TEXAS-SIZED DREAM ON VERGE OF SUC­CESS

Af­ter 17 years and mil­lions of dol­lars spent, new tech­nol­ogy may keep Nat­u­ralShrimp afloat

San Antonio Express-News (Sunday) - - Business Sunday - By Lynn Bre­zosky STAFF WRITER

LA­COSTE — It was a Texas-sized shrimp dream, to breed tasty crus­taceans far from shore but close to trans­porta­tion hubs that would speed fresh seafood to swanky restau­rants as far away as New York or Las Ve­gas.

But for 17 years and de­spite mil­lions of dol­lars in trial-and-er­ror in­vest­ment, Dal­las-based Nat­u­ralShrimp kept en­coun­ter­ing the same ob­sta­cles that have be­dev­iled sim­i­lar ef­forts across the globe: The shrimp kept get­ting sick. Dev­as­tat­ing bac­te­rial out­breaks in its clos­ed­loop in­door farm­ing sys­tem and other set­backs left the com­pany with a cu­mu­la­tive $34 mil­lion deficit.

Now the Texas aqua­farm­ers’ for­tunes may be about to change. Five weeks ago, Nat­u­ralShrimp be­gan putting its patent-pend­ing vib­rio-sup­pres­sion tech­nol­ogy — es­sen­tially us­ing elec­tri­cal cur­rents to keep bac­te­ria at bay — to the test in a 65,000gal­lon tank at its pi­lot pro­duc­tion farm a half-hour south­west of San An­to­nio.

The first crop of tiny post­lar­val shrimp, translu­cent

save for black eyes and di­ges­tive tracts, took to the sys­tem on July 3 and so far are still healthy and grow­ing. It typ­i­cally takes 24 weeks for shrimp to grow to mar­ket size.

“What you see here will rev­o­lu­tion­ize in­door aquatic species, and not just shrimp,” pre­dicted Ger­ald Easter­ling, one of Nat­u­ralShrimp’s three co-founders.

That could have im­pli­ca­tions for a world­wide aqua­cul­ture in­dus­try es­ti­mated at more than $163 bil­lion.

In Amer­ica shrimp is the top-sell­ing seafood, and farm­ing it is big busi­ness. Shrimp pro­duc­tion in Texas peaked in 2003 with 9 mil­lion pounds val­ued at ap­prox­i­mately $18 mil­lion, ac­cord­ing to an anal­y­sis by aqua­cul­ture con­sul­tant Granvil Treece. Pro­duc­tion then de­clined un­til 2011, and has since sta­bi­lized to about 2.5 mil­lion to 2.9 mil­lion pounds per year. In 2016, Texas shrimp farms took in about $8.3 mil­lion.

Treece said one prob­lem is the young shrimp of­ten don’t sur­vive the trans­port and ac­cli­ma­tion to man­made en­vi­ron­ments. Fewer than half make it to mar­ket. Bow­ers, which op­er­ates the state’s largest farm near Matagorda Bay, had the state’s high­est sur­vival rate of 54 per­cent.

The in­dus­try here also has strug­gled of late from a short­age of shrimp lar­vae. Rock­port’s Global Blue Tech­nolo­gies, a ma­jor sup­plier, got hit hard by Hur­ri­cane Har­vey and for now is con­cen­trat­ing on sell­ing ma­ture shrimp as breed­ers. An­other key sup­plier, Florida’s Shrimp Im­prove­ment Sys­tems, was sold to an In­done­sian com­pany that moved hatch­ery op­er­a­tions to Hawaii.

Texas farms are re­spond­ing by grow­ing fewer shrimp and hold­ing back adults to next year try to pro­duce their own lar­vae.

Even with the re­duced yields, Texas raises more shrimp than any other state.

As­sum­ing the vib­rio-sup­pres­sion tech­nol­ogy helps main­tain a healthy crop, Easter­ling said he has buy­ers lined up for Nat­u­ralShrimp’s lo­cally raised, an­tibi­otic-free, nev­er­frozen prod­uct.

“We have chefs in the Dal­las area that have tasted the shrimp, and they can’t wait for more,” he said. “On the mar­ket­ing side it’s not an is­sue. We just need to grow shrimp.”

Glob­ally, In­dia has be­come the lead­ing ex­porter of farmed shrimp, fol­lowed by Ecuador, Thai­land, Indonesia and China. But vi­ral and bac­te­rial out­breaks have made suc­cess hit or miss.

A 1999 dis­ease out­break in Ecuador nearly wiped out that na­tion’s shrimp farm in­dus­try as well as some 100,000 jobs. The farms have re­bounded. But for 2016, Mex­ico’s losses to dis­ease and pre­ma­ture har­vest off­set what would have been a strong year for Latin Amer­i­can pro­duc­tion.

Shrimp farms have typ­i­cally been lo­cated near sea­wa­ter to al­low an ample source of ready­made habi­tat for growth.

Once preda­tor fish are fil­tered out, as many as 150,000 baby shrimp per acre are in­tro­duced to ponds en­riched with food and sup­ple­ments con­tain­ing phy­to­plank­ton and zoo­plank­ton. Wa­ter is aer­ated with pad­dle wheels, and tem­per­a­ture and oxy­gen lev­els are checked through­out the day. To pre­vent dis­ease out­breaks, pro­duc­ers have learned to more lightly stock ponds and use pro­bi­otics to help neu­tral­ize bad bac­te­ria with good bac­te­ria.

“What hap­pens is some­times your bad bac­te­ria will over­come your good bac­te­ria and so by us­ing the pro­bi­otics they’re giv­ing the edge now to the good bac­te­ria,” said Robert Adami, coastal fish­eries bi­ol­o­gist for the Texas Parks and Wildlife De­part­ment.

That neu­tral­iza­tion is the strat­egy be­hind biofloc, which has be­come the pre­mier wa­ter­fil­tra­tion method for in­door shrimp farms.

But af­ter six years and $15 mil­lion, Nat­u­ralShrimp’s lead­ers con­cluded biofloc didn’t meet the needs of their high­den­sity busi­ness plan.

One week­end, Nat­u­ralShrimp pro­duc­tion man­ager Mike Pineda would har­vest 1,000 pounds. A week later it would be only 40. The cur­rent goal for the Me­d­ina County fa­cil­ity is 4,000 pounds a month, but once the fa­cil­ity is built out the com­pany is hop­ing for 7,000 pounds each week.

“The en­closed aqua­cul­ture sys­tem is the way of the fu­ture,” Easter­ling said. “It’s how can you get den­sity? How can you get re­turn on in­vest­ment?

That’s what it’s all about.”

Treece, the in­dus­try con­sul­tant based in Lam­pasas, said dis­ease out­breaks have for the most part sunk in­land farm­ing ven­tures.

“Us­ing the same wa­ter and not be­ing able to clean it prop­erly and keep the dis­eases out, that’s been the ma­jor hur­dle for all of them,” he said.

It hap­pened as far back as 1978, he said, when King James Shrimp in­su­lated a Chicago ware­house and stacked race­ways, or wa­ter-flow sys­tems, six lev­els high. A virus showed up, and since all six lev­els were us­ing the same wa­ter the en­tire crop suc­cumbed.

“You can’t just go pick any­where and start grow­ing shrimp,” Treece said. “I talk to peo­ple about it al­most daily. I talked to a guy in Canada that called me yes­ter­day. He’s in Mon­treal and he’s try­ing a garage-type sit­u­a­tion up there, and if it works he’s go­ing to ex­pand it. So peo­ple try it ev­ery­where.”

Treece said he is skep­ti­cal about Nat­u­ralShrimp’s lat­est ef­fort.

“They’ve been around prob­a­bly 20 years, try­ing it, try­ing it and bor­row­ing money,” he said.

Nat­u­ralShrimp is a pub­licly traded penny stock with a his­tory that goes back to 2001, when ac­cord­ing to cor­po­rate fil­ings the com­pany be­gan re­search and de­vel­op­ment into a “high den­sity, nat­u­ral aqua­cul­ture sys­tem that is not dependent on ocean wa­ter to pro­vide qual­ity, fresh shrimp ev­ery week, 52 weeks a year.”

“We started with a 200-gal­lon tank in my base­ment and then we moved to a ware­house and then we moved up here,” said Tom Un­ter­meyer, an elec­tri­cal en­gi­neer who serves as the com­pany’s chief tech­nol­ogy of­fi­cer. Both Easter­ling and Bill Wil­liams, the third co-founder, have back­grounds in high­tech­nol­ogy food vend­ing.

They’ve con­tin­ued to court in­vestors — the land the Me­d­ina County op­er­a­tion sits on was pur­chased for stock — tout­ing aqua­cul­ture as the wave of the fu­ture as the world’s pop­u­la­tion grows and wild fish­eries are in­creas­ingly de­pleted. Since most farms have just one or two har­vests a year, there’s lim­ited ac­cess to fresh shrimp.

Even wild-caught shrimp are some­times frozen on board shrimp boats that re­main at sea for weeks at a time.

The farm-to-mar­ket trend in food also is a pos­i­tive fac­tor. Nat­u­ralShrimp buy­ers could be able to trace their prod­uct to a farm just a few hours away.

When Nat­u­ralShrimp has had har­vests, restau­rants have paid a pre­mium $12 a pound.

Other in­land farms failed be­cause they weren’t in it for the long haul, Easter­ling said.

“Other com­pa­nies come out and they’ll make big an­nounce­ments that they’re go­ing to pro­duce 100 tons a year shrimp pro­duc­tion or a mil­lion pounds a year shrimp pro­duc­tion,” he said dur­ing a tour of the Me­d­ina County plant, “and in about two years, three years most of them are gone.”

“What you see here will rev­o­lu­tion­ize in­door aquatic species, and not just shrimp. … We have chefs in the Dal­las area that have tasted the shrimp, and they can’t wait for more.” Ger­ald Easter­ling, one of Nat­u­ralShrimp Inc.’s three co-founders

Pho­tos by Josie Nor­ris / Staff pho­tog­ra­pher

Post-lar­val shrimp are be­ing grown at Nat­u­ralShrimp Inc.’s La­Coste fa­cil­ity. The com­pany cre­ated tech­nol­ogy that will al­low for mul­ti­ple in­land shrimp farms that could make it a ma­jor sup­plier of sus­tain­able shrimp.

Nat­u­ralShrimp built a salt­wa­ter tank to grow shimp at its La­Coste fa­cil­ity.Chief Tech­nol­ogy Of­fi­cer Tom Un­ter­meyer ex­plains the process to grow shrimp at an in­land farm.

Pho­tos by Josie Nor­ris / Staff pho­tog­ra­pher

Bub­bles form at the sur­face of Nat­u­ralShrimp’s tanks hold­ing salt wa­ter to grow shrimp. The com­pany hopes to be­come a ma­jor sup­plier of sus­tain­able shrimp as the global pop­u­la­tion grows and oceans con­tinue to be over­fished.

Michael Pineda scoops out shrimp from one of the com­pany’s tanks.

Nat­u­ralShrimp Pres­i­dent Ger­ald Easter­ling cracks a smile dur­ing a tour of the La­Coste fa­cil­ity. He said other in­land farms failed be­cause they weren’t in it for the long haul.

Pineda’s mo­tor­cy­cle trailer is a rolling ad­ver­tise­ment for Nat­u­ralShrimp.

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