11 April, 2008
IT SOUNDED like a great idea. Wild cod stocks under threat? Why not grow the
fish in cages…organically to cash in on the green consumer who holds sway in the
Catch…Just Cod” - a great marketing slogan boosted by a ferocious publicity
campaign which saw the company win no less than 14 awards after the brand was
launched in May 2006.
Business sounded good with press releases boasting No Catch cod was hitting the
shelves of 640 supermarkets in Switzerland and being sliced up in Japanese sushi
bars in London.
But the dream of “the world’s first sustainable white fish” came crashing down
on 19 February when the administrators were called in, confirming rumours
circling for months throughout the islands that this firm was in big trouble.
Debts of £40 million. No cash.
The company was set up in March 2005 after city investment firm Milestone
Capital financed a £21 million management buy out from Vidlin salmon farmers
Angus and Ivor Johnson in the middle of the crisis when salmon prices were
collapsing and companies were going broke.
Former windsurf entrepreneur Karol Rzepkowski had brought in City financier
Laurent Viguié to help him, even though neither had any fish farming experience.
Rzepkowski had hit on the idea of growing cod after seeing how well some Texan
customers had received a consignment, which the Johnsons had looked after on
behalf of some aquaculture students at North Atlantic Fisheries College, in
They raised another £15 million and pledged to grow 30,000 tonnes of cod by
2012, satisfying 10 per cent of UK demand, while earning green credentials from
the Organic Food Federation, Friends of the Sea, the RSPCA and the Marine
Listening to joint administrator Daniel Smith it sounds like No Catch were ahead
of themselves, failing to understand the scale of the challenge they were taking
on. “There is no doubt they tried to run before they could walk,” he confided.
No one had grown cod on this scale in the UK before; no one had grown cod
organically like this anywhere.
expense was spared to make the cod’s life as happy as possible, feeding them
choice off cuts from local fish factories and giving them plenty of room to move
around their cages…they even had “toys” to play with!
They bought the NuFish cod hatchery at Broonie’s Taing for £3 million, with the
help of £750,000 from the Shetland Development Trust, and Danny Watt’s old fish
factory was picked up and converted using £300,000 from Shetland Islands
Council. (In total the company borrowed £2.8 million from the development trust,
all but £1 million has been paid back.)
It was an enclosed “egg to plate” operation which sounded wonderful on paper –
complete control from hatchery to fish cage to factory to supermarket shelf
bearing the company label all the way.
But there was a catch…a fatal one. It was a very expensive operation. In the
first year the company lost £3 million, rising to £7.5 million and finally £10
million, three times their £3.4 million turnover last year.
When the administrators walked in shortly after St Valentine’s Day they were
confronted by an “enormously complicated” situation. They wanted to sell a
company, an idea, a brand, that no one was interested in. Farmed cod had no
Big boys Hjaltland and Scottish Sea Farms were only interested in the assets so
they could grow even more salmon in Shetland, even though Hjaltland’s owners
Grieg Seafoods are one of the major players in cod farming in Norway.
It turns out there are far too many uncertainties growing Britain’s most popular
fish in a cage. They take three years at least to mature, they lose weight when
they spawn and mortality rates are high.
The market is difficult. The environmentally concerned consumer seeking to avoid
politically incorrect wild cod from the North Sea is confused. She faces other
alternatives such as line caught cod, or Pacific cod, making it hard for No
Catch to gain the necessary premium.
And premium was badly needed when the only part of the fish being sold was the
“loin” (an unusual industry term for a creature without legs). That meant no
less than 80 per cent of every fish was wasted.
In the end No Catch cod was being sold at more than twice the auction price of
wild caught cod. In truth, it was very unsustainable.
“They did produce a fantastic product, but ultimately the price it needed to be
sold at and the volumes just weren’t there. They really didn’t sell that much of
it,” Mr Smith confessed.
That much was not lost on the staff working in the factory at Scalloway who
could see that while the company policy appeared to be “no expense spared” – 10
hour Sunday shifts at double time, for example – they weren’t producing enough
fish to cover the wages bill.
Mr Smith optimistically says that cod farming today is at the same level of
development as salmon farming was 25 years ago, when the pink fish took more
than three years to grow and had trouble putting on weight no matter what they
“Now it takes half that time and you hardly have to feed these things. They’ve
got it down to a fine art, and you can only do that with a bit of investment,
trial and error.”
But no one is taking up the challenge, in Shetland at least. Mr Smith is
confident of selling the rest of the business piece by piece – the trout, the
mussels, Grading Systems with its unique way of sorting large fish from small
for harvesting, and the hatchery, which has built up an impressive “intellectual
capital” in the business of producing codlings.
Sales of most of these elements of the firm are expected in the next two weeks,
and the jobs will probably be retained in the islands “because they are not easy
But the losses are huge, with the salmon firms admitting to paying just £7
million for the fish farm equipment and licences.
Both Hjaltland and Scottish Sea Farms talk of boosting production by 2010 and
will probably soak up the cod farming staff working at sea. Already many of the
mostly East European factory workers have walked out of No Catch and into the
salmon factories where job security is higher.
Administrators Grant Thornton still have nearly 400,000 cod to grow and sell
over the next year. After that the fish farm sites will transfer to their new
owners, the cod factory will cease operating and organic cod farming will become
another tried and failed venture in these oil rich isles so desperate to find
new forms of business to keep them financially afloat in the years ahead.