Additional R23,5 million for Graaff-Reinet freshwater fish farm

MARCH 31, 2015

Construction of an additional three ponds, commercial scale hatchery and pre-processing line, coming with a R23,5 million price tag, has begun in Graaff Reinet, in one of the biggest aquaculture investments in South Africa to date.

The Blue Karoo Trust brand, Karoo Catch, received a further boost in 2014 when the Development Bank of Southern Africa’s (DBSA) Green Fund approved an additional R23,5 million for the construction of an additional three ponds for its R100 million Commercial Phase 1.

Construction began in February and at completion of Commercial Phase 1, the on-site ponds should produce 2,640 tons of fish per annum, which will provide a nutritional and shelf stable food source to approximately 275,000 people. An offtake agreement is already in place for the first 120 tons and additional letters of intent have been secured as the production volumes ramp up.

Currently, the catfish farm operates a small scale hatchery and two aquaculture ponds (one for practical training and one for production) capable of producing 22 tonnes of fish a month. The first commercial scale facility was a result of a R10 million injection in 2013 from the national Department of Agriculture, Forestry and Fisheries to cater for infrastructure and operational costs, as well as capacity building. The first production facility currently services a 10 ton a month off-take agreement for processed catfish.

“On completion of Commercial Phase 1, the initiative will boast 10 aquaculture production systems, a commercial scale hatchery, a processing facility and small scale training facilities for both farming and factory operations. Commercial Phase 1 is set to create 815 jobs (direct, indirect and induced), with 3,920 jobs being created by the end of Commercial Phase 2. In this remote rural area, every employed person supports approximately 4,5 dependants, which translates to a total of 17,640 additional people supported by this initiative.

“The construction of the three new aquaculture facilities will justify the establishment of a processing facility in Graaff-Reinet. This is an exciting addition to the Karoo Catch brand which provides an alternative for rapidly declining fish stocks, as a result of climate change, overfishing, and pollution. The Karoo Catch brand is based on fish farming, rather than harvesting wild fish stocks, which guarantees a reliable and sustainable supply of fish,” says ECDC risk capital specialist Phakamisa George.

George says the Eastern Cape Development Corporation (ECDC), as the chair of the progress support committee (PSC), is pleased that it has played a central role in rallying financial and other support for the initiative.

“From the moment the Blue Karoo Trust asked for the development financier’s help in 2006, we were always confident that it would play a catalytic role in growing the infant aquaculture industry in the Eastern Cape. High impact initiatives such as this, place the province in an advantageous position to challenge the Western Cape’s dominance of the sector,” George explains.

George says the Blue Karoo Trust first presented the idea to ECDC in 2006 to farm tilapia, which is one of the most delicious freshwater fish found in rivers. ECDC then spent some R 238 032 on an Environmental Impact Assessment (EIA) to test the impact of farming tilapia on the environment.

The initial EIA was approved, but due to market testing with various species of the processed product, a decision was made to change from tilapia to catfish. From a farming perspective, catfish is a fantastic choice because of its more resilient nature, quick growth and low mortality rates.

ECDC spent a further R612 080 on two separate market surveys, which was supported financially and operationally by the UK Department for Environment Food and Rural Affairs (DEFRA) and the Cacadu District Municipality.

“We wanted to ensure market acceptance of the product and the packaging in an effort to secure additional off-take agreements and letters of intent for the initiative as production is ramps up.

“In 2013, the ECDC-managed Eastern Cape Jobs Stimulus Fund, put in another R1,430,000 for land preparation, electric fencing and for an aquaculture training facility to kick-start the pilot phase which provided a small scale trial facility on which the commercial scale planning was based,” explains George.

However, George says various funders have made commitments to put an end to the current challenge where the processing of the catfish in retort pouches can only be done in the Western Cape.

“Currently, we have to transport the fish in refrigerated trucks to a processing factory in the Western Cape. Due to the increase in demand, the need for an in-house processing factory was inevitable. As such, ECDC approached the Department of Trade and Industry’s (thedti) Employment Creation Fund (ECF) to fund the construction of a processing factory.

“The DTI approved R5.4m towards the construction of a processing factory in Graaff-Reinet for Karoo Catch which will result in further job creation for approximately 100 people during Commercial Phase 1. The factory team will receive both theoretical and practical training during the construction phase and will be absorbed on completion,” George says.

ECDC has also asked National Treasury’s Jobs Fund for R1,3 million to fund on-the-job training to create a ready pool of staff once the additional aquaculture and processing facilities are operational, and an application has been submitted to the National Treasury Jobs Fund ‘agriculture round’ for R 50 million in order to implement Commercial Phase 1 at full capacity.