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Norwegian giants scoop up No Catch

Published: April 11, 2008
Source : Shetland Times
The two Norwegian business giants which own two-thirds of Shetland’s salmon industry increased their grip further this week by snapping up the cod and salmon sites of the failed No Catch Group.

Scottish Sea Farms and Hjaltland Seafarms combined as a consortium to land their latest acquisitions for around £7.2 million, splitting the sites to use for growing salmon.

Yesterday’s announcement effectively kills off the organic cod business pioneered by No Catch from Vidlin and may signal the end for cod farming of any type in Shetland.

Hope remains that a buyer might yet be found for the high-tech cod hatchery at Sandwick, saving the jobs and cod-breeding expertise even if the fish is farmed elsewhere than Shetland.

No deals have yet been concluded to sell No Catch’s trout sites and their fish, nor the mussel farms or the Grading Systems business, which makes salmon-grading panels.

Joint administrator Daniel Smith of Grant Thornton said yesterday some more deals were “pretty close” with possibly more to be announced today.

The gradual break-up of the No Catch empire means continued uncertainty for the 71 people who still have jobs. Those at the cod farm are protected at least until after the stock of cod has been sold. Production is expected to yield up to 3,400 tonnes and it might take up to 13 months for the smallest fish to mature. The administrators will not give the cod sites over to their new owners until the cages have been cleared.

Mr Smith said they would either sell the fish during the period that they retain control over the sites or seek a buyer for the stock. More of the cod was sold on the Scalloway wild fish market this week.

Doubts remain over the future of the No Catch factory at Scalloway where the prize-winning organic fish fillets and fish fingers used to be produced. The administrators just use the remaining staff to gut fish.

Mr Smith blamed No Catch’s demise on over-ambition, excessive costs and refusing to supply cod to big supermarkets to sell under their own labels. It went under in February with debts of £40m after failing to find either new investment or a buyer to rescue it.

The main losers were city investors who lost their £21m stake. The funds recouped by the administrators will go towards the Icelandic bank, Kaupthing, Singer & Friedlander and some will come Shetland Development Trust’s way. It is owed £1.08m, some of which is secured against assets, including workboats.

Commenting on the spectacular rise and fall of No Catch, Mr Smith said the shareholders and directors had embarked on a very ambitious business plan from the outset in 2004 by farming cod on a scale and to a standard not seen before in the UK.

“They chose to produce organic cod, which increased the feed cost by 15-20 per cent, reduced the permissible density level of the fish and restricted the availability of permitted vaccines.

“In addition, management’s business plan required the development of the No Catch brand, refusing to supply the multiple retailers with own-label produce, which would have been particularly useful in increasing volumes.”


Mr Smith said the cost of producing No Catch cod was more than double what wild cod fetches on the fish market, which is less than £3 a kilo. “The consumer is not yet prepared to pay such a large premium to wild cod,”  he said.

He said a great deal still had to be learnt about the life-cycle of cod in the habitat of waters around Shetland, adding: “Only with a better understanding from further investment can the cost of production be reduced, requiring improved knowledge of growth curves and related feed costs, reducing mortality rates, avoiding loss of biomass caused by spawning, and improving yields from processing.”

A shortage of wild cod should see farmed cod prices rise in the future, he said, which, along with more efficient farming, could give farmed cod a viable future.

This week’s sale involves the cod and salmon sites along with their feed barges, boats and cages. Hjaltland got seven sites for its £3.6m and its Norwegian owner, Greig Seafoods, said it also acquired enough organic salmon to make it the world’s biggest producer of the product, through its WildWater brand.

Hjaltland and Scottish Sea Farms have always been among the most likely contenders to buy No Catch assets since it went into administration, even though Hjaltland quickly ruled itself out of any bid to go it alone in a deal.

The two salmon giants own the lion’s share of Shetland salmon production and process almost all of the annual harvest of around 40,000 tonnes at their large factories in Lerwick and Scalloway.

While their salmon production will inevitably increase further it is expected that the companies will use the new sites to reconfigure their existing farming operations to make them even more efficient and to lessen the chance of disease.

Only this week Hjaltland was served with a government notice temporarily banning the movement of fish or feed at a site off Swinister in the North Mainland. Such measures are routine in Scottish fish farming to prevent the spread of diseases or non-native sea lice.

Scottish Sea Farms has been looking for new sites in different parts of Shetland to lessen the risks it faces from having too many farms in the same area.

SIC councillor for Shetland North, Addie Doull, himself a fish farmer, was not surprised to hear the Norwegians had strengthened their control of local fish farming.

“It’s really what we’ve come to expect,”  he said. “We tried a local set-up in the past and it didn’t work. The Norwegians have such a hold on it, it’s really the only way it can go.”

He was concerned about job losses and said the companies would only employ the people they needed. “We don’t want to see job losses,”  he said, “but you’ve got to be realistic.”

Since going into administration, 60 people have left from a workforce of around 130 with 30 being made redundant and 30 leaving to work elsewhere.

Shetland Aquaculture general manager David Sandison said it was positive news in that two companies with a good employment record in the islands were involved.

He said: “I don’t doubt at all that they will find jobs for a lot of the people that are currently employed on those sea sites.”

He added: “I’m very glad to see that something has been concluded out of the administration and the sites, which are obviously key assets, are going to be used again by companies which are committed to continuing to work in Shetland.”

He said it was difficult to know if it spelled the end for cod farming in Shetland but added: “It’s an extreme disappointment that the development of the farming of cod has stalled in Shetland and I would be extremely keen to see something done to ensure that it could start again.

“At this stage it’s difficult to speculate about what happens with the hatchery but I’m very keen to see that the asset doesn’t disappear and we lose the ability to farm cod in Shetland in the future".


Greig’s chief executive, Per Greig, said the seven sites acquired by Hjaltland would allow flexibility and allow “an even-more consumer-tailored salmon production in the coming years”.

He said four sites on the east side: three in Swining Voe and one in the North Voe at Symbister, would be highly beneficial to the company’s existing operation off the north-east Mainland.

The company will grow around 16,000 tonnes in Shetland this year, increasing to 20,000 tonnes gutted weight by 2010. Its newly extended LFT factory at Gremista is to start producing smoked and cured salmon and other products within the next two months.

Scottish Sea Farms is owned by the Lerøy Seafood Group and SalMar ASA, both of which informed the Oslo stock exchange about the deal this morning. They declared that the assets would lead to “better biological conditions”  for their current operations in Shetland, as well as improving potential for increased salmon production in the future.

There was no response from Scottish Sea Farms managing director Jim Gallacher before we went to press.

Meanwhile, the Norwegian seafood news organisation Intrafish has been both praising and critical of No Catch in its Aquaculture Business newspaper.

In a report on farmed cod’s slow progress, a report stated about the Shetland company: “It successfully did much of what the industry is now trying to do – on it did it better. And it made most of the same mistakes the industry is currently making – only it made them in a far more spectacular fashion.”

“The company always had to have the slickest website, the trendiest packaging and the coolest booth at industry shows. All that did wonders for the company’s image. Unfortunately, No Catch never made enough money to justify such profligacy.”

It claimed that farming cod is still too expensive with even the biggest and best companies in Norway still losing money on every fish they produce.

The biggest company Codfarmers, does not expect to turn a profit for another four or five years and Marine Harvest will not try further cod farming until a vaccine is developed for the bacteria francisella, which can destroy farmed stocks.
Source
Shetland Times
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