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Ontario's Aquaculture Industry Comes of Age

Thursday, December 5, 2013

Its growth has come in fits and starts, it has faced tough regulation and opposition from cottagers and environmental groups, but it is finally getting recognition in provincial political circles that it is a legitimate user of freshwater resources

by MARY BAXTER

Mike Meeker and his peers in Ontario's aquaculture industry stand on the brink of change. But the interesting part is not where they're positioned; it's how they have managed. That became apparent when I met Meeker, a 55-year-old hockey player turned fish farmer, on his Manitoulin Island farm in July.

He emerges from the path that leads to Lake Wolsey, technically a bay in Lake Huron's North Channel, where 19 square fishing pens extend like ribs on either side of a dock.

"You're early," he declares in a friendly tone. We shake hands. He does not look like someone who is encountering an unexpected event. There's no panic, no rushed movements or gush of words to camouflage worries that things are getting out of control. Yet I am a surprise, here on spec because my efforts to connect with him via phone and email have failed. He's expressionless as this is explained. He offloads his scuba gear – he's spent the morning in chilly Lake Huron gathering water samples for the regular testing that's a key condition of his Ministry of Natural Resources (MNR) five-year aquaculture licence. Then he invites me inside his rustic cottage. We settle at his kitchen table. I pat one of his two dogs. He pops an energy drink, eases into the subject of fish farming and, at the same time, prepares the samples for shipment.

He's not quite as composed when two hours later another surprise appears – another writer, one who had actually scheduled an appointment, the one who, until that moment, he'd been convinced I was, regardless of my explanation. Such coincidences might easily happen in the rush and bluster of Toronto's Bay Street. But for two writers to appear on the same day on the shoreline bush of Manitoulin Island?

For a sliver of a second, his eyes widen. That's it. Then it's back to business.

Extraordinary situations have regularly visited Meeker's 30-plus-year career in aquaculture, as they have most of Ontario's fish farm operators – currently 10 open pen rainbow trout growing operations in northern Lake Huron and several more on land-based operations that range from fishing holes to hatcheries, fish breeding facilities and a tilapia fish farm. (Nearly 200 aquaculture licences are in effect.)

Few of the situations have been pleasant. Take, for instance, environmental and cottage groups' condemnations of net pen fish farms. They've helped generate crushingly strict government regulations. Then there's Mother Nature. "The movement of ice in the spring is our biggest threat," Meeker says.

But by adopting a steady, reasoned approach and not allowing the sometimes extraordinary challenges to distract their focus, the members of this tiny agri-food industry have managed to steer the pendulum towards more positive change.

Ever since it came into being in the 1960s, after the MNR eased legislation that prohibited the culture of fish, Ontario's aquaculture industry has grown in fits and starts. Many of those early farms, says Steve Naylor, an aquaculture specialist with the Ontario Ministry of Agriculture and Food, were fish-stocked ponds that intercepted a spring's flow. Growers found it difficult to manage the fish in ponds so, in the 1970s, they shifted towards intensification using raceways and circular tanks on land. Terrestrial farmers became involved in the early 1980s when government funding became available to help tobacco growers diversify their operations.

Gord Cole, Ontario's largest rainbow trout producer, was the first to apply Norwegian cage technology to Lake Huron. He'd started working in the industry in 1979 and established his farm, Aqua-Cage Fisheries, near Parry Sound in 1982. Rainbow trout, a relative of salmon, was the fish of choice, as it would be for all the net pen operators that soon followed.

"When I got into this business, the biggest fish farm in the country produced about 100 tonnes a year," he recalls. New technology made it possible to grow large volumes at a far lower cost than the land-based farms. Now, Cole produces 1,200 to 1,500 tonnes, 2.6 to 3.3 million pounds, just under a quarter of Ontario's production in 2012.

Like Cole, Meeker had worked in the industry – at a salmon hatchery in British Columbia – before he established his farm, the first on Manitoulin Island, in 1984. "There was a lot of skepticism as to whether or not it would even work, whether you could even raise fish up here in nets like that," he says.

Today, he annually grows nearly one million pounds of trout, which works out to roughly 400,000 fish. He describes it as a small operation.

It did not take long for rainbow trout production at the cage culture operations – mostly located in Lake Huron's North Channel – to outpace that of the land farms. Many of the early land farms fell off as the global industry shifted towards low-cost commodity production. Land-based containment systems are far more expensive to maintain per fish than net pen operations.

The remainder adapted by turning their operations into hatcheries to supply the sports fishing industry and the cage culture operators that had supplanted them, or to satisfy other niche markets.

Regulation strict
Soon after their establishment, the lake cage operations came under fire from environmental organizations and cottagers. Cole says the trouble started in the late 1980s when celebrity environmentalist David Suzuki criticized West Coast salmon farm operations. Environmentalists argued – and still argue – that net pen fishing spreads disease and generates pollution, and fish escapes create competition problems for other aquatic life.  

From the start, regulation of the Ontario industry was strict. Aquaculture is the only form of livestock production requiring operation licensing. "Imagine a beef farmer having to go to the Ministry of Natural Resources to get a licence to keep beef cattle in a pasture and having to convince the MNR that having the beef cattle in the pasture is not going to affect the deer herd," says Cole, "and when there's about a 50 per cent chance the MNR person thinks beef farming is a bad thing. That's the situation we're in."

Lake operations also had to obtain a licence to occupy public land or get a Crown land lease. Those on land had to obtain a permit to take water and get Ministry of Environment (MOE) certification for discharging water back into the environment. (Because of their significantly reduced water usage, land-based recirculation systems can be exempted from some of the MOE requirements.)

Naylor says the number of water quality conditions on cage culture licenses increased through the 1990s, but they were also being refined as "the science showed what we needed to look at to show that farms weren't having an environmental impact."

By the late 1990s, as public pressure mounted from groups such as the Georgian Bay Association, an umbrella organization comprising 20 cottagers' associations, the province introduced even tighter controls. Licensing applications for lake-based cage operations, for example, had to be posted on the provincial Environmental Registry for public consultation and growers had to do regular water quality testing. And, by 2000, annual feed quotas had become a condition of licensing to limit phosphorus release (any applications for increases of quotas had to be posted on the registry). But perhaps the worst blow was MNR's decision to require operations to apply for a new aquaculture licence every five years.

Cole says the changes meant having to invest considerable time and hundreds of thousands of dollars on studies for developing a new farm site. But how could an operator justify such an investment when there was the prospect of losing their licence after five years or of licensing conditions changing significantly?

"They could have made it very simple or they could have made it very complicated," he says. "What they did was they decided to anticipate everything and have a process that would deal with everything. It's hugely difficult and it has never worked." The changes, he says, halted industry growth for the next 16 years.

In 2002, the industry responded to the situation by forming the Northern Ontario Aquaculture Association. Industry members "saw the value of putting all of their efforts together not only for regulatory matters but for research initiatives, communication, education, all that good stuff," says Karen Tracey, the association's executive director. The organization's 45 members range from fish farmers, feed manufacturers and processors to hatcheries and research institutions. Meeker is its president.

Unified lobbying has resulted in regulatory agencies making greater efforts to work together and keep everyone in the loop. "Now we have a whole series of various working groups, steering committees and dialogue happening all the way up to a minister's office and down to district offices," Tracey notes. The association has also developed a growth strategy.

In turn, MNR is in the last stages of finalizing a long-awaited cage culture policy guide – it's the only aquaculture activity in the province that doesn't have one. Once complete, it will allow operators to submit one application to the ministry that covers all the details of the different provincial and federal government regulations rather than operators having to obtain approvals from each government agency on their own.

Industry potential recognized
Even more encouraging, Tracey adds, is growing awareness in the provincial political sphere "that aquaculture is a viable, legitimate user of the freshwater resource" and has potential for generating jobs and stimulating local economies.

Recent research has alleviated many of the environmental concerns, she says. In particular, studies (financed in part by the association) at the former federal Experimental Lakes Area research facility have revealed that the additional nutrients generated by a fish farm located in a nutrient-impoverished environment will promote native aquatic life. Naylor and others say the finding holds true for the Lake Huron operations, provided the farms are sited properly and the nutrients are released at a suitable rate for absorption into the aquatic food chain. "If it's in the wrong location, you can have the totally opposite effect," says Naylor. "But we know through the science now what makes a good location and what makes a bad location for cage aquaculture."

Cole says he's seen that beneficial effect at work around his farm. Much of northern Lake Huron is identified as ultra-oligotrophic – low in nutrients – and "almost like an aquatic desert," he explains. "In 1982, when we came here, the MNR estimated the (local) wild lake trout population was 200 fish. Fifteen years later, they estimated it was between 15,000 and 30,000. Now there's probably hundreds of thousands of them out there."

With pressures easing, the industry is once again beginning to grow. This year, Cole received the go-ahead to expand his feed quota. His processor, St. Thomas-based Cole Munro Foods Group Inc., has targeted 50 per cent growth over the next two years. Right now, the company annually processes between five and six million pounds of live weight rainbow trout.  

Land-based containment farming is also forging ahead in new directions. Last year, brothers Ewart, Ed and Murray McLaughlin introduced a recirculation tank system, which significantly reduces water use by cleaning toxic wastes from used water so it can be recycled into the operation, in a former mushroom compost facility. They use it to produce tilapia, a warm water, mild-tasting fish that originated in Africa's Nile River. Their venture, Sand Plains Aquaculture near Putnam in Middlesex County, is the largest of its type in the country, and the brothers grow for the live fish market in Toronto.

The market niche is key to their success. If they were to try to compete in the commodity market where prices are far lower, "we'd lose our shirts," because the recirculation system costs are so high, Murray McLaughlin says.

Organic certification
Back on Manitoulin Island, Meeker is preparing for significant growth and others in the industry are watching closely. How the venture fares could predict future directions for open net fish farming in the province.

One of his new directions has been obtaining organic certification. Voluntary organic certification protocol for Canadian aquaculture was released in 2012, and his operation is the first in the country to be certified for rainbow trout production. Meeker also sold his farm in 2012 to Blue Goose Pure Foods, which got its start in large-scale organic and natural beef production in British Columbia and has recently expanded to include beef production on Manitoulin as well as poultry production elsewhere in Ontario.

He still retains a share in the operation and manages the company's fishing operations, which now include two other sites on the island, one recently bought, the other under contract. He speaks enthusiastically about his new arrangement. "I had offers from a fair number of other people that wanted to buy the farm and I didn't feel that any of them had the same philosophical goal as I did – to grow the industry the way it should be grown." Blue Goose, with its emphasis on organic or natural production, did. "The things that we're doing are things that I've felt for many years this industry should do."

One goal has been to move production off shore. Doing so would allow expansion "without having the competing interests of near-shore people like boaters and cottagers." They are looking at using a new type of pen adapted from ocean technology called an aquapod, a net shaped like a geodesic dome that can be completely submerged. It's a "perfect way" to offset threats from storms and ice breakups, he says.

Setting up a deep-water operation will not be cheap. Along with the advance funding that would be needed to satisfy regulatory requirements, there's the cost of the cages, which are at least twice the price of conventional ones. It costs about $50,000 to outfit a traditional 50-by-50-foot enclosure with infrastructure and nets. (Each "hole" has the capacity to grow 50,000 to 70,000 pounds of fish a year.) Other costs, he says, are not significantly different.

Meeker and Blue Goose are developing an application for a site where they can use the new technology. They have also submitted an application for another shoreline site to host a shore hatchery where they can grow the fingerlings acquired from a southern Ontario farmer to a larger size before putting them into the cages. The approach should streamline production, he says.

Meeker's decision to align with a larger corporation could well be the first manifestation of another shift underway in the industry towards larger-scale corporate ownership. That's what has happened in British Columbia, where the small, individually owned "mom and pop" operations that pioneered the salmon fishing industry gave way to multi-national corporations with pockets deep enough to leverage economies of scale.  

"You really need larger companies to be able to move down that road," says Naylor, pointing to the monetary and time investment involved in setting up a new site. A similar reality faces much of mainstream agriculture, he notes.  

Tracey also wonders if consolidation is the way of the future. Yet she doubts it will culminate in large, multi-national companies dominating the industry as they have in British Columbia. "The total size is the limiting factor here," she explains. "You're talking about the Pacific Ocean and the opportunities there for growth and expansion are so much greater. I don't think we have the capacity here to be that attractive to larger, global companies." One salmon farm site in British Columbia can produce the equivalent to Ontario's entire annual output.

Model for agriculture?
Opinions also range on the question of whether the aquaculture industry's experiences hold lessons for terrestrial farmers.

Richard Moccia, an aquatic scientist in the University of Guelph's department of animal and poultry science, predicts the licensing this industry undergoes and its monitoring of phosphorus levels could eventually become realities for land-based agricultural production. So, if indeed terrestrial agriculture faces greater phosphorus regulation, what better model will there be for government and industry to follow than the one already pioneered by aquaculture? The industry's innovative low phosphorus feed formulations may provide inspiration as well.

"I've always said that, in the last 20 years, aquaculture is the leader rather than the follower," he says.

Naylor, on the other hand, notes that agriculture already has its regulatory solution to nutrient management in the Nutrient Management Act. "It's the exact same principle," he says.

Michael Burke, who manages the Ontario-owned, University of Guelph-managed Alma research station where aquaculture is studied, says that it's actually terrestrial livestock farming that has influenced aquaculture and, in particular, controlled atmosphere farming with its emphasis on using an all-in, all-out crops production schedule and specialization in one stage of a crop's development.

Ontario's land-based aquaculture seems to be evolving in a way similar to the province's turkey industry, he says, pointing out how companies in the turkey industry here have secured international roles as suppliers of eggs, poults and genetics. There is the potential for Ontario's land-based aquaculture farmers to achieve the same type of success and some are already moving in this direction, he says.

The question of how easy it would be for terrestrial farmers to venture into the industry prompts different responses, too. Tracey notes she receives many enquiries, often from terrestrial farmers, and feels there is opportunity, particularly in land-based recirculation systems that might specialize in a niche market such as perch or tilapia. "You have to be aware that we are the most heavily regulated agri-food sector," she warns.

However, Sean Pressey, who manages Sand Plains Aquaculture, is cautious. You need to come from a fish background, he says, and have the aptitude to deal with the chemistry involved in water testing. "You need to be very observant of what's going on. Look at fish, look at water flows, see problems before they actually become a problem." That takes experience, he says.

One impression lingers from my June interview with Meeker. It's the unhurried, yet methodical way in which he tackled the paperwork for the water quality test as he talked about the industry. When his site manager, Blaine Osterkruger, arrives to pick the samples up, there's time for chatting, but both men are well aware the samples must be shipped that afternoon to reach the lab in time.

Earlier, Meeker had said that aquaculture farmers have the most at stake in ensuring their operations don't become environmental liabilities. Scrupulous testing and studies, such as the ones that took place at the Experimental Lakes Area might take time, but they prove the industry's case. "We've done the best science of anybody in the world to support what we do," Meeker says.

Now, the samples pass casually from one to the other as the two men natter about other things. The regular effort of demonstrating aquaculture doesn't harm the environment appears to have become routine, manageable and even, perhaps, an accepted part of doing business. BF

 

Facts about fish farming

  • Global cultured fish production has surpassed the world's beef production.
  • Chile is the world's largest producer of rainbow trout and South American operations there, as well as in Peru and Argentina, drive the commodity's price.
  • Global rainbow trout production weighed in at more than 600,000 tonnes in 2007, worth that year nearly $2.6 billion.
  • Ontario is the largest producer of farmed rainbow trout in Canada.
  • According to the results of a 2013 University of Guelph Aquaculture Centre survey for the Ontario Ministry of Natural Resources, the Ontario industry produced an estimated 3,700 tonnes of rainbow trout in 2012 worth $18.3 million. The average price was $2.24 a pound.
  • Lake cages account for 86 per cent of Ontario's rainbow trout production.
  • Rainbow trout is not native to the Great Lakes, but MNR designates it as a naturalized species. Each year it stocks thousands (162,260 in 2012) of the fish in these bodies of water for game fishing.
  • Rainbow trout have a growing out feed conversion ratio of 1.2 for the typical market fish of 2.5 pounds.
  • According to a Northern Ontario Aquaculture Association fact sheet, the MOE requires lake cage aquaculture sites to maintain phosphorus levels of less than 10 parts per billion. Land-based aquaculture operations' limit is 50 parts per billion (for design criteria).
  • Because the province also stocks rainbow trout in the lake, if operators have a fish escape, it is usually not a "huge issue" from an ecological perspective, says OMAF's Steve Naylor. "But it is in the farmer's best interest to keep those fish on their farm because as soon as they escape, they're public property." That means recreational fishermen can fish them.
  • From a Revenue Canada perspective, aquaculture operations must register as a farm business, but they don't have access to most of the government risk management programs that terrestrial farmers do.
  • OMAF and the University of Guelph hold several "getting started in aquaculture" workshops during the year. The next workshop sessions are scheduled for Feb. 25 and Apr. 22. To register, contact the university at (519) 824-4120, ext. 52689. BF

 

A regulatory process that can take years
Today, even though it's regulated under about 22 different acts and pieces of legislation federally and provincially, Ontario's aquaculture industry is criticized for not being regulated enough. For instance, a 2010 report by Gord Miller, Ontario's Environmental Commissioner, argues the way applications are posted on the environmental registry limits public feedback and they tend to be presented as low-level environmental risks.

The farmers themselves speak of how so much regulation can create disputes between regulators that drag on. Gord Cole, who has a net culture operation near Parry Sound, notes that of the roughly four times he has applied for an aquaculture licence, "the last we went through was the first time we actually got it in a timely fashion."

Amazingly, there also appears to be some regulatory cracks, such as who has the authority to regulate First Nations cage culture operations. It is MNR's position that these operations need to obtain licences, says Steve Naylor, an Ontario Ministry of Agriculture and Food aquaculture specialist. However, a description of Fulltime Fisheries that appears on the Northern Ontario Aquaculture website states the operation has obtained its permission to operate from the chief and council of the Wikwemikong Unceded Indian Reserve on Manitoulin Island. Environmental monitoring "as set out by Wikwemikong" is part of the agreement.

The farm, which recently obtained organic certification, supplies Blue Goose, and Blaine Osterkruger, site manager for Blue Goose's Manitoulin aquaculture operations, notes that it must follow the same monitoring protocols as the other Blue Goose sites.

A total of three farms operate in First Nations territory.

The MNR is now in the process of finalizing policy for cage aquaculture applications that it has developed in conjunction with the Ontario Ministry of Agriculture and Food, Fisheries and Oceans Canada, Environment Canada and the University of Guelph. First-time licence applications for a site can take years to complete. The draft policy currently being used describes the four main stages and the steps needed to complete each.

Naylor says the ministry plans to post "very shortly" a decision notice on the province's environmental registry regarding a final draft of its cage culture policy guide. Open net cage culture is the only form of aquaculture that has not had such a policy in place in the province, he says. BF

 

Fish from the Nile in Middlesex County
In 2012, brothers Ewart, Edward and Murray McLaughlin launched a land-based aquaculture operation to serve Toronto's live fish market.

The operation was developed in a former mushroom substrate composting facility near Putnam in Middlesex County.

"We had bought the building about four years previous to when we started looking at the opportunity of the fish farm," says Murray McLaughlin.

A representative from the national Industrial Research Assistance Program approached them with the idea of retrofitting the facility to grow tilapia there. Tilapia is a warm water fish that originally came from the Nile River in Africa. According to the Canadian Aquaculture Industry Alliance, it is among the top 10 fish species consumed in North America.

A wholesale distributor was already in the wings, eager for an Ontario producer. "They were getting them out of Minnesota and Florida," says McLaughlin.

The brothers hired specialists Sean Pressey and Roger Bushey to run the operation. The retrofit began in March 2012 with establishment of the nursery on the building's top floor. By June they were moving fish in.

The goal was to produce annually between one and 1.5 million pounds  of fish. The target fish size was 1.5 pounds. Pressey says they are a little over halfway to meeting their production goal.

At the farm, the tilapia are kept in water temperatures of 28 C. The operation uses natural gas to generate its own power supply and constancy is key. To that end, the hydro grid provides the backup and a diesel generator is a backup to that. "If we're without hydro for 15 to 20 minutes, we're going to have a whole dead farm," McLaughlin explains.

They can get tilapia to market size from 0.7 grams in about eight months, says Pressey. That's much faster than trout, which requires the same period of time just to grow from an egg to fingerling stocking size. Currently, the farm does not produce its own fingerlings, but it is beginning to do some breeding, he says.

Another advantage to tilapia is its ability to spawn throughout the year, which makes available a continuous supply of seed stock.

The building's tunnel system, originally set up for composting, is now transformed into 32 "cells" in eight raceways to house the fish to maturity. Initially, the cells were outfitted with rubber liners, but there have been problems and they have been switched to concrete, McLaughlin says.

Also added on either end of the building were drum filters to remove solid wastes and biofilters to screen out the other contaminants and pumps to return the water. Piping is buried beneath the floors. The recirculation system has an efficiency rate of 95 to 97 per cent, meaning that only three to five per cent of the total volume of water has to come from a fresh source.

McLaughlin estimates the $10 million project would have cost $3 to $4 million more if they would have had to start the building from scratch. That kind of investment and the small size of the market niche are likely to discourage others from getting involved, he says. "Let's say we weren't in it and we were looking at getting in and somebody's already there. If all we're going to do is short the market and drop the price, well, there's no sense in getting in because there's not that kind of money to begin with."

OMAF's Steve Naylor says similar live market niche opportunities may exist for other fish species. Barramundi, a form of sea bass native to the Indo-West Pacific region, for instance, is now farmed around the world.

With recirculation technology, "you can raise anything," Naylor says. It's "just essentially a huge aquarium," that allows the operator to manipulate all aspects of the aquatic environment. BF

 

Next in line – Arctic char?
For several years now, there has been some interest in producing arctic char, another cold water fish related to salmon, here in Ontario.

There are indications the fish has market growth potential. Considered a delicacy, it recently sold for nearly $17 a pound at a Zehrs market in southwestern Ontario, says Michael Burke, who manages the Ontario-owned, University of Guelph-managed Alma research station where aquaculture is an area of study. Currently, arctic char found in Ontario comes primarily from Iceland and the Yukon Territory.

Burke raises a small volume of the fish as a way to generate some income for the station. Initially, the fish were brought to the station to produce brood stock for fish farmers who were exploring diversification into other species. But production challenges discouraged the venture.

Hatching success was a key problem. When the university acquired them, the hatching rate was 10 per cent. Since then, they have managed to improve the rate through natural selection to 40 per cent, although that's still far below rainbow trout's rate of 90 per cent and above. Burke is optimistic that, with some more effort, arctic char can eventually reach the same reproductive rate as rainbow trout.

Keeping water cold enough to facilitate its growth is another challenge, as is the fish's much slower growth rate. In 8.5 C water, it takes arctic char 26 months to reach market size from hatching compared to 18 months for rainbow trout.

Efforts undertaken several years ago to grow the fish at a converted mink farm in Manitoulin Island were not successful, says Denise Purvis, whose family business, Purvis Fisheries Inc., owned the facility that an aqua

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