Inside Australia’s booming aquaculture industry, why global seafood giants are hooked on our fish
As the world looks for new ways to source protein to feed a booming global population, overseas seafood giants are looking to Australia. Here are the top stocks on the ASX.
Australian aquaculture has exploded from trout and salmon to offer a smorgasbord of produce – barramundi, abalone, yellowtail kingfish and even the country’s biggest fish, Murray cod.
Supermarket chains are crying out for producers to deliver more species. But it’s not a move to leave consumers spoiled for choice – rather simple economics.
Global demand for protein is surging as the world’s population hurtles towards almost 10 billion in the next 30 years, and this is where fish producers come in.
It was part of the reason Brazilian meat processing giant JBS bought Tasmanian salmon producer Huon aquaculture for $425m last year.
“At the end of the day, the world we live on, 70 per cent of the surface is water and 30 per cent is land,” said JBS Australia chief executive Brent Eastwood at The Australian’s Global Food Forum. “The protein we consume today is only 7 per cent fish out of 70 per cent of the globe. So we looked at it and said ‘let’s get better’.”
And international interest in Australia is growing, particularly among producers that can deliver scale. This week, Canadian seafood giant Cooke lobbed a $1.04bn takeover bid for Huon rival Tassal, which says it can now produce about 40,000 tonnes a year. For Cooke, Tassal represents a key plank in its geographical diversification strategy, complementing its existing farms in Canada, the US, Chile and Scotland. During a call with Tassal’s biggest shareholders earlier in the week, Cooke chief executive Glenn Cooke said his company could take Tassal to new markets – and the next level.
Tassal’s assets are attractive. It has developed a fish breeding program over the past 40 years that can deliver a food conversion ratio close to 1:1 – it takes about 1kg of feed to produce 1kg of fish, about eight times less than what’s required to produce the same amount of beef.
Aquaculture is therefore the most efficient way to meet that surging demand for protein. But production is constrained. Tasmania has banned further leases of its waterways for salmon farming, pushing producers out into the ocean, about 20km offshore in rougher, federal waters – or looking to waterways and systems in other states.
But Tassal believes it still has room for growth, with capacity to extend production by 10,000 tonnes to 50,000 tonnes a year under its current leases. Regardless, the Tasmanian government believes the future of aquaculture is on land – in tanks – or offshore.
And in mainland Australia, in the food bowl of the NSW Riverina, a fledgling ASX-listed company is steadily proving that land-based farms can deliver scale. Aquna, which trades as Murray Cod Australia and was founded in 2017, began with two ponds and produced about 40 tonnes in its first year of operation.
Five years later, it now has 34 ponds, with another 14 planned for next spring, as it moves towards producing about 10,000 tonnes a year. Once that target is achieved, it will become Australia’s biggest on-land producer of fish, overtaking Humpty Doo Barramundi, which produces about 7000 tonnes a year.
Aquna, which has a market capitalisation of $153m, has begun supplying Murray cod to a limited number of Woolworths and Coles stores as well as high-end restaurants, where it markets its produce as a luxury food.
“We’re aiming to build up to 10,000 tonnes and we’re going to do that in stages,” said Aquna chief executive Ross Anderson.
“Otherwise, you can’t get enough staff and the logistics of it all doesn’t work and you end up falling over. Just doing it in stages is working well for us.”
By growing Murray cod in ponds, rather than its natural environment in its namesake river, it has removed the “strong earthy taste” traditionally associated with the fish. “I didn’t like the taste of them and many Australians I know were the same – they just didn’t like that earthy flavour. But the technology our guys are using to grow them and the way they manage water quality means you’re getting this pristine white flesh with a creamy texture and very mild flavour – I think that’s the reason why top end restaurants are picking it up,” Mr Anderson said.
It’s a venture that requires patience, time and money. Clean Seas – an ASX-listed company with a market value of $86m and secondary listing in Norway – created a buzz when it was founded in 2000 with the goal of breeding southern bluefin tuna. However, the fish were unable to grow past half a kilogram. The problem was the fingerlings died soon after being transferred into cages in the chilly waters of the Spencer Gulf.
Clean Seas is now focusing on yellowtail kingfish and has become the biggest producer of the fish outside Japan, supplying about 98 per cent of Australian consumption and 35 per cent of European consumption.
But agribusiness banker David Williams, who bought Tassal from receivership in 2003, floated it on the ASX and is now advising Cooke in its bid for the company, says breeders of other fish species are a still a long way off Australia’s two biggest salmon producers.
“The opportunity is there because of not only the growing demand for protein but more particularly the supermarkets and food service operators are very happy to support it and give you a contract,” Mr Williams said.
“The other point is even though you’ve got Tassal and other salmon producers being best in class in the world with an FCR (food conversion ratio) of 1:1, some of the other guys are at 1:4 or 1:6. So there is a fair bit of work.
“Not only do you need more capital but you need a lot more work with feeding systems and diets in order to get FCRs to more manageable levels. Having said that, it’s way below cattle, lamb or chicken, so relatively speaking it’s already pretty good. There’s just a fair bit more work to be done on the technology of growing.”
And once significant scale is achieved, that’s when the overseas companies come knocking.
In the meantime, Australia’s aquaculture industry needs to learn from the salmon industry in making fish an everyday food. While Tassal has diversified into prawns, Mr Williams said Australians consume about 80 per cent in the two weeks around Christmas.
“When I took over Tassal it was really a summer fish and they’ve done a fantastic job in making it an everyday meal, so you spread demand across the whole year.
“That enables you to do it far more efficiently because you don’t have to have everything in the water in order to take it out in December, which is what’s happening with prawns.”
