Aquaculture Magazine

With million-dollar investment, Dakota City farm dives into aquaculture

The Garwoods still farm 1,400 acres of row crops, but things have changed greatly since the farm last raised livestock about 15 years ago.

USA: Inside a long, red building just north of here, 27,000 young fish dart around in the turbid waters of a series of 10,000-gallon fiberglass tanks.

From the outside, the building looks like any other machine shed found on farms across northeast Nebraska. But even on a cool spring day, the atmosphere in this building is as muggy as the native climes of the creatures it holds.

The barramundi, or Asian sea bass, in these tanks started their lives in the coastal waters of Australia before being imported into the U.S. via Minneapolis. After spending a month at an aquaculture facility and nursery in Webster City, Iowa, the fingerlings arrived in late March at Cardinal Farms, a six-generation family farm headed by Doug Garwood and his son, Scott Garwood.

By summer’s end, Cardinal Farms will have raised its first batch of market-ready barramundi in a brand-new aquaculture facility that represents far more than the $1 million investment it took to get things up and running.

It’s an example of value-added agriculture, in which farmers enhance their income by better leveraging resources or by producing a new crop that has a better return than commodity crops.

“Out of necessity, it’s either run the rat race of keeping up with land for row crops or find new things we can add to stay viable,” said Scott Garwood, vice president and chief operating officer at Cardinal Farms.

The Garwoods still farm 1,400 acres of row crops, but things have changed greatly since the farm last raised livestock about 15 years ago.

Just five years ago, Cardinal Farms had more than 2,500 acres of crops, but a parcel of land Scott Garwood once rented and farmed has since sold for $10,000 an acre, and nearby acreages fetching close to $8,000 per acre are common.

“There’s always someone that will overpay for land,” said Doug Garwood, the operation’s president and chief executive officer. “With this, we control our growth.”

Working with cold-blooded fish, which require far less energy and take far less land than other livestock, the Garwoods also see more efficiency in converting feed to body mass.

To gain a single pound of body mass, cattle require 6 pounds of feed, according to the Samuel Roberts Noble Foundation. Pigs require about 3.4 pounds of feed, and poultry require 2 pounds of feed per pound of body mass gained.

Barramundi, on the other hand, require just 0.8 to 1 pound of feed to gain a pound of mass, according to Seafood Watch, a program of the Monterey Bay Aquarium.

At capacity, Cardinal Farms will be producing about 140,000 pounds of barramundi per year at $5 per pound. It takes just five to six months for 4-inch fingerlings to grow into 16-inch, 2-pound fish that are ready for market.

Doug Garwood estimates it will take five years to see a return on the initial $1 million investment that will also benefit a 12,000-square-foot hydroponic greenhouse the farm built in 2004. He plans to pump warm, carbon dioxide-rich air from the fish building into the greenhouse to save on energy costs.

To the Nebraska District of the U.S. Small Business Administration, it’s an award-winning plan. The SBA gave Cardinal Farms the loan and also named it the Nebraska Small Business of the Year for 2013.

To agricultural economists like Chuck Schroeder, it’s the future of the rural economy.

“This (model) is absolutely a natural progression of agriculture and one that we need to embrace,” said Schroeder, founding director of the University of Nebraska’s Rural Futures Institute. “When I think about entrepreneurship and innovation in Nebraska, it’s coming in the way of food and fiber production and creating things from resources we have here.”

Brothers Jeff and Kurt Schel kopf from Sutton, about two hours southwest of Omaha, took a similar path 15 years ago when they transformed an old hog house into facilities for Blue Valley Aquaculture. Today, they’re raising 50,000 steelhead trout at any given time.

Those fish have wound up on the plates of Husker athletes in Lincoln and are increasingly being served in Omaha eateries, including Grey Plume, Kitchen Table, Guckenheimer corporate dining rooms and the Omaha Country Club. They’re also served and sold in other restaurants and grocery stores between here and North Platte.

Farm manager Dave Claridge credits the younger generation of locally minded chefs and consumers with Blue Valley’s success.

“As a small business, we really haven’t had the funds to hire a salesperson or do much advertising, but we’ve grown nearly exponentially over a couple years just through word of mouth,” Claridge said.

It also helps to let people know that what they’re eating comes from their own backyard — or close enough, at least — even if it means spending a little more money for a far fresher product.

The U.S. imports 91 percent of the seafood it consumes, according to the National Oceanic and Atmospheric Administration. The organization pegs the U.S. seafood trade deficit at $10.4 billion, meaning operations like Cardinal Farms, Blue Valley and the 25 other private aquaculturists licensed in Nebraska are well-positioned to grow.

But even in the breadbasket of the world, they must identify and create their own markets.

Cardinal Farms’ tomatoes and cucumbers are sold to restaurants and grocers throughout the Sioux City, Iowa, area, but the distribution of barramundi will extend far beyond there.

The Garwoods see the entire Midwest as fair game for an uncommon variety of fish.

In fact, Steven Hedlund, a spokesman for the Global Aquaculture Alliance, knows of only two other domestic farmers who are raising barramundi.

One is in northwest Massachusetts and the other is about two hours east of Sioux City in Webster City, from where Cardinal Farms’ fingerlings came.

There, Jeff Nelson, a partner at Iowa’s First along with his cousin, Mark Nelson, began raising hybrid striped bass about two years ago in an old hog house. They’ve had success marketing those fish to restaurants and grocers in the region but are switching to barramundi.

“We just felt the barramundi was a better fit for us, plus its growth rate is favorable and I’ve heard it’s one of the healthiest fish you can eat,” Jeff Nelson said.

Introducing a relatively unknown variety of fish is risky, the Global Aquaculture Alliance’s Hedlund said, but there’s big potential.

“We saw that (unfamiliarity) with tilapia 15 years ago, and no one knew anything about it,” Hedlund said.

Now, tilapia is common on the menus of national restaurant chains like Applebee’s and TGI Friday’s and is the fourth most-consumed fish in the U.S. behind salmon, canned tuna and shrimp, accord to data from the National Fisheries Institute.

Cardinal Farms originally planned for a mix of tilapia and hybrid striped bass but decided on barramundi in part because of its efficiency. (Tilapia require about 1.4 pounds of feed for each pound of body mass gained, and hybrid striped bass require about 1.9 pounds of feed per pound of body mass, according to Seafood Watch.)

Still, an agribusiness report from Wells Fargo in late 2013 found higher prices for seafood, and lower supply has sent per-capita consumption in the U.S. to a 20-year low.

And even though commercial fisheries are far cleaner and better managed than they were 20 or 30 years ago, consumers hold the final vote on whether fish will become a common protein source in the U.S.

“I really think consumers are driving the system and they’re asking for regionally produced foodstuffs,” said Joseph Morris, an aquaculture expert at Iowa State University and director of the North Central Regional Aquaculture Center. “But you have to educate them and you have to be price-competitive.”


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