Offshore Mariculture Cage Project

This is a proposal by Panama Mariculture, a Panamanian Corporation, for the purpose of raising and marketing high value sustainable marine food fish in cages initially anchored offshore the Island of San Cristobal on the Caribbean Coast of Panama. It will be a vertically integrated business that will have it’s own hatchery, cages, processing plant and feed mill.

The United Nations sees a real threat on a major food supply coming from our seas. They are encouraging countries around the world to develop projects that will save the oceans from being over fished, in turn, providing a solution to feed the world in the near future. There is a great concern that in the next decade, our oceans will be completely depleted of their natural resources. The two main reasons are pollution and over fishing. Aquaculture is the only way the food supply from the oceans can be restored. Industry experts also believe that mariculture production will increase from 29% to 50% over the same ten-year period.

In September of this year the Food and Agriculture Organization of the United Nations (FAO) stated:

• Nearly half the fish consumed as food worldwide are raised on fish farms rather than caught in the wild.
• that fish consumed by human beings originating from aquaculture, just 9% in 1980, today constitutes 43%. (This equates to 45.5 million tonnes of farmed fish, worth US$63 billion, eaten per year, versus 95 million tonnes from capture fisheries, of which 60 million tonnes goes to human consumption.)
• that global consumer demand for fish continues to climb, particularly in affluent, developed countries which in 2004 imported 33 million tonnes of fish worth over US$61 billion.
• that of 600 wild capture species monitored, 52% are fully exploited and 25% are over-exploited (17%), depleted (7%), or recovering from depletion (1%) while only 3% listed as under-exploited.

Basically, the oceans are over fished and now need to be farmed. The hunter-gatherer society is now rapidly coming to an end for our oceans if we are to have enough fish to feed the people of the world.

Vietnam and China have recently entered the market and currently sells an inferior Cobia product in the United States. Very limited production has been accomplished in the Western hemisphere starting with an experimental project moored near an offshore oil platform off the coast of Pascagoula, Mississippi. This project used the Ocean Spar submersible cage which washed away during a storm and never produced a crop. This was the pilot project of NOAA and financed by them. The project in Puerto Rico which uses two Ocean Spar cages has had mixed results. They have had shark problems eating through the bottom of the cone shaped Ocean Spar cage due to the design not allowing a predator net. They also have had problems getting permits and are now in the process of moving near our location in Panama for their enterprise. AquaSense, a company that had set up in Eleuthura and had a limited production of Cobia, got chased out of there by sharks eating the bottom out of the Ocean Spar cages they were using and by hurricanes. They are now investigating moving to Panama also. Maritech (Dyer Aqua) had the same problems as the other companies above and are also now moving to our area to get cages in Panama. There are no hurricanes in Panama and the fishermen report little or no sharks. As of this writing, none of these companies have the approval of Autoridad Nacional del Ambiente (ANAM) (Ministry of the Environment). After 14 months of pioneering offshore cage permitting and mariculture in Panama, Panama Mariculture has received the approval from ANAM to proceed with their project. It is important to note that PMC will be using proven all over the world surface cages with predator nets.

The company will be vertically integrated with it's own hatchery, cages, value added processing plant and feed mill. From the onset, the company will focus on the key principals of sustainability and organic products. The company will go for the sustainability certification under the Marine Stewardship Council (MSC) (New note:This will not be happening because the MSC has got together with the producers of wild caught fish who have "convinced" them that it is not in their best financial interests to support aquaculture for certification of aquacultured products for sustainability - so PMC will follow their standards and concepts until a new aquaculture orientated organisation can put itself together - PMC would be interested in working with anybody that would like to put this much needed organisation together for Caribbean aquaculture) and the organic certification under the German Naturland certification process. This is necessary because there is now a major movement in the developed countries to market only sustainable and organic products. It is better to start with these standards than to later implement them. The products will also have full trace ability from the cages to the consumer.

Cobia will be the initial species for growth and development. This is a proven species that exhibits excellent growth rate, excellent taste and has a high market value. Cobia grow roughly one pound a month reaching 8 pounds in eight months and up to 16 to 20 pounds in only one year. They have a spectacular food conversion ratio between 1:1 and 1.3:1 and are one of the fastest clean protein producing animal or plant for human consumption in the world. The reason why Cobia is not a commonly recognized fish for consumption is because they range in the United States from Virginia along the southern costal states to Texas. All those states only allow a specific catch number and size, usually one per person and a 33" length. So, it is very seldom these fish make it past the fisherman's family and get to the market. They don't want to sell them, they want to eat them. They are Indigenous to all the oceans of the world and are known by at least 53 different names (see Attachment A) such as Ling and Lemmonfish.

Panama Mariculture Corporation has as it’s governing commercial purpose the objective of supplying both domestic and international markets with high quality indigenously produced finfish through the use of offshore fish cages. The company will focus on value added products that are sustainable and naturally grown. This will be accomplished by vertically integrating the company keeping the hatchery, cages, feed mill and processing plant within the company in order to control the entire production.

Site selection for offshore aquaculture is paramount for success and PMC has a site that adhears to all the parameters of a successful venture. It is located due East of Punta Cocos off the island of San Cristobal in Bahia Almirante near Bocas del Toro on the Northern Caribbean side of Panama (see Attachment B). It is located in deep pristine protected waters where wave height never exceeds 3 to 4 feet. The cages are designed to operate in seas of over 15 feet. There is a constant, pollution free Southerly current of approximately .5 knots. This water flow through the farm will provide key benefits to the success of the fishery operations: insure less biofouling; natural removal of wastes; supply a constant oxygenated environment; and, supply microorganisms as an additional source of food for the fish.

The fingerlings will initially be put in nursery nets that are placed inside the main cages and fed to the point where they have reached a size, around 5 to 6 weeks, that will not allow them to escape the netting of the cages. After that will then be released in the the cages and fed twice per day to satiation.

A regular net cleaning program will be started in the second month by the divers employed by the company.

During the harvest of the Cobia during the 7th and 8th months, the fish will immediately be iced and transported to the processing plant to be built NE of the city of Almirante or on the island of Colon. The fish will be marketed in the following forms: Whole (for the European market), head-on gutted, head-off gutted, filets and smoked. Value added processing will be done for the filets and the smoked Cobia. The fish will then be packed in air shipment containers and brought to Bocas del Toro, Enrique Malek in David or Tocumen airport where they will be transported to markets in the United States and Europe.

Management also understands explicitly the situation with the current state of the fishing community of Panama. Commercial fishing is facing more and more problems due to over fishing, disruption of the ocean bottom and coral beds, and the depletion of fish stocks by foreign vessels invading the waters of Panama. Future plans of Panama Mariculture Corporation include the hiring of the commercial fisherman as the feeders and harvesters of the cages and setting up a co-op with local interested parties in the area. The company will work out agreements where the company supplies the technology, cages, feed, processing and marketing for an ethical percentage of the harvests.

This project will be done in phases.

Phase I - Will be the beginning of the vertical integration of the business. It will start promptly after funding. The cages, netting and mooring systems will be ordered. Two 90 meter circumference cages will be placed in Bahia Almirante near Bocas del Toro, Panama. The Cobia will be grown approximately 8 months to 8 to 12 lbs and sold for the market demand at the time of this writing between $3.00 to $3.75. The cages will be installed in a graduated order starting with 2 initial cages in the first month with 2 more cages in each of the two months after the first two cages are installed. Then month 4 will be skipped and the six cage scenario will be continued until all of the 24 cages are installed. The skipping of the 4th month will alow for cleaning of the cages, maintenance and environmental monitoring (see Attachment B). This stocking schedule is pertinent to the marketing plan. It will create a consistent supply of product that can be relied upon by wholesalers, supermarket chains, restaurant chains and end users.

The building of the first phase of the hatchery will be started. The hatchery is synergically attached to the growout stage of the eggs, fry and fingerlings. The growout structures (tanks, pumps, feed production, laboratory and buildings) will be adjacent to the hatchery and allow the fingerlings to reach a size that is suitable to stock the nursery cages inside of the net pens. The eggs will be purchased from a commercial enterprise. They will then be flown to the growout structures where they will be reared to the proper size before they are placed into the nursery net. Rearing time is expected to be between 20 & 40 days. If the growout is not built by the time the cages are ready for stocking, the fingerlings for up to the first 4 cages will be purchased commercially from sources known to PMC. This assures that the project is underway promptly and will start gaining value immediately upon stocking the cages. Stage two of the hatchery will also be started in this phase.

Further on in phase one will be the construction of the processing plant which will value add to the products by reducing weight associated with shipping costs, remove the expensive task of portioning/filleting in the U.S., and will implement company designed packaging according to HAACP and EU regulations. The processing plant will be in production ready for the first harvest. Should there be unavoidable circumstances completing the processing plant for the first harvest. The fish will be shipped whole to the US to be processed.

During this grow out period PMC will be working with an existing feed mill in the city of Volcan in the state of Chiriqui producing a sustainable organic feed. The feed is considered a priority of the company as the ingredients will be listed on the value added packaging of the filets and portions. The company will use sustainable products as ingredients of the feed and will strive to produce a natural/organic product from the inception of the business.

The marketing plan will also be implemented during the very beginning of phase one (see Market Analysis).

Phase II - will be the installation of the cages according to the schedule, finishing the processing plant and hatchery and starting construction of the feed mill. The company's feed mill will be built near the City of David. David is the congregation point for the food products produced in Chiriqui province. The food production center of Panama.

The marketing will expand to Europe and the heartland of America.

Phase III - All of the cages will be installed, the hatchery built, the processing plant built and the feed mill producing the companies own feed. At this phase, the company will be producing a potential biomass of 4,800,000 lbs. The fish, by this time, will all be produced from sustainable feed supplies and will be organically grown commanding respect from the fish community, environmentalists and command a higher market price.

This will also be the expansion stage of the company into other growing areas and countries with suitable coastline in the Caribbean. The permitting arm of the company will go out to suitable sites, evaluate them and the governmental rules and regulations. When the permits are granted, cages will be installed according to the requirements of the various permits. The company in this stage plans to build a finfish hatchery ship/ocean going barge that will travel to the concessions granted to the company and stocking the cages.