The week of March 20, coinciding with the beginning of spring, Norway's first large land-based salmon facility made its last harvest. As announced a year ago, Nordic Aquafarms was abandoning salmon production at its facilities in Fredrikstad, Norway, to dedicate them to the production of yellowtail kingfish, which will be a reality by 2024. Bernt Olav Røttingsnes, CEO of Nordic Aquafarms, talks with WeAreAquaculture about this change and what the company hopes to achieve with it.
When in April 2022 Nordic Aquafarms announced its intention to diversify its operations by dedicating all of its European operations to the production of yellowtail kingfish, the company had already made the first decision to increase the production capacity of its facility in Denmark. They had been producing kingfish there since 2017, but converting to yellowfish also at Fredrikstad Seafood, their Norwegian facility, entailed the need to expand the Danish facility to be able to supply fingerlings to Norway too.
"We have the broodstock and the hatchery in Denmark and they are going to supply Fredrikstad, so we needed higher capacity in Denmark", Røttingsnes explains. So, one year ago they started to raise money to build a new juvenile facility in Hanstholm, Denmark. "We started with construction in April last year and that facility will be ready for production in May. So, we are close to finalizing that", he says. "We have also in parallel with that increased capacity at the hatchery", Nordic Aquafarms's CEO continues.
Meanwhile, in Norway, preparations were underway to abandon salmon production. "We have produced salmon in Fredrikstad since 2019 and with this decision a year ago we tried to time production rates of salmon with this construction in Denmark, so we inserted the last smolt in Fredrikstad before summer last year, and that smolt is now grown up". That last salmon harvest from Norway's first large land-based salmon facility ended on March 24.
After harvesting all the salmon, the company has already started with the conversion of the facility. Compared to the plus-minus €15 million in Denmark for the new juvenile facility – a conversion cost but at the same time increases production capacity -, in Fredrikstad, they are investing about €1 million. "It's not an expensive conversion", Bernt Olav Røttingsnes claims. "The good thing is that we have the facility already so it's only changing some of the equipment. And since we have a similar facility in Denmark, we know what to do".
The changes, he explains to WeAreAquaculture, relate primarily to the increase in water temperature needed to switch from farming salmon, a cold-water fish, to yellowtail kingfish, a fish from tropical and temperate waters. That means they need to go from producing fish at 12 or 14 degrees to fish that require 22-23 degrees. "We need to go from a situation where we cool down water to heat water in part of the year", Nordic Aquafarms' CEO says. "We try to capture as much of the energy, the heat that is being created by the fish by default, by the pumps to by that, reduce the energy consumption".
The Fredrikstad Seafood facility has two production modules. Number one was already emptied in early February for salmon, so they have been working on it to be ready for yellowtail kingfish by the end of next month or the following. According to Røttingsnes, "the plan is to insert the first kingfish in Fredrikstad in that period, in late May or beginning of June, and then have harvest size kingfish out of Fredrikstad early next year".
The CEO of Nordic Aquafarms has said on several occasions that the production of yellowtail kingfish will give the company more profitability than salmon. This has to do with two things, the first is biology. As he explains to WeAreAquaculture, to produce yellowtail you need your own broodstock, there's nowhere to buy the fingerlings. You need a hatchery, and the hatchery process is more complicated than producing salmonid from the egg, but when you get the hang of it, it's done.
"It took us some time to manage that process, but since 2019-2020 we have done so and our experience then is that as soon as you get the 10 grams fish, you have a very robust fish that adapts well into a land-based facility. So, the mortality is much slower than for salmon and it grows faster. It's a very solid or robust fish for the kind of production we were doing", he claims.
Of course, the second thing is money. "The average sale price [for yellowtail kingfish] week by week now is between 17 and 19 euros per kilo", he explains. "So, the sales price for salmon, even if they're quite high at this time it's not even close to that", says Bernt Olav Røttingsnes. "And production cost is perhaps a bit higher with the yellowtail, but not much compared to salmon, so you could say the sales price on the shelf will give us some good profitability on the yellowtail".
He doesn't stop there. "We have already EBITDA posted in Denmark, we were profitable in EBITDA posted in 2022, and will be in 23", he continues, "we've seen already that we can make money on the yellowtail in only a quite small production volume". With their current production facilities, they should be able to have an output of around 3,000 metric tons per year although, he says, their long-term goal is higher than that.
Focused on the HORECA (hotel, restaurant and catering) channel, they do not make any retail sales of yellowtail kingfish. When it comes to selling their products, their main market is Europe – "we already export out of Denmark to 13 countries and 11 of those are in Europe" -, although they do not neglect the U.S. "We export to the U.S. and we will continue to do that", he states. "It's a growing market for this product in Europe but also in the U.S., so we will continue both".
Indeed, the diversification that has led to this change at Nordic Aquafarms was intended to produce yellowtail kingfish in Europe and salmon in the USA where, despite the latest setback in Maine, they do not plan to abandon. "There's no change for us. We're still developing both projects, both in Maine and California", he tells us. In the meantime, they are very optimistic about their new venture. "We see very positive results for both production and sales of kingfish", says CEO Bernt Olav Røttingsnes. "We see a great future for that species as a land-based product. So really looking forward to growing that business in the next years".
Nordic Aquafarms Group AS is a leading player in the international land-based (RAS) segment of seafood farming. The company currently has tree farms in various stages of development, with additional projects in the pipeline. Headquartered in Norway, last year the Group divided into two companies. Nordic Aquafarms Europe agglutinates Norway – Fredrikstad Seafood -, and Denmark – Sashimi Royal and the vertically integrated hatchery Maximus – operations. For its part, Nordic Aquafarms Inc. is its U.S. subsidiary with a bi-costal strategy including projects in Maine and California. Dedicated exclusively to land-based seafood production, the company relies on in-house RAS design, proprietary technology, construction and project management, production, and sales.
