RIC, page-2

Al, I guess it's common knowledge now that the debtor is Huon Aquaculture (HUO). I can't believe they are doing this. Here's why:
Consider these 2 issues. Low levels of oxygen and fluctuation of salinity and temperature of the water the fish are living in.
Macquarie Harbour in which much of HUO's fish is farmed has suffered low oxygen levels many times. This is caused/worsened by fish farming itself and the fish cease to thrive. This situation was worsened by the El Nino that finished earlier this year - one of the most powerful recorded. The water off Tasmania's coast rose to the warmest levels ever recorded (refer Catalyst on ABC last night). As water warms, its ability to hold oxygen falls (refer high school physics). And just as the ElNino dispersed Tasmania endured the worst rainfall events ever. The parched drought and bushfire damaged landscape shed water at an astonishing rate causing immense floods that polluted waterways and reduced salinity - a very bad event for farmers generally - including those in aquaculture.

I noticed when shopping in a salmon shop recently (not HUO's) that there were many unusually small (but good eating nevertheless) salmon for sale - probably caused by same environmental factors noted above.

So why blame the food?
The HUO website under "sustainability" contains the following "Huon has the only ongoing dedicated research program in Australia into salmon feed. We work in close partnership with our feed suppliers to understand and continually improve our feeds so they provide a balanced, healthy and tasty diet for our fish in the unique Tasmanian environment. This generates a specification for our diets for each stage of the salmon’s growth and our feed suppliers manufacture to this specification. There is some flexibility over which ingredients go into the recipe to deliver that specified feed but all ingredients must go through rigorous quality checks before they can be used."
HUO were in discussions with Ridley earlier this year to establish a Ridley owned feedmill on their site so they were on speaking terms then. There needs to be co-operation between stockfeed suppliers and their customers to develop feed with ever lower wild fish content - replaced with plant material - but end product just as acceptable to the farmed fish and as nutritious. This requires a 2-way flow of information - but HUO seems to have let the side down as they consumed 5 months of feed that they are supposedly unhappy with before they told Ridley.

So what's behind all this? Could it be that there is insufficient warning of the risks of farming to potential investors in the prospectus for the recent HUO capital raising? There is one sentence under the section "key risks" on page 14 - one sentence in 155 pages! Bonus's looking doubtful so blame someone else? No insurance covering forces outside of their control? Maybe some plaintiff lawyers in the mix?

Who knows - but I doubt that HUO will get away with this but it could be a drawn out affair with the only winners being the lawyers.