Thank you, Ruth, and thank you, Mr. Chairman, and members of the committee.
It's good to be here again. I have a couple of quick points to make on the company, Marine Harvest, as I haven't met some of you before.
Marine Harvest is the largest producer in the world of farmed salmon, accounting for about a third of the farmed salmon produced. In British Columbia last year, we produced 40,000 tonnes, and we employ about 550 people on the coast of British Columbia.
I like to think of us as scientists and biologists who have become farmers of fish in the ocean, because we have a very strong affinity to the environment where we grow our fish. All of the fish I mentioned--those 40,000 tonnes--were grown in floating net pens.
We're here today to talk about closed containment, because we're very interested in the technology of growing fish in a closed system for the benefits it offers farmers. It has become more and more a part of how we grow our fish. Right now all the fish we put into the ocean spend the first third of their lives growing in a closed system. I'll be touching more on that as I go forward.
In addition to the fish we harvest right now being in a closed system for the first third of their lives, 50% of our brood stock grow to beyond harvest size in a brood stock facility in British Columbia. So we have some knowledge of how to grow fish to a large size, as well as a small size, and some knowledge of the challenges involved in that.
Let me just touch on a couple of points that were made by other speakers last week on this subject, and then I'll move on to our own experience. It was mentioned that the DFO study in 2010 looked at a number of closed containment systems and found two of them to be financially viable. They were the net-pen production and the recirculating aquaculture systems. I think the comment was made that the return on investment was 53% and 4% respectively. The capital costs to get the water in the net water pens and RAS systems were $5 million and $22.6 million. This was in the DFO's 2010 report.
Keep in mind that this was the average situation. When they went to the worst case scenario and factored in all of the things that could go wrong, net pens remained profitable, dropping from 53% to 27%; whereas the RAS systems dropped down to a -23% return. That is why the international community continues to work with the net pens to make them increasingly more sustainable, and is reluctant to move in great measure to recirculating aquaculture systems until we have a lot more certainty about the return on investment.
Why is Marine Harvest interested in closed containment? We have an interest beyond our activities in hatcheries and with the brood stock. We've also been engaged with the environmental movements in British Columbia for the last six years, looking at a number of sustainable projects. One of them is a project on how viable it is to actually do closed containment for commercial-level Atlantic salmon production. That's going to require demonstration projects, as you've heard already.
It's going to take demonstration projects, because most of the production we can currently look at is small scale, whether we're talking about SweetSpring's coho production in Puget Sound; Swift Aquaculture in Agassiz, B.C.; or some of the projects that are at the planning stage, like the one by the Namgis First Nation in Port McNeill, a planned RAS facility that hopefully will begin construction next year; or others across North America that we've heard about. For instance, a Hutterite community is planning a 1,000-tonne production in the Midwest, and there's also a 1,000-tonne coho facility being planned for the Lower Mainland.
These are all exciting developments that will help us learn more about closed containment and how applicable it is to growing fish.
I want to point out that all of those taken together add up to the production from one conventional net-pen farm. These will all go through a struggle to achieve the kind of production they're planning to achieve, and they will not add significantly to the production base of farmed salmon in British Columbia.
We're looking at meeting a 3% to 5% growth market in the United States. We need a new farm at a 3,000-tonne level every couple of years. We won't get that from all of this material currently being looked at in terms of closed containment facilities. In fact, we may fall behind if we're not able to continue to grow both the conventional nets as well as invest in these new structures.
I just have a couple of points on the marine harvest plan. We have developed a pilot proposal to actually test closed containment in a recirculating aquaculture system in order to assess its feasibility for growing fish to market size, given the current state of technology development in British Columbia.
We undertook a site survey plan and a review of the current engineering, done by an engineering company in Victoria, B.C., Worley Parsons.
Interestingly enough, the site survey looked at 16 locations on the coast of B.C., where we seem to have all the water in the world we could ever want. Of those 16, only two were found to have water of sufficient quality and quantity to be useful for an RAS facility. That is because, although the facility recirculates most of the water, it still requires a significant amount of water on a day-to-day basis for things like cleaning, cleansing the fish from off-flavours, and the makeup of the water. It's not as easy to find a good location as one might think.
The second thing that came up was that the available engineering has basically reached the stage of being doable, but it still is very expensive work to invest in. Our exploration for a 2,500-tonne farm looked at making about a $35 million investment before taking into account the cost of land, as opposed to $5 million investment for a net pen, according to the DFO report.
I know I'm running to the end of my time, and I'll have to make time for questions. I'm just going to ask where we see all of this going. What is the bright light going forward for this technology and for farmed salmon in general?
I see a blend of cultures going forward, in terms of culture styles. There is going to be the net-pen culture, which will continue to become more sustainable, growing in the ocean off British Columbia. There are going to be fully closed systems, like we're talking about here today, which are going to meet those markets willing to pay for that product and those consumers who wish to purchase that product.
And there's probably going to be a blend of the two. For example, my company is looking at having our fish in closed systems even longer than they now are, going from the 100 gram smolt entry size to perhaps half a kilogram or a full kilogram, or maybe even larger. Why? That way we will reduce the time our fish are in salt water, maybe getting them down to less than a year, or maybe 10 months. That's good for everybody. We are not exposed to the vagaries of the salt water ocean, and the fish are not in the ocean with the attendant environmental impacts that everyone is concerned about.
With that, I'll end our comments and turn it over to you, Mr. Chair.