Manitoba - Canadian Model Aqua-Farm Initiative (MB-CMAF) Mid-Project Progress Report

Table of contents

• 1.0 Introduction
• 2.0 Key Aspects of the Project
  • 2.1 Project Delay
  • 2.2 Farm Construction
  • 2.3 Budget & Cost Over-Runs
• 3.0 Project Perspective

1.0 Introduction

Expansion within the Canadian freshwater aquaculture sector is dependent upon development and implementation of a strategic approach to generate the knowledge, technologies and practices to improve the environmental and economic performance of land-based ventures. Development of a ‘model farm’ program is a priority initiative in the 3rd Action Plan of the Interprovincial Partnership for Sustainable Freshwater Aquaculture Development in Canada (IPSFAD). The ‘Canadian Model Aqua-Farm’ is intended to be a production unit that effectively integrates the most current technologies in terms of (i) nutrition and feeding strategy, (ii) fish health management, (iii) design of infrastructure and equipment, (iv) water conservation and utility; (v) manure processing and management, (vi) production management and (vii) operational practices and standards to maximize both financial and environmental performance. The Manitoba - Canadian Model Aqua-Farm Initiative comprises the development and construction of a state-of-the-art commercial land-based freshwater aquaculture production system intended to establish norms and baseline standards pertaining to the biological, technological, financial and environmental sustainability of aquaculture. The venture will be heavily monitored to document the economic and environmental performance of the design, leading toward a ‘turn-key’ freshwater aquaculture operation that will catalyze the development of a sustainable freshwater aquaculture industry in Canada.

A principal concept underlying the expansion of freshwater aquaculture in Canada is utilization of vacant agricultural buildings; namely hog and horse barns. The Canadian Model Aqua-Farm is intended to fit within such buildings. The principal structure in the facility is a modified, D-ended raceway that incorporates the water reconditioning systems within the footprint of the unit. A plan has been developed to produce 130 metric tonnes of rainbow trout annually in a modular recirculating facility. Production of 840 to 950-gram fish within approximately 11 to 12 months of stocking fingerlings has been targeted. The intensive recirculation system will use only 227 Lpm of make-up water (99% recirculation).

Financial projections indicated that an investment of $942,000 was required to launch the 130-tonne per year venture; $693,000 for capital equipment (i.e. tanks, water filtration equipment, pumps, fish culture equipment, etc.) plus $249,000 for working capital (i.e. feed, fingerling purchases and other operating expenses). In addition to these costs, it was anticipated that the project proponent would have available latent infrastructure to contribute to the venture, including an agricultural building of suitable size with an adequate power supply, an existing water supply (well), manure storage facilities, etc. The latter are considered to be sunk costs contributed to the operation. Although some of this infrastructure was not in place at the Reimer farm (e.g. main water supply well for the fish farm, sufficient manure storage capacity, barn insulation), it was recognized and understood that the Reimers would make these additional investments toward the project. 

2.0 Key Aspects of the Project

2.1 Project Delay

An integral component of the MB-CMAF initiative is a comprehensive 2-year performance monitoring program intended to quantify production, environmental and economic aspects of the venture to define baseline data for a benchmarking program.  IPSFAD applied to DFO’s Aquaculture Cooperative Research and Development Program to secure resources for monitoring.  The response from ACRDP was favourable, although only partial funding was provided ($28,000) due to budgetary limitations and other project commitments in FY 2009-10.  To keep the project on-track, IPSFAD approached NRC’s Industrial Research Assistance Program for the balance of funding.  After an encouraging initial meeting with two IRAP Industrial Technology Advisors at the Reimer’s farm in January 2009, it became apparent that IRAP funding would not be available in the 2009-10 fiscal year.  Officials from both IRAP and ACRDP have indicated that they have ample resources available in 2010-11 and beyond.  ACRDP in particular is supportive of the project and the ACRDP Project Review Committee has recommended funding.  Nevertheless, the inability to launch the monitoring program in 2009 forced a significant delay in the project as it was determined that it would be impractical to commence fish culture operations without the capacity to monitor the operation.

2.2 Farm Construction

The principal steps associated with the design and development of the MB-CMAF are outlined in the following chart. 

Winter / Spring 2009

• Preparation of barn including removal of all unnecessary structures and equipment, insulation, re-location of a large sliding door
• On-site meeting between MAFRI, DFO- AIMAP, WMT, IPSFAD, Project Recipient
• On-Site meeting with MB Hydro to consider upgrade to 3-phase power
• On-site meeting with NRC-IRAP to request funding for monitoring program
• On-site meeting with potential tank (concrete) contractors to review conceptual design

Summer 2009

• Final technical design revisions
• Preparation of engineered construction blueprints
• On-site meeting between MAFRI, IPSFAD, WMT, Project Recipient, MAFRI Engineers
• Solicitation of quotations from local contractors for tank construction and related works
• Preparation of final budget for water reconditioning systems from WMT, AZCO Industries, AirSep Corporation

Fall 2009

• Order equipment from WMT
• Excavate floor in barn to accommodate tank
• Hire contractor to build concrete tank

Winter 2010

• Construction of concrete tank and related water management infrastructure
• On-site meeting between MAFRI, IPSFAD, WMT, Project Recipient to review progress and address questions posed by contractors
• Excavation of manure storage lagoon and clear water storage pond
• Manufacture and deliver water reconditioning equipment; i.e. pumps, filters, biofiltration media, aeration grids, oxygenation and ozone equipment, etc.
• Installation of water reconditioning equipment

Spring 2010

• Initial system start-up and inoculation of biofilter (mid-April 2010)
• Initial stocking of fish (early May 2010)

Presently, the production tank is built and the water reconditioning equipment is being installed. The photographs and drawings on the following pages present an overview of the system and the construction process.

2.3 Budget & Cost Over-Runs

The capital budget for the project is underfunded by approximately $242,000. The principal reasons for this shortfall are as follows.

In July 2008, when the original application for funding was submitted to DFO's AIMAP program, the MB-CMAF project had a fixed capital budget of $618,819 and a working capital requirement of $233,181. At this time, the conceptual design was for a 120-tonne model farm facility with a fixed capital budget of $618,819. Subsequently, and after funding had been applied for from AIMAP and MAFRI, the model farm initiative was scaled-up to 130,800 tonnes per year - a 9% increase in scale. This change was made because the increased production could be accommodated within the same footprint with only modest increases operating densities and presented an opportunity to improve the financial performance of the venture. As a direct result, however, several key components also had to be scaled-up, including pumping (18,200 Lpm to 20,400 Lpm) and the required amount of biofiltration media (~117 m3 to ~133 m3).  This change in production capacity led to a $74,261 increase in the fixed capital budget for the project to $693,080. As well, it generated the need for an additional $15,739 in working capital (from $233,181 to $248,920). That is, the 9% increase in production capacity added $90,000 to the total cost of the project.

Upon securing quotations for the tank and equipment, and subsequently building the facility and installing the equipment, the actual capital cost for the venture was $49,687 greater than the amount budgeted, a 7.2% increase. In part, this is due to the addition of extra capital items (e.g. second set of sludge cones, micro-particle filter) and general increases in costs between the time of preparing the budget and the actual purchase of equipment (almost 2 years).

In addition to these cost increases, two other material changes to the overall financial scope of the project were encountered. The decision was taken to install a 3-phase electrical service at the farm. Although this will yield long-term economic benefits to the venture, it did present an additional up-front capital expense of $23,630. 

Even more significant was the need to excavate a retention pond to hold process water during the winter months. The Reimers had anticipated spending $25,000 to increase the size of their manure lagoon; however, they did not anticipate the necessity to install a clear water retention pond to store process effluent on-site during the winter months. This added $94,644 to the effluent treatment works, bringing the total cost to $119,644. During the planning stages of the project, the need to discharge process water during the winter months was flagged and, based on the projected water quality criteria for the effluent, MB Water Stewardship felt that effluent discharge to the provincial drainage systems would not pose a problem. Upon applying for a Discharge Permit, however, conditions imposed by MB Infrastructure & Transportation precluded winter discharge of process effluent out of concern that it would lead to frozen culverts and overland flooding. This necessitated construction of a large retention pond on the Reimer farm.

Although these two additional capital costs are not part of the project budget per se since they are infrastructure costs that the project proponent was to provide, they did add $118,274 to the Reimer's total investment and, in doing so, increased their financial leverage to the point that securing the necessary investment for working capital was compromised.  In summary, therefore, the capital budget for the MB-CMAF is under-funded by $242,222. 

3.0 Project Perspective

Despite the budget over-run and the considerable delay in project development, the project continues to advance. Moreover, there have been no material changes to the scope of the venture or to the anticipated outcomes and benefits associated with the Manitoba - Canadian Model Aqua-Farm initiative. In fact, interest continues to grow, generating considerable interest from aquaculture producers and traditional farmers in several provinces. With the addition of fish into the system in May of 2010, the MB-CMAF will launch a new era of freshwater aquaculture development in Canada.

As the lead agency for aquaculture development in Manitoba, MAFRI supports the sustainable development of freshwater aquaculture in our province. The development of an aquaculture industry holds tremendous potential for the growth and diversification of our rural economy.  There exists significant interest from potential aquaculture producers in rural Manitoba to pursue land-based aquaculture if proven to be viable. The MB – CMAF presents an innovative opportunity to improve overall confidence of land-based aquaculture and answer many of the fundamental questions important to the establishment of a sustainable, new livestock sector in the province. For these reasons, MAFRI is supportive of and enthusiastic about the project and will continue to work with the project team on all aspects of the MB – CMAF.
 
Despite project delays, scheduling challenges and budget over-runs, we, the project recipients, Rudy and Leslie Reimer, are pleased that operation of the farm will be beginning soon and we look forward to continuing to work with the project team on production, monitoring and developing a new market for the fish produced in the system. We have initiated the process with our accountant to have all costs incurred to date audited.  Fingerlings have been ordered and we are anxious to stock them to the system and begin fish farming! We are equally excited and optimistic about the future of freshwater aquaculture across Manitoba and Canada and look forward to being active participants in the development of the sector.