November saw another milestone for The Kingfish Company and its planned recirculating aquaculture system (RAS) project in the north-eastern United States, with an important real estate deal.
The purchase of land near Jonesport, Maine, is an important step towards making the project a reality, following the earlier approval of key permits allowing it to move ahead.
This is one of several land-based RAS projects along the US Atlantic coast, but unlike most of the others this farm will not be producing salmon, but yellowtail kingfish. It will be following a model already established by the group’s European arm, Kingfish Zeeland, in the Netherlands.
Kingfish Zeeland has been in operation since 2018 and is currently in the process of expanding its capacity from 1,500 tonnes annually to 3,500.
Chief Executive Officer and co-founder Ohad Maiman says kingfish “ticks all the boxes” for RAS farming: it enables local production of a fish that is normally dependent on imports (for Europe and the US, kingfish is generally imported from Japan); it performs well in a RAS setting; and it is (like salmon) a high-value product.
Otherwise known as yellowtail amberjack or greater amberjack, Seriola lalandi is native to the tropical and temperate oceans of the southern hemisphere. It is an established favourite in two leading cuisines; Japanese sushi and sashimi, and Italian, where it is known as ricciola.
Co-founder Kees Kloet is an aquaculture veteran and pioneered the use of yellowtail kingfish in RAS, but this is Maiman’s his first fish farming venture. He was formerly Vice-President, Business Development, with Israeli investment company the Merhav Group.
At Merhav, Maiman had appraised a number of agro-industry projects and was particularly impressed by the strategic prospects for land-based aquaculture.
As he puts it: “I was hooked on the technology – excuse the pun! I saw there was a development in aquaculture that was no less dramatic than greenhouses in agriculture.”
The fact that world demand for seafood is rising while wild fish production has been flat since the 1990s only underlined the possibilities.
When Merhav proved reluctance to invest heavily in relatively untried technology, Maiman decided it was time to start his own venture. He teamed up with Kloet, who had already been involved with the start-up of around 30 RAS farms, and was the first to trial kingfish in a RAS setting, with Silt BV.
Unlike salmon, kingfish lives its whole life cycle in salt water. In that sense, it is a simpler species, although the need to provide live feed for the fish’s early stages presents its own challenges.
Kingfish Zeeland started with broodstock from Kloet’s original farm. The faster-growing individuals, genetically screened to avoid inbreeding, have been retained and the company now has a broodstock with several hundred fish.
Site selection was also important. Key factors for The Kingfish Company are clean seawater, local community support and good local logistics, with a cold chain infrastructure suitable for transporting seafood.
As Maiman explains: “For us, site selection starts with access to clean seawater. That is not quite as easy as people think. When you look at nice beaches they usually have hotels and the very industrial areas are too risky to locate in from our perspective.”
Finding the perfect site
Both Kingfish Zeeland and the Maine site strike the right balance between being remote enough to enjoy clean seas, but not too remote for the distribution network. In Maine, for example, infrastructure already exists to distribute the state’s famous lobsters, while in the Netherlands the site is within half an hour of one of the country’s major seafood hubs.
The appeal of bringing jobs to an area with relatively sparse industry is another factor in getting the local community onside, and in Maine The Kingfish Company invested time in town hall meetings at potential sites, both to sell the idea and to gauge public support.
Sustainability and respect for the environment are also important to the company, Maiman says. The protected RAS environment means the fish can be raised without recourse to antibiotics and vaccines, while energy for the Zeeland facility comes from renewable sources – wind, solar and biogas – and heat exchangers transfer thermal energy from waste outflows to incoming water.
The company works with some of the leading aquafeed producers, including BioMar and Skretting, increasingly taking a proactive role in helping the suppliers test, develop and optimise better feeds for the species.
For RAS technology, the company’s supplier of choice has been Billund, although as Maiman explains: “As we have gone through several iterations of expansion, we have progressively built up our own in-house design and engineering department, including expertise in construction, management and installation.
“We still work with Billund and several other suppliers, but these days we do much more design, management and construction in house.”
‘We are happy with the economics’
The Kingfish Company has been listed on the Euronext Growth Oslo stock exchange since November 2020. The first half of this year saw revenue at Kingfish Zeeland up by 95% year on year, to almost €3.8m (£3.24m). Overall, the costs of expansion mean the group is still burning cash. For H1 2021 there was an accounting loss of €3.56m (£3.03m) compared with a loss of €1.29m (£1.1m) for H1 2020.
Maiman says: “We are already happy with the economics of what we’re producing. For today, the majority of the expenses that makes us not profitable are expansion expenses. We have a team of six people in Maine already… given the scale up and growth ambitions of the company, that is what we indicated when we listed in Oslo. We are on a five-year expansion plan that should see us with several thousand tonnes more production by the end.”
He adds: “If we were for some reason to stop all growth, with our current capacity we should already be a profitable business.
“But we see the opportunity, and in many ways the race to be the first leader at scale in the RAS sector is an important reason to keep at full throttle ahead.”
He is also happy with the way the company responded to the challenge of the pandemic last year. The Horeca (hotel, restaurants and catering) sector was the mainstay of the business before Covid-19 arrived. The company was able to successfully pivot to supplying the retail market during the first half of 2020, and this year has also signed deals with two more leading retail chains in France and Italy.
Maiman says: “We are active across several European markets and within each of these markets there are several channels, from distributors to retail. So when we add capacity, it does not cause a shock to one single market.
“For almost three years straight we have had to continuously limit allocations to clients on fulfilment. There are simply not enough fish!”
Now that the Horeca sector is reopening in many markets, The Kingfish Company is looking at an almost 50/50 split between Horeca and retail, Maiman says, with the possibility to go 60/40 either way.
He adds: “We saw that with the right retail partners, who are interested in the sustainability and environmental aspects of our operation and who are willing to support the product from a marketing point of view, retail could become a very important part of our addressable market.”
Looking ahead to 2022
The company’s capital investment in the Zeeland plant should be complete next year, with the increased capacity expected to be stocked during the second half of 2022.
In Maine, it is hoped that construction on the new site will start early in the new year, and meanwhile the company is also in the early stages of assessing the possibility of a third site, in southern Europe. And Maiman can’t rule out the possibility of finding an additional species to farm, as long as it meets the criteria.
Of course, RAS farming is not without its risks and there have been recent examples of major losses. Maiman is aware of this but argues: “The way I see it, when I first heard about RAS, in 2013, there was a perfect track record of failure in the sector!
“But my personal view is that these systems are in many ways similar to operating a submarine or a spaceship. It’s a 24/7 life support system that can’t be allowed to fail.
“With that in mind, my thinking was that if we can relatively reliably operate and deal with risk to human lives on a submarine or a spaceship if it’s done right, then we should be able to maintain such a life support system for fish.”
As he explains, there are triple redundancies for all critical systems and backup systems for oxygen and electricity.
He adds: “We take about a year to train production employees to become shift managers, who are then always on site, at night and on weekends, and available to troubleshoot if necessary.
“There is, of course, a built-in risk, so we are also insured, but we have reached year four with no mass mortality events. Our comfort and confidence is increasing.”
He is also confident that RAS aquaculture has a bright future. As Maiman puts it: “It’s apparent that since the late 1980s, or early 1990s, that wild catch has flatlined at about 90 million tonnes. Barring the discovery of a new ocean, I think the best we can hope for is responsible fishing that maintains it at that volume.
“Aquaculture has nearly doubled global supply, with an additional 90 million tonnes; but now more and more, and particularly in western target market countries, governments are either not allowing or starting to ban some of the practices of traditional aquaculture.”
So, he concludes: “Assuming that challenges to capacity in traditional aquaculture continue, looking to the next 30 years and to the next 90 million tonnes that the world will presumably need, I think it falls between RAS and offshore farming as potential solutions.
“I don’t think RAS is a ‘magic bullet’ answer for every species, everywhere, but I do think it has the potential to pick up a substantial part of that additional supply that is needed.”