Is RAS ready to shine?
A new report analysing the ever-increasing investment in recirculating aquaculture systems points to these technologies disrupting the salmon sector within the next decade, writes Jason Holland.
Recirculating aquaculture systems (RAS) have been a part of the seafood landscape for several years, with a relatively low success rate to date. But now the latest wave of land-based production innovations are being primed to change the face of fish farming – starting with the salmon sector, claims a new report from Dutch multinational finance group Rabobank.
Compiled by RaboResearch Food & Agribusiness analyst Beyhan de Jong, the Aquaculture 2.0: RAS Is Driving Change report finds that the number of proposed projects to farm seafood species using RAS is increasing on almost a daily basis, with the majority of enterprises focusing on salmon farming. This trend, it identifies, is being driven by the increasing global demand for salmon, the species’ high prices, and also the perception that there can be only limited growth in the conventional production of these fish in sea pens and cages due to licensing constraints and biological challenges.
More than 50 projects aiming to farm salmon in land-based systems have been recorded, with a total estimated production of 700,000 tonnes by 2030, or 25% of the current total salmon production. While Rabobank feels this volume is unlikely to be reached within the 10-year timescale for a variety of reasons, it does believe that RAS systems have the potential to produce 250,000 tonnes by this date.
Not surprisingly, due to its salmon farming know-how and existing cold chain and logistics infrastructure, Norway will be home to the majority of these planned land-based salmon farms. Yet this research finds that total proposed production volumes are highest in the United States, followed by China, and this is attributed to the high demand growth rates in these major seafood markets.
One-third of the proposed RAS projects mapped by Rabobank target a production volume up to 5,000 tonnes by 2026 or later, while the majority of the projects aim for a production volume between 5,000 to 35,000 tonnes.
So far, the largest harvest volume targeted by a single RAS facility is by the Miami-based aquaculture producer Atlantic Sapphire, which wants the facility it’s currently building to harvest 220,000 tonnes. At the same time, the Singapore-based firm Pure Salmon is aiming for a global salmon volume of 260,000 tonnes, of which 100,000 tonnes will be produced China.
Only a few projects are actually harvesting salmon today. Others are at the financing stage, or getting permits, and some are constructing their facilities. Indeed, the report states that despite the large planned production, the current salmon volumes coming from RAS are only around 3,000 tonnes, with no company currently producing more than 1,000 tonnes. Nevertheless, with the number of announced projects increasing from 30 to over 50 from 2018 to 2019, more than doubling the planned production volumes, the report reckons this pace of growth means it’s reasonable to expect more proposals to be added to the pipeline, and this might increase planned volumes up to 1 million tonnes next year.
It also offers that RAS could be a disruptive aquaculture technology in the next 10 years – not only in terms of adding volumes to salmon production, but also by potentially disrupting trade flows, supply chains, and the marketing of salmon. There’s also the further assertion that land-based salmon could almost be a mainstream product in the next decade if the proposed RAS salmon projects can more or less achieve their harvest levels and successfully deliver a volume of around 500,000 tonnes.
Obstacles to success
While RAS can bring sustainability and biosecurity benefits due to the technology being based on closed farming, Rabobank’s analysis suggests four sets of risks that such operations need to manage effectively.
First, on the financial side, RAS is more capital-intensive than other, more conventional aquaculture systems, and one of the biggest challenges is the upfront capital expenditure (capex) required. Also, there are still many unknowns in RAS farming, including the future cost of production and, therefore, the profitability of such projects. Furthermore, the period between the investment in and the revenue generated from the RAS farm is relatively long, necessitating financial flexibility to deal with unexpected production and technological challenges. Extra financing could also be needed while ramping up the production volumes.
Secondly, from an operational perspective, while there have been a lot of developments that have lowered the cost and enhanced the efficiency of RAS, there’s still the possibility of production setbacks. Indeed, the report declares the RAS history has seen more failures than successes due to technological failures, biological challenges such as diseases and mortalities, and product quality risks from the taste, texture and colour of the fish.
Next, permits are necessary to set up land-based fish and shellfish farms, and licenses are required for the intake and discharge of water. Rabobank advises that in some cases, getting the support of the local community where the RAS facility is planned might not be straightforward, and that in such cases, open and transparent communication between industry and local authorities and communities is necessary.
Last but not least, when it comes to marketing risks, because salmon production with RAS is not yet available on a commercial scale, Rabobank insists that it’s difficult to anticipate the consumer acceptance of land-farmed fish. “While RAS farmers argue their products would be local, more sustainable and environmentally friendly, sea-based salmon farmers could argue that their fish come from pristine, open waters – the natural habitat of salmon.”
Additionally, it offers that RAS stocking densities and intensification of systems could also raise questions of fish welfare.
“In the end, consumer acceptance will determine who will win this marketing game and get the price premium,” suggests the report.
Rabobank points to species and location as key factors that can mitigate the four risk areas. While in theory it’s possible to farm any aquatic species in any part of the world using RAS, by raising fish with greater growth rates and higher economic values, it maintains that it’s possible to overcome the production costs. This is why RAS is presently focused on high-value, premium and niche products, such as salmon and, to a limited extent, kingfish, sole, sturgeon, turbot, barramundi and steelhead.
At the same time, one of the main advantages of RAS is the ability to establish farms in end markets – essentially where there’s demand but no local production. According to the analysis, if all of the projects to farm salmon on land in the United States that have been publicly announced actually come to fruition, this would equate to a production volume of 300,000 tonnes within the next 10 years – equal to the current imports from Norway and Chile into the US market.
Similarly, the four large salmon projects currently planned in China could potentially result in land-based production of 140,000 tonnes, which is more than the country’s imports in 2018.
Rabobank’s report concludes that there is a high chance that some RAS projects will succeed if they fulfil at least half of the key success factors regarding the species and location selection. It states, “The companies who achieve this will be the frontrunners in land-based aquaculture. RAS technology is here. The big questions are where and when mainstream land-based salmon production [will] start – and who will start it.”
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