Land-based salmon farm nearing economic viability

North America’s only land-based Atlantic salmon farm battled through technical and equipment issues in 2015, but the operators are edging close to covering production and overhead costs.

The Kuterra land-raised Atlantic salmon farm — a commercial pilot project located near Port McNeill — has been forced to replace several substandard pumps, install additional oxygenation and carbon dioxide stripping capacity and repair a malfunctioning feeding system that overfed the fish by up to 75 kilograms a day.

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Equipment problems forced the operators to impose feed restrictions and lower temperatures to slow growth of some fish while repairs were made, leading to poor growth.

As a condition of its philanthropic funding from Tides Canada, Kuterra releases detailed reports on its technical operations and financial results in order to demonstrate the viability of land-based Atlantic salmon aquaculture. “One of our goals is to lower the risk to new entrants to this industry by providing them with data and information that will help inform their decision-making,” said Garry Ullstrom, CEO of Kuterra.

The facility was designed based on trials run by the Freshwater Institute in West Virginia that failed to accurately portray some biological issues.

“The fish produce far more CO2 and consume far more oxygen than we expected,” said Ullstrom.

The first three cohorts of Kuterra salmon consisted of 23,000, 33,000 and 40,000 fish as the facility ramped up, but fungal infection on the smolts entering the facility led to unexpected mortality. Fungus is killed when smolts go directly into the ocean, but Kuterra raises fish in freshwater, necessitating the application of salt when young fish enter the facility.

Mortality from all causes ranged from 13 to 29 per cent in the first three cohorts, but projected mortality has since dropped to less than 10 per cent, Ullstrom said.

The next group of 45,000 salmon is now being harvested for sale. With most of the unanticipated costs of start-up well behind, Kuterra will break even in the next fiscal year, Ullstrom said.

The facility was built with $9.5 million of government and charitable investment, including $1 million from the Namgis First Nation, which owns the plant.

The first groups of fish have had quality issues, including discoloured flesh due to early sexual maturation, and being under-sized and off flavour.

Fish is not graded at each harvest, so fish is harvested at all sizes, Ullstrom said. Grading would require handling the fish, which leads to stress and slower growth.

Kuterra earns $9 per kilogram of salmon (sold head on, gutted) from its distributor, Albion Fisheries.

Fish that meet all of Albion’s quality requirements sell for 15 to 35 per cent more than conventional net-pen Atlantic salmon, according to Albion vice-president Guy Dean.

Demand for the product — certified sustainable by SeaChoice, Seafood Watch and Ocean Wise — has expanded considerably since Kuterra was introduced in April 2014.

“We are getting more interest from U.S.-based retailers than before,” said Dean. “As Kuterra gets more exposure, more people are asking about it.”

Kuterra has some high-profile local fans, including Ned Bell, chef at Yew Seafood in the Four Seasons Hotel Vancouver, who said its “consistency, flavour and quality are second to none.” Safeway is the only grocer in B.C. that stocks Kuterra.

Closed-containment aquaculture answers many of the pressing environmental issues the ocean-based industry is wrestling with, including Atlantic salmon escapes, chemical controls for sea lice and disease transfer to wild fish.

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