Undercurrents

Salmon processing veteran looks for farming partner on ‘egg to retail pack’ US RAS operation

Tom Seaman

Aug 30, 2019
UK-born salmon processing veteran Jonathan Brown is seeking to raise $150 million and secure a partner for a fully integrated, “egg to retail pack” recirculating aquaculture system (RAS) farm on the East Coast of the US.

Brown, who sold the US Macknight Food Group (MFG) smoked salmon plants in Florida and Nevada to private equity McCarthy Capital earlier this year, has purchased a 90-acre site in the state of Maryland, which is “fully licensed” to farm up to 60,000 metric tons, he told Undercurrent News.

There is also another similarly sized site next to the one Brown owns which could be used to produce another 60,000t of Atlantic salmon.

The entrepreneur, who still owns the Grants Oak Smoked plant in Cumbria, from which he hails, has already invested $10m into the site and is looking for $150m more in order to build a totally-integrated operation named American Salmon, he said.

“We have the water supply and water treatment plant operational licensed and running (see below). We have just finished a 15,000-square-foot building for the hatchery and the business model is to be the first fully integrated from egg to retail pack of smoked salmon and dog treat packs,” Brown told Undercurrent.

The target is for 30,000t of production by 2026, but the site has the capacity for double that.

The $150m would finance the first stage of 15,000t, he said, adding: "We would then have the space water and treatment plant to be able to put another four of these [15,000t units] on our site. So, our site has the capabilities to produce 60,000t with its existing water supply and treatment plant. This could be expanded by another 60,000t with another 100 acres next to us having been committed to us and agreed with our local partner and state officials."

A point of difference to the other operators getting going with RAS salmon farms in the US -- like Atlantic Sapphire, Whole Oceans and Nordic Aquafarms -- is Brown’s expertise in processing.

“My experience is value-adding and yield management. we will be unique in this as absolutely everything farmed will be value-added and processed into everything from raw portions to dog treats and foods,” he said.

“Everything will be processed on-site and delivered daily fresh to the market that is hours away. We will partner with three local supermarkets and grow on-site exclusively for them in their own tanks, meeting every level of sustainability and accreditation possible.”

American Salmon will produce value-added products on-site ranging from portions to ready-to-eat cold and hot smoked salmon, to flavored items developed with retailers, he said.

Then, Brown plans a "human-grade pet facility on-site which will take the 30% core products others call “bi-products” that are not used for the human side. These will be turned into pet food products for sale in the UK and US. Brown is already selling pet treat products made from salmon under the Snif-Snax brand (see below).

"This will contribute to the largest part of our company's EBITDA [earnings before interest, taxes, depreciation and amortization], even more so than the farming," he said. "The plan is to merge Snif-Snax into American Salmon so we are profitable from day one."

At the moment, the Snif-Snax products are being manufactured in the UK, in Maryport. However, the plan would be to shift this volume to Maryland, Brown said.

Snif-Snax salmon pet treats Jonathan Brown The site in Maryland, which is an area known colloquially as the "Eastern Shore" due to its proximity to the Chesapeake Bay, “is strategically located so the tri-state market can be supplied with pre-rigor fillets, whole fish and portions”, he said.

“We can deliver not needing plastic or polystyrene boxes and have the lowest carbon footprint in the industry. We will be a zero plastic company only using sustainable and recyclable ingredients and packaging,” he told Undercurrent.

Brown also expects McCarthy Capital, the private equity which bought his US plants earlier in the year, having snapped up Honey Smoked Fish Company in 2018, “to be a substantial partner in this project as one of our major customers”. After the sale of his US plants, Brown's MFG is still an investor in Honey Smoked Fish with McCarthy Capital, he confirmed.

Some of the $150m will come from government grants, but Brown is seeking to raise the bulk from equity.

https://www.undercurrentnews.com/2019/08/29/salmon-processing-veteran-looks-for-farming-partner-on-egg-to-retail-pack-us-ras-operation/

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