Iowa is an advantageous location for salmon production for a variety of reasons. The major input for salmon, like any animal protein, is feed and clean water. Iowa is one of the lowest cost feed ingredient locations in the world. Another major input for recirculating aquaculture systems (RAS) is electricity, and Iowa has some of the most competitive rates in the US. The factors that motivated Google, Facebook, and Microsoft to locate server farms in Iowa are the same factors motivating placement of large-scale RAS aquaculture in Iowa. Finally, much of the farmed salmon you eat in the Midwest travels approximately 3,500 miles from Norway or 5,500 miles from Chile. We believe that salmon production in Iowa will have an out-of-the gate transportation cost advantage of approximately $0.50 to $1.00, aside from a freshness and quality advantage. Iowa is the number one U.S. producer of corn, soybeans, pork, ethanol, eggs… and soon, we anticipate salmon!
Inland Sea is an Iowa business set to build a state-of-the-art recirculating aquaculture system (RAS) facilities for salmon production, the first located in Harlan, Iowa. Inland Sea has access to the full suite of technologies, systems, and know-how needed to construct and operate one of the most technologically advanced, highly automated recirculating grow-out systems in the world.
Entrepreneurs, engineers, and marine biologist have been at work for the last decade developing systems and technologies to enable large-scale indoor fish production, with multiple RAS salmon production facilities are currently operational in Europe. Inland Sea’s facility will leverage this work and has agreements with equipment companies, technology providers, and experts to bring these next-generation state-of-the-art systems to the United States. As presently contemplated, our facility will be large-scale with a two-acre footprint and be bio-secure and efficient which we expect will be capable of weekly harvests of approximately 100,000 pounds of salmon, 5.3 million pounds annually.
We believe the salmon market represents a significant opportunity due to its broad market appeal and supply constraints in both wild-catch and seaside aquaculture. Salmon supply constraints have been caused by factors ranging from topping out of wild-catch supplies to environmental and biosafety problems at seaside aquaculture operations. Overall we believe this relects a global need to increase and shift salmon production to scalable, sustainable methods. U.S. salmon demand grew rapidly in the 1990s, then was relatively flat until 2012 because of higher prices and constrained supplies, and has ticked up in the last two years. Salmon has passed tuna as the second highest consumed seafood in the U.S., coming in at 2.7 pounds per capita in 2013 compared to 3.6 pounds of shrimp and 2.3 pounds of tuna. In addition, salmon is the only seafood consumed primarily as a premium product rather than frozen or canned. U.S. salmon demand exceeds 850 million pounds per year (more than 150 Harlan facilities), with consumers spending more than $5 billion annually in the U.S.
Salmon is one of the best sources of omega-3 fatty acids, particularly EPA and DHA, which are nature’s "heart medicines". One fascinating new area of health benefits involves the protein and amino acid content of salmon. Several recent studies have found that salmon contains small bioactive protein molecules (called bioactive peptides) that may provide special support for joint cartilage, insulin effectiveness, and control of inflammation in the digestive tract.
Global salmon supplies are now driven by farmed salmon production capacity, which primarily occurs in seaside cages, as wild catch is at capacity or beyond. Two-thirds of today’s salmon supplies come from farmed Atlantic salmon, which grew by an annual rate of 7 percent between 2000 and 2013, doubling supply during the period. Due to biological constraints, seawater temperature requirements and other natural constraints, seaside farmed salmon is only produced in Norway, Chile, UK, North America, Faroe Islands, Ireland, and New Zealand/Tasmania. Seaside salmon aquaculture production has reached a level where biological boundaries are being pushed beyond their capacity. The Chilean industry, for example, has had significant struggles with disease, sea lice, and algal blooms in recent years. In addition, seaside salmon aquaculture production can occur only in a few areas globally because of water temperature and there is little upside production potential remaining. Future production growth of any significance will need to come from RAS systems.