Thank you very much.
I'm Andrew Storey, president and CEO of Open Ocean Systems from Saint John, New Brunswick.
We have been asked to make this submission to your committee in order to share how our activities might impact the future direction of aquaculture development and debate in Canada in ways that were not contemplated by the Canadian Science Advisory Secretariat when the original assessment of traditional open-net pen and closed containment systems was performed.
We would also like to take this opportunity to illustrate how our activities and technology align with priority areas identified by the government as key to Canada’s future ability to enhance our standard of living and competitiveness within the global community. So while our sectoral focus is actually the farming of fish in the sea, lakes, and man-made reservoirs, we are really here to talk about rural development, rural job and rural wealth creation, first nations communities engagement, innovation, innovation commercialization, productivity improvement, and increased export sales of goods, services, and technology to global markets.
That's really quite a long laundry list, but I'll only be ten minutes, I promise.
All of this is balanced with emerging ecosystem management principles that ensure the long-term ability of our abundant natural resources to sustain an additional stream of wealth for our country.
To put all of this into context, in Canada we have quite amazing natural aquatic resources. Canada has 25% of the world’s coastline and 16% of its fresh water. The abundance and extremely high quality of these natural resources would suggest that we should be global leaders in aquaculture output as well as aquaculture technology. However, Canada’s share of global aquaculture output hovers somewhere around 0.3%, and with our growth in output more or less stagnant over the past few years, we are falling even further behind.
The good news, though, is that the aquaculture sector, which in many ways is still in its infancy, shows no sign of moderating. Indeed, the movement towards further growth in aquaculture output is virtually unstoppable. There is still tremendous opportunity and scope for Canada to assume it rightful position in this most global of sectors, and, more importantly, to use the resources and the financial and innovation tools we possess to create significant additional wealth for the country, especially in our rural areas.
I have two other pieces of good news. First, the knowledge and understanding is now starting to catch up with this very young and promising industry, and is pointing to what is truly important and possible from an ecological and economic point of view within this sector. As well, because of this relative youth, there is really, at this point, no traditional way to farm fish. I'm a pioneer, and I'm still a pretty young guy in this industry. We are not held back in considering alternative business models for farming fish within Canada.
So far in Canada, two business models are emerging—conventional or open-net pen farming and various forms of the closed containment system—both of which have been the focus of this committee and studies by DFO. As our title suggests, we have what we consider to be a third option.
Just as a bit of background, we're based in Saint John, New Brunswick. We have been developing our innovative fish farming technology since 2006, and we're now commercializing the products. The foundation of the system we call the “iCage”, which is patented fixed-volume, fixed-framework net pen architecture. I think you all should have received pictures of it.
The iCage has a number of attributes and functionalities, such as fixed growing volume, tensioned nets, submergence, rotation, and independent mooring configurations. To this operating platform we are now adding advanced sensor webs that give us a window into the growing units for high operational efficiency. When you really get to think about it, we're actually taking elements from both of the business models being considered by the committee so far while we add additional capabilities.
Currently we have iCage net pen containment systems operating successfully on commercial farms in the Bay of Fundy—farming Atlantic salmon—as well as Lake Diefenbaker in Saskatchewan. We've also grown cobia where we should all be today: at a warm-water site in Belize.
So our technology shows great promise, not only for growing fish in Canada but also for export of the technology. By April of this year, well over 300 tonnes of fish will have been grown or harvested from our generation one iCage units.
What does this mean for rural development in Canada? Through our development process, we realize our technology enables new approaches to unlocking more farmed seafood value from Canada's natural aquatic resources—an effort that has been constrained in the past by scale, geography, and investment. In order to have more aquaculture output, Canada needs to have more farmers farming more fish in more areas of Canada. It's a pretty simple equation.
The typical operational and investment scale required for the two business models being considered by the committee creates a significant barrier to entry for many parties, be they individuals or corporations, considering fish-farming opportunities. Scale and other constraints also limit the availability of suitable geographical locations for these types of farming operations as well. As a result, opportunities for rural development in many parts of Canada using these two models can be constrained. I'm not saying they are, but they can be.
A key focus for our company has been issues concerning small-scale fish-farming technology requirements. The iCage platform eliminates net management, reducing operational and infrastructure investment costs, which are key drivers for large scale in conventional net-pen farming. Fixed volume and tensioned nets maximizes natural water flow through the iCage, which is the largest operational cost associated with closed containment systems, requiring significant investment in pumps and energy to run them.
These are just two of the considerations that enable much smaller economic units for farming operations using the iCage. Our models show that a profitable iCage-based farm can be as small as 250 metric tonnes to 500 metric tonnes, versus the 2,500 metric tonnes to 5,000 metric tonnes considered in the other business models and in the models originally developed by DFO. Coupled with the ability to be submerged, these smaller farm site requirements open up vast new areas for fish farming in Canada that are otherwise currently unused. Consisting of just three to six individually moored units—what we call an iFarm, pardon the pun and apologies to Mr. Jobs—the footprint is very small and allows for operations in areas unsuitable for the other two business models.
Submerging the iCage helps the farmer evade numerous surface events, like storms, algae blooms, and ice cover—which occur in most of freshwater Canada—and reduces the risk and potential for escape.
This enables farming within a significant number of our freshwater lakes and reservoirs and eventually in open ocean farming on both coasts and open lake farming in our larger bodies of fresh water, such as the Great Lakes.
Ecosystem interaction of farming operations is an extremely important consideration. We need to ensure that we are using our resources as efficiently as possible and in such a way as to sustain our ability to generate wealth. This is an area where science, knowledge, and experience—much of it, by the way, generated in Canada—is starting to catch up with the growth of the sector and is pointing to ways in which the goals of ecosystem-based management can be pursued.
You're going to hear later on about IMTA, integrated multitrophic aquaculture, and closed containment systems that rely on the collection of solids for eventual dispersal as crop fertilizer for farmers’ fields. It's all about nutrient cycling and staying within ecosystem boundaries.
At a recent meeting of the Standing Committee on Environment and Sustainable Development, the Canadian Environmental Assessment Agency told the Commons committee that it must screen all projects that could touch federally regulated activity, and that more than 90% of small projects have little or no environmental impact.
While we are by no means suggesting that the CEAA process be circumvented, the combination of small-scale farming operations, the ability to move and moor individual iCage units, and other attributes suggest that an iFarm can operate at the low end of the CEAA scale.
We call this “balanced ecosystem aquaculture”, and we are working with government and academic scientists to establish the parameters. They're quite similar to IMTA and the fertilizer strategies that you see in the closed containment systems. Using the natural assimilative capacities of the ecosystem in which one is farming and staying within these ecological boundaries helps the farmer avoid tipping points and enables the long-term ability of an ecosystem to support small-scale farming activities.
The iCage and other tools also allow us to investigate new approaches to mitigate the impact of sea lice on salmon farming operations. A lot of good science suggests that submergence and other tools could help to mitigate infection levels. With some of our development partners, we'll be trying new materials designed to be even more resistant to damage and predator interaction than what we currently use, with the goal of minimizing the risk of fish escaping from the iCage.
We are also developing training processes and curriculums around standard operating procedures for iFarm and balanced ecosystem operations that will lead to certification of farmers and technicians.
Turning to the economic considerations that flow from all this, at the time of the original comparative studies that were performed by DFO and its panel our technology was at a much too early stage to be considered. However, using the same assumptions, we estimate the capital investment required for our technology package will be similar or slightly higher than traditional net-pen capital costs per metric tonne and much lower than CCS.
Our farming systems will drive operational and structural productivity improvements as we proceed along our generational release strategy, so that farmers using this system will be as efficient as or more efficient than other business models being contemplated.
Innovative technology leads to innovative financial tools, which again is a major constraint. The attributes of our systems allow us to work with partners such as Farm Credit Corporation and others in order to develop innovative financial tools such as leasing or rental of the systems. We strive to reduce the barrier to entries with not only rental and leasing programs but also working capital tools as well.
In conclusion, our technology represents a viable and valuable third option for helping to unlock the value within our aquatic resources that we all know is there. As with the smart phone and other technology revolutions that we have all experienced over these past few years, we see the same sort of evolution happening within Canada’s farmed seafood industry—technology opening up new approaches to wealth creation by reducing barriers to make it accessible to a much wider variety of people over a much wider geography.
The ability to create wealth through profitable small-scale farming represents a significant opportunity. It's highly suitable to rural and first nations communities, and allows them to participate in the highly strategic, very fast-growing global farmed seafood sector in a way that is sustainable and respectful of our natural aquatic resources. With this participation comes increased knowledge jobs, more innovation, and export sales of farmed seafood, all leading to more stable and vibrant rural communities as well as increased export sales of aquaculture services and technology.
Thank you.
