Sector booms as Asians happy to shell out for abalone

First published on The Australian Business Review, 21 January 2019. Click here to read the full article.

Yumbah general manager Tim Rudge with abalone. Picture: Robin Sharrock.

Tim Rudge lovingly tends to every need of his unusual “herd” on the windswept rim of Bass Strait on Victoria’s far west coast.

All 7.3 million of them — not cattle, but the stunning green and bright blue shelled abalone that Asian consumers are scrambling to buy. Australian abalone bred and raised in shallow seawater-flushed bays under dim light on Rudge’s Narrawong farm near Portland.

Farmed abalone is becoming a key player in Australia’s booming $1.5 billion seafood export industry, as the volume of wild ocean abalone taken by licensed divers falls because of strict sustain­ability quotas and international demand soars for Australia’s two unique species: green-lipped and black-lipped abalone and their hybrid-cross “tiger” breed.

Abalone is now Australia’s second-largest seafood export. A quarter of the 4000 tonnes sold overseas each year, worth $170 million, is now raised on farms in Victoria, South Australia and Tasmania.

For Rudge, a long-time abalone industry player, surfer and co-founder of $30m privately owned Yumbah Aquaculture, the thriving demand from mainly sushi-loving Japanese consumers and wealthy Chinese for abalone, whether live, frozen or canned, comes as no surprise.

“Where else in the world do you have such clean oceans, unique species of abalone and ­20 years of technology that makes us world leaders in aquaculture?” he asks, proudly surveying the long, shallow flooded bays packed with blue “tiger abs”.

It takes nearly three years to rear an abalone from conception to its ideal 100g in a large mother-of-pearl shell that, rather like cows on a farm, includes daily handfeeding, rotating “paddocks” and strict health control.

Each abalone is worth an average $3 when ready for processing, with Yumbah’s snap frozen abalone in shell selling for $37 a kilogram to Japanese consumers.

Fresh Australian “abs” can com­mand an even more lucrative $50kg-$80kg when airfreighted live to high-end restaurant tables and homes in Singapore, Shanghai, Tokyo and Hong Kong.

“We’ve developed sustainable systems here in Australia and a reputation for the best quality abalone at the same time as wild stocks have dramatically ­declined,” says Rudge. “The ­problem is we can’t keep up with demand.”

To meet orders — dominant producer Yumbah grows 70 per cent of Australia’s farmed abalone and 17 per cent of all abalone exports — Rudge is spearheading plans for a new $60m abalone farm to be built 10km east of Portland at the small seaside settlement of Dutton Way.

He needs the expansion, which will double Australia’s farmed abalone production, ­because of contracts with retail giant Costco worldwide and to step up its exports of fresh live abalone to Asia.

Rudge says the proposed ­Nyambat farm, with its 10 hectares of covered seawater bays and ponds producing 1000 tonnes of abalone a year, would employ 100 locals and a further 60 in a new $13m cannery and processing plant to be built in Portland.

It’s a ramping-up of the company’s farmed seafood scale that became possible after Yumbah began to attract the ­attention of private equity investors and high net worth indivi­duals keen to invest Australia’s food industry.

The capital inflow has seen Yumbah — formed from the ­aggregation of four separate abalone farms in 2009 — leap from being one of many small agribusinesses with a $2m to $5m turnover to a major second-tier player and industry leader attracting significant investor interest and the potential to float on the ASX.

Yumbah has two major core shareholders — medical imaging Pro-Medicus owner Anthony Hall and Jonathan Lillie of Fox & Lillie wool-broking fame, but has also attracted adventurous wealthy Australian family investors including US-based corporate helicopter businessman David Calvert Jones and pearl diver Richard Baillieu.

Their confidence was rewarded last year when Yumbah Aquaculture — now the world’s biggest producer of greenlip abalone — won the agribusiness category in the Australian Export Awards, beating other finalists such as cattle company Consolidated Pastoral and AGT Foods.

“Aquaculture promises extraordinary productivity and export value — a lot more productivity than you get producing Wagyu beef,” says Hall, a Yumbah director who decided to invest in Rudge’s dream after diving for wild abalone off Gabo Island.

But opposition to the big new Portland abalone farm — known internally as Yumbah Nyambat — is strong among some locals. The settlement’s seafront road is lined with protest posters stuck to beach shack balconies and fences.

More than 300 objections have been sent to Glenelg Shire council, ranging from construction noise and obstructed sea views to concerns about the 5200 litres a second of seawater that will be circu­lated through the farm and into the sea, abalone ­effluent outlets, industrial-scale corporate aquaculture and the welfare of offshore whales.

But Rudge is adamant the abalone farm is both environmentally best practice and essential to the town’s future. “We are not going to pollute the sea. This is my family’s home and where we swim. We have ­absolutely no intention of doing anything but keeping this beautiful water as it is and we have dozens of scientific reports to support that,” he says.

Glenelg Shire Mayor Anita Rank would not comment on the new abalone farm project as the council is to make its final development decision this month.

Sue Neales’s flights to Portland were paid for by Yumbah Aquaculture. Costco CEO Patrick Noone will speak at The Australian Global Food Forum on March 20.