How Murray cod producer Aquna plans to beat inflation crunch

Demand for Murray cod is soaring, with Victoria and Queensland governments wooing an ASX-listed producer to set up factories within their borders.

It starts lurking in the depths of teal-coloured ponds outside Griffith and ends on a white china plate at Melbourne’s Atlantic restaurant — and depending on who you talk to, may well be a hedge against inflation.

Murray cod — Australia’s national fish that has become endangered in the wild — has become the latest boom industry in aquaculture, in demand from supermarkets to higher-end restaurants.

And unlike salmon, prawns or barramundi, it’s a market Australia has all to itself, with Murray cod only grown in the Murray Darling basin — stamping out cheaper competition from China and Europe.

Even states are fighting over the fish, with Victoria and Queensland governments actively wooing ASX-listed producer Aquna to set up processing factories as it ramps up capacity.

But Aquna chairman Ross Anderson is mindful of picking sides — at least at the moment — and has built the company, which has a market value of $102.3m, with “insignificant government support”.

“We’ve got a big growth trajectory ahead of us. That’s the bottom line,” Mr Anderson said.

“We’re at the stage of going from start-up to adolescence. Where we end up on having all our investment, who knows? But government support we will always entertain as a possibility and look at where we end up and what we do.”

A Murray cod fattening dam. The fish has become the latest boom industry in aquaculture.

Demand for Australian aquaculture assets has increased in recent years. Brazilian meat processing giant JBS bought Tasmanian salmon producer Huon aquaculture for $425m in 2021, while Canada’s Cooke Aquaculture settled its $1.7bn takeover of Tassal in November.

Meanwhile, supermarket chains have urged producers to deliver more species on top of the trout, barramundi, yellowtail kingfish and other varieties that are on offer.

But not everything is booming. Two weeks ago, Seafarms Group (SFG) — one of the largest and most well-regarded prawn farming companies in the country — put its wholly owned entity Project Sea Dragon into voluntary administration after a contractual dispute with construction contractor Canstruct.

SFG posted a loss of $75m for the year to June 2022, amid uncertainty surrounding Project Sea Dragon that was forecast to be eventually capable of producing up to 180,000 tonnes of fresh and frozen black tiger prawns annually.

But Aquna is on track with its growth projections. It is produces up to 3000 tonnes of Murray cod a year and is planning to lift its capacity to 10,000 per annum by 2030.

It is already stocked in the two biggest supermarkets and more expensive restaurants. But with retail prices at $65 a kilogram — almost twice that of salmon — will demand remain as Australians reduce their spending with household budgets coming under pressure from the Reserve Bank’s nine consecutive interest rate hikes?

Coles outgoing chief executive Steven Cain said last week while there were plenty of people still buying premium food, more Australians were “clearly on a budget” looking for promotions and swapping more expensive products for private label versions.

“We expect that to continue for at least the rest of the half (year), if not beyond that,” Mr Cain said.

Furthermore, dining out budgets are coming under pressure as more people look to save money from home.

Murray cod is in demand from supermarkets to higher-end restaurants.

But Mr Anderson says higher restaurants are typically immune from inflationary pressures while Aquna also has demand from international markets to cushion against a pullback in domestic spending.

“We’ve got enormous flexibility because we export, we do a bit into the live markets of Sydney, Melbourne and Adelaide which still have very strong demand — we have people of Asian heritage who really support those markets. And we’ve got the supermarkets.

“You tend to see the middle to lower end restaurants are the ones that often get hit by the consumer winding back a bit with the economy tightening. At the top end, you don’t see that so much, historically, and that tends to be where our product caters into that really top end restaurant.”

In the six months to December 31, Aquna’s customer receipts jumped 39 per cent to $6.1m, while the company had cash reserves of $17m.

At the same time, live fish prices for those under 1.2 kilograms leapt from $24 to $27 a kilogram.

“We’ve been embraced by the top end chefs, so that positions us. Secondly, if you taste the product, you know it’s a very rare, hard to get fish. Australian salmon producers produce upwards of 80,000 tonnes a year but the world production of salmon is over 4 million tonnes, so it’s more of a commodity.

“Whereas we’re in a situation where we have one of the rarest fine dining fish in the world. We have got something that is an endangered species – so there is no wild catch to compete with.

“They’ve got barramundi growth all over the world. It’s a commodity that’s never going to make any serious money because Asians bring it into Australia at $9 a kilogram. We’re doing a brand new industry that not only doesn’t exist anywhere else in the world, it doesn’t even exist in Australia, so it’s an industry that has got huge export potential, enormous growth potential because no one else can do it apart from an Australian.”