Capital costs limit halibut-farming industry’s growth

Nearly 20 years ago, the raising of halibut was being touted as the promising wave of the future for the aquaculture industry in this area, and while some researchers are still optimistic about the industry's outlook, the growth of halibut farming has taken longer than expected. Efforts to raise halibut in cages at Campobello and Eastport have ended, but a company in St. George, N.B., has been raising the fish since 2003, and researchers, including ones in Maine and New Brunswick, have overcome most of the technical hurdles. Capital costs are still the limiting factor for fish farms like Canadian Halibut Inc., which is growing halibut in sea cages in Lime Kiln Bay, but the company recently received additional government funding to help prove the industry's economic viability.

"The sky's the limit, if you ask me," says Debbie Martin-Robichaud, a research scientist with the Department of Fisheries and Oceans' Biological Station in St. Andrews, of the industry's future potential. She points out that the market for halibut is very strong. Noting that it took the farmed salmon industry time to develop into a viable business, she says that a halibut-farming industry has the same potential, if not a greater one, when one considers the market price. A Maine seafood company is currently selling farmed salmon fillets for $8.99/pound and halibut steaks for $11.99/pound.

However, Nick Brown, director of the Center for Cooperative Aquaculture Research (CCAR) in Franklin, Maine, is less optimistic about the future for halibut farming, noting that the industry has not grown at the rate that was expected. "It's a lack of capital, not technical issues or the market or the growth potential," he explains. He says that most of the capital being invested in aquaculture is going into salmon farming. "We've made great technical strides, but the amount of fish getting to market is still awfully small."

Martin-Robichaud says raising halibut, during the hatchery and grow-out stages, is "fairly straightforward now. What's holding the industry back is the expensive development stage, being able to buy fish until they can start marketing them." Companies that don't have deep pockets and are starting to raise the fish will need other sources of funding, she says. "Outside sources of funding are desperately needed for start-up." She says the economic viability depends on how much funding the government is willing to provide for the start-up costs.

George "Skip" Wolf, president of Canadian Halibut Inc., agrees that the challenge has been the cost of raising halibut during their early stages. "A lot of money's invested before you get any return. That's the challenge C having enough fish so there's enough value there," he says. "We need enough fish at one time to carry the cost of overhead." He adds that banks "are not interested in looking at new trial species."

The early rearing stage for halibut in a hatchery is about two years, which is longer than for salmon, and the cost is greater, too. The juvenile halibut are sold for $14B$16 each, and Martin-Robichaud says the price won't go down until the volume being produced gets up to hundreds of thousands. She notes, though, there are presently not enough buyers in Canada, and hatcheries are currently selling juvenile fish to companies in Norway and Scotland.

Other issues include the development of a diet specifically for halibut during the grow-out period and the continuation of a breeding program. Development of a domesticated stock has been initiated, but it's been expensive. Also, some fine-tuning needs to be done for growing halibut in cages, including how to feed the fish, how to transfer the juvenile fish to the cages, developing shelving for the cages and securing the cages more rigidly. Martin-Robichaud notes that methods developed for raising salmon cannot be simply transferred to raising a bottom-dwelling flatfish. The grow-out period for halibut C up to four years C is also longer than for salmon, which can be grown to market size in 18 months.

Wolf observes that the fish have not been growing as fast as had been hoped. "They are slow growing in our temperatures," he says. Canadian Halibut currently has about 40,000 fish in its grow-out cages in Lime Kiln Bay near St. George. The company has been harvesting fish last year and this year, marketing about 15,000 fish a year. The firm is the only one in Canada that currently is raising halibut in sea cages. Canadian Halibut has been growing the fish since 2003, obtaining the juvenile fish from Scotian Halibut Ltd. in Clark's Harbour, Nova Scotia, which is raising them on land. CanAqua Seafoods also has a halibut hatchery in Nova Scotia.

Harbour DeLoutre Products on Campobello had been raising halibut for years, beginning with a broodstock program in the early 1990s. However, after company founder John Malloch died, the remaining fish were marketed, with the last ones harvested in the fall of 2007. Jeremy Henderson, a site manager for Northern Harbour Sea Farms, which acquired Harbour DeLoutre Products in January 2008, says that they found halibut quite slow to grow, with it taking four years to get them to market size. Juvenile halibut were about five times more expensive than salmon smolts to buy, and the different diet and cage structure for halibut also were expensive. Although the company received a good price selling the fish, Henderson notes that the market window for when the fish can be sold is very small. Just as Harbour DeLoutre got out of the business, the government began giving grants for raising the fish.

In 2006, $3.3 million was invested into research for raising halibut by Canadian Halibut, in conjunction with federal, provincial and academic experts. And last month it was announced that Canadian Halibut will receive $300,000 from the Department of Fisheries and Oceans' Aquaculture Innovation and Market Access Program (AIMAP) to help show that raising halibut can be economically viable. Assisting will be the provincial Department of Fisheries, the University of New Brunswick and the National Research Council Canada. In addition, a land-based halibut project on Prince Edward Island recently received $160,000 from AIMAP. "The Government of Canada is committed to enhancing the global competitiveness, productivity and environmental performance of Canada's aquaculture industry through AIMAP, which will provide $23.5 million to Canada's aquaculture industry over the next five years," said Minister of Fisheries and Oceans' Gail Shea.

In Maine, the Center for Cooperative Aquaculture Research, which is run by the University of Maine, also has been raising halibut and will be supplying juvenile fish from its hatchery to private companies. Two or three companies are interested, and one, Maine Halibut Farms, will be growing out the fish in a land-based operation at the Franklin facility, which also provides business incubator space.

CCAR Director Brown observes that salmon and cod farming are more interchangeable than salmon and halibut farming, since halibut require a different type of cage and grow-out site. He believes that halibut are more suited for land-based grow-out operations than marine-based sites.

Brown doesn't think that halibut farming will ever replace salmon farming, but he does believe that halibut eventually will offer another species for aquaculture diversification in this area.