James Arthur Smith, founder of Seatopia, pioneering Regenerative Aquaculture for the Direct-To-Consumer Markets, shares about aquaculture, the challenges with unsustainable feed, concentrated pollution, commodified markets and more.
LISTEN TO THE CONVERSATION ON:
How do we farm the oceans regeneratively? We all have heard of the massive issues with fishing and especially the industrial-scale extractive way. We are basically emptying the oceans. It sounds very much like the rest of the agriculture and food industry. So what can be done? This is a deep dive into the world of regenerative aquaculture!
UNDERSTANDING REGENERATIVE AQUACULTURE
A Kampachi farm where James worked for in the Sea of Cortez, in the Baja Peninsula in Mexico, is an example of farming regeneratively. They’re raising Kampachi, which grows at a very efficient rate, and can be adapted to eating a feed that is much more sustainable. According to James, you can create healthy food systems if this is done at low density, and in well-sited locations. For example, in areas that are far from industrial pollutants, deep water, tons of current, etc.
‘The potential of aquaculture to create healthy seafood in a controlled environment where you control the feed and you control the exposure to toxins, in the same way, that we can raise tomatoes or chicken or cattle done right, you can produce an absolutely beautiful product that’s clean, that’s nutrient-dense, that’s free of exposure to toxins. And the principles of aquaculture have been there from the beginning.’ – James Arthur Smith
‘So, an algae-based feed, that can be grown regeneratively can be a high feed component for the Omega threes, the oils and the proteins that it needs. Combining that with either land-based proteins, it could be a variety of different sources, it really has the ability to create a sustainable feed for a fish that grows very efficiently.’ – James Arthur Smith
THE ISSUES WITH WILD CAUGHT FISH
The evolution of feed in aquaculture followed the trajectory of feeding them exactly what they eat in the wild, which is sardines, anchovies, and mackerel, but there is a finite resource in the ocean. If we were to mitigate the pressure on the bait fish and give them land-based proteins like soy and corn, that would have a direct effect on the Omega 3 and Omega 6 levels because fish don’t produce omega 3. There is only a handful of fish in the entire world that produce their own omega 3. The original source of Omega 3 comes from algae. So, an algae- based feed is going to provide the actual Omega 3 content that the fish needs.
‘The underlying issue is that there’s a finite resource and the gross production of wild-caught seafood has plateaued. We’re not going to find a new well of fish in the ocean. We’ve plateaued already so we can’t keep extracting.’ – James Arthur Smith
‘Growing different types of micro algae to be used in feed is something that is currently evolving. There’s a lot of investment actually happening in the commercial and industrial-scale production of different types of micro algaes, for aquaculture and other industries. Because you can now feed a Kampachi, for example, an algae-based diet get even more omega 3 than a wild-caught fish.’ – James Arthur Smith
WHY FARM TO TABLE RESTAURANTS ARE NOT THE IDEAL CUSTOMERS
Many star chefs or celebrity TV chefs were taken to farms and they were really stoked to work with a product that allowed them to work with a Farm to Table menu and they could also tell stories about their seafood. But the scalability of this menu was quite limited because while there are a lot of farm-to-table restaurants, there are very few national distribution channels for these products.
‘One of the largest farms-to-table restaurant groups that we had brought to the farm was a group called Tender Greens, which really cared about where their products were coming from. But as Tender Greens grew, its business model changed. Instead of allowing each chef to make the decisions on their buying, it switched to a national buyer. And then the national buyer was more conscientious of the volume discounts that were going to be applied by choosing slightly different proteins. And then eventually, it changed to being somebody that was probably more of like a controller or CFO and had less connection to the consumers’ demands or concerns or different incentives and motives.’ – James Arthur Smith
‘We were bringing chefs to the farm. You know, bringing a chef to a farm where, maybe they’ve visited a cattle farm or pig farm […] but to do it with fish was something that was out of sight, out of mind for so many people. So we created this authentic connection to where their seafood was coming from and gave them the chance to swim in this aquarium. Swim with a school of 5000 beautiful fish in crystal clear turquoise water, the experience was spectacular, and it definitely worked and we were able to develop probably one of the most trusted speciality seafood distribution businesses in Southern California because of this direct relationship with high-quality farms.’ – James Arthur Smith
DIRECT-TO-CONSUMER BUSINESSES CAN SCALE REGENERATIVE AQUACULTURE
Seatopia puts forward a model that creates a supply chain to support and reward the farms that were innovating. They’ve opened up a much better sales channel that creates a feedback loop and is much more scalable.
‘The consumer seems to care more. So, I knew that a direct-to- consumer model was going to get the product to the people who care and create that feedback loop. So Seatopia was this idea that ‘well, maybe one day consumers will care enough about seafood to be able to pay what it actually costs and get it to them delivered at home, in an authentic way that isn’t just wrapping it in styrofoam and calling it sustainable seafood.’ – James Arthur Smith
‘Seatopia was an idea on the back burner until COVID actually created the impetus in the space to justify it. So as restaurants closed, during COVID, you have these farms around the world that have been investing in class feed and handling low-density farming, it’s an expensive way to do it. And you have these living creatures in the water that are required to be fed. And they no longer had a sales charge because the restaurants were not buying and these fish needed to eat. So you know, what’s the future the crystal ball didn’t really have a vision for when those restaurants were gonna come back. So I really pushed this Seatopia model.’ – James Arthur Smith
OTHER POINTS DISCUSSED
Koen and James also talked about:
- Seatopia’s vision and model
- Best place for investors to be looking
- The benefits of aquaculture
- What would James do with $1B dollar fund
Feedback, comments, suggestions? Reach me via Twitter @KoenvanSeijen, in the comments below or through Get in Touch on this website.
Join the Investing in Regenerative Agriculture and Food newsletter on www.eepurl.com/cxU33P
The above references an opinion and is for information and educational purposes only. It is not intended to be investment advice. Seek a duly licensed professional for investment advice.