5 Questions with Richard Buchanan of Agrimarine (TSXV:FSH)

Things are changing quickly in the world of fish-farming. For proof you need look no further than the man voted “Canada’s most trusted Canadian” in a recent Reader’s Digest poll; David Suzuki. In what was a stunning reversal to some, Suzuki last year penned an editorial in the left-leaning Vancouver newsweekly The Georgia Straight entitled “Salmon farming may be a good idea after all”.

Founded in 1993, Agrimarine (TSXV:FSH) now boasts offices in Vancouver, Campbell River, Beijing and Benxi City, and is rapidly expanding its business with 40 full time employees. Agrimarine’s corporate history is something of a catalogue of the collective knowledge and history of commercial aquaculture. The company has been around for more than a decade, first as a traditional net cage operator. Agrimarine then got into land based systems after the BC government asked for help the problem, working on a project in Cedar, BC in the early to mid 2000’s. The company now operates something unique; a self-contained floating system that operates in the marine environment and replicates natural conditions more closely than has been done before.

Cantech Letter talked to Agrimarine President and CEO Richard Buchanan.

Tell us a bit about your business. How do you make money?
As a former net cage salmon farm operator, we have a deep understanding of fish culture and the issues related to escapes, algae blooms and pollution to the surrounding eco‐systems related to fish farming. Our goal is to prove that salmon farming can be done in a sustainable and cost effective manner. We make money by harvesting and processing the fish ourselves from our farm in China, and by working with key distributors specializing in the high end food
service. This year, our fish will be entering the retail markets as well.

Is your space growing? How are you positioned to benefit?
Because of our innovative clean technology, we were able to establish a strong foothold in China as the only domestic producer of salmon, a $300 million market with consumption doubling every year. Global salmon prices have increased by 81% since 2000 and salmon is an
$11 billion market worldwide. AgriMarine is positioned to benefit from the growing middle class in China that consume salmon as a luxury item and that has an established and solid market in the country. The
advantage over our international competitors is the freshness and superior flesh quality of our fish, price advantages by avoiding import taxes and air freight, in addition to the environmental advantages in our rearing process. Having a local production of salmon translates into a $3 per kilo advantage. We are also entering the yellow croaker market in China, which represents a $460 million market.

What is the most common misconception about your company or its business?
People have a preconceived idea of farmed fish, and farmed salmon has a negative perception in Western Canada. We are educating the market about sustainability in the industry and have the first mover advantage of leading the industry into positive change. We have strong
environmental support and large North American and European retailers are making commitments towards seafood sustainability. We are well positioned in this regard as the only company that offers solid‐wall closed containment for salmon that can meet stakeholders’
demands for sustainable supplies.

What’s your financial situation like?
As a company entering commercialization and sales, we raise equity capital from the public markets. This is an ongoing effort until we reach our desired milestones towards positive cash flow. With corporate sales of our fish in China, we are also considering licensing agreements of our technology worldwide and joint project partnerships.

What is your key competitive advantage?
AgriMarine has a ‘disruptive’ technology that is poised to become the industry standard. We have no competition in the aquatic closed containment space and we are demonstrating that environmentally sustainable aquaculture can be cost effective and comparable to the existing industry. We are the only company with commercial scalability and massive growth potential with a solid plan for expansion in the fastest and largest growing market in the world. Without having to move fish farms on land, the company can transition current net cages into closed containment farms with little impact to the existing socio‐economic infrastructure of coastal communities that depend on the industry for their livelihood.