Every day it seems to become just a little more obvious that the future of the commercial salmon business is on land no matter what Alaskans might think about where the tastiest fish are to be found.
This week the news is from northern Spain where a company named Norcantabric announced it will begin production of salmon next month using recirculating aquaculture system (RAS) technology in a new, €32 million ($37.4 million) plant.
Why indeed when the people of Spain could be eating what Norcantbric bills as the “first salmon farming plant in Spain with organic certification.”
On its website, the company boasts that its farm will produce salmon that are “fresh, reduces transport time up to 5 days; 100 percent natural, without antibiotics, free of toxins, heavy metals and other artificial materials, without hormones, without sea lice and free of parasites.
There are keywords and phrases there – “fresh,” “free of toxins, heavy metals and other artificial materials,” “and free of parasites” – now being used regularly by RAS marketers.
A changing world
There are long term implications here for an Alaska commercial fishing industry once the economic mainstay of the territory, and for decades after Statehood, the 49th state’s largest employer.
Jobs in the industry have been in a decline since peaking in 2015, and the salmon fisheries have led the way.
“The labor-intensive salmon fisheries, which represent the largest number of jobs, added 93 in 2019 after a dismal 2018,” the Alaska Department of Labor reported in a five-year analysis published in November 2020. “Salmon harvesting employment peaked five years ago, so despite last year’s gains, the fishery remains below the five-year average of 4,472 jobs.”
The data in the report pre-dated the pandemic which began in earnest in the state in March 2020. It wreaked further havoc in the commercial salmon industry, but the industry’s problems are more systemic than pandemic related.
Salmon long ago became a farmed commodity, and the farmers now own more than 75 percent of the market. Competition between them is what is driving the move to RAS, which largely eliminates environmental criticisms that net-pen farms in marine waters are a source of pollution and sometimes of escapes of non-native fish.
And RAS presents the opportunity to claim the product is free of parasites, which are natural in wild fish; antibiotics, which are used to limit lice outbreaks in some net-pen salmon, and who knows that environmental pollutants a wild salmon might encounter while swimming around in an increasingly polluted ocean.
Then, too, there is the matter of freshness, which matters more for fish than for most other agricultural products. Fish are described as “highly perishable” and spoilage starts almost as soon as they are killed.
Given this, the less time between the kill site and the processing plant, the better. Farmers – RAS or net-pen – enjoy the luxury of moving their fish straight from the water into the fileting machines.
Commercial fishermen must haul their catch to shore or a tender, and then sometimes queue up to offload. Farmed fish have a lot going for them while wild-caught fish mainly have the cachet of being wild-caught.
That used to carry a premium in the market, but today’s most valuable salmon are farmed. Ora King salmon from New Zealand have been billed as the Wagu beef of the marine world and sell for upwards of $30 per pound.
RAS promises the opportunity to “go local” with all of these selling points as the Spaniards point out.
Whether the company succeeds or fails, only time will tell. There have been plenty of growing pains in the RAS business.
Florida-based Atlantic Sapphire, which The Fish Site bills as “the world’s flagship land-based salmon farming company,” reported losing more than $55 million in the first half of 2021, its first year of full-scale operation.
That follows a reported $33.8 million loss for the same period in 2020 as it was just beginning to grow its first fish.
Seawest News, a Canadian publication that favors net-pen farming of salmon, has labeled the company’s problems “a cautionary tale,” arguing that “the technology to replace ocean-based salmon farms to land-based operations on a large scale is years away.”
That might well be. Atlantic Sapphire’s plan to produce 90,000 tonnes per year – about 68 percent of the five-year average sockeye salmon catch from Alaska’s Bristol Bay – might indeed reflect a farm too big.
No matter what the new business, scaling up production is a difficult ask.
“Creating a scale-up is truly against the odds,” according to the accounting firm Deloitte. “Our research shows that the chances of a new enterprise to ascend as a scale-up are around 0.5 percent, which means that only one out of 200 surviving new enterprises will become a scale-up. ‘Unicorns’ make up the even smaller subset of scale-ups; only 104 startups are valued over $1 billion.”
Atlantic Sapphire is certainly gambling big, which could produce big rewards.
“Scale-ups are…exciting,” Deloitte noted. “They demonstrate a spectacular growth and expansion while revolutionizing industries with new business models. Coming from nowhere and with a fresh new outlook, they topple incumbents that have been around forever, all the while garnering unprecedented wealth for their founders.”
“Coming from nowhere” would well describe a massive, land-based salmon farm built in Florida – about 1,200 miles south of the southernmost wild salmon population on the U.S. East Coast.
Most RAS operations are not gambling this big. Cantabria plans to produce 3,000 tonnes per year, a 30th of Atlantic Sapphires dreamed of production.
Many other RAS farms are even smaller, and as Salmon Business reported in May 2019, “they may be years away from being profitable.
“But they are popping up at an alarming rate – with over half a million tonnes of salmon to be on the market in a decade.”
The RAS business today looks a little like the portable computer business did in the early 1980s when Kaypro, a now-gone company, introduced a “luggable,” 29-pound computer that started the train rolling toward production of today’s ubiquitous laptops.
Whether Kaypro or the Osborne Computer Company, which predated Kaypro but sold only a fraction as many portable computers, gets credit for the start of the revolution is debatable, but their pioneering work hugely altered the way the citizens of the globe looked at keyboards.
Still evolving RAS technology seems likely to do the same to the way people look at salmon, and the competitive ripple effect is sure to have implications for the futures of Alaska coastal communities that have staked their futures on commercial salmon fishing.
As all real Alaskans know, those RAS salmon are never going to top the taste of a wild-caught Alaska salmon, but often there is more to the food business than taste.
McDonald’s doesn’t do haute cuisine, but it is today the largest, fast-food business on a globe that is increasingly all about getting things done fast.