Abalone farmer rides out red tide
• Operations at Hermanus-based abalone farming company disrupted as a third of its molluscs are killed off
Unlisted abalone farming venture Abagold, which is backed by public shareholders, has ridden out a ravaging red tide in the year to the end of June and is now investing heavily in production capacity for the new financial year.
Unlisted abalone farming venture Abagold, which is backed by public shareholders, has ridden out a ravaging red tide in 2017 to the end of June and is now investing heavily in production capacity for the new financial year.
Hermanus-based Abagold’s recently released annual report noted the company started the financial year strongly with record growth and sales numbers for the abalone business.
But in February a red tide event disrupted operations for what chairman Hennie van der Merwe described as a “harrowing six-week period”.
The red tide caused Abagold to lose R55m worth of animals, which was 30% of the abalone farm tonnage at that time.
Although unlisted, the performance of Abagold provides a point of comparison for JSElisted fishing counters with abalone farming exposure, most notably consumer brands giant AVI and Premier Fishing & Brands. Neither AVI nor Premier’s operations — located at Danger Point and Gansbaai in the Western Cape, respectively — were affected by the red tide.
There is also considerable interest in abalone farming or aquaculture ventures, which are not subject to the fishing rights allocation process.
At a recent investment presentation Oceana Group, the largest fishing enterprise in SA, expressed its determination to acquire aquaculture assets.
Abagold is a sizeable operation, even though its annual report showed a fall of 22 tonnes in abalone sales volume to 385 tonnes. Sales revenue was static at R188m. However, that figure included a R37.5m insurance claim for the red tide event.
Van der Merwe noted that the red tide caused growth on the farms to decline almost 35% to 262 tonnes from 402 tonnes in 2016.
Although there was steady market demand and Abagold was able to supply most of the demand through the Chinese new year, the momentum created was severely affected in the second half of the year by the red tide, he said.
“The pipeline has been materially prejudiced by the event and although a great deal of focus is directed at the efficient farming of the remainder of the pipeline, a large part of our resources and capital investment has been channelled to the hatchery to deliver the increased volume of spat [baby abalone] required to restock the operation as soon as possible.”
Van der Merwe noted that the red tide had prompted further expansion and capital investment in Abagold’s hatchery to more than double its capacity by end-December.
He said further expansion was planned for the new financial year.
“The consistent production of increased volumes of highquality spat to our farms is the essential basis for the recovery of our pipeline as well as for sustainable future production of abalone at appropriate levels.”
The hatchery remained the platform for the rest of Abagold’s operations to achieve growth targets, competitive feed conversion rates and cost efficiency, Van der Merwe said.
A LARGE PART OF OUR RESOURCES AND CAPITAL INVESTMENT HAS BEEN CHANNELLED TO THE HATCHERY