NaturalShrimp Inc (SHMP)

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Mods - please sticky - copy/paste of San Antonio 2/1 follow up article.


BUSINESS
Texas-sized shrimp dream at long last proves viable
Lynn Brezosky | on February 1, 2019

LaCOSTE — After 18 years and $35.4 million in development spending, the founders of NaturalShrimp are convinced shrimp lot No. 180 at the company’s remote Medina County fish-tank complex is their aquaculture-industry pay dirt.

The translucent, beady-eyed crustaceans zooming through the salty water are now into their 22nd week of growth. They’re about five inches long and 18 grams apiece. They are gulping down food pellets dropped at hourly intervals with abandon, well on their way to a harvest weight of 23 grams.

NaturalShrimp is one of the companies trying to prove you don’t need a big body of natural saltwater like the Gulf of Mexico to raise shrimp — that they can grow to commercial proportions in specialized tanks on land. The business’s aim is to deliver fresh shrimp to restaurants and markets far from the sea.


Survival rates at the NaturalShrimp facility are beating expectations, and could wind up being well above the 50-percent rate considered notable in the industry. For the first time, workers haven’t had to wade through the tanks with buckets, fishing out floaters.

Investors in the penny-stock company are perking up, with the share price rising 353 percent from Jan. 2 to its Jan. 31 close of 7.7 cents.

But despite the small burst of excitement, Dallas-based NaturalShrimp is still just getting started.

The next step is to restock after harvest, and add three more, 65,000-gallon indoor tanks to the complex. From there, the company will attempt to replicate the process in places far from sea water but a less than a half-day’s drive from metro areas teeming with markets clamoring for chemical-free, never-frozen shrimp.

Or salmon, sea bass, lobster, clams or oysters. Natural Shrimp’s patent, granted Christmas Day, 2018 — patents are only granted on Tuesdays — covers all aquatic species.

“We know it works — it’s just now ramping up production,” co-owner Gerald Easterling said. “It’s not a concept any more, it’s a reality.”

By “it,” Easterling was referring to a pricey system of pumps, filters and a proprietary device that, after the latest round of tinkering, is in its fifth iteration. It essentially uses selective electrical currents to destroy the bacteria and break up the effluent ammonia that have so far destroyed crop after crop of shrimp — and globally made shrimp farming a shaky proposition.

On ExpressNews.com: In August, the shrimp were about the size of a pen cap https://www.expressnews.com/business/article/Texas-shrimp-farmers-turn-to-technology-for-13144582.php

“It basically singes (shrimp-killing bacteria) and disintegrates it so it’s not able to spread,” said Peter Letizia, CEO of Florida-based F&T Water Solutions, which partnered with NaturalShrimp to develop the technology.

Electrostimulation has been around for over 100 years, Letizia said, and is commonly used to sterilize surgical equipment. But it’s beginning to expand to commercial agriculture. Letizia also has been working with fruit, vegetable and marijuana growers to test its capabilities as an alternative to pesticides and herbicides.

But the expense and complexity so far has kept the technology from widespread use in food production.

“Trying to just put electricity in water is basically the science, but there is an art behind exactly how do you do it,” he said. “What kind of electrodes do you use? What kind of power source do you use? What kind of spacing? How much volume? There are all those intricacies that take it from a science and make it more like an art.”

“NaturalShrimphas it down to where they know exactly how much they can grow a pound of shrimp for, and basically they know how much they can sell it for,” he added. “So it’s actually a very predictable or predictive market, which is kind of why we like it.”

Jim Bloom, managing partner at San Franciso-based investment firm Vopne Capital, called NaturalShrimp a “fundamentally attractive investment.”

“NaturalShrimp continues to show signs of breaking out after underperforming in 2018 on investors taking note of the company’s push to strengthen its growth prospects,” Bloom wrote in an analysis published Jan. 22. “The company is fresh from receiving a new patent for the commercially viable system for growing aquatic species indoors. The company now owns worldwide rights for growing shrimp species indoors leveraging its new-patented technology.”

NaturalShrimp started in 2001 in a tank in the basement of co-owner and chief technology officer Tom Untermeyer. Untermeyer, then a newly retired Southwest Research Institute program manager. wanted to use his electronic engineering background to help start a business.

There’s no doubt of the strong demand for shrimp.

Shrimp is the United States’ top-selling seafood, with the average consumer eating 4.4 pounds of it per year. As ocean stocks have declined from overfishing and pollution, farming it has become a big business, overtaking wild harvesting in 2007.

Traditional shrimp farms are built on coastlines that have a ready supply of salt water to fill open ponds. Inland shrimp farming has been evolving, but companies have mostly experienced inconsistent production and have to stock their ponds at low density due to water treatments that introduce bacteria and cloud the water.

“The reason we’re here, (why) we stayed with it, is we always knew the market and the need,” Easterling said. “What we have here is phenomenal. It answers all the problems in the industry as far as raising aquatic species indoors.”

Texas leads in U.S. shrimp cultivation. But that production has declined, from a 2003 peak of 9 million pounds valued at about $18 million to between 2.5 million and 2.9 million pounds per year. Texas shrimp farms in 2016 generated revenue of about $8.3 million.

Aquaculture consultant Granvil Treece said the farms have taken hits from young shrimp not surviving the transport or acclimating to man-made environments. Fewer than half make it to market. Bowers, which operates the state’s largest shrimp farm near Matagorda Bay, had the state’s highest survival rate at 54 percent.

It’s the same for farms around the world. And even when the larvae take, shrimp in all producing countries have frequently succumbed to disease outbreaks. There also are concerns about aquaculture operations damaging estuaries and contaminating natural fisheries with toxic outflows.

A 1999 disease outbreak in Ecuador nearly wiped out that nation’s shrimp farm industry as well as some 100,000 jobs. Mexico in 2016 suffered devastating losses to disease and premature harvest.

Many in the industry thought they’d found the solution with biofloc, a water-filtration method that uses probiotics to help neutralize bad bacteria. But after six years and an investment of $15 million, Natural Shrimp’s leaders concluded biofloc didn’t meet the needs of their high-density business plan.

One week they’d be selling out their shrimp at the Pearl Farmers Market, the next they’d be no-shows. Harvests would, within a few days, drop from 1,000 pounds to 40 as the bacteria quickly proliferated.

“We would have tanks full, and then we’d start having them die off,” Easterling said. By the time they noticed the first few dead ones, it was too late.

While NaturalShrimp mwon’t harvest the current tank till mid- to late-February, the goal for the 30,000-square-foot facility is 4,000 pounds of shrimp a month. The aim is to produce 7,000 pounds each week once the new tanks are operational, sending truckloads rumbling past neighboring corn, cotton and sunflower fields to buyers like Michael Scott, the corporate chef at Rosewood Texas Raised Wagyu Beef.

Scott first came across the shrimp about a decade ago at a Dallas food show. He has since become a NaturalShrimp shareholder.

“I thought they were Hawaiian blues,” a variety of shrimp, he said. “I walked over, snapped the head off and I bit into the tail raw... I said, ‘This is buttery — this is very clean.’ I said this is like the ‘Kobe beef of shrimp.’”

Scott likes that the shrimp aren’t washed with citric acid and sodium for extended shelf life, and haven’t had exposure to water pollutants.

“When I clean these shrimp, we’re not pulling big poop lines out,” he said.

Lynn Brezosky is a San Antonio-based staff writer covering trade, agriculture and the economy. Read her on our free site, mySA.com, and on our subscriber site, ExpressNews.com. | [e-mail] | Twitter: @lbrezosky