog said the method of fishing in the ocean for seafood needs to change and "we need to get a production system we can rely on 365 days of the year."
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Thursday, May 28, 11.41 a.m EST
Pacific Andes sets sights on organic growth
Pacific Andes' future strategy, particularly for the next two years, is organic growth, maximizing value in existing operations by increasing volume and building a strong balance sheet, Ng Joo Siang, vice chairman at the processing giant, said in his presentation.
The company hopes to improve production facility efficiency and reduce borrowing costs.
With more than 30 years of working in China, the country continues to be Pacific Andes' key market.
"China's seafood industry is still fragmented so there is opportunity to consolidate," Siang said.
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Thursday, May 28, 11.20 a.m EST
Bakkafrost: Merging 7 factories
The company is "now in the year where investments are largest," Regin Jacobsen, CEO at Bakkafrost, said. Investments will be made step by step in relevant parts of the value chain to secure efficiency, reduce biological risk and boost organic growth.
Investments this year includes new factories and hatcheries.
Bakkafrost plans to merge seven factories into one to reduce risk, improve efficiency and create synergies.
The Harvest VAP factory aims for a better quality of fish and creation of new products. The construction of buildings started in January and contracts for machinery are signed.
Delivery and mounting will begin in the fourth quarter this year. Production at the factory is expected to start in the first quarter of 2016.
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Thursday, May 28, 10.18 a.m EST
Emerging salmon frontier: brand or commodity?
In raising funds for new projects and operations, there is a knack to talking to investors who may not know much about aquaculture.
Ian Trahar, chairman at Seafarms Group, said it's "aquaculture 101" and to translate it to domestic investors, he looks to make parallels with business models investors may be more familiar with.
He said he approaches it as a commodity in terms of running the business, such as getting the product merchandised.
Neil Anthony Sims, CEO and co-founder at Kampachi Kampachi Farms, however, said he doesn't see his fish as a commodity.
"Where we see real value is in the branded product," he said.
Sims' plan includes establishing the value of kampachi, such as its taste, health factors and "the perception of farmed fish has to change with time."
Verlasso Director Scott Nichols said he also disagrees with Trahar.
"We don't want our salmon to be a commodity product," he said, adding an analogy to Starbucks, which was able to de-commoditize coffee. People used to pay less than a dollar for coffee and now pay a premium price for Starbucks coffee. However, "that transition hasn't bothered consumers, they value many different things in that cup of coffee."
Trahar clarified, saying, "I used the term commodity and industrialization referring to cost, independent of what you produce."
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Thursday, May 28, 7.30 a.m EST
Major seafood firms set to take the floor
This year's IntraFish Seafood Investor Forum in New York kicks off with a slew of panelists covering topics from investing in seafood and new aquaculture frontiers to fishmeal, oil and money.
Panel speakers today include:
- Verlasso Director Scott E. Nichols
- Seafarms Group Ltd Chairman Ian Trahar
- Kampachi Farms CEO and Co-founder Neil Anthony Sims
- Disneyland Resort Sourcing Specialist Jason Horn
- The Food Group Executive VP Kyle Kraus
- Pareto Securities Seafood Analyst Henning Lund
- Cuna del Mar CEO Robert Orr
- Cooke Aquaculture CEO Glenn Cooke
- AGR Partners Managing Member Ejnar Knudsen
- Marine Harvest CEO Alf-Helge Aarskog
- Pesquera Exalmar CEO Rossana Ortiz Rodriguez
- Calysta CEO Alan Shaw
And there will also be presentations from:
- Bakkafrost CEO Regin Jacobsen
- Pacific Andes Vice-Chairman Ng Joo Siang
- Marine Harvest CEO Alf-Helge Aarskog
- Multiexport CFO Cristián Garcia-Huidobro
- Lerøy Seafood Group CFO Sjur Malm
- Pesquera Exalmar CEO Rossana Ortiz Rodriguez
Keep checking back here to follow our up-to-date, live coverage of what is being said.
-- IntraFish Media
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