Cutting-edge firm making waves in salmon industry

It is a beautiful, if unlikely, location for a company involved in cutting-edge scientific research that could have a global impact on aquaculture. It is also the base from which the firm hopes to make inroads into Norway and Chile – the largest players in the industry.

Neil Manchester is director of Landcatch Natural Selection, which, he explains, is not a normal fish-farming company:

"We like to say that we sell one thing and that is science, but we sell it in three packages: genetic services; eggs; and salmon smolts, juvenile fish."

He explains the genetic services work, undertaken at the firm's base in Alloa, is all about improving the product through breeding, which is done at Ormsary.

The purpose is to make the production of the fish that end up on supermarket shelves more cost-effective. The ultimate goal is the perfect salmon.

He says: "Salmon are a relatively new species to be farmed and the industry has only really been going for about 40 years.

"We are probably only about 10 generations from an entirely wild animal. If you look at other livestock species like cattle, sheep and pigs, they have been selectively bred for farming purposes for many thousands of generations, across more than a millennium."

He says the more progress that is made, the less controversial fish farming should become. Fish welfare and consumer safety are the watchwords.

"We are looking at disease resistance, so that will result in fewer therapeutics [chemicals] being used in the industry and that should satisfy environmental concerns. Sea lice is a major project we are involved with. If we can eliminate the sea lice issue within Scotland, then you take away one of the major arguments against aquaculture raised by the wild fish lobby."

Progress has been made already. In 2007, Landcatch, working with Glasgow University and Stirling Institute of Aquaculture, pinpointed a major gene influencing infectious pancreatic necrosis (IPN)

"IPN affects both wild and farmed salmon, but has a greater impact in farmed salmon because of the numbers you have in a contained environment. It is a virus, and you normally don't know until the fish are dying. Ten years ago, producers regularly expected up to 20% losses due to IPN in seawater. Nowadays in the industry, with the combination of improved vaccines and breeding, we are rarely seeing any losses to IPN in seawater.

"But on our own sites, although we once saw IPN about 10 to 12 years ago, it is, touch wood, a thing of the past."

He says the key development has been identifying markers that pinpoint where genes reside. "The memorable quote from our geneticist Dr Alan Tinch was 'we are closing in on the genes all the time. It's a bit like us knowing the street where they live but we just don't know yet which houses, whereas previously we only knew what town they lived in'. The new technology we have introduced, the SNP chip, takes us to the next stage.

"The exciting thing is that once we have the SNP chip developed, it wouldn't just be applied to IPN but we could establish the different positive traits and breed from those."

The SNP chip has nothing to do with Alex Salmond's diet. It is a cutting-edge genomic selection tool used to analyse variations in DNA sequences, or single nucleotide polymorphisms (SNPs), which act as biological markers and help scientists locate a range of genes associated with disease. Work is well advanced on sea lice, with Landcatch having run collaborative projects with Glasgow and Edinburgh universities. "We have been exposing our fish to sea lice then identifying individuals which resisted them best. That allowed us to showed that sea lice resistance is heritable. If it is heritable, it allows us to breed fish with inherited resistance."

He says this has genuine global significance.

Landcatch was started by the shipbuilding Lithgow family in 1980 as a way of generating income and employment on their Ormsary Estate along with a big hydro-generation scheme. Today there are around 30 households working on the estate, mostly for Landcatch.

Mr Manchester, 48, joined in 1998. He was from a farming background in Wales, did a degree in agriculture but saw that the industry was in trouble and looked for an alternative. Aquaculture seemed to present some opportunities.

He came to Scotland in 1985, when fish-farming was in its infancy and started with Kames Fish Farming Ltd at Kilmelford, south of Oban, and was there for 13 years before going to Landcatch as an area manager, progressing to director level.

In the mid-1990s, the Lithgows decided to focus on fish breeding. As a result, Landcatch became heavily involved in exporting eggs to Chile in the early years of the 21st century.

But the Chilean salmon industry had suffered major losses to infectious salmon anaemia in 2007, and one of the measures taken to recover the situation was to close the door to imported salmon eggs in 2008. So the Lithgow family decided that aquaculture wasn't for them, and look for a buyer.

Enter Dutch-owned multi-national livestock breeding company Hendrix Genetics.

Hendrix has operations and joint ventures in 24 countries and more than 2500 employees. So being part of that is significant for Landcatch, not least the access it gives to research and development facilities.

It took over in June 2011, with Landcatch a loss-making concern. "We have undergone a restructuring of the company and so 2012 is a difficult trading year. But our anticipated turnover for 2013 is just over £6m with a target return on capital in excess of 15%. We already have markets to deliver these figures, and we are looking for more.

"Our parent company Hendrix is used to being number one or number two in the world in every field they operate in. So that's an indication where they see aquaculture going. The only way we can make substantial inroads into the global market is to make an entry into Norway."

They are already in Chile.

"Using the Landcatch strain of salmon, we are managing the breeding operations of other companies. In fact, the Landcatch strain now accounts for 26% of the Chilean total. But we have no physical production ourselves. By selling that technology, we get revenue and genetic support fees as well.

"However, we are investigating setting up a new company and our target is to win about 40%-plus of the Chilean market share over the next five years.

"We plan to achieve that either through increased production from the contracts we have or new genetic support contracts and possible acquisitions as well. Within that five years, we also need to make entry into the Norwegian market using the same strategy."

Back in Argyll, Mr Manchester is proud the jobs that Landcatch provides helped save the local Achahoish Primary School from closure. He also lays great store by the close link he has with Lochgilphead High School. "I go in there regularly to give careers talks because I am trying very hard to employ locally. I want the pupils of today to know there are worthwhile careers for them without leaving Argyll."