Framing any investment in as positive of a classification as possible can be a beneficial and helpful strategy in funding strategies. In recent years we have referred to BCI's aquaculture efforts as "biotechnology" as opposed to "manufacturing" or "farming." That said we have found this to be a "two edged sword cutting both ways." In other words whether we call aquaculture "manufacturing" or "biotechnology,"  or "farming" it means that potential investors will compare our specific proposal to other competitors in the same category areas.

Aquaculture will generally have have more risks with less controllable solutions than most manufacturing processes and most manufactured products - especially those for discretionary income products (entertainment devices for example) will almost always have higher margins and quicker payoffs. Same for aquaculture as "biotechnology" where nutraceutical, cosmetic, and pharmacological applications will almost always have higher returns and shorter break-evens than the typical food aquaculture production process. In other words regardless of the category we insert aquaculture into - it still has to compete on a time and money basis with all other investments. However, aquaculture food production doesn't have to compete strategically with other long term investment opportunities. Logically and priority wise it can be at the top of any list of investment priorities - if the investor understands the priorities.

I think the argument for aquaculture investment as a priority over other investment categories will come from better investor education regarding the precipitous and finite nature of food production resources (petroleum dependent NPK and human food productions dependency on NPK fertilizers - a relatively unknown topic for most investors). Further, in demonstrating the fact that some forms of advanced aquaculture (RAS) have more ability than any other forms of aquaculture or terrestrial food production to effectively use and recycle those critical resources - producing more protein (and income) for less resources and capital can form the basis for a logical argument for certain types of aquaculture investment like RAS and particularly  ISRAS (Integrated Species Recirculating Aquaculture Systems).

As some point out - aquaculture is becoming more like a manufacturing process and will surely and necessarily become even more so as peak resources (petroleum dependent NPK) affect the price and availability aquaculture and terrestrial food production commodities (like grain based feeds). However, unlike most manufactured products - electronics, vehicles, etc. we are absolutely dependent on food production and aquaculture food production properly explained should represent an almost irresistible captive market (with growing demand and declining availability - food production will follow peak petroleum trends) for technically astute and savvy investors.

Most investors - especially American investors are remarkably inadequately educated regarding science. They are near clueless about subjects like "mass-transfer" and "mass-balance" and consequently don't understand the finite nature of the worlds resources relative to it's growing human population and its growing demand for those resources. The best example is probably peak petroleum. Investors see peak petroleum as potentially limiting transportation convenience.  While the debate over when the last of accessible petroleum will be sourced is all but impossible to predict, the oil volume per well operated/product unit effort of global oil production trend lines don't lie. We are running out of petroleum regardless of new technical innovations both in drilling and exploration. 

What investors don't really get is that 95% of the global food supply is dependent on petroleum. Consider that the production and processing of NPK fertilizer is 100% dependent on petroleum and that 85% plus of the global food supply is dependent on NPK - and now that India and China are converting from manure based agriculture to NPK the number will rapidly approach 100% for NPK food production dependency. Petroleum in the form of natural gas for nitrogen, in fuels mining, and chemicals for processing rock phosphates and potassium ores aren't replaced in the best case for alternative energy resource development. Solar, wind, and tidal produce only energy, not chemicals for processing the nutrient components of NPK required for modern food production technology. Alternative energies may well provide the energy for mining  potassium and phosphorus bearing ores, but they can't produce the chemicals required for processing it as directly and petroleum. 

NITROGEN is manufactured from natural gas - which is currently more than abundant in the US and at the lowest prices in recent history - so no pressure on nitrogen supply availability in the foreseeable future. 

POTASSIUM /potash is the seventh most abundant element in the earths crust and consequently its supply issues are more of a function of mining and distribution logistics (fuel costs) than actual availability.

PHOSPHORUS on the other hand is neither abundant, nor are its reserves well documented. The USGS depends completely on host country and fertilizer companies to develop its phosphate reserve figures. Both countries and companies use these reserves estimates as financial assets in their book-keeping, banking and credit ratings and are apt to be motivated to over represent them. To compound this problem, rock phosphates (only known at-scale economic source of phosphorus - which every living organism requires to grow) are highly variable in their ore quality. Heavy metal and radioactive contamination make many phosphate deposits totally unusable for fertilizer and further confound estimates of reserves which generally have very spotty if any analytical basis. Scientist studying the phosphate reserve estimates believe that the USGS reserve estimates of a 300 year supply, could be off by an order of magnitude and the world could run out of economically accessible phosphates in less than 30 years.

While other sources for phosphorus such as undersea mining exist, their cost could drastically change the amount we spend on food and consequently our way of life. As Asia switches from a manure based agriculture to a modern NPK based form, phosphate demand is expected to increase dramatically. In fact, in 2002 China effectively stopped all exports of phosphates to conserve their internal reserves (reserve quantities now unknown) of this critical food production element - which also further confuses phosphate demand estimation over time.

Of the three NPK fertilizer components - rock phosphate would seem to be the most limiting and sensitive to rising petroleum chemical and fuel costs, especially considering that more chemicals are required for processing as higher quality reserves are depleted first - meaning more rock phosphate has to be processed to get the same amount of phosphorus. Another factor relating to food production economics is that as petroleum becomes less and less accessible and the current industry around it decreases in size - the availability, costs and the economics in general of the chemicals used for NPK product are likely rise as the former petroleum industry economies of scale necessarily decline as petroleum effectively runs out. Without economically equivalent processes to replace petroleum based NPK  production in place as petroleum runs out, global food production is at serious risk - and especially those that depend upon the cheap foods that we have come to expect NPK to produce.

It is specifically informative to read the 2011 USDA Fertilizer Import/Export Summary and note that 54% of US (less than a decade ago the worlds number 1 NPK supplier) fertilizer components were imported. According to the 2011 USDA Fertilizer Import Summary - "U.S. nitrogen and potash supplies largely depend on imports. More than 54 percent of nitrogen (N) and 85 percent of potash (K2O) supply was from imports in calendar year 2011. Because domestic production capacity is limited, any increase in nitrogen and potash demands will have to be met largely by imports." Read more on peak phosphates and you will note that 15% of US phosphates were imported from Morocco in 2011. Morocco and Western Sahara are considered to hold 85% of the worlds remaining phosphate reserves (excluding China's unknown reserves). 

The US's growing importation of NPK food production components begs the logical question - "If we have to import the fertilizers that we use for military biofuel and food production - how is that less risky or a lower priority than importing oil?" and "How does it reduce our critical dependency on foreign resources - especially in times of war where foreign dependency can be used against us as an effective weapon?" We think we have problems with imported oil - wait to our food production is totally dependent on foreign fertilizer supplies. If you thought OPEC members were oil extortionists? Think of the leverage comparison for oil extortion ability - compared to that for the potential for food production. Controlling ones food production ability is strategically equivalent to controlling ones destiny - or not.

Unfortunately, to bring these facts regarding our precarious global food production abilities to the highly competed for attention of strategic long term investors is likely to take some serious food shortages first to demonstrate the reality of the worlds "peak food" situation. In 2008 food shortage/food price riots (interestingly peaking with NPK prices) in a number of countries were the first installment of this lesson on man's ultimate peak commodity - peak food. Future investor educational installments on the critical resource dependency nature of global food production and necessarily RAS aquaculture's role in keeping it from being catastrophic are very much needed, sure to come - whether timely enough or not(?)  and relatively soon.

My sense of current analytical approaches to resolving current RAS design's lack of economic production competitiveness, are that they are too focused on engineering and technology in general, and really don't provide enough focus on prioritizing economic sensitivities of the RAS process to accomplish successful RAS economic outcomes - competitive profits. At BCI, we have taken a somewhat different analytical approach in the way we view RAS. First of all we believe that the basic biological and engineering technologies for economically successful RAS production exists - ready to adapt and install in optimized RAS designs. I use the word "optimize" a lot because this is what seems to be missing in RAS designs - "optimization" - particularly economic optimization. Secondly, on a mass balance/life cycle basis - no other form of aquaculture offers as much designer and manager control over inputs as does RAS technology.

From this perspective we theorize that the frequent failures of RAS comes from the designers not understanding RAS systems and its products economics. To understand those economics and in order to optimize a RAS design, an exhaustive and extensive analysis must be accomplished for all the various RAS design components and their operating cost economic sensitivities - in general, and then again optimized for site specific RAS designs.  In our opinion the current state of the art in RAS misses this approach completely - focusing almost purely on technical/process functionality and relationships - with little consideration for the overall economic sensitivity prioritization of opportunities and challenges presented by the RAS concept. 

In our on-going/in-progress economic analysis of RAS we note first and foremost that in all "fed" aquaculture systems - that only about 15-25% of the feed input by dry weight comparison ends up as product. We note that in most fed aquaculture business models - feed is the largest single overhead cost, typically some 50-70%. In open forms of aquaculture (cage culture and flow through pond/tank systems) the 75-85% of unused feed and its metabolites end up in the surrounding environment. The typical RAS system design removes, processes the unused feed and its metabolites as waste products, turning them into valueless biofilter biomass, filterable substances (proteins) and gases - usually at a significant expense of energy, instrumentation, management, maintenance, operating and capital investment costs and the cost of that money. 

In other words, beyond the capital requirements, the economic distinction between RAS and open systems is that the open systems have the economic of advantage of little or no waste feed nutrient processing cost burdens (particular in cage culture) and it is their primary competitive operating cost edge. We have turned this basic observational advantage for open systems on its head. We view the primary advantage of the RAS system as it inherently having the ability to capture wastes and not necessarily as a cost burden. Further that those wastes are an economic resource and a "sunk cost" for RAS designers to draw upon. This availability - nearly 75-85% of the feed nutrients (again a  "sunk expense" - an unavoidable cost already invested) and that the open systems inherently and to their unavoidable disadvantage - waste and pollute. Basically we believe the economic view should be that if your feed costs are 60% of your overhead and only 25% of that ends up as salable product, then 75% of 60% of your overhead is literally going down the drain. Consequently the potential advantage of RAS over open aquaculture systems is that it has at least a theoretical 85% (or the potential for the beneficial and useful recovery of half of your feed expenses) nutrient availability advantage and minimal pollution and environmental impacts. 

The challenge for RAS designers then becomes whether they can use these captured waste nutrients to effectively offset their other RAS system production costs - or, whether they will just represent waste removal expenses (current design practices). Several authors recently note the possibility of multi-trophic aquaculture as a way recovering those wastes. At BCI, our Integrated Species Recirculating Aquaculture Systems (ISRAS) concept is an economically analyzed and strategically optimized design form of multi-trophic aquaculture such that waste use is (there's that word again) - "optimized."

In a world where the confluence of peak petroleum and peak phosphates makes the conservation of food production inputs a critical economic necessity to global food production itself, food production systems that capture nearly all of their wastes as an inherent design feature, motivated by using those captured nutrients as side stream incomes and or cost offsets - ought to have a significant potential economic advantage over ones that squander them - assuming those wastes are used optimally.

We see the retention and optimization of phosphorus usage particularly - as something only RAS technology can effectively provide - even more so than terrestrial agriculture where phosphorus is lost in unavoidable runoff and dilution. In RAS systems the entire production environment is capable of effective management - meaning all input wastes not consumed by the primary product(s) are available to be repurposed for the economic benefit of the system and that is the true advantage of RAS and something RAS designers should be more focused on.

Unfortunately, current RAS approaches as a few analyst are noting - are just too small to have the economies of scale to capture all the benefits - especially nutrient optimization that ISRAS production systems can offer. We believe that a comparison of an ideal totally vertically integrated non-RAS aquaculture venture, to a totally optimized vertically integrated ISRAS type RAS system - the ISRAS system would have a significant economic advantage over the non-RAS system in terms of:  

Greater income -  from a wider range of income streams produced on a year round basis.

Reduced risks - through more optimal bio-security and theft/sabotage control, and extreme weather events.

Lower logistical costs - through less siting limitations for optimized economics between input sources and major product market locations. 

While RAS in the US has been primarily the focus of small business entrepreneurs, we believe its real future lies with reaching economic feasibility scales necessary for total vertical integration of its economics. At such scales and in our opinion, concepts such as ISRAS will be the low cost food producer in a world where food production efficiency is necessarily becoming an ever greater concern as the global human population continues to grow.