Down East Maine is one of the poorest parts of the United States.
The area used to have large numbers of salmon canneries and paper mills, which have all disappeared.
Now, the drop in costs for land-based salmon farming has resulted in an investor-led rush to acquire and build suitable properties in Maine.
The latest investment group is Whole Oceans, a company owned by the private equity venture group called Emergent Holdings, which first filed its Securities and Exchange Commission form to raise capital in 2015.
Whole Oceans CEO and founder of Emergent Holdings is Rob Piasio, who is a native of Yarmouth, Maine, .
Piasio has been reportedly looking for salmon farming sites in Maine for several years. In 2016, a deal for a facility in Harpswell was discussed, using a marine industrial site. When that deal fell through, the opportunity in Bucksport came up.
The Bucksport project will use the former Verso paper mill, now closed. The site has access to water from the Penobscott river and good industrial facilities.
According to Ben Willauer, Whole Oceans’ director of corporate development, a Freeport resident and current board member of the Nature Conservancy of Maine, “In all my years in investing, I have never seen a more obvious and compelling business model than Whole Oceans. All aspects of this plan have been carefully considered, with an uncompromising dedication to ‘doing the right thing’ toward every decision, at every level. It is with great pride and purpose I am able to help bring this project to Bucksport.”
The company aims to capture 10 per cent of the U.S. salmon market of 500,000 tons.
Although they make a claim as an investment company to have “pre-sold 100 per cent of their production for 10 years,” this can’t be considered a sale in the commercial sense. The company has not sold one physical pound of salmon. Nor does Emergent Holdings apparently have other large products it has funded.
Instead, the claim is likely based on expression of interest and the willingness of parties to buy locally-produced salmon in the U.S. if sold at competitive global prices.
The initial goal of the Bucksport plant is to get up to 20,000 tons per year production.
This is the second recirculating salmon plant to be announced in Maine.
Earlier this year, Nordic Aquafarms, announced its plan to construct a 33,000-ton plant in Belfast. Unlike Whole Oceans, Nordic has actually sold fish and is part owner of a Danish recirculating aquaculture company now selling yellowtail.
The key in both developments is low costs for land acquisition. In Belfast, the land is part of a municipal industrial park. In Bucksport, the town will own an adjacent parcel and provide services to the planned aquaculture facility.
Besides Nordic, another company, Atlantic Sapphire, is building a RAS (recirculating aquaculture system) plant in Florida. A number of industry people toured the plant during the recent NFI Global Seafood Marketing Conference in Miami. The incubation part of the plant is scheduled for completion by October of this year and the first salmon should be available for sale in 2020.
Atlantic Sapphire also aims to build up production to around 10,000 tons per year, with possible expansion beyond that.
There is a lot of market interest in RAS Atlantic salmon, even though it is initially projected to cost more than net-pen salmon.
According to retailers who know about the project, the idea of selling a ‘local’ and American product is very appealing, and they see it as a good opportunity.
A cluster of RAS facilities on the U.S. east coast could prove very disruptive to the global salmon
industry. Environmental problems with escapes (leading Washington State to vote to phase out Cooke Aquaculture’s net pen farming in Puget Sound), sea lice and lower density requirements in Chile due to Algae blooms and disease, all make land-based aquaculture systems attractive. They are also widely supported by environmentalists.
The presence of these large RAS facilities would also be a big opportunity for Aquabounty, which has genetically modified (GM) salmon that must be grown on land only.
Aquabounty is now expanding its facilities in P.E.I. and has received permission from the province to add full grow-out capacity to its hatchery, known as Snow Island’s Atlantic Sea Smolt Ltd.
The company announced sales of about five million pounds of unlabeled Aquabounty salmon in Canada during the past year.
The risk for investors in RAS systems is whether in fact they can control their costs sufficiently to be competitive in the global salmon market. It could be that using fast growing salmon becomes a critical part of achieving that goal.
Whole Ocean’s plans, like those of Nordic Aquafarms, have the wholehearted support of Maine’s political establishment, including both of its senators and Governor Le Page. The investors are working with individual towns, and not making claims for state assistance.
However, Maine has seen other companies come in and take over facilities with big fanfare only to fail to raise the capital needed or in other ways go bust.
The fact that some of the claims here may be exaggerated, especially about potential size and market share, should be a yellow flag saying that while exciting, the emergence of successful large scale indoor farms is still a big gamble. What is undeniable is the business models depend on scale.
Should this scale not materialize, the investments and plans would clearly be in jeopardy.
This article was republished with permission of John Sackton and seafood.com.
