Making Sound Investment Decisions in Aquaculture

Investing in aquaculture can be risky.  As in traditional forms of animal husbandry, aquaculture operations are becoming increasingly intensive to enhance productivity, efficiency and competitiveness.  Greater intensity, however, also introduces a corresponding increase in operational risk.  Nevertheless, many aquaculture ventures successfully produce high-quality products at a reasonable cost in a sustainable manner.  A comprehensive understanding of risk awareness and business management are fundamental in such successful operations.  Upon closer examination, these are reflected in the design and operation of these ventures – and they are often absent in those that are less successful.

As an investor or lender to the sector, however, it is often difficult to evaluate the degree of risk in a given project based on a prospectus or business plan.  Moreover, when asked to invest additional money into a venture for expansion or to re-finance a weak cash flow position, the prospect of “throwing good money after bad” inevitably arises.  How can an investor be assured that the “problems” which caused the current situation have been identified and corrected?  It has been said that “If you always do what you always did, you’ll always get what you always got!”

In the attempt to secure financing, business plans tend to highlight the potential benefits of a project while suggesting that the risks are known and manageable.  As an investor, therefore, how do you make an informed decision?  Moreover, the range of culture species, the diversity of culture techniques and the rapid pace of technological development within the sector compound the challenge, making it difficult to apply a generic evaluation tool.  Canadian Aquaculture Systems, Inc. (CAS) can facilitate the review process to help lenders and investors address this challenge.  Founded in 1984, CAS is a professional firm providing services pertaining to the design, development, productivity and competitiveness of commercial aquaculture operations.  CAS also provides services to governments in relation to policy analysis, program planning and feasibility studies.

CAS has experience and expertise in conducting comprehensive evaluations of aquaculture ventures.  These “operational reviews” typically are conducted on behalf of investors, lenders and/or government lending/granting agencies to evaluate the soundness of a business plan or to identify challenges in operating ventures.  In either case, our objective is to evaluate the overall quality of the investment and identify means to enhance productivity and performance.  Our operational review process is applicable to a variety of culture systems and species, and provides a comprehensive and integrated assessment of biological, technological, managerial, governance, financial, market and regulatory factors.


Systems Species
  • Flow-Through Life Support Systems
  • Salmon / Steelhead / Trout
  • Recirculation / Re-use (RAS)
  • Arctic Charr
  • Marine/Freshwater "Bag" Systems
  • Tilapia
  • Land-Based Culture Systems
  • Halibut / Pompano / Yellowtail
  • Cage Culture Systems
  • Walleye / Sturgeon
  • Hatcheries to Grow-out
  • Conch / Shellfish
  • Aquaponics
  • Shrimp / Prawns / Crayfish


Aquaculture is agriculture; hence, the biological requirements and performance of the culture organisms are paramount.  When considering the biological aspects of a business plan or an operating venture, CAS evaluates:

  • The culture environment (water quality, temperature profile, seasonal issues, etc.);
  • Production capacity;
  • Bio-productivity and industry norms (growth rate, feed conversion, mortality, etc.);
  • Stock / strain comparisons;
  • Fish health management records;
  • Operational strategies (feeding, handling, grading, inventory management, etc.); and
  • Biosecurity protocol.

CAS develops comprehensive production models based on farm management inputs including water temperature, rearing density, cage/tank numbers and volumes, and stock characteristics for expected growth and mortality rates to project the number and weight of fish that can be successfully reared in the facility.  The model is an essential management tool, enabling planning for the scheduling and size requirements for fingerling purchases, projecting feed consumption and scheduling, and maintaining production schedules to yield fish of the required size and quality.



The fundamental life support systems for fish and shellfish in intensive culture systems depend on efficient and effective technologies.  When considering the technological aspects of a business plan or an operating venture, CAS evaluates:

  • All aspects of facility design;
  • Hydraulics (water supply systems) and water exchange rates;
  • Oxygenation capacity and efficiency;
  • Dissolved gas management (CO2, N, etc.);
  • Pumping systems and efficiency;
  • Filtration and water reconditioning processes;
  • Effluent management systems; and
  • Emergency back-up and alarm systems.

Based on our evaluations, CAS prepares detailed reports to outline the efficiency and effectiveness of operations and to identify the economic costs associated with existing and alternative technologies for meeting production targets.



In any venture, the role of management is to maximize productivity and performance while minimizing shareholder risk.  Management is perhaps the single largest factor governing productivity, and yet a detailed assessment of the functional role of managers is often neglected in the review and assessment of business plans.  Unfortunately, such shortcomings are usually quick to emerge once the venture is operational.  When considering the managerial aspects of a business plan or an operating venture, CAS evaluates:

  • Record-keeping & reporting (information management);
  • The design and implementation of operational routines (daily, weekly, monthly, seasonal);
  • Historical decision-making; and
  • Employee training and skills sets.

CAS can provide effective schedules for daily, weekly, monthly and seasonal tasks designed to establish operational routines and minimize risk.  The collection and reporting of essential operational data are central to the routines and provide managers with essential information to support informed decision-making.  Simple models and charts facilitate computerized information management and provide meaningful feedback to employees and managers.  CAS can also recommend curricula for skills upgrading and can arrange for practical training on-site or via distance education.



Among industries, aquaculture is somewhat unique in that resource allocation during the formative years is almost exclusively directed toward enhancement of production systems, regardless of species.  Efforts to increase capacity and productivity generally dominate the agenda of aquaculture management.  Productivity, however, is only one component of planning for success.  Moreover, many aquaculturists define productivity as technical feasibility and then assume that this also translates into financial viability.  Comparatively little effort is directed toward business management functions, such as cost control, financial budgeting, cash flow management, marketing, organizational structure, etc.  As a result, effective business management practices are often not developed until they become essential for the continued existence of an organization.  When considering the financial aspects of a business plan or an operating venture, CAS evaluates:

  • Cost-volume-profit analysis;
  • Financial controls, statements and cash flow position;
  • Key liquidity, asset management, debt management and profitability ratios;
    • Financial and operating leverage;
    • Sensitivity analysis; and
    • Insurance coverage and claims.

CAS provides comprehensive business planning services, including the preparation of capital budgets and 5-year monthly pro forma statements for income, cash flow and balance sheets.  For operating ventures, CAS also engages in creditor relations and debt re-profiling services.



An organization requires the right skills at the governance table to be successful.  Board members, apart from financial expertise, must have the necessary expertise to critique/advise on all areas of an organization’s operations, including any proposed change in direction for the organization into new geographic or business markets, any gravitation to new technology, new pressures in the legislative pipeline, etc.  A portion of the Board should be composed of persons independent of the organization.  With proper governance in place, the chances of having a successful result are greatly improved.  When considering the corporate governance aspects of a business plan or an operating venture, CAS evaluates:

  • Governance policies, structures and processes;
  • The skills and expertise of Board members;
  • The culture of the Board of Directors; and
  • The relationship between Management and the Board.

CAS can assist with the definition of proper governance policies, structures and processes for the venture.  These will be tailored to minimize impediments to growth while still maintaining proper controls.  CAS can also facilitate the original sourcing of board members and, through workshops, we can help with the creation of the necessary culture.  CAS can also serve in an advisory capacity to Boards of Directors of aquaculture companies, bringing an experienced and objective perspective to the decision-making table.


Markets & Marketing

For the most part, aquaculture ventures are part of the North American food production system and hence must be competitive with other foodstuffs to secure a share of “stomach space.”  When considering the marketing aspects of a business plan or an operating venture, CAS evaluates:

  • Industry & consumer trends;
  • Price stability / volatility;
  • Food safety issues; and
  • International trade issues and non-tariff barriers.

CAS can provide market scanning reports and market strategies to enhance the competitiveness of aquaculture operations.


Legislation & Regulations

Aquaculture is governed by a complex federal / provincial regulatory framework that requires developers to obtain a number of permits, licenses and/or authorizations.  When considering the legislative and regulatory aspects of a business plan or an operating venture, CAS evaluates:

  • Licence, permit and authorization requirements; and
  • Compliance standards for the venture.

CAS can also compile the necessary permit / licence applications on behalf of aquaculture clients and facilitate meetings between industry and government agencies.