24 >> MA RC H/A P RI L 2 0 1 6 AQUACU LTU RE NORTH A M ERICA

REVIEW

Land-based salmon still not investor-ready

An analysis of the BC-based “Kuterra” project confirms that
PHARMAQ offers fish health
there is currently no sound business case to be made for
to global aquaculture through
vaccines and therapeutical rearing market-size Atlantic salmon on land.
products adapted to the
BY BRAD HICKS
region’s species.
he Salmon Aquaculture Innovation Fund at Tides Canada recently released its
T final report on the ‘Namgis First Nation’s land-based Atlantic salmon project on
northern Vancouver Island in British Columbia.
Please visit us at A detailed analysis of the Tides’ report on the heavily subsidized “Kuterra” project
confirms that at this time there is currently no sound business case to be made for rearing
www.pharmaq.com, market-size Atlantic salmon on land.
find your regional However, before launching into an analysis of the Kuterra project it is important
to acknowledge the hard work and commitment demonstrated by the employees and
contact and learn managers of Kuterra and the ‘Namgis First Nation. It is clear from the Tides’ reports that
they have made an incredible effort getting to this stage and this article is not intended as
how we can help you! a criticism of their efforts.
LAND-BASED PROPONENTS
Some environmental groups, government agencies and First Nations continue to
insist that land-based operations, like Kuterra, are economically viable and a successful
alternative to net pens for commercial Atlantic salmon production. While Kuterra should
be congratulated on their efforts with the project, their experiences to this point clearly
demonstrate that they have been unable to achieve economic viability and therefore are
unable to support a case that inspires investment on a scale needed to rear market-size
Atlantic salmon in this type of system. Indeed, one of the strongest proponents for this
venture, Dr Andrew Wright, commented at a workshop on rearing salmon on land in
Virginia last fall that this system was not yet investor-ready.
KUTERRA FUNDING
The project was funded primarily Funding Sources Amount %
by Government of Canada grants and Grant Funding 5,310,601 42%
a large charitable donation by Tides
Canada, using funds provided primarily Charitable Funding 3,094,745 24%
from the US-based Gordon and Betty Long Term Debt 2,250,000 18%
Moore Foundation. The remainder was a
combination of contributed or borrowed Investments 1,000,000 8%
capital by the ‘Namgis First Nation. Of Line of Credit 1,000,000 8%
the total project funding, $9 million was
construction capital and $3.5 million were 12,655,346
operational start-up funds.
CONSTRUCTION
The accompanying chart (right) shows
how the $9 million in construction costs
were allocated.
The facility was constructed on forested
land owned by the ‘Namgis First Nation
and although costs associated with tree
removal, leveling the construction area,
drilling wells etc, are reflected in the costs,
purchase of the land is not.
SYSTEM GOAL
The system was designed to produce 400 metric tons of harvested product per year
(measured as whole fish, guts-removed, head-on) which equates to $22,630/metric tonne
of production based on capital costs. This is approximately seven times more expensive
than a comparable net pen facility. To date, this project is achieving a level of production
equivalent to ~250 metic tonnes/year. If this level of production cannot be increased,
capital costs would be roughly 12 times higher than the norm in the net pen industry.
O P E R AT I O N A L R E S U LT S
The report covers four production groups which have been harvested and another three
groups growing in the system. Details are shown below:
Entry Month/Year Mar -13 Oct - 13 Jan - 14 May - 14 Oct - 14 Jan - 15 Apr - 15
Smolt Input Number 23,503 33,723 40,201 41,387 45,163 45,230 39,840
Smolt Average Weight (grams) 85 104 100 101 98 106 125
Mortality % 24.1% 12.6% 28.5% 21.8% 8.5% 3.6% 12.2%
Ending Number of fish - - - - 14,302 43,713 17,654
Ending Average Live Weight (kgs) - - - - 1.84 2.01 1.67
Harvested Biomass (kg HOG) 50,341 62,550 81,336 89,961 39,287 - -
Harvest Average Weight (kg HOG) 2.8 2.1 2.4 2.9 1.5 - -
March 13, October 13, January 14 and May 14 harvested; October 14 partial harvest; January 15 and April 15 pre-harvest.
 AQUAC U LT U R E N ORT H AM E R I CA
The project reports provide a thorough analysis of
commissioning issues and of the challenges experienced
with each group. It is obvious from the details contained
in the reports that the technology and process is neither
robust nor dependable at this stage. The project managers
have struggled with design and capacity elements as well as
water quality. These challenges are in turn reflected in the
production which is far below expectations.
HARVESTING
Based on the Kuterra reports weights have been
dramatically lower than their targets (2.4 kegs versus 6 kgs
targeted) and the norm for the farmed salmon industry
(5.0 – 5.5 kgs). Low harvest weights are a function of
slower-than-expected growth, higher maturation rates,
increased mortality and rearing capacity constraints.
What’s more, it appears that quality has been variable.
On average only 79% of the product harvested has been
graded Premium. The norm within the net pen industry is
85% - 95%.
Nineteen percent of the volume produced in the first
two years of production (48,000 kgs) was unsold in frozen
inventory. Commentary in the report suggests this product
is of inferior quality – primarily pale meat. It is unclear
how this inventory is reflected in the financial statements.
Notes indicate that costs and potential revenue associated
with this product are not reflected in the unit costs and
sales prices reported. It is also unclear as to whether this
discounted inventory has been written down. Failure to
write down this inventory will result in an understated cost
of production.
O P E R AT I O N A L I S S U E S
As with most startup situations, the Kuterra facility has
experienced significant technical and biological challenges
over the past two years. Recirculating land-based systems
are purported to eliminate pathogen risks and reduce
mortality compared to net pen production. However,
the data supplied to date shows much higher levels of
mortality in this land-based system compared with
mortality levels seen in salmon net pens.
In this type of system, it is also assumed that
consistently higher rearing temperatures will enable faster
growth and shorter production cycles. So far, the growth
rates have actually been lower than experienced in net pens.
Maturation rates, which result in slower growth and
downgraded product, have also been much higher in this
land-based system than in conventional net pens. With
these operational results it is not surprising that this facility
is still financially unsuccessful.
M AT U R AT I O N
Atlantic salmon normally mature (the physical and
metabolic changes to prepare for spawning) in their 3rd,
4th or 5th years. Salmon farmers typically use photoperiod
lights to manipulate the response of the fish and delay
maturation until at least the fourth year when 100% of
the crop will have been harvested. Normally a net pen
producer will see ~1 – 3% of the fish mature despite the
photoperiod lighting. Maturing fish do not convert feed
into red flesh. Rather, they convert feed into eggs and milt
and after a certain stage, begin to catabolize their own flesh
to become ready for spawning. The meat from maturing
fish has low market value.
To date the Kuterra project has experienced high
maturation rates among all of its harvested groups despite
the use of photoperiod lights. Although there was an
improvement from the first to second cohorts (0313 –
1013), the rates on the remaining completed groups may
be consistent when factored for harvest size. Cohort 1014
is showing a low level of maturation but it is too early
in its growth cycle to know for sure if the photoperiod
adjustments will be successful in reducing the maturity
rate.
The Freshwater Institute had similarly high maturation
results with a trial of land-based production in 2013. A
link to their report is included at the end of this article.
FUNGUS
Fungal infections are common during the freshwater
(hatchery) phase of salmon farming and are normally
controlled using salt or formalin. Fungus is not a concern
in the marine environment. Management of fungal
mortality using a combination of salt and formalin seems
to have resulted in lower mortality for the current cohorts.
Final mortality figures will not be available until these
cohorts are harvested.
C ATA R A C T S
Cataracts are a significant problem and sampling
indicates fish with cataracts are ~20% smaller than those
without. The absence of cataracts in the first two cohorts
may reflect a late recognition of this problem rather than
an absence of the problem. Cataracts are occasionally seen
in net pen reared salmon but at very low levels (likely
below 1%). The pathogenesis of the cataracts is unknown.
This is another problem that will need to be solved before
this system will be functioning successfully.
FEEDING
The accompanying graph (below) shows the amount
of feed available per week expressed as a percentage of the
average weight of the fish in that week. It is a common
metric for comparing feeding performance between
groups with differing populations. The graph indicates
the challenges experienced in determining the correct
feed ration for each group. Particularly with the first three
cohorts, there was considerable variability in feed response
from week to week.
The data suggest (and the report commentary supports)
that initial cohorts were significantly overfed. In a
recirculating environment, uneaten nutrients can present
enormous challenges for managing water chemistry.
High rearing densities and turbidity leading to poor light
penetration in the tanks can make it difficult to ensure that
all feed is eaten. In a net pen environment, overfeeding is
avoided through the use of underwater cameras and other
MARCH/APRIL 2016 >> 25
A place for land-based systems
The first land-based system for rearing Atlantic
salmon in British Columbia was installed 20 years
ago. This facility was an earlier version of the current
Kuterra system and it was used for rearing Atlantic
salmon smolts, not market fish.
It was a successful operation and now most
Atlantic salmon smolts are reared in land-based
recirculating systems. These systems work well for
rearing smolts because they are more efficient than
flow-through freshwater systems where ambient water
temperatures limit growth rates and overall hatchery
production. Some public hatchery systems are also
successfully using land-based systems to rear pacific
salmon smolts for stocking.
Land-based systems have also been successful for
a number of non-salmonid species. Tilapia (primarily
for the live market), Barramundi, stripped bass,
sturgeon and eels have been reared profitably in land-
based systems. Going forward land-based systems
will be refined and improved and will be suitable for
rearing a variety of species. However, there will also
be limits to their application and whether or not they
can ever be developed to the point where they can
competitively grow market-ready Atlantic salmon
remains to be seen.
feedback systems. Water clarity and light penetration in
the marine environment is typically sufficient to make
these systems consistently effective.
GROWTH
The graph below compares growth on a typical sea site
to the average of the first seven cohorts in the Kuterra
facility. When comparing the weekly data summaries to
an existing net pen facility, the growth on a sea site is 25%
faster and results in a harvest fish of 4.9 kgs (live weight)
in 72 weeks versus a fish of 3.9 kgs (live weight) at Kuterra.
Ambient temperatures are considerably lower in the net
pen environment which goes against the belief that higher
temperatures alone in a land-based system will lead to
more rapid growth.
ENERGY CONSUMPTION
Energy is a major input for land-based farms. The
Kuterra project consumed 597,120 kwh of electricity
production for 250 tonnes, equal to $745 per metric tonne.
Generating electricity for a similar size net pen farm would
be equivalent to $50 – $60 per tonne.
NOT ALONE
There have been numerous failures for those
attempting to grow market salmon in land-based systems.
Going back to the early 1990s there was a large pump
ashore operation called Hagensborg Resources in Nanaimo
BC, which had several different operators over the years
but all failed and millions of dollars were lost. Other
notable failures for land-based growout salmon include
Sweet Spring Salmon in Washington State and Hutterite-
operated farms in Montana. There were also several land-
based farms in eastern Canada and Denmark that ran into
significant problems.
continued on page 26
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REVIEW NEWS

continued from page 25

CONCLUSIONS
Scientists see role Reduced man-hours,
costs among the benefits
The production of farmed salmon from net pens has reached in excess of 2.4 million
tonnes worldwide. However, at this time there are no long-lasting, profitable land-based for robots in mariculture of using ‘aquabots’
systems for rearing market-sized Atlantic salmon. BY ERICH LUENING
Market salmon produced in these systems are simply still not economically
competitive when compared to net-pen fish, a fact which will continue to make them cientists are exploring
unattractive for private sector investment.
S the potential of robotics
in addressing the
Dr Brad Hicks has been working in the fish farming industry for over 40 years. He has raised challenges in open-ocean
six species on a commercial basis and helped pioneer the rearing of sablefish. He has been involved mariculture, which include
with fish farming operations throughout Canada, the US and Chile. He was the founding high man-hour requirements
chairman of the Pacific Organic Seafood Association and a principal author of the Canadian and high maintenance costs.
Organic Aquaculture Standard. He is currently a partner in a privately held feed company in At a workshop in January,
BC. Pertinent to this current discussion, Dr. Hicks was responsible for the decision to install the researchers at the Woods
first land-based smolt rearing facility in British Columbia in the mid 1990s, and served as a Hole Oceanographic Institute
member of the Technical Advisory Committee for Tides Canada on the Kuterra project. Dr. Hicks and Marine Biology Labs
holds degrees in fish and wildlife biology BSc., pathology MSc and veterinary medicine DVM. (MBL) explored the potential
 The information contained in this article is taken from a series of technical and financial of robotics and autonomous
reports issued by Kuterra and, in some cases, from net pen data available to the author. (A link to underwater vehicles (AUVs) AUVs such as this 17’ diesel-electric TowDrone could
the Kuterra reports is below). for mariculture application. someday replace towboats for towing offshore cages
Technologies presented
Link to Kuterra Reports ranged from sleek, autonomously operated torpedo-like platforms to high-tech
http://tidescanada.org/wp-content/uploads/2016/01/saif_workshops_reports_dec2015.pdf miniaturized laboratories to parasite-zapping lasers.
Link to Freshwater Institute 2013 Land Based Salmon report: Commercial and government representatives were in attendance at the workshop
http://www.conservationfund.org/images/projects/files/FI-ASF_Final-Report_March-20131.pdf held at the Quissett Campus in Cape Cod, Massachusetts. Their presence highlighted
the interest in this growing sector, the challenges faced by farmers, and the need for new
technology to meet those challenges.
“It was a good meeting with an interesting mix of offshore aquaculture people needing
Grow your idea here! solutions to problems, and ocean robotics experts looking for applications for their robots,”
Michael Rust, National Oceanic and Atmospheric Administration (NOAA) aquaculture
Maine’s Aquaculture Business Incubators provide entrepreneurs science coordinator, told Aquaculture North America after the workshop.
and business startups professional support and excellent Participants acknowledged that one of the challenges of farming fish in open-ocean
facilities to develop their aquaculture ideas. pens roughly 50 miles out to sea is the cost and man-hours necessary to maintain the
technology and the fish.
We offer:
“There are certainly going to be aquabots in the future of marine aquaculture, but it
• Extensive technical support with access to juveniles and seed will take both camps working together to get there in the near future with products that
• Academic partnerships with the University of Maine are robust, cost-effective and transformational,” he said. “The key will be finding a way to
• Entrepreneurial training & business counseling provide benefits greater than the costs to purchase and keep them going and focusing on
• RAS and flow-thru culture facilities from 50-1000 sq meters those hard-to-solve-any-other-way problems.”
• State-of-the-art culture systems One presentation highlighted a new software that could assist “aquabots” in deciding
what to do and when, using spatial and pattern recognition to identify anomalies in
• Business support facilities and networking opportunities
regular patterns.
• Assistance in grant writing and identifying funding opportunities Yogesh Girdhar, a post-doctoral researcher at WHOI, presented video of a small
• Plus exceptionally high quality sources of water! flapping underwater vehicle, which, by using the software was able to identify differences
on a coral reef it had been surveying.
For more information, contact: Chris Davis, Maine Aquaculture Innovation Center Girdhar called it a “curious robot” and explained the software he developed could help
5717 Corbett Hall, Rm 436, Orono, ME 04469-5717 • 207-581-2263 • maic@maineaquaculture.org robots or AUVs also identify dead fish at the bottom of a pen, feed distribution, or even
holes in the cage, and notify workers onshore.
“Fish farmers could use a ‘smart’ robot instead
of hundreds of cameras and hydrophones, or use it in
collaboration with the other technology,” he said.
OUTLOOK

Participants acknowledged that a lot of what is on the shelf

at WHOI and other oceanographic robotics labs, such as
the Monterey Bay Aquarium Research Institute, may be
too costly for startups, or fledgling open-ocean mariculture
companies to adopt.
That said, the existing AUV and robotics commercial
industry may be able to bridge that gap until cheaper
technologies from the researchers and developers at the
institutes become available.
A number of companies have small, yet affordable,
solutions that may address some challenges open-ocean fish
farms face.
Remotely operated vehicles (ROVs), like Teledyne
SeaBotix’s LBV platform, are on the market but their
products have limitations, including requiring operators on
the surface. While others offer small AUVs that currently
sell in the defense, oceanographic, and energy sectors,
makers like Bluefin Robotics and Riptide Autonomous
Solutions claim they can serve marine fish farmers as well.
Hauke Kite-Powell, the aquaculture research specialist
at WHOI’s Marine Policy Center, believes there are pros
and cons to farming fish in open-ocean pens, and robotics
and autonomous vehicles can make an impact on its success.
He also said that some of the challenges marine fish
farmers may face, like exposure, logistics, mooring at deep
water depths and adverse working conditions, could be met
by robotics technologies once they come on to market.