Rob Saunders, Island Scallops | BCBusiness

Rob Saunders, Island Scallops | BCBusiness
Marine biologist and CEO of Island Scallops Ltd. Rob Saunders.

B.C.’s aquaculture industry is flowing in the right direction for entrepreneurs such as Rob Saunders, as global demand for seafood rises while wild supply falls. But the industry’s success as a global player is precariously balanced upon stringent regulatory controls that can drown the whole thing

Rob Saunders, marine biologist and CEO of Island Scallops Ltd., balances on a narrow wooden plank over one of several man-made ponds at his hatchery in Qualicum Beach, mid-Vancouver Island. Saunders, a youthful 60 years old, is like a kid in a candy shop as he pulls up clumps of artificial seaweed holding almost microscopic scallops. He shows me where geoduck, oyster and clam seeds are growing in adjoining ponds and barks a few orders to his 16-year-old son, who is digging a ditch nearby. “He has to start at the bottom, doing odd jobs,” Saunders says with a wink and a grin.

Saunders is typical of entrepreneurs in B.C.’s rapidly expanding shellfish aquaculture industry, who would appear to be in the right place at the right time. Global demand for seafood is rising and wild supply is falling, so the world is increasingly looking to aquaculture, and B.C. shellfish aquaculture in particular is increasingly attractive to investors for a number of reasons. First of all, the province is known for its clean water, and the local industry has the added bonus of a comprehensive tracking system that responds to consumers wanting to know exactly where their food comes from. But more importantly, new techniques and technologies offer enticing possibilities for increasingly efficient operations and an expanding array of specialty products.

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Island Scallops hatchery in Qualicum Beach
is famous for producing a hybrid scallop the
size of a hockey puck.

According to the B.C. provincial government, the wholesale value of the farmed shellfish harvest in B.C. rose to $32.5 million in 2010, from $28.3 million in 2008 and $20 million about 10 years ago. B.C. is home to about 500 shellfish farms employing approximately 1,000 people full-time, not including spinoff industries.

Saunders, who has 45 full-time employees, takes me over to the oyster pond and makes adjustments to a FLUPSY, or “floating upweller system.” Two rows of water wheels are feeding nutrient-rich seawater to about 10 million oyster seeds. Ninety per cent of these two-millimetre seeds will be sold to oyster growers, and anywhere from 50 to 70 per cent of those will make it to market, depending on the shellfish farmers and mother nature.

Island Scallops, which has been in operation since 1989, is now famous for producing the hybrid Qualicum Beach Scallop, which is about the size of a hockey puck and is featured on many B.C. restaurant menus. Over the years, Saunders has also produced 15 different species, including marine fish, invertebrates and marine algae. Now, in addition to supplying other growers with geoduck clam, mussel and scallop seed stock, his main business is producing scallops for retail consumption.

Fanny Bay Oysters, a large Vancouver Island shellfish farming company, acts as an international distributor for local producers, and Island Scallops sells about three million Qualicum Beach Scallops (bringing $2.5 million in revenue to Island Scallops) to a U.S. distributor through Fanny Bay. “It’s a good relationship because besides selling seed stock to shellfish farmers, we’re a one-trick pony—just selling scallops—and Fanny Bay Oysters has established customers already buying their oysters and other products,” Saunders explains.

Like many of his colleagues in the emerging industry, Saunders is as much a researcher as a business entrepreneur. Among his many projects, he’s currently working with the Department of Fisheries and Oceans (DFO) to breed strains of oysters, scallops and mussels that can withstand higher concentrations of carbon dioxide in seawater. As if that doesn’t keep him busy enough, Saunders is most enthusiastic about his work with the Nile Creek Enhancement Society. For the past four years, he has been helping the society replenish beds of bull kelp in the Georgia Straight, with promising results. “We are trying to get the ecosystem back to where it was,” says Saunders. “Bull kelp produces a huge amount of nutrients for all marine life, from abalone to salmon.”
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He and his colleagues have even figured out a way to remove excess carbon dioxide from the seawater. “Increasingly we are seeing high mortality in the scallop hatchery due to ocean acidification, which affects the shell and growth of larvae,” Saunders explains. The more cabon dioxide is pumped into the ocean, the higher the acidity, and a lower pH balance spells more toxic algae. “Of course we can’t change the ocean’s pH balance, but we can control it in the hatchery,” he explains, likening this carbon-dioxide removal to furiously shaking a pop bottle then releasing the cap, degassing all the carbon dioxide. Saunders and other scientists are also working with several farmers in their struggle with the forces of nature—namely toxic blooms and increasingly acidic oceans—by breeding stronger brood stock and putting larger seed in the ocean.

Five years ago, when Saunders approached the Cape Mudge band (We Wai Kai Nation), the band had looked at several employment opportunities and saw little hope for commercial fishing. “Rob [Saunders] told us that the waters of Sutil Channel would be the best place to grow scallops, which happens to be part of the band’s territory and in front of one of the reserves,” says Shawn O’Connor, general manager of We Wai Kai Seafood Corp. Today the We Wai Kai Nation has more than three million scallops growing on its 85-hectare sea farm and employs eight people full-time and several part-time at its processing plant on Quadra Island. This year they expect to harvest 400,000 scallops.

The band plans to grow the business, not only by expanding scallop production, but by diversifying into other species. It is working with Vancouver Island University (VIU) in Nanaimo to develop a commercial cultivation of cockles, with local sales and the U.K. as target markets. O’Connor says some cockles are ready for harvest, but the band hasn’t yet amended its scallop license to include cockles. “Eventually we want to have several multi-species farms, including species such as sea cucumbers,” he explains.

Stephen Cross, CEO of SEA Vision Group Inc., is another scientist/entrepreneur who has built and operates a pilot-scale multi-species aquaculture farm in Kyuquot Sound on Vancouver Island. Cross and his firm hold a commercial license for 11 species, making his the first aquaculture farm of its kind in Canada. Cross says a multi-species, ecological design could vastly improve the environmental performance of single-species operations that are currently typical of most coastal aquaculture. Cross’s Sustainable Ecological Aquaculture system (which he has dubbed SEAfood) is designed to mimic the way animals grow in nature, with filter feeders, such as oysters, scallops and mussels, catching fine organic particles as they drift downstream, and sea cucumbers feeding on the larger organic solids that settle onto the seafloor. Dissolved nutrients, meanwhile, are taken up by seaweeds and kelp, producing additional commercially viable products.

Cross believes his SEAfood system could provide a big boost to B.C. shellfish farming. He now has a license for scallops, oysters, mussels, cockles, sea urchins, sea cucumbers and kelp. He predicts that a multi-species farm could produce 500 tonnes of sablefish, 75 tonnes of oysters and scallops and 15 tonnes of kelp a year, once they have been fully built and stocked. So far, his vision remains in the planning stages: “Our business plan is to fully commercialize our first SEAfood farm and then to build an additional three in the same region of the coast, which will be our commercial production model/template for future expansion,” says Cross.

Developing multi-species aquaculture farming could open up new markets for B.C. seafood. The bottom-feeding sea cucumber, for example, was considered inedible by North Americans until recently, but for thousands of years it has been valued by the Chinese for its medicinal properties. Some processed and dried sea cucumbers sell in China for hundreds of dollars a pound, depending on the grade. Here in B.C., the price for sea cucumber has jumped from six dollars to eight dollars a pound in the past year, and the sea cucumber may soon be a viable export.

Although China and Indonesia have been farming the sea cucumber for many years, Brian Kingzett, a marine biologist and manager of the VIU Deep Bay Marine Field Station, believes that B.C. can crack the market with this unlikely critter. “Globally, sea cucumbers have been over-fished, and China doesn’t have the ability to produce and meet the demand,” says Kingzett. “Due to our food safety and proximity to Asian markets, the Chinese would like to do business over here and we could export well over a million pounds a year, just for starters.”
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Since 1989, Island Scallops had produced 15 different species, including marine fish, invertebrates and marine algae.

A number of shellfish farmers, including the We Wai Kai Nation, have proposals in the works to employ the “ecosystem” approach in order to grow the bottom-feeding sea cucumbers under their farms. The VIU Deep Bay Marine Field Station is looking at the economic, social and environmental benefits of harvesting and processing the sea cuke. “We are trying to grow them in the hatchery. This is our first year,” says Kingzett.

Right now, researchers in B.C. can grow and harvest sea cucumber, but Matthew Wright, communications manager for the B.C. Shellfish Grower’s Association, says that before farmers can harvest them they need the green light from three levels of government: local, provincial and federal. That means a lot of paperwork for shellfish farmers and that’s slowing them down. Particular barriers in bringing sea cukes to market, shellfish farmers say, include a delay in processing farm-site amendments and delays in issuing new licenses.

Kingzett is concerned that Canadian regulations will slowdown development of sea cucumber farming and the opportunity could be snapped up by other countries. But do it right, he says, and B.C. has the ability to play in the global market.

He explains that B.C. shellfish farmers can’t compete with cheap producers overseas because of our relatively high labour costs and our stringent regulatory controls, which stem at least partially from public controversy over farmed salmon. That makes the production of high-value seafood, such as the sea cucumber and geoduck, all the more important to the local shellfish industry.

Nowhere is the increasing demand for specialty shellfish more apparent than in the growing popularity of local oysters. Gone are the days when blissfully ignorant consumers might be offered a generic oyster as a novelty menu item. Restaurants specializing in oysters today offer dozens of varieties, and new oyster bars pop up regularly. Wholesale distributors no longer fill truckloads with no-name, one-size-fits-all product, but meet the demand for specialty varieties of small oysters for half-shell appetizers, medium oysters for consumers looking for a barbecue delicacy, and larger varieties for export to the Asian market.

In an effort to help suppliers keep up with demand, the VIU Deep Bay Marine Field Station is developing new varieties by essentially rebirthing the native Olympia oyster. This oyster was plentiful in the late 1800s, but it doesn’t reproduce in large numbers, and pulp mill effluent was its death blow. In the Salish Sea they are functionally extinct. Kingzett’s station group is working with U.S. groups and waiting for funding. “We were excited to see 1.4 million Ostrea lurida larvae this week,” says Kingzett. “That’s not a lot of larvae for a Pacific oyster, which can produce well over 100 million eggs each, but they’re good numbers for Olympia oysters.”

Down the road from Island Scallops at Odyssey Shellfish Ltd., a tumbling machine knocks oysters around to chip off the thin growing edge, forcing them to grow into a deep cup, which helps create the plump and sweet Kusshi—Japanese for “precious” oyster. Changing the shape of the shell can also change the oyster’s flavour. With the tumbling machine, shellfish farmers or “growers” can design and cultivate a product the consumer wants.

“We have five tumblers and grading and sorting machines. We’re growing about six million oysters per year,” says owner Keith Reid. Many of these started out at Island Scallops.

Yves Perreault harvests about a half-million Little Wing cocktail oysters a year near Lund. He believes there is lot of potential in an expanding market, but you have to work at it and have the right tools—and know how to apply for government assistance. Reid and Perreault both have machines for sorting and grading, bought with some help from the DFO. “We sort the oysters as they’re growing, and when they’re ready for market we run them through a computerized optical vision grader that can grade 200 oysters per minute,” says Reid.

Perreault sells the Little Wing cocktail oysters for $3.75 a dozen. He explains that oysters can double in size in three to five weeks. “When they are small, it’s easy to lose them. I start about 70,000 juvenile oysters in a litre jug. They are smaller than a grain of pepper,” he says.

Perreault also notes that the more you look after the oyster, the better the quality. In the industry, there’s a new emphasis on “merroir,” a relatively new word that describes the ocean-site conditions, just as “terroir” describes a wine grape’s soil. The same oyster species might have a different taste, depending on the water it is grown in.
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Added to the challenges of navigating government regulations and procedures, and the technical difficulties of shellfish aquaculture, these pioneering shellfish farmers face a considerable obstacle in public perception. This is at least in part because the DFO, which has overseen the industry since 2009, recently grouped shellfish aquaculture in the same category as finfish farmers, says Wright.

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“We have such a struggle getting the right message out to the public about shellfish aquaculture, and one reason is because when the public thinks of aquaculture they think ‘fish farms,’ and we’re completely different from that industry. We rear our animals from the hatchery stage and grow them out in the ocean, period. There’s no feed or antibiotics; the shellfish naturally grow in the water until they’re harvested,” he says.

He points out that while farmed and penned fish are fed and generate waste, most bivalves feed themselves, and oysters—bless them—help clean up the environment; their main talent is filtering nitrogen.

Perhaps the biggest wild card in the prospects of B.C.’s shellfish aquaculture industry rests in the hands of the federal government. Driven by its mandate to protect Canadian marine habitats, the DFO moves very cautiously, and to anyone concerned with the environment, moving slowly is a good thing when it involves potential changes to the marine environment. Investors, however, are not necessarily as patient.

China, for example, is a prime export market for farmed shellfish, and importers there are itching to get their hands on B.C. product.

“Chinese investors see this untapped potential and opportunity,” says Kingzett, “but they have to keep in mind that we do things differently here—we move slowly.”

Despite his respect for the DFO’s caution, Kingzett’s frustration is apparent: “On the one hand, the DFO is trying to help us,” he says, “and on the other hand it is curtailing any business opportunities. It says we can’t take any more product from our oceans. Right now the federal budget is gutting the DFO to an operational paralysis.” He adds that B.C.’s pioneering work on fostering a sea cucumber fishery “is smack in the middle” of the fed’s cutbacks.

The federal government announced in July 2012 that it cut R&D funding to the VIU research station by one-third. However, the DFO says that each year since 2009 it has provided funds through the Aquaculture Innovation and Market Access Program for farmed shellfish and other aquaculture projects in B.C. A maximum budget of $4.5 million in DFO contribution funds is expected to be available annually to support innovation initiatives, and a maximum of $200,000 total (not per grant application) in DFO contribution funds is expected to be available annually to support market access initiatives for all types of aquaculture, including marine finfish, shellfish and freshwater.

Hollie Wood (her real name) carries two buckets of oysters—from a patch of about 800 dozen—about 15 metres down her leased beach on Denman Island to the low-tide line. It’ll soon be feeding time. Wood, age 38 and mother of two, is a Denman Island native. She and Greg, her husband, started working in the industry at Fanny Bay Oysters on Vancouver Island as a summer job when they were in university.

In 1996, Wood, Greg and several other oyster farmers submitted a bid to the government and bought their first water lease. They created a company, aptly called Hollie Wood Oysters, and had 40 rafts that suspended oysters in deep water. One year later, the group bought a beach lease, which costs about $100,000 and is good for 25 years. “We aren’t talking prime real estate here—it isn’t property, it’s a business to be worked,” she explains.

Wood continued to work part-time at Fanny Bay Oysters and Greg stayed in school until three years ago, when Hollie Wood Oysters became their sole income.

It’s hard work. Moving oysters is back-breaking and time is limited because of tides. However, since they bought a tumbling machine to shape the oyster, their work has become more efficient: the Zen oyster lives its entire life in deep water, like Reid’s Kusshi oyster. The medium-sized Denman Island Satori, and her namesake, the honking big Hollie Wood oyster, also start out on the raft, but they are moved to the beach for 40 to 50 days (the longer they stay on the beach, the bigger the oyster) before going to market.

Wood’s phone rings, and she takes an order for Satoris from a chef in Victoria. “Chefs prefer oysters finished on the beach because the shells are easier to shuck—they don’t splinter like our Zen, but many people prefer the sweeter taste of the Zen,” she explains.

Wood points out Keith Reid’s raft to the south, where his Kusshi oysters are growing. Directly across Baynes Sound is Fanny Bay Oyster Farm. Island Scallops boats are working close by. We are surrounded by one of the biggest oyster-producing areas in the world. Wood points out an eagle so close we can see the white of its eyes, its sharp talons.

“Not a bad office, eh?” she says.