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Land-Based Aquaculture: Seven Tips for Investing Successfully

Leonid Goldshtein | CIS Director and co-founder

15.05.2020

According to the United Nations Food and Agriculture Organization, aquaculture has become the world’s fastest growing food-producing industry, currently producing over 50 percent of consumed seafood worldwide. Out of all existing aquaculture methods, Recirculating Aquaculture Systems (RAS), a land-based aquaculture technology, offers significant advantages.

 

What is a Land-Based Aquaculture System?

Growing fish in land-based aquaculture systems, in closed and controlled environments, reduces the risk of disease contamination. No antibiotics or disease treatments are involved in a normal production process, so the fish produced are completely natural and healthier.

Since RAS technology is not entirely dependent on a specific water source, these land-based aquaculture systems can be built close to market, resulting in a shorter time from water to plate and reduced transportation costs. Another advantage is advanced filtering capabilities that significantly reduce water pollution from feed, feces, and chemical waste, making it a much more sustainable alternative.

In terms of efficiency and productivity, RAS enables continuous harvest year-round, and fish grow to commercial size faster compared to other methods. Faster growth usually means better conversion of feed to fish mass, lower impact on the entire production chain, and lower production costs, thanks to complete control of water temperature and the ability of the land-based RAS to maintain optimum levels of oxygen and carbon dioxide.

 

Greater Demand, Greater Risk

As seafood industry stakeholders and financial investors increasingly recognize the many advantages of land-based RAS technology for aquaculture, we are seeing greater demand for these facilities. Dozens of RAS-based installations are successfully operating around the world and there are many underway. But this is not without risk as we are unfortunately also witnessing failure cases.

 

An Insider’s Advice for Investors

As a pioneer in land-based aquaculture, and RAS specifically, I’ve partnered with many investors both from within and outside of aquaculture industry. Drawing on my experience successfully navigating this industry, I would like to offer the following seven tips that I believe increase the chances of a successful investment.

  • Choose a Technology Provider with Proven Experience

Visiting an operating RAS land-based aquaculture facility is a must, so don’t skip this step. A written list of projects doesn’t necessarily prove a successful operational facility. You need to go into details about these projects, talk to clients, and understand if these facilities are operational and profitable. If you’re aiming for a larger-scale project, search for a company with relevant experience. Additionally, scalable technology is a huge advantage in this field – make sure this is offered by the technology provider.

  • Learn In-Depth About the Technology

Take the time to learn about every aspect of the technology for RAS land-based aquaculture. This will allow you to ask the right questions, and make the best decisions when comparing all existing RAS technologies. Then you can understand the differences between them, which may have a significant impact on OPEX and CAPEX, and whether or not the project will succeed.

  • Build a Detailed Business Plan

Check all relevant expenses that will affect the OPEX and make a detailed simulation of the outcome projected over the next few years. Some of the technology providers offer this service, which can be a significant advantage.

  • Choose the Right Species

Market research will aid in determining the right species for your project, taking into account crucial elements such as capacity and a suitable location for your project. It is extremely important to simulate different scenarios – only then will you be able to get a real scope of the true potential of your land-based aquaculture project, and the best financial results.

  • Evaluate All Existing Financial Resources Thoroughly

Evaluate all financial resources, including funds, loans, and grants, in order to negotiate the best term conditions. You need to be ready with these resources as early as possible to prevent delays in your project, which can hinder your chances to succeed.

  • Think Long Term

Once the land-based aquaculture facility is completed and day-to-day operations begin, you will be able to test the real potential of your investment. For example, choose a partner that can offer their services for the long run. Finding qualified and experienced employees is not an easy task in the RAS industry, so a partner that can train your employees can be extremely beneficial in overcoming significant obstacles, and help you start off on the right foot. Additionally, long-term support for your land-based aquaculture facility is crucial. A partner that has the means to offer this shouldn’t be overlooked.

  • Think Big

Economy of scale is one of the most crucial elements affecting your projects’ success, especially in land-based aquaculture systems. If you choose to go for a large-scale project, at least 2,000 tons, your production costs will be reduced and so too your investment per Kg. produced (CAPEX) – providing a better financial outcome.

 

Putting It All Together

The past few years have witnessed a surge of technology developments in the land-based aquaculture industry. Cutting-edge RAS facilities, with promising financial advantages, have caught the eyes of many investors, resulting in significant investments.

While there have been failed RAS-based projects in the land-based aquaculture industry, there are also successful facilities, providing quick ROI and steady profit to investors. With cautious decision making, thorough due diligence, and choosing the right partner, land-based RAS aquaculture facilities can be a window of opportunity for a very good investment.

  • aquaculture
  • CAPEX
  • investment
  • OPEX

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