A Maine company’s pending acquisition of a foreign counterpart could give it a boost as it seeks to become one of the first in North America to prove the commercial viability of an emerging industry — fish farms that grow Atlantic salmon in large tanks instead of at sea.
Emergent Holdings’ plan to buy majority ownership of Kuterra, North America’s first land-based salmon grower, should give Emergent subsidiary Whole Oceans of Bucksport access to Kuterra’s experience using an old technology, land-based recirculating water systems, in a new way: to grow Atlantic salmon, said Jason Huffman, a senior reporter at the seafood industry trade journal Undercurrent News.
“The technology works. It is getting to a point where people are beginning to produce on a regular basis,” Huffman said. “The question is, is it a profitable business?”
The Native American ‘Namgis First Nation, which launched Kuterra in 2012 on its portion of Canada’s Vancouver Island, is deciding whether to accept Emergent’s proposal in voting that wraps up next month. Terms of the deal were not revealed.
At stake for Bucksport are Whole Oceans’ plans for a $250 million facility it plans to start building on the former Verso Paper mill site later this year. With the eventual possibility of 200 jobs, the project could be a boon to the town, which lost 570 jobs when Verso closed in 2014. The project’s first phase is expected to employ 50 people and cost $75 million.
Success could put Maine at the forefront of a fledgling national industry — if land-based recirculated aquaculture systems, which flush seawater through large fish tanks and back out to sea, can make the leap from small-scale or research testing into mass-market production as growers of Atlantic salmon.
While Whole Oceans could be an early player in the industry, it has little chance of becoming America’s first land-based Atlantic salmon grower to make it big in the marketplace. A Florida company is already planning its first harvest for early next year.
The need for speed
Kuterra’s six years of running recirculating systems should prove helpful in Bucksport, Huffman said.
Whole Oceans has “the developing technology, they have blueprints, but that’s as far as they’ve gone,” said Huffman, who has covered the industry for 1 ½ years.
With Kuterra in British Columbia, and Bucksport near Boston, the purchase would position Whole Oceans in big markets on both coasts, said Sebastian Belle, executive director of the Maine Aquaculture Association.
“What Emergent has done here is consistent with Atlantic salmon-RAS growth trends worldwide: build or plan facilities to serve regions,” Belle said, using the acronym for recirculating aquaculture systems.
The regional approach recognizes that fish grown closest to customers are usually the freshest, and thus the tastiest.
“The greater your scale, the more you have to offer, and the bigger your business,” Huffman said. “You are competing with other producers of seafood. If you can offer them the speed of delivery that a regional location would allow, your buyers would more likely want to do business with you.”
With salmon, RAS is a fledgling technology
The regional approach also saves on steep transportation costs that producers pay in the U.S. The world’s third largest market for seafood, the U.S. ranks 15th in aquaculture production, having imported 91 percent of its seafood in 2016.
The U.S. is the largest market for Atlantic salmon worldwide, yet it imports 98 percent of its Atlantic salmon, according to the Freshwater Institute of West Virginia, which focuses on the sustainability of the domestic seafood supply.
Maine aquaculture is the world’s fastest-growing food production sector, increasing 6.2 percent annually from 2000 to 2012, according to a 2017 University of Maine economic impact report. With more than 200 aquaculture farms off its coast, the total economic impact of Maine sea-farming grew from $50 million to $137 million between 2007 and 2017.
Maine has long been home to traditional salmon aquaculture — fish grown in floating pens out to sea — along the coasts of Hancock and Washington counties. Canadian firm Cooke Aquaculture uses recirculation systems to grow salmon, but unlike Kuterra and other companies that use recirculation systems during the entire lifespan of the fish, Cooke moves its salmon to pens when the fish are a year old, Belle said.
Seafood producers have used land-based recirculated aquaculture systems since the 1980s. European sea bass, Atlantic halibut, trout and catfish are among the species grown that way, Belle said.
58 RAS salmon land farms around the world
But the use of RAS systems to grow salmon from eggs to market size, at least 8 pounds, began with Kuterra in 2012, and only a fraction of the world’s producers do it.
Compiled from industry news stories, a list provided by Huffman counts 58 land-based farms proposed, under design, being built or operational worldwide as of last month. Norway leads with 18. The U.S. has nine, China has five and Canada, Iceland and South Africa each have three.
Kuterra was the first to try growing Atlantic salmon with RAS technology at commercial scale in North America, in 2012, but has struggled. After getting $9.5 million in Canadian government and private funds, it shut down for several months last year. As of April 29, after a cash infusion, it had 70,000 fish set for harvest in September.
That’s fewer than the number commercial producers shoot for now, said Brian Vinci, the Freshwater Institute’s director.
Huffman agreed.
“There aren’t any Atlantic salmon farms that have harvested a large amount of salmon, and by large, I mean more than 1,000 metric tons annually,” Huffman said.
Vinci is aware of only five North American companies that are growing Atlantic salmon in recirculating systems at the moment: Atlantic Sapphire of Miami, Florida; Cape D’Or Sustainable Seafoods of Nova Scotia; Kuterra; Superior Fresh of Wisconsin; and Sustainable Blue of Nova Scotia.
One of the signs of the industry’s youth: It has yet to establish a minimum production, in tons, of salmon needed annually for a given company to survive. But the numbers keep increasing, Vinci said.
Whole Oceans seeks to produce 5,000 tons its first year, eventually increasing to 20,000 tons annually.
Teething pains
Proponents say land-based recirculating systems have advantages over traditional methods.
Pen-grown and RAS salmon both grow to maturity at the same rate, 24 to 36 months depending on conditions. Wild salmon take four to seven years.
Recirculating-system users also avoid problems that dog pen-grown fish: sea lice, diseases or natural disasters such as algae blooms, and general opposition from Maine’s influential lobstermen, who dislike the pesticides that pen growers use and the fish wastes that force the growers to rotate sea-bed locations.
Yet land-based farms often suffer teething pains due to neophyte workers with an inexact understanding of fish habitats. That’s why Whole Oceans and the University of Southern Maine are offering aquacultures classes to potential workers.
A recently-published study by The Nature Conservancy says that RAS-salmon systems offer better environmental performance, higher production capacities per unit area and greater control over production outcomes than traditional penstocks.
“However, RAS systems are not without environmental tradeoffs: they may result in increased” energy, water and land usage compared to pen-stocking, according to the study.
“A legacy of failed projects, high capital requirements, a lack of experienced operators, and unproven economics at scale has left many investors and industry players skeptical until recently,” the study states.
“Our view is that the sector will remain risky in the short-term, but not prohibitively so in all cases. Selective, knowledgeable investors with a higher risk tolerance may find compelling opportunities to be early movers in the space,” it adds.
‘It won’t happen overnight’
Bucksport has the inside track to being home to Maine’s first land-based salmon farm.
Nordic Aquafarms has permit applications under review for a land-based salmon farm it’s proposing in Belfast. Palom Aquaculture of Gouldsboro has permits but lacks funding. A Dutch company, Kingfish Zeeland, might move to Maine, but will use its RAS to grow yellowtail.
What is likely North America’s largest Atlantic salmon producing farm, Atlantic Sapphire in Miami, seems poised to market its first commercial-sized harvest, of 6,000 tons, early next year. It could harvest 220,000 tons by 2030.
It’s unclear when Whole Oceans will harvest. Upon arrival in Bucksport in early 2018, the company anticipated building a plant in 16 months, but later said that design modifications could change that.
Whole Oceans will likely need several years of production runs before it is truly viable, said Belle of the Maine Aquaculture Association.
“One production run does not make a farm,” Belle said. “It has to prove, over time, that it can be competitive from a quality and cost of production point of view.”
Huffman said the development of land-based farms is a long and difficult process.
“A lot of companies have folded in the middle of their development,” Huffman said. “The difference now is that there is more money coming into the market and there’s more patience.”
The unprecedented amounts of investor capital leave Huffman and Belle bullish about the industry’s chances.
“Maine’s aquaculture makes it one of the states leading the industry,” Huffman said.
BDN writers Abigail Curtis and Bill Trotter contributed to this report.
Watch: Get an underwater view of 25,000 Atlantic salmon being dumped in the Piscataquis