U.S. Frozen Food Giant Makes Significant Investment in Shrimp Farming

August 14, 2017

U.S. frozen food giant Schwan’s Company has made a significant undisclosed investment in Ralco-backed trū Shrimp Systems. Through the investment, the companies have formed a strategic partnership designed to advance land-based shrimp production.

Although both companies are based in Marshall, Minnesota, the joining of the two global distribution networks will facilitate the mutual goal of providing the world with traceable, safe, and natural shrimp.

“We are eager to be a part of this strategic relationship with Schwan’s Company,” said Brian Knochenmus, president and CEO of Ralco. “This is our first opportunity to collaborate, and they are a proven company that brings great market insight and capabilities to assist the growth and development of trū Shrimp,” said Knochenmus. “Schwan’s Company recognizes the potential of what trū Shrimp is doing, and the impact it will have not only domestically but also internationally.”

Plans in the Pipeline

In June of this year, trū Shrimp announced its intention to construct its first $50 million shrimp production facility in Luverne, Minnesota, called “Luverne Bay Harbor,” and its first shrimp hatchery – “Marshall Cove Hatchery” – to be located in Marshall, Minnesota.

At the time, the company also announced its plan to renovate a vacant processing facility in Marshall which has been approved by the U.S. Department of Agriculture (USDA) for the preparation of more than 8 million pounds of shrimp per year.

“We are often asked why raise shrimp in Minnesota, and the answer is because the feed is here,” said Michael Ziebell, president and CEO of trū  Shrimp Company in a June announcement. “Economically and environmentally it makes much more sense to raise shrimp near their food source than to ship feed to shrimp raised in coastal ponds thousands of miles from the U.S. market. Until now, the technology to effectively raise shrimp in the Midwest United States on a large scale did not exist; now it does and we have proven it.”

Under the framework of the partnership between Schwan’s and trū  Shrimp, the companies will initially focus on the renovation and retrofitting of the available manufacturing space owned by Schwan’s located in Marshall, and Schwan’s Company will be designated one seat on the trū Shrimp Systems Board of Directors.

“These are two companies who have built their businesses in Marshall for several decades and it is great to see Schwan’s Company and Ralco working together. Any time you have two companies in the same community working together on a project that has this kind of economic development potential, it is a big win for Marshall and the region,” said Cal Brink, director of the Marshall Economic Development Authority (EDA).

Smart Shrimp

In 2015, Rabobank released a report titled, “A New Dawn for Prawn” in which it stated that shrimp demand in both the U.S. and the EU was better than expected in 2014 as import values reached records in both markets on high demand despite high prices.

Based on strong macroeconomic conditions, Rabobank estimated that the U.S. imported more shrimp than ever in 2014 – importing 405,000 tons – breaking a previous record set in 2011. The report goes on to state that in terms of value, in the first three quarters of 2014, the value of U.S. shrimp imports reached $4.8 billion.

These record-breaking import levels, even in the face of high prices, reflect the significant opportunity for domestic North American producers to capture market share.

In December 2015, the Province of Ontario announced its commitment to invest in indoor shrimp farming startup, Planet Shrimp Inc., as the company was seeing rising demand from Canadian consumers for locally produced and locally fed animal protein.

Another more recent announcement came in February of this year, when Taft, Texas-based genetics shrimp hatchery Sea Products Development, an affiliate company of shrimp farm Global Blue Technologies, announced it was nearing completion of a $20 million fundraising in the company’s single largest round to date.

Demonstrating the real potential return on investment within the shrimp farming space, Ralco released an economic impact study conducted by the University of Minnesota that concluded that the construction of one production facility by trū Shrimp Systems would generate more than $48 million in economic activity in southwest Minnesota.

“The construction of a Harbor will be a boom [sic] to local communities, and it will also mean good quality and well paid jobs for the long term, said Ziebell. “The people who work in a Harbor are going to be technically qualified and trained. Also, the economic impact doesn’t consider feed commodities required for a Harbor including corn, soybeans and hard red wheat. trū Shrimp is creating more than economic ripples, it is an economic tsunami.”

In the long term, trū  Shrimp states that it is planning to construct two hatcheries that will be able to continuously supply up to three Harbors, with just one of the company’s Harbor’s having the capacity to exceed 50 percent of the current total U.S. shrimp farming output.

“We have been watching with great interest the concept and the progress that was being made by trū Shrimp,” said Dimitrios Smyrnios, CEO of Schwan’s Company. “At Schwan’s, we are intrigued and excited about the possibilities of inland shrimp production and view this as an excellent opportunity to provide consumers with a predictable and traceable supply of nutritious shrimp.”

-Lynda Kiernan

Lynda Kiernan is Editor with GAI Media and daily contributor to GAI News. If you would like to submit a contribution for consideration, please contact Ms. Kiernan at lkiernan@globalaginvesting.com.

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