Aqua Farm

FINAL REPORT Market Assessment Study of Organic White Fish For AgriTECH Park Inc.
Submitted by:
March 2004
Prepared by: Rob Assels Research Director Advocate Communications Group Box 1000, 181 Browns Point Road Pictou, NS B0K 1H0 1-877-485-8787
Prepared for: K. Laurie Sandeson AgriTECH Park Inc. 90 Research Drive Truro, Nova Scotia B2N 6Z4 March 2004
AgriTECH Park Market Assessment Study
March 2004
Project Partners
This project was a collaborative effort. The steering committee was comprised of:

Advocate Communications Group Rob Assels, Agriculture and Agri-Food Canada Shelley Manning AgriTECH Park Inc Laurie Sandeson Mena'taqug Aquacultural Facility Heather Stevens Millbrook First Nation David Roberts Nova Scotia Department of Agriculture and Fisheries Clare Hanlon-Smith Nova Scotia Department of Agriculture and Fisheries Scott Hosking Nova Mariculture Brian Ives
The research was completed for: AgriTECH Park AgriTECH Park is a business development and agri-business centre designed to assist entrepreneurs in the development of innovative products and services in the agricultural, food & environmental sectors in Atlantic Canada. The Park is in close proximity to the academic and research resources at the Nova Scotia Agricultural College and offers office and lab facilities to the agri-food industry along with marketing and management counselling. Laurie Sandeson is the Parks managing director. The research was completed by: Advocate Communications Group The Groups research division has conducted research in the Agri-Food sector for: A&P Foods, Coca-Cola Foods, Foodland, Grinners Food Systems, Pioneer Organics, Sobeys, and West Nova Agro Commodities. Advocate specializes in quantitative research methodologies that apply to food systems. These include executive interviewing, taste testing, GIS mapping, on-line interviewing, and the test launching of new food products. Rob Assels is the Groups research director and was the primary investigator on the project. He has been a member of the Professional Market Research Society for twelve years. Nova Mariculture Nova Mariculture provides a wide range of analytic and developmental services to aquaculture operations. It has been involved in aquatic farming for over 25 years. Nova Mariculture offers site evaluations, consultations on wastewater management, advice on appropriate technologies and bi-catch utilization, aquaculture training, HACCP services and business plan development. Brian Ives is Nova Maricultures president and provided the projects oversight and analytic support. He is also a registered organic inspector with the Independent Organic Inspectors Association and has carried out over 150 inspections of farms and processing facilities.
Prepared by: Advocate Communications Group
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Table of Contents 1. 2. 3. 4. Executive Summary .............................................................................................................. 4 Background ........................................................................................................................... 6 Objectives............................................................................................................................... 7 Literature Review ................................................................................................................. 7 Globally............................................................................................................................... 7 Asia ..................................................................................................................................... 8 European Union .................................................................................................................. 9 Chile.................................................................................................................................. 10 United States ..................................................................................................................... 10 Canada............................................................................................................................... 11 Regulatory Environment.................................................................................................... 11 Bioterrorism ...................................................................................................................... 11 Country of Origin.............................................................................................................. 12 Fair Trade.......................................................................................................................... 12 Eco Labeling ..................................................................................................................... 12 Industry Trends .................................................................................................................. 13 Executive Interviews........................................................................................................... 14 Restaurant Trade ............................................................................................................... 14 Producers........................................................................................................................... 15 Processors ......................................................................................................................... 16 Wholesalers....................................................................................................................... 16 Grocery ............................................................................................................................. 17 Mainstream Grocers ................................................................................................ 17 Natural Food Market ............................................................................................... 18 Feed Mills ......................................................................................................................... 19 On-line Interviewing........................................................................................................... 20 Market Opportunities......................................................................................................... 20 Restaurants........................................................................................................................ 21 Wholesale.......................................................................................................................... 21 Organic Certification Versus Natural Label.................................................................... 22 Implications ......................................................................................................................... 23 Recommended Next Steps .................................................................................................. 24 Appendix A Bibliography ............................................................................................... 28 Appendix B Certification Bodies For Organic Aquaculture ....................................... 29 Appendix C On-Line Survey Results ............................................................................. 30 Appendix D List of Companies Interviewed ................................................................. 31 Appendix E Terms and Acronyms ................................................................................. 32 Terms ................................................................................................................................ 32 Acronyms.......................................................................................................................... 32
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10. 11. 12. 13. 14. 15. 16. 17.
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1.
Executive Summary
The study conducted twenty interviews with producers, processors, wholesalers, distributors, chefs and caterers in order to identify whether there is a potential market for certified organic fish in general, and for farmed white fish in particular. The interviews were conducted January 27 to March 4, 2004. The results are not intended as a quantitative assessment and cannot be statistically projected onto the industry at large. The interviews suggest that there is no immediate market for certified organic fish products within Atlantic Canada itself, but that there are several markets immediately outside the region. Those markets are all in their early stages of development, both at the consumer and retail level. There is evidence from wholesalers that retail chains and larger restaurants are showing an interest in acquiring organic fish. Within the U.S. this interest is coming predominantly from New England and West Coast States. This is consistent with the Canadian Department of Foreign Affairs and International Trade (DFAIT) studies that suggest these markets are the number one and two U.S. markets for certified organic and natural products. There is also a seasonal window for suppliers to sell certified organic halibut during the three-months period when the West Coast wild fishery is closed. Interviews conducted with those familiar with the Ontario market suggest that this market is in the initial stages of small but steady growth. One of the larger Canadian distributors of natural foods mentioned premiums of 25-50% for a well-branded certified organic line of fish; however most of the premiums mentioned during the study were in the 10-25% range relative to farmed fish. The Ontario interviews also indicated receptiveness for value-added and ready-to-eat organic fish products. At this time, retail chains in Atlantic Canada do not believe there is sufficient demand to carry certified organic fish. The exception to this is the customer base of specialty grocery stores that focus on health and natural foods. These consumers have higher than average disposable income and currently buy organic products on a regular basis; no educational efforts are required to get them to add certified organic fish to their weekly purchases. The restaurant market may sustain some smaller producers that target restaurants in larger urban areas. Producers targeting this market in the U.S. will find direct sales difficult to acquire; upscale U.S. restaurants tend to purchase from wholesalers. This is consistent with previous studies that indicated that 90% of the supplies to the grocery and restaurant markets is provided by wholesalers. The current size and rate of growth of these markets may not be sufficient to be considered attractive to large aquaculture operations in the short or even medium term, but they could provide a unique opportunity for family farms. The smaller producers interviewed saw organic certification as a means of distinguishing their product from that of larger operations. Aquatic farmers in Canada may be in the fortunate position of being small enough to succeed by servicing a small group of restaurants and local farmers markets or grouping
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together into sellers groups to selling in larger quantities to the wholesale market in the U.S. Smaller family farms do not need to be certified organic to reach these markets; however, if they choose not to certify, they will be competing with larger aquaculture operations, not only on price, but in convenience, packaging and speed of delivery as well. Smaller aquatic farms will find access to retail markets increasingly restricted. Centralized purchasing and electronic data interchange are widespread in the grocery industry. If the market for organic fish follows the market for other organic categories, it should experience annual growth rates of 10-20% per year for many years to come; however, there are a number of reasons to believe that this would be an overly optimistic view. Organic meat sales have been very slow to develop relative to the produce and processed goods. Furthermore, there is significant confusion over the difference between farmed, organic and wild fish. Most of the industry stakeholders interviewed felt that significant public awareness initiatives would be required before organic fish would begin to see and maintain double-digit growth rates.1 Awareness, even among industry experts, of organic certification bodies that have standards for aquaculture is quite low. The market for certified organic fish is in its infancy. Organic aquatic farms will operate in virtually a competitor-free market for many years to come; however, foreign producers have begun to target both Canada and the United States for organic seafood. In the longer-term, as organic fish becomes more mainstream, smaller aquatic farms should expect to see an increasing number of aquaculture operations enter the market with a full range of both fresh and frozen product lines. Co-operative marketing initiatives between smaller scale producers could help maintain or even expand market access to those buyers requiring larger and consistent year-round supply. There are several steps that would help the industry establish itself. The development of national organic standards for aquatic farming will give assurance to all producers and feed mills that the industry as a whole is on a level playing field. Consumer awareness initiatives also become easier to implement with federally regulated national standards. Efforts could be made to develop an inventory of existing aquatic farms as well as a profile of those that are successful. The inventory and profile are consistent with the Renewal Pillar of the Federal Governments Agricultural Policy Framework (APF). The inventory should be comprehensive enough to culminate in the addition of aquatic farming to the Benchmark for Success program. A needs assessment should complement the inventory and should investigate husbandry practices, marketing efforts, distribution channels, size of operation (aquatic and agricultural), and any other characteristics that could help potential aquatic farmers determine if this is a suitable crop to grow. Consideration should be given to the development of facilities that would encourage research and training specifically designed to meet the needs of agricultural producers that are considering diversifying into aquatic farming. This would help stimulate wet lab
1
Pulsifer Associates noted in 1999 that the largest barrier in the development of the organic food industry is the lack of consumer awareness.
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applied research and development as well as on-farm trials. Studies that help identify the most appropriate feed formulations, crop densities, and species diversity for organic production, will help producers develop the best quality standard operating procedures. Feedback between researchers and producers would encourage advancement and innovation in the development of organic aquatic farming standards. Both the research and the training facilities would be consistent with the goals of the Environment and the Science and Innovation pillars of the APF.
2.
Background
Aquaculture has seen significant growth in Canada over the past 20 years. Most of the growth has been on the Atlantic and Pacific coasts, with more than 75% of that growth being in salmon production. Statistics Canada and Price Waterhouse Coopers collected data in 2001, which suggest that farmed salmon represented approximately 70% of the total aquaculture industry value. Salmon farms in British Columbia and New Brunswick, the countrys two largest producers, raise almost 100,000 tonnes of salmon, valued at over 400 million dollars. Over the same period, freshwater fish production remained relatively static at under 10,000 tonnes, a fraction of the annual salmon production. Unlike marine farming, freshwater production is achieved with smaller scale operations, often under 100 tonnes. There are larger operations such as a cooperative grain company on Lake Diefenbaker that produces 1,200 tonnes annually, but this is the exception. Another key distinction is ownership; many of the larger marine aquaculture operations are foreign-owned international companies, while their freshwater counterparts are predominantly Canadian owned. The rapid development of marine aquaculture was a natural response to the partial collapse of some components of the ocean fisheries and the federal governments new fisheries policy, which placed a high priority on aquaculture in order to revitalize the coastal economies. This growth is expected to continue as the worlds stock of wild species continues to decline at the same time as the world population and protein demands rise. Both the marine and freshwater fisheries are subject to food safety issues. The single case of mad cow disease in Alberta and subsequent case in Washington State have led to highly publicized speculation about the safety of the meat industry. This in turn has played a role in increasing regional demand for fish products.
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Conversely, results published in January 2004 from the University of New York in Albany that showed higher levels of PCBs in farmed fish than wild fish, could have a negative impact on consumer purchasing of farmed product.2 Federal and provincial agriculture departments have encouraged producers across Canada to diversify their operations to minimize their exposure to financial risk. Many agricultural farms across Canada have the basic requirements to consider aquatic farming including, a consistent supply of fresh water, a need and destination for resultant fish waste, and a thorough understanding of livestock husbandry. The current study is an initial investigation of the market for certified organic (freshwater) fish. This is the first step in determining the viability of aquatic fresh water farming as a source of incremental farm revenue and financial stability for family farms in Canada.
3.
Objectives
The specific objectives of the study are to understand industry stakeholders expectations of a certified organic fish product line, including:
Expected demand within Canada, the U.S. and overseas markets (frozen & fresh) Demand timeline / Frequency of need Consistency of supply Packaging Marketing requirements Educational initiatives Competitive reaction Industry trends and preferences Anticipated premium for certified organic fish
4.
Literature Review
Globally Aquaculture production has been growing at rate of 9% each year since 1970; however, the quantity and variety of organic aquaculture has lagged far behind the agri-food industry. This is in part due to the lack of universally accepted standards and accreditation protocols for the production of certified organic aquaculture. In 2000, the total global production of certified organic aquaculture was estimated at only 5,000 metric tonnes (mt). Eighty percent of this was salmon farmed from Ireland and
2
The study was made public two weeks before the interviews for the current study began. There was significant discussion of the Albany study by interviewees. Many of those that dealt directly with consumers had noted an increased concern; however, at the time of this report, it is impossible to estimate the long-term negative impact on the purchasing of farmed fish. Its impact on certified organic fish sales is expected to be positive. In Scotland on January 18, 2004, salmon producers indicated that the number of orders for certified organic salmon, which represents just two percent of domestic production, had risen by 10 percent since the University of New York report suggested that Scottish fish farms were among the most contaminated with PCBs in the world.
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Scotland that was subsequently sold to the EU market. Freshwater fish and trout made up the bulk of the remaining production; this was sold in local markets in Scotland, Austria and Germany. The FAO projected in 2002 that the production of certified organic aquaculture to rise from 5,000 mt to 1.2 million mt by 2030. It anticipates an increase of 30% annually from 2002-2010. This growth rate will fall to 20% (2001-2020) and then to 10% (2021-2030). These estimates are primarily based on existing organic aquaculture production levels from developed countries, and the assumption that the major markets for certified farmed aquatic products will be Europe and North America in the West, and Australia, Japan, New Zealand and Singapore in the East. Demand in the latter countries will be fuelled by the growing awareness concerning environmental pollution and the safety of aquatic products for human consumption, as well as the state of global fishery resources and long-term sustainability of current aquatic food production systems. FAO 2002 There are a number of private certification bodies that have developed organic aquaculture standards in Europe, Asia, Oceania, and North America. In addition France, the UK, and Australia have adopted their own national standards. Germany has national organic standards, but at the time of this report, aquaculture was not included. For a list of private and national certification bodies see Appendix B. The growth of aquaculture in developing countries and in what the FAO refers to as lowincome, food-deficient countries (LIFDCs), is expected to be six times higher than in developed countries. In contrast to developed countries where finfish aquaculture production currently targets the production of higher-value carnivorous species, the bulk (93.7 percent) of finfish aquaculture production within developing countries targets the production of lower value (in relative marketing terms, and therefore more affordable in economic terms) freshwater filter feeding species (28.7 percent total, including silver carp, bighead carp and catla) and omnivorous/herbivorous fish species (64.9 percent total, including grass carp, common carp, crucian carp, nile tilapia, rohu) feeding low on the aquatic food chain. FAO 2002 Asia The differences between regions can be more than just economic. Aquaculture, as a portion of the worlds food supply currently ranks fourth, after pork, beef, and chicken; however, on Mainland China, aquaculture is second only to pork. Aquacultures portion of the Chinese diet could increase significantly due to the 2004 outbreak of avian influenza, which required the slaughter of millions of meat birds throughout China. According to the Department of Foreign Affairs and International Trade (DFAIT) May 2003 Fisheries Market Study of Japan, domestic smoke houses and their preference for low priced salmon have significantly changed the Japanese import market for salmon and
Prepared by: Advocate Communications Group Page 8
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trout. Imports of smoked salmon products from Canada have steadily declined from 338 metric tonnes in 1995 to 87 metric tonnes in 2002. Japan is well known for its very high organic certification standards (JAS); however, the Japanese have a particular affinity for a darkly pigmented fish. This is particularly true of salmon because the colour red signifies health and prosperity and the assumption that the colour of a fishs flesh is indicative of its health and eating quality. In Korea, where Canada has a reputation as a good supplier of quality fish at reasonable prices, consumption of fish is increasing; however, demand for organic fish products has not yet materialized. European Union DFAIT studies on France and Germany suggest the EU is a different market from Asia. France leads the EU in salmon consumption. This consumption, while high, is in decline due to negative publicity and environmental concerns. In October 2003, scientific evidence indicated that EU cod and haddock quotas were still above sustainable levels. The decision was made to cut North Sea harvest 45% against the 2002 quotas along with a compulsory reduction in the number of vessel-days at sea. Total allowable catches were cut by 50% for haddock. These decisions have compelled EU countries such as Germany and France to import more of their seafood from non-EU countries. EU members such as the United Kingdom, Spain and Holland have preferential access to the French and German markets. Compared with Canadian suppliers, European companies have a proximity advantage that both minimizes shipping costs and maximizes product freshness. Non-EU countries such as Norway have negotiated bilateral agreements that allow them to avoid costly tariffs. This is particularly true for processed seafood. The French are also developing a preference for prepared and ready to eat foods. The DFAIT believes that by 2010, 32% of French fish counter sales will be prepared cooked product. Another 32% will be smoked and cured product; ready to use product will account for an additional 12%. Hotel and restaurant sales of seafood in France represent 28% of national consumption. Large grocery store chains dominate the food market in France. Collectively the supermarket chains sold 67% of the fresh fish in France. The chains are offering a greater number of prepared and ready to eat products in an effort to steal market share from the restaurants. Consumers in France are becoming more time conscious and are willing to pay a premium for convenient and attractively packaged fish products. The UK Soil Association, which overseas British organic food, announced on December 7, 2003 that it is going to bring in much more rigorous standards for organic fish farms. This is expected to drive the price higher. Marks and Spencer, Sainsbury, Waitrose, and Tesco all have organic product lines, and have all doubled their sales over the past three years.
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Chile In December 2003, the Falklands-Mavinas newspaper reported that the University of Magallanes in Chile has finished its five-year pilot project for farmed Atlantic halibut and is ready to transfer the production techniques to the private sector. The now fifth generation Chilean halibut, which were originally imported from Canada, have a much faster growth rate than their progenitors. United States According to the Canadian governments infoexport website, there are opportunities in the U.S. market for a variety of fish products, including private label, gourmet, ethnic, food service and natural products. Ninety percent of the fish sold to retail establishments and food service businesses is through wholesalers. Of the major supermarket chains that carry natural or organic products, only Trader Joes buys directly from producers. To meet wholesaler expectations, suppliers must be able to provide product within 48 hours, ensure a consistent supply, have competitive pricing and be able to meet a minimum of 100-500 lbs per week. A study of 3,600 U.S. consumers sponsored by The U.S. Trout Farmers Association in 1996 suggested that a marketing strategy that targeted high-end restaurants would be very successful. The study found five distinct clusters of attitudes toward fish. Four of the five clusters were favourable to purchasing fish regularly. These represented 84% of the sample. Twenty-five percent of the sample were very favourable to purchasing fish regularly and were not concerned with price. According to the May 2003 Midwest Frozen Food Market Summary, American retailers view Canadian private label suppliers as very sophisticated with innovative ideas and products. The mid-Atlantic market is dominated by supermarket and club chains that claimed over 93% of the region's $50.5-billion food business in 2001. Seventy-five new supermarket and club stores are scheduled to open here over the next 12-18 months. In all stores in the region, there is a greater emphasis on perishables, home meal replacement (HMR) and natural foods and wellness products. Kosher-certified products across all categories are increasingly in demand. HMR consumers are looking for chilled prepared food or value-added ingredients that can be prepared at home. While produce, deli, bakery and convenience foods are all growing categories, the category with strongest growth is natural. The New England market includes Maine, Vermont, Connecticut, Rhode Island, New Hampshire, and Massachusetts. According to the Spring 2002 report on Organic Food Sector in the New England Region, the East Coast of the United States was the second leading developing market for organic products. According to A&L Goodbody Legal News and Publications, in August 2003, Emerald Island Global Trading (EIGT) closed a deal with Wild Oats and will supply Irish organic seafood products for all Wild Oats stores. Wild Oats seafood programme is one of the fastest growing sectors of their company, and enjoyed 32% sales growth in 2002.
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EIGT has committed to a three-phase program. Firstly, Wild Oats weekly usage of 8,000-12,000 lbs of salmon will be sourced exclusively from the Clare Island Sea Farm. In September, premium smoked salmon, prawns and scallops will commence shipment. In October mussels and value added salmon products will help meet the US market demand for organic fish. Canada According to the December 29, 2003 edition of the Western Producer, the Manitoba towns of Killarney and Boissevain and four adjoining rural municipalities formed Turtle Mountain Sustainable Ventures in an effort to farm fish indoors in large tanks. The venture is expected to fit in well with livestock operations that want to convert their barns. In 2002, Manitoba fish farms sold 16,000 kilograms of rainbow trout and 47,000 kilograms of arctic charr. Mike Dolinski, the organic specialist for the Agriculture, Food and Rural Development department of Alberta noted in March 2001, since we all know that the first specialized products in the marketplace frequently bring the highest prices, organic fish production may be an opportunity for some Alberta aquaculturists. The one thing Dolinski is sure of is there will be a demand for organic aquaculture products in the near future, and those that are ready will have an opportunity to capture that niche market.
5.
Regulatory Environment
Bioterrorism The Bioterrorism Act, officially known as the Public Health Security and Bioterrorism Preparedness and Response Act, became law on June 12, 2002. It has created significant bureaucracy for Canadian exporters to the U.S. Prior to goods entering the U.S., the Food and Drug Administration (FDA) requires notification and documentation for every shipment. In some cases, exporters have shouldered the responsibility themselves, by hiring additional staff or by increasing the workload on existing staff. Others have passed the cost on to their customs broker who charges the shipper $20-25 US per load. Most treat this market hurdle as the cost of entry; however, some of the respondents interviewed noted that they know of some smaller producers that no longer ship to the U.S.
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Country of Origin A number of respondents were concerned with the pending Country of Origin legislation that is expected to come into effect on September 20043. While several of the producers that are exporting to the U.S. have some concerns about decreased demand for Canadian product, the John Nagle Company out of Boston, which is a leading buyer of Atlantic Canadian product expects no impact, and has no intention to change its purchasing volumes from the region. Country of Origin labelling has been required for frozen packaged products for several years. The new legislation requires labels for seafood, meat and produce by September 30, 2004. The Farm Security and Rural Investment Act requires retailers to inform consumers about a products country of origin at the point of purchase. They must also distinguish between farmed and wild fish. The EU has had similar country of origin labelling requirements since January 2003. Fair Trade The Fairtrade Labelling Organizations Interantional (FLO) is responsible for issuing fairtrade labels. Over 300 producer organizations have been inspected and certified fairtrade in Africa, Latin America and Asia. While fairtrade standards are primarily concerned with workers wages and working condition, they also address a companys environmental practices, particularly as they affect the workers health. FLO certification also has resonance with consumers predisposed to purchase product for social and environmental reasons. Currently, canned tuna as well as some frozen or processed fish are being sold in Germany carrying the fairtrade label. Eco Labeling Eco-labelling has been discussed at multilateral meetings of the World Trade Organization (WTO) without a great degree of success. The U.S. is in favour of voluntary standards, claiming that mandatory eco-labelling could be used in a discriminatory method to restrict a countrys market access. The U.S. position is that if mandatory standards are adopted, world seafood markets will be segmented because those countries unable to meet the entrance requirements of the EU countries would seek out other countries with less rigour in their standards.
Section 10816 -- Requires mandatory country of origin labeling for beef, lamb, pork, fish, perishable agricultural commodities and peanuts after a two-year voluntary program. The Secretary is prohibited from establishing a mandatory identification system to verify the county of origin of a covered commodity but the Secretary may use, as a model, certification program in existence on the date of enactment, including the carcass grading and certification system, voluntary country of origin beef labeling system, and those systems used to carry out the market access program under the Agricultural Trade act and the National School Lunch act. Any suppliers of covered commodities must provide information to the retailer indicating the products country of origin. If a retailer willfully violated this Section, they face a fine of not more than $10,000for each offense. Guidelines for the voluntary program must be issued not later than September 30, 2002, and regulations for the mandatory program must be promulgated not later than September 30, 2004.
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In the face of a lack of international standards for aquaculture, eco-labelling has become one of the methods that aquaculture operations and retailers can rely on to demonstrate to environmentally conscious consumers that a particular fish was raised and harvested in a sustainable manner. One such label is the Marine Stewardship Council (MSC). MSC has developed environmental standards and management practices for sustainable fishery operations (both wild and farmed). MSC has better recognition currently with those interviewed than any one particular certification body; however, at least part of MSCs funding comes from corporate stakeholders. This could call its integrity into question in the future. It has been adopted by a number of fish food retailers such as Whole Foods, Wegmans, and Whole Oats. It was beyond the scope of the current study to investigate the brand recognition of MSC among consumers.
6.
Industry Trends
The Aquaculture Association of Nova Scotia held its Conference and Annual General Meeting on January 23-24, 2004. Several of the conference sessions dealt with the report on farmed salmon from the University of Albany in New York. This report had documented higher levels of Polychlorinated biphenyls (PCBs) in farmed salmon than in their wild counterparts. Most of the attendees at the conference were producers, suppliers to the industry, government agencies, or media representatives. There were few buyers. Feed mill representatives were interested in the availability of certified organic inputs to feed. Two of the larger feed mills suggested that if there were market demand, they would like to be able to formulate a certified organic feed. One said that they have already begun investigating what would be required. Producers at the conference anticipate a demand developing for certified organic fish, but didn't see one currently. Some producers noted that buyers had asked them if they could obtain certified organic product (specifically salmon). At least one producer at the conference was interested in obtaining information about the certification process. The majority of those at the conference believed that the growth of organic certification in aquaculture would begin in niche markets until the public started to demand it in mainstream distribution channels. Others noted that North America would have to offer a certified organic option to customers if only in response to EU producers that are already offering it. One often mentioned trend was the increase in food safety regulations. Producers commented that as an industry they have developed rigorous systems that are grounded in science that are aimed in part at enhancing best management practices and in part to both protect the public and comply with federal and provincial regulations. The general feeling at the conference is that food safety regulations will only become more stringent in the future. The conference took place within days of the release of the Albany New York report that showed higher levels of PCBs in farmed fish. The large majority of conference attendees felt that the media coverage of the report was misleading and intended to create fear among members of the public. There was consensus among key industry stakeholders
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that media coverage of the aquaculture industry will continue to show it in an environmentally unfriendly light.
7.
Executive Interviews
A total of twenty interviews were completed from January 27 to March 4, 2004. These have been grouped into restaurant, producer, wholesaler, and grocery interviews. Restaurant Trade Interviews were conducted with two luxury restaurants (one in Boston, one in Halifax), one national restaurant supply company, and one catering firm for large events in Florida. Both restaurant chefs have purchased certified organic fish for their restaurants. The interviews suggested that restaurants are predominantly concerned with the quality of the fish they serve. While the price is an important part of the decision of which fish to buy, and from whom, it is not the case the restaurants will add a premium for certified organic products. Menus are in place for several months without change, so the ability to source a product over the medium and long-term is important. In the restaurant trade, customers only see a cooked product. For this reason, chefs are not overly concerned that an organic fish such as salmon might have a lighter colour than a wild or farm fish fed highly pigmented feed.4 The catering firm in Florida, which caters events such as the SuperBowl, air shows, and high-end corporate banquets, was very cost conscious. Much of the food at a catered event goes to waste without being touched. For this reason, caterers buy predominantly less expensive farmed fish. Their customers are more concerned with presentation and service than with product quality. The restaurant supply company felt that there would be a market for certified organic fish in some of their five star restaurants, but it was unlikely any chain restaurants would purchase it for the foreseeable future. Producers selling to the restaurant trade, either directly or through wholesalers should expect premiums of 10-20%. They should also expect that the volume of fish sold to be significantly less (e.g. 50-100 fillets per week). 10 lbs master cartons are the most common size. Chefs prefer to purchase fish from a variety of sources including, wholesalers, direct from producers, or from the local fish market. If producers opt to sell direct to chefs, they should expect to spend some time developing a relationship with the chef and the restaurant staff. Preferences between fresh and frozen varied among the chefs, but the restaurant supplier was only interested in frozen product.
Erik Hempel noted in Seafood International (November 2003) that trout, despite a lighter colour and higher price, is beginning to take market share from salmon, particularly in Europe.
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The interviews with the executive chefs suggested that when consumers eat in a luxury restaurant, they are buying not just the food; they are buying the atmosphere, the service and the overall dining experience. It is a given in the consumers mind that the food quality is beyond reproach (organic, wild or farmed). Restaurant patrons are not well informed about fish in general, or about organic fish in particular. Producers that want to sell directly to restaurants or to restaurant supply companies should expect to assist in the education process. Well-designed tent cards or menu inserts will help diners understand the product and stimulate trial. Many of the larger suppliers to restaurants require electronic data interfaces (EDI) of one kind or another. Producers Three producers were interviewed. They varied in size from a relatively small freshwater aquatic farm to one of the larger aquaculture operations. None of the producers interviewed are currently certified organic. All three believed that their customers understood the difference between wild and farmed fish, but that the term organic is clouded in confusion. The majority of their customers have no idea what the term means, while some think organic is synonymous with wild, and others think it means the fish were fed an antibiotic free feed. Larger producers sell their product predominantly in the U.S. market, although there is a significant export market to the EU and Japan. Producers sell to wholesalers, grocery stores and to larger restaurants through buyers groups. Smaller producers target restaurants and smaller wholesalers. Restaurant volumes tend to be 25-125 lbs of fish per restaurant per week. The smaller producers interviewed felt that organic certification would allow them to distinguish their product from larger producers and that it might allow them access to markets, that would normally require higher volumes than they could consistently deliver. One of the producers who currently sells product as natural and gets a premium of 25% believes he can get the same premium for a certified organic product. He is interested in organic certification in part because he isnt sure how long his natural-branded product will continue to get a premium as more and more organic product appears in the market from other countries. The larger producer was unsure of the financial viability of organic certification. It is going to investigate it, but currently doubted whether the price premium would offset the increased cost of feed. The 10 lbs tote was the most common size mentioned although one producer noted that he had some customers that preferred 20 lbs and 30 lbs master cartons. All those interviewed agreed that in North American, there is a belief that the darker the colour of a fish, the better the quality; this is particularly true of salmon. One producer commented that his Japanese customers regularly phone him and ask for more pigment to be added to the feed.
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One producer gave the examples of Idaho and Denmark where the only trout sold is nonpigmented. He suggested that while a paler fish might be a more difficult sale in the short-term, as the consumer becomes educated about organic standards, pale flesh might serve as the physical indicator of an organically raised fish and may begin to be perceived as the higher quality fish; however, he emphasized that this is a cultural change that will take place only over a long period of time. All producers agreed that national organic standards are a prerequisite for the niche market to develop. There was also unanimity on the need for an awareness campaign to educate the public. One of the producers suggested that industry stakeholders in smaller organic aquatic farms should consider pooling their resources and advertise in the National Restaurant Magazine and at the Boston Seafood Show, where Canada has a booth each year. This might help firm up executive chef commitment to their product. Processors Three interviews were conducted with buyers/processors, all within Nova Scotia. Two of these processors, Clearwater and D.B. Kenney Fisheries dealt primarily with wild catch. Neither of these processors were interested in organic product and believed that it would be many years before the consumer would prefer organically farmed fish over wild fish. Fishermans Market International indicated that a market might be developing but that it is currently below levels that processors servicing international markets would be interested in. Wholesalers Four interviews were conducted with stakeholders in the wholesale distribution channel. One of these was in Boston; two were in Nova Scotia, while the fourth was a sale agency located in Ontario. Wholesalers were open-minded to the idea of certified organic fish. All four believed that there would be small niche markets for organic fish. The Boston wholesaler, John Nagle Company, has already been approached for organic product and believes that there is a market for organic salmon now, but organic white fish could only be sold during the three-month period when there is no West Coast wild catch. Wholesalers also viewed the luxury restaurant market as being a potentially good market. Canadian Gold Seafood sells the majority of its product to EU countries and Japan and believes buyers in those markets would be interested in organic fish. All four wholesalers interviewed would be prepared to pay a premium for certified organic fish; however, there appeared to be consensus that the upper limit for retail pricing is $10 per pound; above that price and consumers will purchase prime beef. Premiums of 10-25% were offered, but wholesalers cautioned that premiums would be in relation to farmed fish and would be subject to usual market fluctuations. It was generally agreed that currently, organic fish would be unlikely to get a significant premium over wild fish.
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There were also concerns raised over certification standards. There was very little awareness of the different certification bodies, but it was generally the case that wholesalers would expect the producer to have organic certification that was beyond reproach on an international basis. Each wholesaler was different in terms of the amount of fresh versus frozen product they carried. This was also true for their preferences in master carton sizes and for the weekly volumes of organic fish they would be interested in carrying. Volumes ranged from hundreds of pounds per week in the case of organic white fish, to thousands of pounds per week in the case of organic salmon. Wholesalers expect high quality and consistent supply. In the case of organic product, they would also expect some degree of support in marketing. Producers should not expect wholesalers to explain what organic certification means to their customers. The sales agency in Ontario, which represents the U.S. Catfish Institute, suggested that there is strength in numbers and that smaller aquatic farms would benefit from selling under a single brand. This would provide them with greater market access and make them more difficult to supplant from markets they obtained. He also suggested that a cooperative approach to promotions, events marketing and taste testings should be considered when targeting the grocery distribution channel. Grocery Five interviews were conducted with grocery stores. There was a mix of U.S. and Canadian, as well as mainstream and natural stores. One of the interviews was with one of the largest Canadian suppliers to the natural food industry. The grocery industry showed the most fluctuation in opinion, particularly between mainstream grocery chains and the natural food distribution channel. There were differences between Canada and the U.S. but they were largely in terms of degree not direction. Canadian grocery distributors have been implementing centralized purchasing policies and requiring stricter and more integrated financial and food safety protocols of its suppliers. Most U.S. chains have had these in place for some time. Atlantic Canadian food distributors were far more inclined to want a frozen product, primarily because of concerns over spoilage due to lower or unpredictable sales volumes.
Mainstream Grocers
Sobeys, one of the largest grocery store chains in Atlantic Canada, indicated that it believes there is currently no market for certified organic fish in the region. The perception is that consumers in Atlantic Canada have a long-standing connection with the fisheries industry and that it would be difficult to change their belief that no product could be more organic than wild caught fish. The price premium for organic fish was also seen as a major hurdle. The chain concurred with the Atlantic Canadian producers view that there was a $10/lbs ceiling for fish. Harris Teeter, a chain representing over 140 stores from North Carolina to Florida, also believed that consumer demand for certified organic fish has not yet reached the level necessary to be considered viable within the U.S. Southeast.
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Whole Foods, a chain of over 175 natural food stores, is best characterized as a mainstream grocery distributor. Whole Foods distinguishes itself from the other mainstream chains by its level of awareness of natural products, but it has vertically integrated its buying, particularly of its seafood products, in much the same way that other mainstream distributors have. Both Whole Foods and Harris Teeter have committed themselves to internal environmental and quality assurance programs. Whole Foods has also invested time and corporate energy in promoting the Marine Stewardship Council certification of its products and doesnt see the need for organic certification. In the U.S. it is more common for Canadian producers to sell to grocery store chains through wholesalers. Despite that fact it is still possible for grocery stores to differ significantly in their method of purchasing. Harris Teeter has a list of pre-approved wholesalers from which the managers of their individual Fishermans Market can buy directly. This is in marked contrast to Whole Foods, which has arrangements with a number of commercial vessels that fish exclusively for Whole Foods. The fish is then processed at one of three Whole Foods plants in Georgia, Washington or Massachusetts.
Natural Food Market
The smaller natural health food stores across Canada purchase both direct from primary producers as well as through distributors that specialize in natural and organic products. These retailers and wholesalers have an advanced knowledge of certification standards and of the consumer market to which these products appeal. Ontario Natural Food Cooperative is one of Canadas larger distributors of organic products to the natural food retail market. It has only recently added fish to its catalogue (September 2003), but it has experienced strong demand for both its natural and certified organic fish5. It now carries twelve SKUs (Stock Keeping Units) for fish and hopes to expand the category offering. The preferred product is a three-quarter pound frozen steak or fillet. Producers that are looking at this type of distribution channel should ensure that their product is bar coded, comes in standardized weights, and has a well-documented certification audit trail.6 Great Ocean Natural Food Store is the leading outlet in Atlantic Canada devoted to natural and organic products. As is common among consumers of natural food stores, Great Oceans customers read labels thoroughly and have a high capacity for distinguishing between organic, free-range7, natural, antibiotic free, and sustainable products. Great Ocean gets a premium for both organic and free-range fish.8
Premiums for natural were in the 10-25% range, while premiums for certified organic products were in the 25-50% range. 6 An audit trail is what a certification body requires of producers to allow consumers to track a purchased product back to the farm where it was raised and to the food it was fed. 7 Wild fish is sold as free-range to be consistent with the stores non-certified organic freerange poultry and beef. 8 Concerns over PCBs in farmed raised salmon have had a significant impact on its sale. While premiums of 20% could still be realized on free-range trout, free-range salmon had to be
March 2004
Producers looking at the natural food distribution channel should concentrate on packaging and branding their product for a particular type of consumer. The consumers that frequent this distribution channel have higher levels of disposable income. They also have a higher tendency to make social and political statements with their purchasing dollars than the average consumer. There is also an opportunity to supply the natural food market with ready-to-eat fish products. The brand should tell an honest and simple story and accurately detail the certification practices. Producers should also have attractive packaging, but avoid over packaging. Feed Mills Interviews were conducted with two feed mills located in Atlantic Canada, Skretting and Corey Aquafeeds. Both feed mills indicated that if their customers were willing to pay for the increased cost of a certified organic feed, they would willingly develop a formulation. The actual cost of the feed would be dependent upon the rigor of the organic standards. In fact feed costs would potentially have to factor in the cost of the ingredients, purging of systems, natural pigment, duplicate storage, cleaning, paper work, and certification fees One of the concerns is parallel production. There are as many as 25 one-thousand-tonne containers of ingredients in a feed mill. If concerns over cross contamination of organic and non-organic ingredients required the virtual duplication of warehousing facilities, feed costs could end up being prohibitive. Parallel production is not just a concern in the production of the feed. Organic fish would have to be raised throughout the year in the same way and at the same time as conventional fish so that organic feed production wouldnt start and stop. This would enable feed mills to contract with local producers of certified organic wheat and soybean a year in advance; however, it would be a logistical hurdle for aquaculture operations. Minimum run sizes would also be dependent upon the standards. If the standards required the complete shut down of the mill and the cleaning of all equipment, this would only be affordable if larger organic product runs were put through the system, or if the standards would find a mere purging of the system with organic product acceptable. Representatives from both mills indicated that customers had asked them if they could develop a formulation; however, to date, neither has received an order. The time required to develop an organic formulation would also be dependent upon the standards. If the standards allow the use of fish oils, it would not take long for mills to develop a formulation; however, if the organic formulation was required to be vegetarian, it could take several years of research and development. Skretting believes that both the mills and the producers could expect a premium for their products. Its efforts to investigate an organic feed formulation extend to sourcing the necessary materials. Skretting has looked at at least two sources of natural pigmentation
marked down to sell. Great Ocean also sells a certified organic smoked salmon from Great Britain at a price per portion that works out to over $45/lb.
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that might be acceptable in an organic formulation, one from algae and another from flower petals. Skretting has also looked for and found a source of certified organic wheat within the Maritimes.
8.
On-line Interviewing
A short (6 question) on-line interview9 was broadcast by email on February 26, 2004 to 250 people in the fisheries industry in North America, Europe and Oceania. The email addresses were obtained from a list of attendees at the First Joint Trans-Atlantic Fisheries Technology Conference in Reykjavik, Iceland 11-14 June 2003. A total of 40 respondents completed the questionnaire by March 1. Respondents were from Canada (10), Denmark (6), Germany (2), Iceland (4), Ireland (2), New Zealand (2), Norway (6), Spain (2), Sweden (2), UK (2), and USA (2). The results showed that: 95% of those that participated indicated that they believed there was a market for certified organic fish. Price premiums for certified organic fish over wild fish ranged from 6.5% 17.5%. Relative to farmed fish, participants felt certified organic fish could expect premiums ranging from 13.3% - 22.6%. 60% of the participants were unable to name a single organic certification body.
The complete results are available in Appendix C.
9.
Market Opportunities
The retail market for certified organic fish is in its infancy in North America. There has been measured demand both within B.C.10 and Ontario; however, it is at a level that is only beginning to interest wholesalers, and therefore it has interested larger aquaculture operations only in terms of gathering information about the process. There is product appearing in the natural food distribution channel that is being supplied by European producers. Within Atlantic Canada, demand exists only at a limited number of restaurants and at natural food stores that specialize in organic products, but there appears to be niche markets developing just outside the region, in urban areas where there are higher concentrations of disposable income.
9 On-line surveys are subject to self-selection bias. They are not random and should not be projected onto the general population or even onto the population from which they were sampled. 10 Nathan Pelletier, from the Aquaculture Development Branch of B.C.s Ministry of Agriculture, Food and Fisheries, noted in Trends in Aquaculture that the governments market research found that similar to other agricultural products, there is growing consumer demand for organic aquaculture products and that a number of commercial finfish and shellfish farmers are interested providing product to these markets.
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Restaurants There is an opportunity to supply higher-end restaurants in both Canada and the United States. Restaurants in Canada can be approached either directly or through restaurant supply companies. In the U.S. effort should concentrate on selling product to wholesalers that supply both restaurants and restaurant buying groups. Professionally printed information pieces should be produced that help restaurants and chefs promote the product to their patrons. Premiums can be expected in the 10-25% area. Producers should anticipate that different restaurants would have different product preferences for frozen, fresh, filleted and whole product. There may also be an opportunity to sell the same restaurant a variety of species. In most cases, producers will find that it is the chef that makes the purchasing decision. While restaurants may have wide variation in need, producers can expect average sales of between 25-125 lbs per week of product. Restaurants are similar to other distribution channels in terms of their need for consistency of supply. The restaurant market for organic fish will initially be limited to urban areas where there are a large, but finite number of restaurants. As additional producers sell into the same urban area, there will be downward pressure on the price. Additional downward pressure should be expected as organic fish becomes more mainstream and becomes available in local markets and grocery stores. Producers should also anticipate a competitive response from non-certified producers that defend their market share of the restaurant trade by offering preferential pricing or more attractive, and possibly all-inclusive delivery agreements. Wholesale Wholesalers are beginning to experience demand for organic fish. The demand is primarily for organically raised salmon, but there will be opportunities to sell wholesalers farmed fresh water fish or marine species whenever wild stock is unavailable. Initial demand is expected to come from larger restaurants and restaurant buying groups, although the natural food chains have become a considerable buying power and may purchase organic fresh water fish even when wild stock is available. Wholesale demand will increase substantially as demand shifts to the retail grocery market; however, large aquaculture operations can be expected to have begun raising organic fish by that time and the smaller aquatic farms may actually find that their market access shrinks unless they have developed a promoted strong brand presence. Wholesalers will require 48-hour delivery, internationally recognized organic certification, promotional literature, a competitive price and a consistent supply. There is an exception to the need for consistency of supply. The opportunity to supply white fish in general, and halibut in particular, between December and February, when the wild fisheries is closed, will require coordination with wholesalers and feed mills. It was outside the scope of the current project to determine what strains a strong threemonth market would place on a year round organic production system.
March 2004
Premiums can be expected in the 10-25% range over farmed fish. These premiums should be on the upper end of the range while demand exceeds supply. This may mean that the white fish opportunity on the West Coast is a lucrative market on an annual basis. This particular market needs further investigation.
10. Organic Certification Versus Natural Label

The difference in demand for organic product at mainstream and natural food markets cannot be attributed to higher levels of disposable income; both Whole Foods and Harris Teeter in the U.S. are frequented by customers with higher family incomes. It is also difficult to explain it in terms of a higher social and environmental concern among customers of natural food stores; Whole Foods carries a wide variety of organic products and its customers traditionally would be considered natural food customers, and yet there has been virtually no demand for a certified organic alternatives at either Whole Foods or Harris Teeter. It is possible that both the mainstream and natural food markets may be open to an ecolabel such as MSC certified. While organic standards for livestock list a number of additional principles, the motivation for consumers to purchase certified organic is primarily four fold: It assures consumers that the producer gets a reasonable return; It ensures the meat is raised in an environmentally sustainable way; It ensures consumers that the meat they purchase is free of synthetic material, antibiotics, and genetically modified organisms; and, It assures consumers that the animal was raised humanely.
It was outside the scope of this study to determine which of these motivators are necessary and sufficient to provide consumers with a level of comfort when making their decision to purchase fish. If consumers main concerns with aquaculture revolve around environmental issues, the MSC certification program may be sufficient to obtain a premium. A more detailed investigation of consumer awareness of the MSC logo and standards is advisable. Such a study should also determine whether the animal cruelty motivator toward organic livestock transfers to fish. There is evidence that it does.11 It is likely that in the short-term future, MSC and organic certified fish products will coexist on store shelves. Future studies should determine the degree to which organic products take share from MSC certified products and vice versa. The MSC certification is likely to be easier to comply with than the final organic standard from the point of view
11
The dolphin friendly logo has had an impact on consumer buying habits. In 1990, a U.S. consumer boycott of Heinz, in protest against the 100,000 dolphins killed and injured each year in 'purse-sein' fishing nets used to catch tuna, forced Heinz to take action. Later that year, the company announced they would no longer accept tuna caught in nets that kill dolphins and adopted a dolphin friendly logo campaign, prompting other companies to follow suit. Dolphin deaths have decreased by 97% since 1990.
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of producers and processors. Furthermore, recognition of the MSC logo doesnt suffer from the confusion that organic certification logos suffer from. Organic certification has a distinct advantage over MSC certification. Organic certification bodies are not reliant upon corporate sustenance. Integrity is the basis of consumer confidence in any regulatory or monitoring system. If consumers doubt the integrity, the premium will disappear. Wholesalers should be cautious of carrying natural products, particularly if they also sell wild catch. Premiums associated with the natural product are being realized, sometimes in the same range as organic products; however, product may be slow to move next to wild product. As demand from organically minded consumers increases so will the clarity of the distinctions between the terms natural, wild, and organic. Premiums for natural product may diminish or disappear altogether. There is currently no international accepted organic standard for aquaculture or aquatic farming; however, a standard can be expected in the coming years if not months. Despite the lack of an international standard for aquaculture, the international community has organic standards for other agri-food products as well as an international infrastructure for verification and monitoring. Producers may decide in the absence of an organic standard to comply with an ecological standard such as MSC and subsequently, after an internationally recognized organic standard has been accepted, seek certification for it, either in addition to or instead of the MSC certification.
11. Implications
1. There are a number of niche markets that small-scale aquatic farmers could access. These include higher-end restaurants, natural food markets, and seasonal wholesalers that service regional markets lacking wild catch. 2. Organic certification will distinguish aquatic farms from both large and small conventional aquaculture operations and potentially provide market access. 3. Aquatic farms will require some form of cooperation in order to service the increasing demand for certified organic fish products in the wholesale distribution channel. 4. As demand begins to shift toward mainstream grocery stores, aquatic farmers should anticipate larger aquaculture operations entering the market and competing for the wholesale market. If aquatic farms havent collectively branded and promoted their products, they will find maintaining wholesale market access difficult. 5. Aquatic farms that set up within the same urban marketing region should expect to co-operate or see a reduction in price. 6. Organic certification is not fundamentally necessary to the aquatic farm; however, without it, those farms may be supplanted in their market by those who choose to seek organic certification or by larger suppliers that can provide better pricing or delivery terms.
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7. Organic aquatic farms will need assistance in developing farming methods. Water management, species-specific husbandry and marketing advice will be particularly important in the initial start up phase. The managers of non-certified organic farms will need to familiarize themselves with existing organic standards for agriculture and develop a conversion plan. 8. Organic aquatic farmers and feed mills will need research to identify appropriate feed formulations, crop densities, and species diversity for organic production. 9. Foreign producers have begun to target Canadian retailers for organic fish products. 10. Diversified family farms may see financial benefits if they include aquatic farming in their mixed operations.
12. Recommended Next Steps

The following recommendations are aimed at assisting with the development of organic aquatic farming. 1. Aquatic Farm Inventory: Develop an inventory of existing aquatic farm operations in Canada. The inventory should include a GIS mapping component to allow efficient regional interpretation of the data. The inventory should list data specific to the farm (Location, structures, water resources), the livestock (fish, poultry, swine, beef), the marketing channels employed, and the end market serviced. As well, this data source could enhance understanding of wastewater considerations on the farm. The marketing data should be general to maximize compliance (e.g., wholesaler, restaurant, grocery). It should also be related to the GIS system. This will enable aquatic farmers, investors and government support workers to anticipate sales volume by geographic market and help prevent oversupply and downward price pressure. The inventory should be maintained over time so that profiles of successful operators can be developed. This will enable the inclusion of aquatic farming into the Benchmark for Success program under the Renewal pillar of the APF. 2. Research & Training Facility There will be a significant need for scientific research that pertains specifically to organic aquatic farming. One example would be research into feeds and probiotics and their efficacy on livestock health relative to antibiotics. Internationally there are many publicly and privately funded aquaculture associations and institutes that have developed and published a large body of quality literature; however, these have focussed on the needs of the conventional marine operations. There is no clear agreement among international organic certifying bodies about what final standards will look like. In fact, some organic standards may prohibit some marine based aquaculture from organic certification altogether. Whether or not large marine based aquaculture operations are certifiable, small organic aquatic farms will
March 2004
have unique research and training needs including feed rations, new species development, densities, and water management in an organic system. These needs are best met by locally based facilities that can offer both wet lab and onfarm trials where training can take place. Because of its unique proximity to the research resources at the Nova Scotia Agricultural College and the number of food and water scientists it has as tenants, AgriTECH Park could help facilitate public and private partnerships. The Park is also home to AgraPoint International, which has an organic and rural infrastructure specialist; their involvement could help keep the research focussed on its applicability to family farms. In keeping with the Science and Innovation pillar of the APF, these facilities should be located where a climate of innovation can be created. The market for organic fish by all wholesaler accounts, both within Canada and abroad, is a premium market. The goals for these research centres should be to facilitate the success of the aquatic farming industry and to mentor those within the industry that show innovation in species development, production practices and in marketing initiative.12 The facilities could also conduct valuable research into best management practices for organic production and measure the impact of organic aquatic farms on their surrounding environment. This research would help organic certification bodies in grounding the standards in science. This is in keeping with the Environment pillar of the APF. 3. National Market Study The current study was an initial survey of the market within Atlantic Canada. Both its scope and depth were limited to a number of key stakeholders in some key industry roles. The results suggest that there may be stronger markets further west both within Canada and the United States. This should be confirmed. In addition, it would be valuable to know consumers fish preferences within each of the markets across Canada. This will be particularly true of the restaurant market. This information should be currently available from industry sources, but it should be compiled and added to the geographic inventory. The study should conduct interviews with producers, wholesalers, natural food stores, grocery store chains and restaurants in both larger and smaller urban areas in each of the provinces. The producer interviews should identify any human resource issues that could be a barrier to entry. They should also determine producers willingness to cooperate in both branding and marketing initiatives as well as their understanding of organic standards.
12
Science and innovation are the cornerstone of efforts to make the Canadian agriculture and agri-food sector the world leader in food safety, innovation and environmentally responsible production and to support its future success and prosperity. (Federal-Provincial-Territorial Framework Agreement on Agricultural and Agri-Food Policy for the Twenty-First Century May 2003) Page 25
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Consideration should be given to increasing the revenue of aquatic farms by exploring the revenue opportunities of aquatic plants. This could be explored in the interviews with retailers and restaurant chefs. 4. Communication and Marketing Strategy There will be a need for on-going communication between producers, government, research facilities, feed mills, wholesalers, the restaurant trade and consumers. Existing aquatic farms will have limited awareness of organic standards. Existing livestock farms that are determined to be good candidates for aquatic farming will have limited awareness of both organic standards and aquatic farming protocols. Both these groups must have the risks and opportunities clearly explained to them. Specialized production and marketing reports such as those issued by Statistics Canada (VISTA Organic Fruit and Vegetable Production: Is it for you?) will also help producers determine for themselves if they are suitable candidates for organic aquatic farming. Research facilities must be made aware of producers research, human resources and informational needs. These needs will change over time. In addition, as research results become available, there needs to be an organized process for getting them in the hands of producers and investors so that commercial advantage can be realized. Marketing strategies need to be developed for both individual aquatic farms and for those that form regionally based buying and selling groups.13 Each of these will have different needs, markets and resources. Initiatives should focus on the primary target markets: executive chefs and wholesalers. Chefs can be best targeted through the Canadian Culinary Federation, which is having its 41st annual conference in Charlottetown, June 8-13, 2004. The federation has a Certified Chef de Cuisine program, which is administered by the Canadian Culinary Institute. The industry should maintain contact with executive chefs and sponsor events with the federation to promote its products. The federation has chapters across the country so individual aquatic farms can maintain contact in close proximity to its market. Advertising to chefs through trade publications will not be effective until such time as branded products are available for national distribution. Wholesalers are best reached through the Boston Seafood Show. The federal government has a booth at the show each year and could facilitate the presence of aquatic farmers and their products. If value added or ready-to-eat products are developed, natural food trade shows are best suited to showcasing product launches. Government programs that assist
13
According to Statistics Canadas VISTA report in September 2002 (Catalogue # 21-004-XPB) because the market for organic products in Canada is not well defined, it is essential that producers develop marketing plans for their products. Choice of product, geographic location and the quality of the marketing plan are all factors in the premium consumers will pay for an organic product over a conventional one.
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processors attend these events and possibly enter the export market should be communicated to producers.
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13. Appendix A Bibliography

A&L Goodbody. August 1, 2003: Legal News and Publications. Irish Seafood Cracks US Market in Largest Organic Seafood Deal in Irish History. Bell, Ian. December 29, 2003: The Western Producer Magazine. DFAIT. May 2003: Canadas International Market Priorities. DFAIT. October 2003: Fish and Seafood Sector Profile in Germany. DFAIT. May, 2003: Market Study Japan. DFAIT. May, 2003: Market Study Republic of Korea. . DFAIT. October, 2003: The Fish and Seafood Market in France. Falklands-Malvinas. December 28, 2003: Chile Prepares For Halibut Farming. FAO. 2002: Review of Organic Aquaculture. Current Status and Future Prospects. Hanson, Gregory D. September 27, 1996: Consumer Profiles in Fish Marketing. U.S. Trout Farmers Association 43rd Annual Meeting. Tannersville, PA. Hempel, Erik. November 2003: Seafood International. Trout A Serious Challenge to Salmon. IFOAM. August, 2002: Basic Standards for Organic Production and Processing. Infoexpert Canada: The Mid Atlantic US Market. Document ID 28706. Khan, Stephen. January 18, 2004: Scotland editor, The Observer. Sunday Edition. Parson, William. September 2002. VISTA: On the Agri-Food Industry and the Farm Community. Organic Fruit and Vegetable Production: Is it for You? Pelletier, Nathan. June, 2003: Market Trends in Aquaculture. http://www.certifiedorganic.bc.ca/rcbtoa/services/aquaculture-standards.html Pulsifer Associates. 1999: Marketing Opportunities: Export of Atlantic Canadian Organic Produce to New England. The Independent (UK) December 7, 2003: Tighter Rules for Organic Fish Farms.
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14. Appendix B Certification Bodies For Organic Aquaculture

Asia Europe ACT (Thailand) Biokreis, Bioland, Demeter, Naturland (Germany) BIOSUISSE (Switzerland) DEBIO (Norway) ERNTE (Austria) KRAV (Sweden) QCI (Italy) SOIL (UK) TN (Iceland) North America FOG (USA) FVO (USA) NOFA Massachusetts (USA) Oceania BFA (Australia) BIOGRO (New Zealand) NASAA (Australia) In addition, France, the United Kingdom and Australia have national standards for organic aquaculture. In the US, Indiana and Iowa have their own state standards. IFOAM adopted a set of draft standards in August, 2002; however, these standards have not yet been ratified.
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15. Appendix C On-Line Survey Results

Total Respondents 40 NA 12 EU 26 Producer 8 Government 18 University 20
1. Do you believe there is a market for certified organic fish?

Total Yes 95% NA 100% EU 93% Producer 100% Government 89% University 94%
2. What degree of price premium would you expect to pay for certified organic fish over a similar species of wild or farmed fish.
Premium over Wild Fish Farmed Fish Total 11.4% 17.9% NA 17.5% 20.8% EU 8.6% 16.6% Producer 13.8% 17.5% Government 6.5% 13.3% University 11.2% 22.6%
3. Which of the following categories describe your involvement in the aquaculture industry? Check as many as apply. Producer 20% Government 45% Education 50% 4. Are your annual sales greater than 25 tons? (8 Producers Only) Greater than 25 tons 4 25 tons or less 2 Did not answer 2 5. Which of the following species do you farm? (8 Producers Only) Perch (0) Charr (0) Salmon (4) Cod (0) Tilapia (2) Flounder (0) Trout (2) Haddock (2) Other (4) Halibut (2) 6. Can you name an organic certification body that has developed standards for aquatic farms? (All respondents)
Certifying Bodies Dont know NOSB * EU Body ** Total 60% 5% 35% NA 67% 17% 17% EU 57% 0% 43% Producer 50% 0% 50% Government 67% 11% 22% University 60% 0% 40%
* National Organic Standards Board (USA) ** (AENOR, DEBIO, GAA, KRAV, Naturland, Scottish Fish Farmers Association, UK Soil Association)
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16. Appendix D List of Companies Interviewed

The following is a list of those companies that were interviewed during the course of the study. Canadian Gold Seafood Company Enfield, Nova Scotia Clearwater Fine Foods Bedford, Nova Scotia Cooke Aquaculture St. George, New Brunswick Corey Aquafeeds Fredericton, New Brunswick D. B. Kenney Fisheries Briar Island, Nova Scotia Delta Barrington Hotel Halifax, Nova Scotia Fishermans Market International Halifax, Nova Scotia Great Ocean Natural Food Market Halifax, Nova Scotia Grill 23 Boston, Massachusetts Harris Teeter Raleigh, North Carolina Indian Point Marine Farm Mahone Bay, Nova Scotia John Nagle Company Boston, Massachusetts Joy Wallace Catering Miami, Florida Ken Berger Sales Company Thornhill, Ontario Ontario Natural Food Cooperative Etobicoke, Ontario Scotian Halibut Halifax, Nova Scotia Skretting St. Andrews, New Brunswick Sobeys Stellarton, Nova Scotia Sysco Food Services Lakeside, Nova Scotia Whole Foods Market Gloucester, Massachusetts
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Market Assessment Study
17. Appendix E Terms and Acronyms

The following terms and acronyms were used in this report: Terms Aquaculture operation (production of 50 tonnes or more) Aquatic farm (production of 25-50 tonnes) Small-scale aquatic farm (production of 15-25 tonnes) Acronyms APF (Agricultural Policy Framework) DFAIT (Department of foreign affairs and international trade) EDI (Electronic Data Interface) EIGT (Emerald Isle Global Trading) EU (European Union) FDA (Food and Drug Administration) FLO (Fairtrade Labelling Organizations) GIS (Geographic Information System) HACCP (Hazard Analysis and Critical Control Points) HMR (Home Meal Replacement) JAS (Japanese Agricultural Standards) MSC (Marine Stewardship Council) mt (Metric Tonne) NSAC (Nova Scotia Agricultural College) SKU (Shop Keeping Unit)
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FINAL REPORT Market Assessment Study of Organic White Fish For AgriTECH Park Inc.

AgriTECH Park Market Assessment Study

Prepared by: Advocate Communications Group

AgriTECH Park Market Assessment Study

10. 11. 12. 13. 14. 15. 16. 17.

Prepared by: Advocate Communications Group

AgriTECH Park Market Assessment Study

Prepared by: Advocate Communications Group

AgriTECH Park Market Assessment Study

Prepared by: Advocate Communications Group

AgriTECH Park Market Assessment Study

Prepared by: Advocate Communications Group

AgriTECH Park Market Assessment Study

Prepared by: Advocate Communications Group

AgriTECH Park Market Assessment Study

AgriTECH Park Market Assessment Study

Prepared by: Advocate Communications Group

AgriTECH Park Market Assessment Study

AgriTECH Park Market Assessment Study

Prepared by: Advocate Communications Group

AgriTECH Park Market Assessment Study

Prepared by: Advocate Communications Group

AgriTECH Park Market Assessment Study

AgriTECH Park Market Assessment Study

Prepared by: Advocate Communications Group

AgriTECH Park Market Assessment Study

AgriTECH Park Market Assessment Study

Prepared by: Advocate Communications Group

AgriTECH Park Market Assessment Study

Prepared by: Advocate Communications Group

AgriTECH Park Market Assessment Study

AgriTECH Park Market Assessment Study

AgriTECH Park Market Assessment Study

The complete results are available in Appendix C.

AgriTECH Park Market Assessment Study

AgriTECH Park Market Assessment Study

10. Organic Certification Versus Natural Label

Prepared by: Advocate Communications Group

AgriTECH Park Market Assessment Study

Prepared by: Advocate Communications Group

AgriTECH Park Market Assessment Study

12. Recommended Next Steps

AgriTECH Park Market Assessment Study

Prepared by: Advocate Communications Group

AgriTECH Park Market Assessment Study

Prepared by: Advocate Communications Group

AgriTECH Park Market Assessment Study

Prepared by: Advocate Communications Group

AgriTECH Park Market Assessment Study

13. Appendix A Bibliography

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AgriTECH Park Market Assessment Study

14. Appendix B Certification Bodies For Organic Aquaculture

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AgriTECH Park Market Assessment Study

15. Appendix C On-Line Survey Results

1. Do you believe there is a market for certified organic fish?

Prepared by: Advocate Communications Group

Market Assessment Study

16. Appendix D List of Companies Interviewed

Prepared by: Advocate Communications Group

Market Assessment Study

17. Appendix E Terms and Acronyms