After the Canadian federal government's commitment to transform the BC salmon farming sector by 2025, the Province of British Columbia commissioned Counterpoint Consulting Inc in 2021 to provide an economic analysis of farming salmon using RAS technology. The newly released report maintains that profitable land-based salmon production on a commercial scale remains difficult in BC. "We have concluded from our research and analysis that RAS development in BC is possible, but at smaller scales and not in isolation from the larger aquaculture sector currently operating in BC", it concludes.
Although RAS systems have emerged as the preferred alternative to ONP farming systems for a variety of species and applications, profitable land-based salmon production on a commercial scale remains difficult. According to the report, regulatory uncertainty, high capital cost, low return on investment and lack of incentives to locate facilities in BC are the primary restraints challenging the development of salmon farming in recirculating aquaculture systems (RAS) – also known as land-based and closed containment systems – in the province.
"Globally, there are number of RAS farms now producing market-size Atlantic salmon, coho salmon, and steelhead trout. Production capacities at these farms range from <100 tonnes to 1,000+ tonnes. Among those that have achieved steady state operations, none is producing more than 3,000 tonnes of marketsize salmon", claims the report. It also points out that RAS production currently represents <1% of BC farmed salmon production.
"To replace current ONP salmon production with RAS production would require financing the development of 90,000 tonnes of RAS Atlantic salmon production. Based on our model of a medium farm, whose capital cost equals $20 per kilogram of production capacity, that would require a capital investment of $1.8 billion", continues the analysis and, they stress, their estimate could be as low as 20%.
The report makes one more warning, current industry results suggest that the weight targets used to make that calculation are not achievable. Currently, salmon raised in ocean-based pens are grown to between five and six kilograms, while those raised in RAS facilities are harvested at less than four kilograms in most cases, making this technology even more economically unviable. "The IRR of a large farm is 8.7% while the IRR of a medium farm is 5.8%", says the report. "Those rates of return are far too low to attract the investment required to build and operate a RAS salmon farm".
As said at the beginning, the report concludes that the development of RAS in British Columbia is possible, but on a smaller scale and not in isolation from the aquaculture sector currently operating in BC, a diversified aquaculture sector that includes significant volumes of salmon produced in ONP systems. "A large, diverse sector is required to provide skilled labour and help support critically needed supply chains and research, development, and innovation", it claims. And the industry is prepared to respond.
"The salmon farming sector are leaders in RAS technology since our fish spend half their life on land in hatcheries", says Brock Thomson, Innovation Director for Cermaq Canada. "We are currently trialing new technologies such as semi-closed containment and hybrid systems to systematically reduce interactions with wild salmon and improve fish health. We understand land-based technology, but given the constraints faced, we do not see fully moving to land-based production as a viable solution in the remote, coastal communities where we farm", he adds. And continues, "It is likely that this sort of development could not be accommodated in existing coastal areas, which would result in serious economic impacts to families and all coastal communities up and down Vancouver Island and the Central coast".
Brian Kingzett, Executive Director of the BC Salmon Farmers Association (BCSFA), agrees. "This report released by the province supports what salmon farmers have been saying for many years", he states. "Our sector strongly supports RAS technology – in fact we are experts at using RAS to grow salmon – but to move the entire sector on land isn't a realistic option, nor is it required to protect wild salmon. The federal government's numerous science assessments have confirmed Atlantic salmon farms pose no more than a minimal risk to wild salmon abundance and diversity under the current fish health management practices. The challenges identified in the report need to be addressed before we could even consider this".
Moreover, in a recent conversation with WeAreAquaculture, Kingzett commented on the possibility of land-based salmon production: "If we moved to land, those facilities are going to likely be located in the United States, closer to the markets, not in the rural coastal communities where we currently operate. This will mean the loss of a $1.2 billion carbon-friendly protein sector for British Columbia and Canada, that contributes to our local food supply".
Counterpoint Consulting's report recommends focusing on three key drivers to attract RAS proponents to BC:
1. Regulatory certainty and responsiveness.
2. Financial incentives to compete against jurisdictions with lower costs and closer to key North American markets.
3. Infrastructure support, in particular prescreened sites and access to hydro power.
Additionally, in the report's summary of recommendations, the first of the high-priority recommendations calls to "develop a long-term vision for seafood sector growth, including objectives, targets, and supports that would encourage investment, reconciliation, food security and rural development, with specific targets to support economic growth of RAS salmon farming in BC".
The mention of reconciliation connects with the Indigenous-led transition plan as the future of salmon farming in British Columbia that the BC Salmon Farmers Association presented a few weeks ago. "Working together with First Nations who are interested in aquaculture is essential to our future on the west coast", they said at the time. Shortly thereafter, the BC First Nations for Finfish Stewardship also made their position clear. They asserted that, as rights holders and stewards of their lands, waters, and elements since time immemorial, they should be recognized as the sovereign governing authorities of their traditional territories.
Whatever the Canadian government's final decision on land-based aquaculture in BC, the report says it will take time. They warn that the development of RAS farms will require fundamental regulatory changes that will take several years to implement. After that, project development and construction will take even longer. And it will be even longer before the first fish are harvested, and only then will the farm be on the path to stable operation. "We estimate that it will be at least ten years before a significant RAS production sector is operating at steady state in British Columbia", it concludes.