Snail’s pace is fast money in Yumbah’s coastal agribusiness game

First published on Farm Online 24 April 2018. Click here to read the full article.

There’s nothing sluggish about market demand or business growth for one of Australia’s newest, and less conventional, agribusiness achievers – sea snail farmer Yumbah Aquaculture.

Victorian-based Yumbah has emerged from an idea just 18 years ago to become a four-farm business turning over almost $30 million a year in abalone sales.

While most Australians are unlikely to have tasted the southern ocean delicacy, let alone frequently tucked into an abalone feast, the Japanese have prized these marine molluscs for centuries, and in China they are treasured, too.

In fact, abalone is just about the world’s most expensive seafood.

With local retail prices about $50 a kilogram and export values up to $60/kg, the rewards look impressive.

About 80 per cent of Yumbah’s harvest goes overseas to Asian and North American buyers, who want more.

Supported by a small group of adventurous investors whose backgrounds range from the wool, grain and feedlot sectors, to software engineering and abalone diving, the business has weathered some nasty scares in its short history before emerging as the southern hemisphere’s biggest abalone farmer.

In December its pioneering production achievements and the credibility of Australia’s abalone exports received national recognition when Yumbah won the agribusiness category in the Australian Export Awards, beating other big name finalists such as Consolidated Pastoral Company and AGT Foods.

“For a company that’s not exactly big, the award has given us a new level of significance in the agribusiness sector,” said director and foundation investor, Anthony Hall.

“I think aquaculture promises extraordinary productivity and export value – a lot more productivity than you get producing Wagyu beef.”

The award has not just recognised Yumbah’s achievements to date, but has spurred on ambitions to be a more diverse shellfish enterprise, with seaweed farming also an option.

“We don’t have a big shareholder base, but a lot more people certainly seem interested in getting involved,” said Mr Hall, a majority shareholder alongside managing director, and Victorian wool broker, Jonathan Lillie.

Mr Lillie heads the Fox Lillie sheep and wool group which also has seafood interests in mussel farmer, Bay Sea Farms, and trader, Fisher Direct.

Yumbah has farms at Port Lincoln and Kangaroo Island in South Australia, Bicheno on Tasmania’s east coast, and near Portland in western Victoria.

Five years ago it harvested only about half its current 700 tonnes a year of greenlip and tiger marine snails, also recognisable for their mother of pearl shell.

Now Yumbah is bracing to expand with another onshore farm development to lift annual production possibly to about 1700t.

As part of its growth plan it bought a 75 per cent stake in South Australia’s EP Aquafeeds last year and has just commissioned a bigger 400kg an hour specialist stockfeed production unit – something akin to a giant fettuccine pasta machine – at Lonsdale in Adelaide.

Re-named Yumbah Aquafeeds and run with previous owner Dr Tom Coote, it provides feed supply certainty, cost and quality control for the expanding business, and fresh research and development options.

Also in Adelaide, Yumbah has just centralised process and pre-export activities at a $1m facility at Wingfield.

Abalone is harvested from eight hectares of shallow seawater raceway tanks, built just above the high tide zone on the coastline farms.

Chewing through their soybean-based pasta diet, the snails grow out to about 70 grams each after two years, then are harvested, chilled and snap frozen for processing into market-sized orders.

Female marine snails can each produce 10 million eggs at mating, but in the wild few survive the perils of ocean life.

However, at Yumbah’s hatcheries the offspring feed on algal-cultured plates in the safety of a nursery for six months before moving to the main tanks.

Yumbah is now the southern hemisphere’s largest producer of the premium-valued greenlip abalone.

Most Australian abalone sales originate from wild fisheries.

Despite fishing limits, however, natural stocks are fast depleting worldwide, which leaves Australia with the world’s largest annual wild abalone catch.

In 2016 local wild abalone prices hit $85/kg – more than double that of the next highest priced fresh whole fish or shellfish, according to the United Nations Food and Agriculture Organisation.

Australia’s abalone harvest totals about 5000t/year.

With only about 1100t farmed, Mr Hall wants to expand Yumbah’s own sustainably managed production and work with marine management bodies to “re-seed” wild stocks in traditional environments along Australia’s Great Southern Ocean shoreline and around Tasmania.

“Australia has eight wild catch sectors, but only one is still considered sustainable,” he said.

“I think there’s enormous opportunity to work with authorities to rebuild natural stocks.

“It would be wonderful for the environment and the industry in general to re-seed these harvested areas.”

His own enthusiasm for shellfish grew from the experience of abalone diving in south eastern Victoria with childhood friends, the Rudge family, then teaming up with eight like-minded friends to back Tim Rudge’s plans to farm abalone at Narrawong, near Portland.

Early market success was followed by a near-death experience in 2006 when an outbreak of a herpes-type virus forced all stock to be destroyed.

It convinced Mr Rudge, Mr Hall and fellow shareholders to diversify  their production base and reduce exposure to future disease risks.

That decision led a gradual production rebuild, a merger with the Port Lincoln farm and later acquisitions at Kangaroo Island and one of Australia’s oldest abalone farms in Tasmania.

Taking the diversification theme and disease risk management a step further, Yumbah dived into an oyster breeding partnership with Cameron of Tasmania in 2016, helping rebuild SA stocks after a Pacific Oyster Mortality Syndrome outbreak in Tasmania left farmers short of oyster spat.

The Point Boston joint venture has just begun supplying SA leases with commercially viable oysters and recently won a state development grant to assist it with a $750,000 hatchery upgrade.

Yumbah Aquaculture management is also weighing up other diversification options to better use the 19,800 cubic meters of fresh sea water washing through its abalone farms every hour.

“The water is very clean and could easily enable production of more species before it runs back to sea – we may as well use it to help cover our pumping costs,” Mr Hall said.