David Tze is the managing director of Aquacopia, a New York-based venture capital firm focused solely on investing in early-stage aquaculture companies. The firm has invested in both Searsmont, Maine-based Ocean Farm Technologies and Open Blue Sea Farms, which currently operates the largest offshore fish farm in the world nine miles off the north coast of Panama. I wrote about both these companies in my recent cover story in Mainebiz.
I contacted David because I am interested in what an investor thinks of offshore aquaculture's prospects in the United States. Here's what he has to say:
Q: What are the prospects of the domestic aquaculture industry in the United States? In general, and specifically in regards to offshore aquaculture?
A: One has only to look to our domestic agriculture industry to see the indications that there is enormous potential for aquaculture in the United States. Like agriculture, aquaculture is a capital intensive food production process based on the most fundamental of natural resources: space. In the USDA, we already have one of the world's best organizations supporting food production. Moreover, the American academy has, for decades, produced much of the best work in aquaculture science and technology development. Where we have been deadlocked is in the actual cultivation of large quantities of seafood. Leaving aside the challenges of land-based aquaculture, much of the fault lies with the jerry rigged regulatory framework that, by default, currently governs offshore aquaculture in state waters. This legacy patchwork of disparate agencies is confusing, irrational, unpredictable, scattered, and unnecessarily expensive.
Q: Have you been following H.R. 4363? To what extent do you think the lack of a federal regulatory process for permitting an offshore fish farm in the EEZ impacts the expansion of the offshore industry in the country? Is H.R. 4363 a move in the right direction?
A: The lack of solid regulatory processes for permitting offshore fish farms in state waters and the EEZ is the key obstacle blocking the cultivation of healthy, high quality seafood in and for the United States.
I put significant effort towards forwarding a prior, Senate incarnation of H.R. 4363, a few years ago. I was on a panel at the National Marine Aquaculture Summit and visited members of Congress and congressional staff to share my perspective, while versions of that bill were being drafted for subcommittee. In this iteration, I've largely given my proxy to the Oceans Stewards Institute. I serve on the group's board of directors. As a group, we are actively engaging on H.R. 4363.
Per our website, The Ocean Stewards Institute is "a trade organization advocating for the emerging open ocean aquaculture industry. Members include open ocean aquaculture, seafood trade and supporting industries. Affiliate membership is offered to interested individuals and parties in government agencies, academia, NGOs and the media." Our Mission is to "To represent and work towards the best use and management of the open oceans, meeting the increasing demand for healthful seafood, through appropriate balancing of the expansion of environmentally sound open ocean aquaculture, with protection of open ocean resources and habitats."
In essence, we think that H.R. 4363 is a start, but should be improved in several essential ways before it becomes law. A more nuanced account may be had from Neil Sims, our chairman.
Q: Is it a case where investors and entrepreneurs are ready to go, but are scared away by the uncertainty (but certainly litigious process) of permitting an offshore farm? Or, are the economics just not there yet, so that even if there was a federal regulatory process put in place tomorrow it would still be several years before there was any movement on that front?
A: Some investors and entrepreneurs are ready to go, but, they are the exceptions. By analogy, football teams don't form or practice for the big game when there are no published rules, no referees, and no league. It will take time and positive feedback for awareness to develop on any real scale. Awareness will accelerate into interest. Then, broad interest will develop into readiness by investors and entrepreneurs. It's a chicken and egg problem. The cycle of inaction must, first, be escaped by creating a reasonable permitting process.
Originally posted to The New Aquaculture on Wednesday, January 27, 2010.
All SeafoodSource blogs >
