Article of the Day

The Future of Agriculture – Economist

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The seafood counter historically is the only place in the grocery store where we have been hunting and gathering, and that is rapidly changing to a farmed environment. And with the interest in local and domestic production, sustainability, and carbon footprint, the emphasis is now on producing more seafood here in the U.S.
~ Joe Hankins –  Director, Freshwater Institute

Six Reasons Salmon Production in Iowa is Interesting

I am part of a startup business, Inland Sea, that in September publicized for the first time an intention to build a recirculating aquaculture system facility to produce salmon in Iowa, specifically a site in Harlan.  With a two-acre footprint, this large-scale, bio-secure and efficient facility will result in weekly harvest of approximately 100,000 pounds of salmon, 5.3 million pounds annually.

ras-tank-renderingRendering of Salmon Production Tank ~150 feet in Diameter

We believe indoor fish production is the emerging frontier of aquaculture and the most promising systems to emerge for indoor, efficient production are recirculating aquaculture systems (RAS), and it’s been interesting for the last month to get a deeper sense of other people’s thinking on the topic.  As we’ve conducted a series of public meetings about the Inland Sea-Harlan project, a sense of people’s interest in the project has emerged based on the questions they ask.

A common question to the Inland Sea team, however, is why we became interested in this opportunity.  The top six include the following.

  1. The technology model has been proven elsewhere – Multiple RAS salmon production facilities are currently operational in Europe. These European RASs have demonstrated capability as environmentally sustainable and scalable, with the ability to guarantee both the safety and the quality of the fish produced.
  2. Competitive unit economics – The economics of aquaculture starts with feed conversion. One advantage fish have over land animals is feed conversion. Fish need fewer calories, because they’re cold-blooded and due to living in a buoyant environment, they don’t fight gravity as much. It takes roughly a pound of feed to produce a pound of farmed fish; it takes almost two pounds of feed to produce a pound of chicken, about three for a pound of pork, and about seven for a pound of beef. The salmon produced in a model facility in Denmark has demonstrated a feed conversion ratio of approximately 1.10.
  3. Salmon consumption has upside potential – U.S. salmon demand grew rapidly in the 1990s, and has been relatively flat since because of higher prices and constrained supplies. Salmon passed tuna as the second highest consumed seafood in the U.S. in 2013, coming in at 2.7 pounds per capita compared to 3.6 pounds for shrimp and 2.3 pounds for tuna. In addition, salmon is the only seafood consumed primarily as a premium product rather than frozen or canned.  A one pound uptick per capital in U.S. salmon consumption would require about 60 Harlan facilities worth of production to fill.
  4. The next model of salmon production – Due to biological constraints, seawater temperature requirements and other natural constraints, seaside farmed salmon is primarily produced in Norway, Chile, UK, North America, Faroe Islands, Ireland, and New Zealand/ Tasmania. Seaside salmon aquaculture production has reached a level where biological boundaries are being pushed. The Chilean industry, for example, has had significant struggles with disease, sea lice, and algal blooms in recent years. In addition, seaside salmon aquaculture production can occur only in a few areas globally because of water temperature and there is little upside production potential remaining. Future production growth of any significance will need to come from RAS systems.
  5. A fantastic food – A good aim for a food business is to make a fantastic product, and salmon from RAS production fits the bill with great texture, taste and nutrition profile.  And, of course, fresher is better.  Salmon has been termed by nutritionists as a superfood for its health impact. It is one of the best sources of omega-3 fatty acids, particularly EPA and DHA, which are nature’s heart medicines.
  6. Iowa and aquaculture are a fit – The major input for salmon, like any animal protein, is feed. Iowa is one of the lowest cost feed ingredient locations in the world. Another major input for RAS salmon is electricity, and Iowa has one of the lowest kWh prices in the nation. Finally, the salmon you eat in the Midwest travels approximately 4,000 miles from Norway or approximately 5,500 miles from Chile. We anticipate that salmon production in Iowa will have an out-of-the gate transportation cost advantage of approximately $0.50 to $1.00, aside from a freshness advantage.

We know other agricultural entrepreneurs working on aquaculture projects, driven by similar reasons to ours at Inland Sea.  But what other opportunities may be driven by one or more reasons similar to the above?  What opportunities are there for other proteins?  How might technologies deployed in RAS systems (sensors, water treatment, precision feeding, biological controls) be deployed for agricultural production beyond fish?  What opportunities for entrepreneur may emerge as new industries emerge in new areas?

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