Recent events in the public markets relating to Salmon RAS have many asking if this is the beginning of the end for interest by investors in this sector. Steve Atkinson, founder of Taste of BC Aquafarms, North America’s oldest Salmon RAS says emphatically “no.”
Taste of BC was recently purchased by Blue Star Foods is currently listed on the OTC Markets and will soon be up listed to the NASDAQ. The company has plans to expand and are confident investors will see value investing in their company.
Atkinson feels that the problem is not with Salmon RAS, rather the problem is more like the burst of the Tech Bubble of decades ago.
“Investors in some of the current projects which are now facing troubles are facing a similar reality that the tech industry faced in its early days. Enthusiasm was stirred by lofty pronouncements and big dreams that simply so far are not panning out.”
Atkinson says in a press release that “Patience for some of those may be running out, but the problem is not salmon RAS, the problem is poorly executed business plans. This is an industry in its infancy and to think one can, in one fell swoop, dominate production overnight in my opinion is a mistake. Sure, it is sexy and garners headlines, but how realistic are the goals.”
Atkinson recalls the question of probability of success of the Miami project being asked at an Aquaculture Innovation Workshop in fall of 2018. Probability was pegged at between 25 and 35 Percent. That percentage has gradually been amended upward, “not on performance but on promise,” says Atkinson.
“Just looking at the financial statement of the Miami project obvious shortcomings become clear. It is not an industry problem, rather it is a company problem,” Atkinson reflects.
He says “a common mistake business make, large or small, is trying to run before they learn to walk. Here we see a company that has overhead the size of their dream, not the size of their operation. The financial statement shows 187 people on the payroll. A search of LinkedIn shows some 90 people in the organization with the title “manager.” Operating losses in the last six months are more than five times revenue. The prototype or proof of concept, in Denmark, has simply not yet figured out the technological uncertainties of growing salmon in their system, yet the operation is already in it’s second phase of commercial rollout. Is there any wonder investors are getting antsy?”
“The company is making some progress, but the financial hole they are putting themselves in will be very difficult to overcome. If everything was running fine and production was in line they would have to sell a more than one billion dollars’ worth of fish just to recover losses up to now, and we all know things are not yet at that stage, losses are still building and will for the foreseeable future.”
Eric Heim, CEO of Nordic Aquafarms, shares the perspective. He writes: “An unfortunate event again in Florida. It underscores the importance of investors looking under the hood of any land based operation they are considering. There can be significant differences tied to technology, location, capabilities, and diligence that speak to risk. Land based is no uniform standard across projects as some tend to portray it. While I wish all RAS developers the best, Nordic has laid low for a while de-risking with a track-record of zero mass mortality events across our operations.”
He goes on “rushing projects too fast or cutting corners to save money increases risk – and the downside is large with too fast scaling. But in the end you need the right total package. That is not an off-the-shelf commodity, and most developments will have some bumps along the way.”
“No one is writing off the Miami project just yet. Everyone in the industry recognizes that no one benefits from their failure.”
However, Atkinson says “investors simply need to look at basic business fundamentals. They can’t be blinded by glossy presentations and big pronouncements. salmon RAS has a great future. The market for salmon is growing exponentially worldwide and RAS is one of the most sustainable production methods. Some smaller-scale operations such as ours have successfully proved pilots and demonstrated a route to profitability in the short term. Prudent expansion will see predictable growth and investors will be rewarded all they need to do as look for those who are actually growing fish!”
SalmonBusiness has contacted Atlantic Sapphire CEO Johan E. Andreassen for a comment.