Advantages and risks of land-based fish production
Until now, recirculating aquaculture systems (RAS) have mostly been used to produce freshwater fish species such as eel, African catfish, tilapia, zander or sturgeon. Now, however, an increasing number of projects for land-based RAS that are designed for marine fish are emerging. For salmon alone, the planned capacity is over half a million tonnes. Investors are fuelling this development, but are their profit expectations actually justified?
Critics never tire of pointing out the environmental consequences of open net pens in aquaculture. Metabolic products, food residues and chemicals enter the sea and endanger local ecosystems, and escapes can damage the genetic integrity of wild fish stocks. In open aquaculture operations, fish are also subjected to many hazards due to toxic algal blooms, environmental pollution, parasites and “imported” diseases. These kinds of risks are still increasing, because climate change and global warming are accelerating such developments. Land-based, recirculating aquaculture systems with integrated, highly efficient biological water recycling, or “RAS” for short, could be a way out of this dilemma. These systems can be almost completely sealed off from the surrounding environment, meaning that they do not constitute a threat to the biological diversity around them. Pollution and emissions are retained by the efficient filtering technology or converted into non-harmful substances. It is almost impossible for pathogenic germs and parasites to enter a system like this, which is so insulated from the environment.
These features make land-based aquaculture production systems a real alternative to traditional aquaculture processes, in which aquatic animals are kept in open systems (net pens), ponds or channels. Particularly since fish production on land offers exactly what consumers want: Value creation chains with full traceability, on-site production, short transport routes and a reduced carbon footprint. Since the Covid-19 pandemic, consumers also want as few people as possible to have had contact with food they will later eat. What sounds convincing in theory, however, cannot always be fully implemented in practice. RAS are in fact highly effective systems that are tailored for production performance, but they are also extremely unnatural systems that do not leave any room for sentimental ideas about nature. Operating them requires a lot of energy and technical effort, and they are often prone to disruptions and are extremely demanding of the production regime. Managing the health of the fish does not allow for even the smallest error. For salt water recirculating aquaculture systems, the construction and material technology requirements are even higher than for freshwater RAS systems, because everything must be “seawater resistant” in order to not break down due to corrosion after a short period of operation.
High willingness to invest in salmon farms on land
Despite the high costs and technical requirements associated with the operation of land-based RAS systems, the level of enthusiasm for this demanding technology is high, and is currently increasing even further. Many analysts expect the future of aquaculture to lie mainly in the land-based technology segment. What already functions perfectly well in the freshwater sector must now be adapted for marine fish species. The fact that they are largely free from dependence on locations directly by the water is a decisive advantage for these operations. RAS systems can be built wherever there is access to water and energy sources, and in particular in locations close to profitable markets. Even desert climates no longer present an obstacle to the construction of RAS systems. Pareto Securities, a Norwegian company that monitors equity and investor markets, has confirmed the enormous interest of the financial sector in investing in aquaculture. Even in 2020, the year of the pandemic, shares in the salmon producer Lerøy gained 20 percent in value, and Salmar gained as much as 30 percent. Bakkafrost posted gains of 20 percent after taking over the Scottish Salmon Company. According to Pareto, companies that produce salmon on land or that are planning to establish such land-based facilities can look back on an excellent year, as significant investment in these technologies has taken place.
The salmon industry is in fact a core area and growth driver for land-based fish production. The Atlantic salmon is one of the most profitable fish species for aquaculture. The salmon farming industry generates over 15.4 billion US dollars in revenue every year. RAS systems are becoming more popular, although their economic feasibility has not yet been convincingly demonstrated. Facilities on land have always been used for the freshwater phase of salmon cultivation, up until smoltification. However, given the biological risks and the increasing costs of combating sea lice during salmon grow-out in net pens in the sea, many companies are more prepared to extend the on-land cultivation phase and to populate marine fish farms with larger smolts. Instead of 100-150 gram smolts, marine pens are being filled with smolts weighing 500 grams or more. This almost halves the time the salmon spend in the sea, and thus the time window for a sea lice infestation to take hold. However, some companies are going one step further and want to move the entire salmon production chain, i.e. including the marine cultivation phase, on land in indoor farms. The first land-based farms in Poland, Denmark, Iceland, China, Canada and the United States are already in operation and are demonstrating that this path is feasible in principle, although perhaps with mixed success.
Technical potential has still not been fully exploited
On the one hand, salmon cultivation on land is a measure that makes sense as it reduces costs and biological risks. The growth of the fish can be better controlled, expensive live transport is unnecessary and the entire cycle from egg to market-ready salmon is under the control of the cultivator. Fish escapes into nature can be completely ruled out. These advantages lend land-based RAS systems an image of a green, sustainable and environmentally friendly technology that does not pose a threat to natural ecosystems. On the other hand, marine aquaculture projects on land present an enormous challenge. Their energy and maintenance requirements are very high, which results in huge costs. Experts have calculated that land-based salmon facilities would need to have a minimum production capacity of 5,000 tonnes per year in order to be really profitable. Biologists warn that fish kept in closed tanks can release hormones that accelerate early maturity and affect the taste of the flesh.
Such problems can be overcome, claim the proponents of land-based aquaculture. For example using modern sensors that collect comprehensive data on water quality and feed consumption, as well as health, wellbeing and fish growth in real time. It is claimed that artificial intelligence and statistical models will soon be able to support facility operators in the science-based automatic management of RAS production. With the help of modern deep learning tools that can record thousands of video sequences of normal and abnormal fish behaviour, developers want to teach the computer about “species-appropriate” fish behaviour, turning the computer system into an early warning system for fish health.
Many projects worldwide with huge production capacities
The global boom in land-based salmon farming seems to be unstoppable, with some projects almost appearing to be excessive in scale. Such as the Bluehouse facility, located 65 km southwest of Miami (Florida), which went into production in 2011. It now produces only 3,000 tonnes of salmon per year, but is to be expanded to become the world’s largest land-based fish farm. Its owner, Atlantic Sapphire, wants to increase production to 222,000 tonnes by 2031, which would meet 41% of the current US demand for salmon. Atlantic Sapphire has already invested 400 million USD in its US facility and plans to spend a total of 2 billion USD. Florida salmon is popular with US consumers. Salmon fillets from the Bluehouse brand retail for 12 US dollars per kg, more than double the price of some Norwegian imports. But the competition is never far behind. Whole Oceans is investing 250 million USD in a land-based RAS in Maine which is to supply approximately 50,000 tonnes of salmon per year. Nordic Aquafarms is also building two facilities in the USA. At its Belfast (Maine) location, initially 16,000 and later as much as 33,000 tonnes of salmon are to be produced per year. Almost 23,000 tonnes of salmon or steelhead trout are planned to be produced at its second location in Genius (California).
Nordic Aquafarm also opened one of the largest land-based salmon farms in Europe in 2020, with an annual capacity of 6,000 tonnes. Salmon Evolution’s RAS, which has received approval for a fixed biomass of 13,300 tonnes and annual production of 28,800 tonnes of salmon, is even bigger. Losna Seafood Norway is planning a land-based salmon farm with an annual capacity of 50,000 tonnes. The investor Geir Nordahl-Pedersen even wants to blow up a mountain to create enough space for some 30 fish tanks. And in northern Norway, Andfjord Salmon is building one of the world’s largest facilities for organic salmon cultivation, which is designed as a flow-through facility, however, not an RAS. It is to have a capacity of 10,000 tonnes per year. In Skagen, the northernmost city in Denmark, the construction of a land-based salmonid cultivation facility began in 2020, which is designed for a capacity of 3,300 tonnes. The operators of two land-based farms in Jutland, Danish Salmon (salmon) and Sashimi Royal (yellowtail amberjack), who founded Skagen Aquaculture together, are behind the project. Switzerland is another country where salmon is produced in recirculating aquaculture systems. Swiss Salmon in Lostallo produced approximately 300 tonnes in 2019.
The range of species suitable for land-based farms is relatively small
The independence of land-based systems on any location also makes highly unusual sites possible, for example in the desert. In the Jebel Ali port in the United Arab Emirates, the Fish Farm facility is cultivating 600 tonnes of salmon per year in 34 tanks, and this quantity is to be increased to 1,000 tonnes. The Crown Prince of Dubai is said to be behind the project. A 90 million USD indoor salmon farm project by Viking’s Label for 5,000 tonnes of salmon in the United Arab Emirates is scheduled to go into production in 2020. The Danish technology company Nordic Aqua Partners wants to build an RAS in Ningbo in eastern China that will initially produce 3–4,000 tonnes of Atlantic salmon, and in 5 years up to 20,000 tonnes. The fish is intended for the region surrounding Shanghai, Hangzhou and Ningbo, which is home to more than 100 million people. The Bordemar project of the Tumbes peninsula, which has former EWOS managers behind it, is to be Chile’s first land-based salmon farm. It is planned that investment of 46 million USD can produce 4,000 tonnes in the first year and 24,000 tonnes in the third year.
A 25 million euro project for 2,500 tonnes of Atlantic salmon is planned for the Vologda region in Russia. The Kuterra facility of the indigenous Namgis Nation on Vancouver Island is being expanded by 1,500 tonnes per year, and land-based indoor facilities at the island location in Öxarfjörður produce some 1,200 tonnes of salmon per year. The spectrum of marine fish species for land-based aquaculture is not solely restricted to salmon, however. The Kingfish Company, a Dutch cultivator of yellowtail amberjack (Seriola lalandi), is increasing the capacity of its land-based farm in Kats from around 1,250 to 2,750 tonnes. The company is also investing almost 100 million euro in the construction of a kingfish farm in the USA (Jonesport, Maine), which should supply 6,000 tonnes of kingfish per year. This marine fish species is clearly particularly suitable for marine RAS systems, as Sashimi Royal is also cultivating yellowtail amberjack in Hanstholm in Denmark. The farm reached its full capacity of 1,100 tonnes produced annually in 2019.
Interest in shrimp farms is particularly high in Central Europe
In addition to salmon and yellowtail amberjack, sea bass and gilthead sea bream and occasionally turbot and even sole are cultivated. For some years shrimp has also been cultivated, which is almost always the brackish water species white shrimp (Litopenaeus vannamei). The quantities produced by shrimp farms are relatively low, and seldom exceed 10 to 30 tonnes per year, but this drawback is compensated for by the relatively high market value for crustaceans. Prices per kilo for freshly caught shrimp of between 50 and 90 euro are in no way unusual. Swiss Shrimp actually costs 99 CHF for 480 grams, which corresponds to more than 190 euro/kg. At the Grevesmühlen site in northern Germany, two more shrimp farms are operating again after HanseGarnelen took over an insolvent operation. In Glückstadt, the foundations have been laid for an 85 tonne HanseGarnelen shrimp farm, and in Langenpreising near Munich, Crusta Nova is producing shrimp species from the Pacific. While “Garnele 1” (“Neue Meere”) in Gronau in Lower Saxony began cultivating shrimp in March 2020, “Förde Garnelen” has already been in existence for some years and announced in 2019 that it wants to increase its production from its current 5 tonnes to 50 tonnes. In Eurasburg in Swabia (Aichach-Friedberg district), white shrimp have already been in cultivation since March 2017 ( although in limited quantities) by VITAshrimp and in 2018 the first shrimp farm went into operation in Niedenstein in the federal state of Hessen.
In Austria, there is a shrimp farm that has been producing 10–12 tonnes of white shrimp per year that is marketed as “Alpine shrimp from the Tyrol”, and in Rottenmann (Steiermark) an RAS designed for 60 tonnes of “mountain shrimp” went into operation. The same annual capacity is claimed for the Swiss Shrimp farm in Rheinfelden (Aargau canton) in Switzerland. However, in July 2021 the company announced that it wants to acquire 7.4 million euro in new capital in order to double its capacity to 120 tonnes. Swiss Shrimp has already invested 23.1 million euro in its operations to date according to its own figures. The marine RAS sector is therefore currently undergoing positive developments, which is confirmed by the increasing range of system technologies that are available. These range from small-scale turnkey container systems such as the “ocean[cube]”, for the annual production of approximately 6.5 tonnes of fish, to large-scale custom systems, as designed, for example, by AquaMaof, the high-tech RAS supplier. Although a lot more is technically feasible nowadays, investing in land-based aquaculture systems, in particular marine RAS systems, remains highly financially risky. Only a few operations have made the leap to financial profitability to date.
Financial risks must be taken into account
Ecomares, which was the first marine RAS in northern Germany to produce turbot, only survived for a few years. The Fluxx2 shrimp farm in Grevesmühlen went into insolvency a few months after starting production. The marine fish farm in Völklingen (Saarland) proved to be a money pit and a financial disaster. Following its privatisation, the situation did stabilise, but according to reports, the company is still in the red in 2020. Great British Prawns, the first and only shrimp farm in Great Britain, went into insolvency in summer 2019 barely two years after the start of production. In Poland, Jurassic Salmon ran into production problems practically from the start, and its planned capacity has still not been reached. The Bluehouse project also reported difficulties. 200,000 salmon had to be “emergency harvested” due to problems with the water quality, a construction fault caused a fish die off event. Danish Salmon, the Danish salmon cultivator, did report a profit in 2018 for the first time since 2012, but production at its land-based farm in Hirtshals still does not always go according to plan. The original production target of 2,000 tonnes per year has still not been reached. In 2019, Danish Salmon produced 1,200 tonnes in the 7,500 square metre farm. And the bad news keeps coming. In July 2012, Atlantic Sapphire, which operates a land-based recirculating aquaculture system for salmon cultivation in Hvide Sande in Denmark, reported another mass fish die off. Due to an error in maintenance works on the filtering system, almost 400 tonnes of fish that were to be harvested in the second half of 2021 were destroyed. This corresponds to 17% of the annual quantity harvested at Hvide Sande. So there is still plenty of room for development, if land-based marine recirculating aquaculture systems do end up actually shaping the future of aquaculture in a decisive way.