Abalone ocean rancher catches China wave

China’s appetite for Australian produce is expected to lead Ocean Grown Abalone to the ASX boards next year.

Ocean Grown Abalone chief and third-generation fisherman Brad Adams

The voracious appetite for Australian produce in China and the booming food tourism market is expected to lead an innovative abalone company to the ASX boards next year.

Ocean Grown Abalone has been experimenting with ocean-based aquaculture at its Augusta base in Western Australia since 2006. It sent an initial shipment of frozen abalone meat to Hong Kong in September.

It represented a major milestone for the group, which builds its own reefs on seabeds in areas best suited for highly prized abalone, the process making its product akin to wild-caught without the issue of quotas.

The first shipment further stirred interest in the company ahead of a $5 million seed-­funding round later this month, which chief executive Brad Adams expects to generate strong interest on the back of an oversubscribed $7m raising in 2014.

“The amount of inquiries we’ve had is just extraordinary,” Mr Adams told The Australian.

“I think it will be oversubscribed quite quickly.”

The funds will be used to further expansion, including the doubling of the company’s ­Augusta production, trials in Port Lincoln and Esperance, and ­planned value-adding facilities. The activity comes as the group lays the groundwork for a $12m to $15m float next year.

“We are looking to May to June next year (for the IPO),” said Mr Adams, a third-generation fisherman.

The company is largely pinning its hopes on China, where its greenlip abalone product has been “well-received”.

“The demand (there) is insatiable,” Mr Adams said.

OGA, whose first harvest came in at 10 tonnes, receives $US125 to $US130 a kilogram of meat shipped to China.

The pricing is critical as aquaculture product typically receives less than wild-caught.

But early signs point to OGA receiving a price broadly comparable to wild catch.

“We’ve got a really unique product. (It’s) essentially a wild-caught product, but with the advantages of aquaculture,” Mr Adams said. “It avoids the peaks and troughs of the wild-catch ­industry.”

OGA is confident Australian food companies have plenty more opportunity to cash in on the China growth story, a message sent amid a push led by iron ore magnate Andrew Forrest to secure a breakthrough with “Brand Australia” in China.

Progress on this front is expected to see Austrade shortly pursue a pilot program around a unified brand strategy for produce shipped to China.

The next step for OGA is to ­expand operations into Esperance and Port Lincoln, where it has met some pushback from local ­fisheries. But its dreams extend beyond the export of frozen meat.

It has plans to send to China live produce, which commands a premium price, and even tap into the surging food tourism market.

With record numbers of Chinese visitors heading to Australia, and with the Margaret River region increasingly making a name for itself as a foodie hot spot, Mr Adams hopes to make Augusta synonymous with abalone in the same way Broome is linked to pearls.

“We plan to make our business a destination,” he said.