Imagine an 8 year old child who sees a parent cooking on their stove day in and day out producing wonderful meals all of a sudden trying to emulate them and reaching for a hot stove. What a risky proposition.
That is how many feel about land based salmon farming. Maybe in 10 years when that 8 year old is ready to undertake cooking a meal will the risk be removed and a tasty nutritious dinner arrives without incident.
But who wants to be the RAS burnt fingers, the communities that end up with useless facilities with no promised jobs nor tax relief? After all, isn’t a community where a land based salmon farm proposed one of the investors?
In an opinion in today’s IntraFish, Drew Cherry points out that “Land-based salmon farming investors are ignoring the risks” noting “All signs indicate most of the money being thrown at the sector won’t pay off”.
Pulled right from the playbook of the RAS opportunists he notes “Here’s the pattern: An unknown company issues a gushing release about a new land-based salmon operation, with outlandish projections of production, the expected size of the project, and the eager market ready to pay a premium for locally grown fish.”
What are the risks?
As noted here at RAS.Exposed, land based salmon farming requires a lot of energy. Society is at an interesting place right now where we don’t have consensus regarding climate change. In fact, many now refer to our climate situation as climate catastrophe. So, where will these LB-RAS operators get affordable energy? In the Canadian government’s recent report, they recommend choosing a location where electricity is sourced from 90% or better non-fossil fueled based sources such as hydroelectric.
Other risks include off-flavor, large mortalities and lack of skilled employees.
Interestingly, Cherry quotes Nordic Aquafarms Erik Heim “Most RAS startup cases in the United States have not had a strong financial foundation, have lacked scale and do not have an established industry to recruit from. That increases risk and makes profitability difficult.”
Yet Erik Heim’s efforts in Belfast, Maine have been less than stellar. Nordic Aquafarms originally planned to break ground in 2019 and still has many roadblocks before any soil is moved. It turns out, choosing a community to build a RAS operation is another risk and one which Heim didn’t anticipate.
Also, as any investor knows, time to market is key and while Nordic struggles to get the necessary permits while dealing with lawsuits, their land based salmon farm competition is moving forward. Will Nordic’s first product arrive to established competition and be forced to lower price to survive? Investors in such risky propositions demand profit otherwise they go elsewhere.
Unlike Whole Oceans just 26 miles from Belfast, the community welcomed this risk. It turns out, one of the biggest and perhaps unanticipated risks is finding a location where resistance to risk is minimal. In Bucksport, Whole Oceans found a brown field, a town that needs jobs and a community willing to accept LB-RAS’s risk for what may very well turn out to be another failed land-based salmon project.