Seafood farming is poised to become the next agricultural boom as Asia’s population soars and wild fish populations plunge.
But Australian aquaculture operators will need to be selective about the species they farm, with the country having little success in the sector, an agribusiness leader warns.
David Lock, the chief executive of West Australian agribusiness outfit Craig Mostyn Group, said Australia’s high cost of production meant seafood farmers had to focus on premium, luxury products as well as provenance.
His comments came as Craig Mostyn bought an abalone farm on Victoria’s Bellarine Peninsula, about 100 kilometres west of Melbourne, in a deal worth about $20 million.
The acquisition of Jade Tiger Abalone followed Craig Mostyn buying two other abalone farms in Tasmania late last year and will account for about one-quarter of the company’s seafood exports.
Aquaculture is expected to play a crucial role in meeting the growing global demand for fish, with a United Nations report, released last month predicting seafood farming would account for 62 per cent of eaten fish by 2030.
But Mr Lock said takeover targets were difficult to find despite Australia having about 500 seafood farms.
‘‘I haven’t seen many fish aquaculture businesses that make sense. They are too expensive to produce and the product is too low value,’’ said Mr Lock, citing the Tasmanian salmon industry as an example.
‘‘Most of the other aquaculture in Australia struggles because of our cost of production. And that’s why we like the abalone because, firstly, it is an export business and, secondly, it’s high value, so the cost production plays a lesser part as to whether it’s competitive or not.’’
The Jade Tiger acquisition will take Craig Mostyn’s live abalone exports to about 800 tonnes a year, servicing the Hong Kong, China, Japan and Singapore markets.
Mr Lock said the company began looking at Jade Tiger in January but soon got ‘‘distracted’’ by the fight for Western Australia’s biggest beef producer, which mining magnate Andrew ‘‘Twiggy’’ Forrest bought for an estimated $30 million, although Mr Lock said the figure was closer to $50 million.
‘‘It was disappointing,’’ Mr Lock said about being outbid by Mr Forrest, who predicted demand for Australian beef would soar in similar manner to iron ore.
While Mr Lock said Australia's proximity to Asia gave local agriculture exporters an advantage over competitors in Brazil, Argentina, Canada and Denmark, but capitalising on the region’s fast-growing middle class was far from a done deal.
‘‘There is a great opportunity for Australia to grow its production to supply not only the domestic market but also the increasing export market.
‘‘But I think we need to be cautious that we are an expensive producer, that we need to pick the products where we can sell on some basis other than price, whether it’s got traceability and certainty about what’s in the food, the food quality, or it’s some other attribute that allows us to recover our costs of production.’’
The $20 million Jade Tiger deal has been split between buying its brand and assets and funding a three-year plan to double the the size of the farm, located at Indented Head.
Mr Lock declined to say how much Craig Mostyn paid for the farm itself.
He said its 35 staff and management would be retained, with up to 20 more jobs created under the expansion plan, which is expected to be completed within three years.