Inflation is a double-edged sword for Massachusetts company AquaBounty Technologies. While the land-based salmon producer benefitted from high salmon prices, inflation across the board is prompting it to slow down the construction of a second farm in the United States.
AquaBounty, known for developing the first genetically modified (GM) salmon, generated $1.1 million in product revenue in Q2, up 11 percent from Q1. Year on year, product revenue is up 371 percent.
Sales improvement as the market reopened post-pandemic and high salmon prices have created for it a favourable environment.
“Our genetically engineered Atlantic salmon saw continued market validation from seafood distributors in the quarter, with strong demand continuing for the entire output of our Indiana farm,” said Sylvia Wulf, CEO.
The company began commercial-scale harvest at its Atlantic salmon farm in Indiana in late 2020.
It is building a second farm in the United States, in the town of Pioneer in Ohio, but inflation and higher interest rates are prompting the company to slow down both the construction of the facility and bond financing.
“Since our estimate for construction of the farm currently exceeds our previous range of $290-$320 million, we will review all options for reducing cost, including potentially phasing the construction of the 10,000-metric-ton farm with an initial production output level that would demonstrate our competitive advantage and ability to operate at commercial scale,” said Wulf.
“We believe this is a prudent move and it will allow us to re-estimate remaining construction costs and thus avoid locking in contracts, commodity pricing for materials or interest rates at what may be their peak.”
The scale-up of harvests and sales at the Indiana facility is well underway, the company said. It expects the construction of the Ohio farm to continue, albeit slowly, and it aims to close the bond financing by year-end.
“We are committed to bringing a high-volume of fresh, sustainable Atlantic salmon to the market and look forward to continued execution and foundation building in the months ahead as we strive to build long-term value for our shareholders,” said Wulf.