The Israelis who will save the world's fish

Translated from עובדי אצות: הישראלים שיצילו את הדגה העולמית

רותם סלע | 25/12/2010 12:27

The oceans are emptying, the Chinese become prominent, the Europeans get older, the fish are getting more expensive and the Israelis invent and initiate, with no commitment to a specific domain or site. For example, the entrepreneur Eric Koppelman - once one of the co-founder of high - tech Relegence, a search engines manufactured which was sold to AOL for tens of millions of dollars; later, one of the first investors in the company Green Road, which manufactures innovative technologies for vehicles' safety and which the Venture Capital Fund investment of Al Gore inversted in; today: a fish farms' investor. Yes, fish and algae.

His partner, Bud Janowski, was - until a little less than two years establishing and managing venture capital funds for the Korean government, and spent - he said, 4 out of the last 10 years in the Far East. Before that he worked as a manager of venture capital investments at Ampal which invested in M-Systems, remembered for the invention of the Disk-on-Key. Today, he's also involved in fish and algae, or in more attractive wording: aquaculture. It's much more profitable than it sounds.

Koppelman and Yanovsky vision for SEMG systems is shaping up - especially the link-up with the government of Vietnam. They are going to build a giant fish and algae farm utilizing a particularly innovative circular method: the algae, utilizing carbon-dioxide they need for growth from polluting power plants, serve as food for the fish: the fish are grown in special containers that look like huge test tubes; their excrements are used as fertilizer for the algae, and the process is repeated.

The duo's story is inundated with high-tech, money and grants, collaborations and dreams of expansion to East Asia. "Once one farm is operational, there's no problem in duplicating it," declares Koppelman. So why in fact, not?

Fish today are less and less as in the "Old man and the Sea" by Ernest Hemingway - that image of a person venturing into the big blue, rod hanging from his shoulder and his boat at the mercy of the heavens, Poseidon, and the Goddess of Luck. It may serve as a nice postcard for tourists, as a children's tale, or as nostalgy - but the real story is a bit more complex, and in many ways much more interesting.

First of all people eat far more fish, and as fish get eaten - the fish run out. Decades ago the story of man and the sea was not much different from the conduct of prehistoric man, exiting each day from his cave into the wild. And as that human picked what grew wild, or what roamed the Earth, so the fisherman - though equipped with increasingly advanced technologies - caught what Mother Nature offered him.

In fact, only the late '50s commercial growth of fish for consumption, especially in cages placed in the sea where fish were grown in more crowded and controlled living conditions. Until the early '90s, open fishing - called "wild" by marine farmers – produce about 90% of the world's fish. However, aquaculture now accounts for more than a third of the fish market, with world trade estimated at $100 billion a year.

The reason for the change was the sharp decline in the fish population, at lakes, seas and oceans. "There are estimates according to which in a few years fishing in the Mediterranean will be prohibited," said Janowski, who serves as CEO of SEMG. He points to the a graph showing the growth in world fish market, which grew from 30 [sic. Probably meant 30 million] tons in the 50s to more than 5 times that today, while the division between aquaculture fishing and "wild" fishing (which is not growing in recent years) stays the same [sic].

"Economic growth in the Far East and the rise in material welfare of a large part of the planet's inhabitants results in people eating far more fish," said Janowski. He said, "It's simple: as a person's income rises, the first thing that changes is that his diet becomes richer in proteins and calories." Thus economic growth and demographic explosion joined to contribute to a slow but persistent extinction of marine ecological environment, covering about 70% of the area of the planet.

But marine cages are no longer the last word in an attempt to meet demand for fish. New inventions often create new problems, and in the case of the cages there were claims that placing them in the sea causes an increased distribution of disease, degeneration and destruction of ecosystems found in their environment. "Many times the fish cages are located in pastoral bays, that are defined as Nature reserves which are tourist attractions," said Janowski. "This actually augment the damages."

For example, in Eilat fish cages were placed by companies Ardag and Dag-Suf, which provided livelihood for hundreds of families and yielded thousands of tons of fish annually. However, public pressure eventually led to the government's decision to get the cages out of the Bay of Eilat. "Along with the severe damage to the environment, and in fact because of it, there is a strong consumer trend against the purchase of these fish," says Janowski. Indeed, a number of retailers – from the American's Wal-Mart, through the British Marks & Spencer and Dansk, the largest network in Denmark - have announced that starting next year they will refrain from purchasing such fish grown in cages. The course to the sea is again getting closed, but with a hungry world - the Israelis produce answers.

Janowski and Koppelman do not define themselves as farmers. In fact, if you met them a decade ago and told them that their future will be in aquaculture, you would probably be met with raised eyebrows. Still, they are in Vietnam, tieing the ends before the establishment of their first fish and algae farm.

The farm could provide a breakthrough not only in fish growth, carried out in containers rather than in cages, but also in fish feed production - made with algae instead of flour and fish oil - and in the production of Omega 3, derived from algae that are not fermented. Thus, it can also help in battling global warming.

"A farm of 500 acres is expected to sell about $80 million a year to earn 30-25 million dollars," says Koppelman and continues: "When we establish one that works, we can replicate this model in other places like Cambodia, Korea, China and Thailand, who have already approached us."

Why the East? "Cheap and skilled fish farming labor, as well as the fact that all the processing industries, cold storage, marketing infrastructure and fish exchanges are already located there," says Koppelman, who has invested with Yanovsky the last two years promoting the project and is convinced they have the trump card.

On Janowski right sits Dr. Amir Drori, an expert on algae who has worked the past two years at a biofuel from algae producing American company and before that has specialized in manufacturing special algae for fish coloring, which make up some of the products SEMG tries to produce.

Fish painting?
Koppelman: " Do you eat salmon?".
At Weddings.
"Well, 90% of salmon sold today comes from cages in fish ponds, which do not eat the algae found in the sea, that causes them to become red. Because no one wants white salmon on their plate, it creates a $300 million market for fish and shrimp pigmentation."

Drori's right hand is Dr. Elizabeth Judah, who's the company's main biologicist, and Drori is Professor Jonathan Zohar, the company's chief scientist's deputy. Professor Zohar, in fact, resides sitting thousands of miles away, at the University of Maryland, where he serves as head of the Institute of Marine Technology. Zohar, one of the great experts in aquaculture, develops and operates fish breeding systems in crowded containers on dry land, in which a huge density of fish is managed in a sterile and controlled environment, and where the growing time is half the usual, while consuming only 80% of the normal amount of food. According to Kopelman, it's worth a lot of money.

"This is a very complex system," says Drori, "not yet used in an industrial manner, as there a need to control the water quality, filterisation and a lot of other factors and variables, to ensure optimal growth and quality. It's not easy."

Pictures of Zohar's center in Maryland show that the system seems very effective: 3-2 meters in diameter pools covered with plastic shade, dense fish floating content – so dense they actually touch each other. According to the SEMG, this is the future of raising fish.

Today SEMG explores two different areas, north and south of Vietnam. The Vietnamese, very interested in the green image and the innovative technology the company offers, gave them the land for free. In addition, they receive government grants and carbon-dioxide from a nearby power plan - a nuisance the locals are happy to get rid of. The activity in the center is managed by Asher Sadan who resides in the county for several years, and is the former manager of the Fishman group in Vietnam.

An ecologic-economic system is expected to be created in the 500 acres of the farm, which will join together the scientific fantasies of Zohar Drori with the business ones  of Janowski and Koppelman. Growing algae is cheap, as they feed on carbon-dioxide and the sun in giant pools, and become food for young fish living in another part of the compound. From there the maturing fish are moved to growth containers - a series of structures each of which "produces" about 500 tons of fish annually.

The two also have further programs, except expansion, such as adult fish food. "Today, only young fish eat algae, while adults fish eat fish," said Janowski, "In fact, this accounts for half of the cost of their growth, and because the demand for fish rises – along with it rises their feeding price. Each year, the price of fish flour and fish oil climbs. Professor Zohar was able to use algae to feed mature fish, and today the price is almost equal. I believe that in 3-5 years, with technological advances and continuing upward trend in prices, it will become a huge market. "

Yanovsky, who began his operations in East Asia in '98, with the opening of a joint venture fund with the Government of Korea, knows the Asians to their core.

What's the sentiment between the Asians and Israelis?
"For them we are all Jews. They have a deep appreciation of our history, intellectual abilities, initiative and what they perceive as the impact we have on the world. For example, the incursion of Chinese money into Israel: they look at us - so small and produce so much Hi-Tech – and they are angry at themselves that they let the Americans "soak" us of all that technology. They have tremendous appreciation for us, really."

And it helps business?
"Yes," he says, "no doubt."