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Don’t risk taxpayers’ money to invest in fantasies


July 22, 2019
By Dr Brad Hicks

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Aquaculture North America (ANA) welcomes guest columnist Dr Brad Hicks.

A non-profit dedicated to advancing sustainability in British Columbia’s Fraser River recently published a report on the potential economic impact of the development of a fantasy 50,000-tonne Atlantic salmon recirculating aquaculture system (RAS) industry on northern Vancouver Island.

When I read the report, “RAS Atlantic Salmon Industry on Vancouver Island—Financial Model & Economic Impact Analysis,” commissioned by the Fraser Basin Council, the proverb, “If wishes were horses then beggars would ride,” immediately came to mind because of its fantastical nature. Just because one would like it to happen, it does not mean it will. Its fanciful nature is also captured in a quote from the report itself:

“We developed a financial model to estimate the revenues and expenditures arising from a 50,000-tonne industry and chose to assess the industry at an unspecified date in the future when production efficiencies had been realized, and steady-state (ongoing) performance achieved.”

In other words, the report describes a mystical industry in a far, far away future time with an analysis based on mythical and wishful performance data. This criticism may not be entirely the fault of the authors of this report. They were following the mandate from their funders (Tides Canada) and relying on published data from other mythical literature produced as blue-sky promotional material from a variety of prospectuses designed to entice capital for various RAS ventures. The authors were also cautious enough upfront to throw in their own disclaimer of the mythical nature of the report:

“The analysis is not intended or designed to assess the feasibility of RAS technology for growing Atlantic salmon nor to gauge the probability or timing of the development of RAS-based Atlantic salmon production on Vancouver Island.”

After admitting that the contents of the report are both fantastical and mythical, the authors then continue on to accept both the fantasy and the myth and plug their data into a model to produce “realistic” expectations for the economic contribution of such a mythical industry. The model is like a magician on the stage. It produces an illusion of a reality when no such reality exists. Out of thin air it produces GDP and employment—in this case GDP of $407.5 million and 4,000 mythical jobs.

This report also illustrates the risk of building one’s house on quick sand. The authors seem a little confused on the strength of the data used to build this report. In the Executive Summary, the authors admit the data used for the report is highly speculative: “Conducting an economic impact assessment for a nascent industry is challenging, since there is no concrete data to draw upon.”

But there is data, in the public domain, from producers with actual experience with RAS growing Atlantic salmon to market size. For instance, Atlantic Sapphire is a public company and has been reporting financials for quite a while, which include financial data on the more mature operations in Denmark. The report would have been more realistic if the authors compared and contrasted the actual financial data from the Atlantic Sapphire prospectus from a couple of years ago. Kuterra’s financial data, BC’s only land-based Atlantic salmon farm growing market-size fish, is also available publicly and showed quite a dismal performance. In addition, there should be data available from a number of government-sponsored ventures such as the Nanaimo land-based fish farm Taste of BC Aquafarms and the land-based Canadian Model Aqua-Farm in Manitoba. It is also well known that many land-based Atlantic salmon farms have failed and none of this information has been acknowledged in the report. Instead the authors chose to rely on data from the blue-sky proposals.

Yet in the text of the report these authors assure the reader the data is sound: “We considered concrete financial data found in the following articles or publications.”

The articles it referred to were, again, all speculative. The actual financial data that is available would not have supported their thesis that such an industry is anything more than fantasy.

Their own advisory committee told them the data they were using was nonsensical: “The members of the Advisory Committee generally found that our model was too optimistic.” So the authors modified their data based on an average of the mythical data rather than use real data.

Even with reliance on the toned-down data, the financial model used in the report could barely squeak out a profit, the risk of insolvency was very high and the fanciful rates of return on deployed capital would not be sufficient to attract serious investment.

Since investors would be difficult to attract on the basis of such poor financial performance, the report suggests that the government risk taxpayers’ money instead by providing a number of incentives to attract investment. The assumption being, it is okay to use taxpayers’ money to invest in fantasies.

I am not against RAS. When I was in salmon farming we built the first RAS system on Vancouver Island in the 1990s to successfully help with the production of Atlantic salmon smolts and we invested in RAS for the production of tilapia. What distresses me is the use of speculative data to produce a report, which presents an unrealistic possibility in an effort to manipulate public policy. According to the Fraser Basin website, the purpose of the report was to have the information used by another consultant “undertaking a broader study of aquaculture technologies being led by Fisheries and Oceans Canada (DFO).” It will be fascinating to see how the consultant working with the DFO will incorporate this report into the DFO report, and to see if DFO has the intestinal fortitude to use such fanciful dogma to create public policy.

Dr. Brad Hicks has been working in the fish farming industry for over 40 years, has raised six species on a commercial level, and helped pioneer rearing of sablefish. He has been involved with fish farming operations throughout Canada, the U.S. and Chile, as well as fish feed operations in Canada. He has been intimately involved in the farmed seafood market and worked extensively in the development of a variety of standards and certifications for farmed products. Pertinent to this current discussion, he was responsible for the decision to install the first RAS smolt rearing facility in British Columbia in the mid-1990s. Hicks holds degrees in fish and wildlife biology BSc, veterinary pathology MSc and veterinary medicine DVM.


Aquaculture North America (ANA) welcomes critical debate between opposing perspectives. Any viewpoint that you wish to submit will be much appreciated as it will contribute to the conversation around the industry’s development. Email your ideas to ANA Editor Liza Mayer at lmayer@annexbusinessmedia.com.


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2 Comments » for Don’t risk taxpayers’ money to invest in fantasies
  1. cyr couturier says:

    Congratulations Dr. Hicks on a fantastic piece on a fantastical report.
    You hit the nail on the head – the authors curiously omitted, or forgot to include, real data on RAS salmon production systems, most that have failed or never achieved consistent production of harvest size fish beyond 500 tonnes per annum. Moreover, those that were mentioned I suspect have never made an operating profit to date, and have relied entirely or almost exclusively on tax dollars (public dollars that is) and high risk investments to do so to date, and in spite of this, have not reached their production objectives, for one reason or another.

    Your 30+ years in the sector, as a farmer, an RAS producer, a veterinarian, and a researcher, certainly will attest to your credentials in making your comments, and recommendations to not waste public funds on such high risk ventures as a 50,000 tonnes facility (ies) in rural BC. I don’t want my tax dollars going into nonsensical investments and propagandist suggestions.

    The reality is, as you know full well, there are many start up RAS Atlantic salmon facilities for commercial production in the past 30 years in Canada, the US, and elsewhere, and most, if not all, have failed to date, and reach their original production targets of a few hundred tonnes of farmed fresh seafood. This does not mean that the newly proposed AS operations in Miami (90,000+ tonnes), the expansion in Wisconsin (to ~1,000 tonnes) , or the facilities proposed in Maine (30,000+ tonnes) will not achieve their targets, but I would suggest this will be more than a decade and lots of hurdles to overcome before they can meet operating costs, and realize a profit. They still have to contend with animal health and welfare, technological glitches, environmental impacts (quite high carbon impacts, certainly higher than naturally raised fish in ocean pens), and so on before they can consistently produce high quality, high volumes of fish in RAS. So, there is no doubt that small volumes of salmon can be produced in an RAS system (less than 500 tonnes per year) with current technology, but to scale up by several orders of magnitude is not straightforward when dealing with biological systems.

    I am surprised you did not mention that most of these innovations now are being fueled by dot.com investors on the stock market, used to high risk ventures. But, the point here is that the private sector is taking the risk, not the public sector. I agree with you that the public sector should NOT be involved in fantastical efforts, either by change in policy and in funding such ventures.

    Thanks again for your piece Dr. Hicks, well done.
    Regards,
    Cyr Couturier
    Aquaculture Scientist
    Memorial University

  2. Don MacKinlay says:

    This is an excellent article that dispels the myth that the pristine, ideal rearing environment for salmon found in BC coastal waters can be adequately replicated in a warehouse. If such were the case, the BC aquaculture industry would relocate to industrial estates in the big US and Canadian cities, closer to markets. However, economically viable RAS for salmon is thankfully still a far-off nightmare, because if it ever does come to pass, BC will be marketing its fish as the best quality in the industry due to the only advantage that we have over other locations — our pristine, ideal rearing environment.
    Well done, Dr. Hicks,
    Don MacKinlay
    Salmon Biologist
    Vancouver

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