$20m abalone farm boosts Craig Mostyn’s stable

 $20m abalone farm boosts Craig Mostyn’s stable

 

The Jade Tiger acquisition will take Craig Mostyn’s live abalone exports to about 800 tonnes a year, servicing the Hong Kong, China, Japan and Singapore markets. . Photo: Bloomberg

Australian aquaculture operators are on the cusp of a potential boom but, with a poor record of success, they must be selective about which species they farm, an agribusiness leader has warned.

David Lock, the chief executive of West Australian agribusiness outfit Craig Mostyn, said Australia’s high cost of production meant seafood farmers had to focus on premium, luxury products, as well as provenance.

His comments came as Craig Mostyn bought an abalone farm on Victoria’s Bellarine Peninsula, about 100 kilometres west of Melbourne, in a deal worth about $20 million.

The acquisition of Jade Tiger Abalone followed Craig Mostyn buying two other abalone farms in Tasmania late last year and will account for about a quarter of the company’s seafood exports.

Aquaculture is expected to play a crucial role in meeting the growing global demand for fish. A United Nations report released last month, predicted seafood farming, by 2030, will account for 62 per cent of fish consumption.

But Mr Lock said takeover targets were difficult to find despite Australia having about 500 seafood farms.

‘‘I haven’t seen many fish aquaculture businesses that make sense. They are too expensive to produce and the product is too low value,’’ said Mr Lock, citing the Tasmanian salmon industry as an example.

‘‘Most other aquaculture in Australia struggles because of our cost of production. And that’s why we like the abalone because firstly, it is an export business and secondly, it’s high value, so cost of production plays a lesser part as to whether it’s competitive or not.’’

BOOST TO EXPORTS

The Jade Tiger acquisition will take Craig Mostyn’s live abalone exports to about 800 tonnes a year, servicing the Hong Kong, China, Japan and Singapore markets.

Mr Lock said the company began looking at Jade Tiger in January but soon got ‘‘distracted’’ by the fight for Western Australia’s biggest beef producer, which mining magnate Andrew Forrest bought for an estimated $30 million.

‘‘It was disappointing,’’ Mr Lock said about being outbid by Mr Forrest, who predicted demand for Australian beef to soar in similar manner to iron ore.

Mr Lock said Australia’s proximity to Asia gave local agriculture exporters an advantage over competitors in Brazil, Argentina, Canada and Denmark, capitalising on the region’s fast growing middle class was far from a done deal.

‘‘There is a great opportunity for Australia to grow its production to supply not only the domestic market but also the increasing export market.

‘‘But I think we need to be cautious that we are expensive producer, that we need to pick the products where we can sell on some basis other than price – whether it’s got traceability and certainty about what’s in the food, the food quality or some other attribute – that allows us to recover our costs of production.’’

EXPANSION PLANS

The $20 million Jade Tiger deal has been split between buying the brand and assets, and funding a three-year plan to double the the size of the farm, located at Indented Head.

Mr Lock declined to say how much Craig Mostyn paid for the farm itself.

He said 35 staff and management would be retained, with up to 20 more jobs created under the expansion plan, over three years. ‘‘‘One of the advantages of the Jade Tiger business is its science. It’s by far the most advanced [scientific operation] from a genetic breeding perspective.

“They have done a lot of work with CSIRO and they have developed a program that delivers much faster growing abalone and a particular hybrid of black and green lipped abalone.”

Mr Lock said opportunity existed to roll out these advances to other farms growing abalone.