San Antonio Express-News (Sunday)
TEXAS-SIZED DREAM ON VERGE OF SUCCESS
After 17 years and millions of dollars spent, new technology may keep NaturalShrimp afloat
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