JACKSON — Indian Brook Trout Farm Inc. plans to leverage $150,000 it received through a state grant to win vital contracts with national grocery retailers.
While the Jackson-based fish farm currently serves a network of 2,400 restaurants and numerous regional grocery chains, including Plum Market and Busch’s Fresh Food Market, both in Southeast Michigan, the company believes the opportunity for more meaningful growth stems from its access to larger distributors.
However, those large distributors often require more robust product tracking and heightened food safety standards beyond current state mandates, said President Owen Ballow.
Ballow plans to invest the $150,000 grant from the Michigan Department of Agriculture and Rural Development (MDARD) in a variety of facility upgrades, including to implement a barcoding system for tracking products, install air purification equipment and develop antimicrobial coatings for the interior of his production facility.
All told, Ballow believes the investment could yield a four-fold increase in revenues for the 90-acre farm, which he purchased from its previous owner in 2014.
“It allows us to go after any and everybody in the country,” Ballow said of the grant, noting that the company already was in talks with grocers such as Meijer and Kroger.
Presently, Indian Brook Trout Farm generates roughly $500,000 in annual revenues, Ballow said.
The company should complete the facility improvement project by fall 2017.
For Ballow, Indian Brook Trout Farm’s latest $150,000 investment marks the next step in capitalizing on the state’s nascent aquaculture industry, which includes farm-raised fish, shellfish and other aquatic animals for consumption.
Ballow previously secured another $75,000 state grant to purchase mechanized fish processing equipment that greatly increased product consistency and production speed. He’s invested more than $1 million into the farm since purchasing it, increasing its annual capacity from 20,000 pounds of fish to 1 million pounds.
“The majority of fish that we eat in the Midwest are imported,” he said. “Of those imports, many come from Southeast Asia and South America, where they do not adhere to the same food safety standards that we have.”
A GROWING INDUSTRY
Two key factors should continue to drive business for farm-produced fish, according to Ballow. That includes a shift for consumers in wanting to know the source of their food, plus dwindling stocks of wild fish, he said.
Sales of domestically raised food-sized trout have increased over the last five years, reaching nearly 58 million pounds in 2015, up from 45 million pounds sold in 2010, according to data from the U.S. Department of Agriculture.
Despite the increase in sales, growth in the domestic aquaculture industry has been limited over the last five years, particularly as U.S. farms struggle to compete with cheaper imports, according to a report by IBIS World.
“Since 2011, inexpensive products from importers have gained an increasing share of domestic demand,” according to the report. “The majority of aquaculture product imports have come from Chile and Canada, which have both larger and more cost effective operations than in the United States.”
The U.S. imports approximately $1.9 billion, or 4 percent, of its farmed seafood, according to data from the International Trade Commission cited in the IBIS World report.
Still, companies such as Indian Brook are betting on the industry’s long-term growth prospects.
While the Jackson-based farm primarily raises rainbow trout and a limited number of brook trout, it plans to add atlantic salmon, coho salmon and arctic char in the coming years to meet consumer demands, Ballow said.
MDARD also has made a bet that the state’s aquaculture industry is poised to grow. The agency has partnered with the Department of Natural Resources (DNR) and the Department of Environmental Quality (DEQ) to support and attract new aquaculture companies to the state.
“We import 90 percent of our sea food so we think we have a great opportunity for growth in the sector and we think we’re very well suited (for the industry),” said Jodi Gruner, an economic development specialist for MDARD. “We have water, infrastructure and education. The ecosystem is beginning to grow.”
Gruner notes that both Michigan State University and Jackson Community College are developing aquaculture degree programs.
The government agencies provide guidance on permit applications, compliance with state regulations and site selection. The agencies also work with aquaculture businesses to secure funding from angel investors and other financiers.
So far, results of that state’s push to attract further aquaculture have been mixed. Harrietta Hills Trout Farm LLC, located in Harrietta, a village 30 miles west of Cadillac, is the only other commercial aquaculture facility in the state, Gruner said.
But Gruner hopes to change that by attracting a recirculating aquaculture facility to Michigan. Unlike Indian Brook, which is fed through an artesian spring, recirculating facilities do not need a natural water source. Instead, those operations rely on purification technology and pumps and can be built virtually anywhere, Gruner said.
“We’d love to see that industry grow here,” she said. “I think we just need one good win in that recirculating aquaculture sector.”
Cost remains a key headwind for the aquaculture sector.
Commercial operations can require $12 million to $60 million to launch a facility. With that amount of capital outlay, most traditional financial institutions aren’t interested in lending to would-be aquaculturists, Gruner said.
“You have to realize, like any other agriculture venture, it takes a while (to become profitable),” Gruner said. “You think about blueberries: You plant them and have five years before your first full harvest. If you’re growing rainbow trout, you have a year before you’re turning profit.”