Cooke Aquaculture Inc., an independent family-owned company in St. George, has purchased the Canadian east coast operations of Heritage Salmon from George Weston Limited as well as the U.S. operations of Heritage Salmon, subject to regulatory approval. The sale was completed on Monday, June 20.

     Cooke Aquaculture is also in the process of acquiring Stolt Sea Farm's east coast farming and processing assets. If the Stolt acquisition goes through, Cooke Aquaculture will be nearly the only salmon farming company in Maine, with Erick Swanson's Trumpet Island Salmon Farm in Penobscot Bay being the only other one.

     In the transition, approximately 20 top-level executives were let go by George Weston, which provided them with severance packages. However, employment for other Heritage workers will remain "status quo," says Glenn Cooke, chief executive officer of Cooke Aquaculture. Members of Cooke's management team will meet with each new employee during the transition period. Heritage Salmon's operations in New Brunswick and Maine have approximately 620 employees, with 570 in New Brunswick and 53 in Maine.

     Sebastian Belle, executive director of the Maine Aquaculture Association, notes that some of the people who had been working for the former Atlantic Salmon of Maine and now work for Cooke Aquaculture had been worried about how committed the company was to operating in the state. Now, he says, "they're all very confident and very encouraged by the commitment that Cooke seems to have."

     "We need to get Maine turned around," Glenn Cooke says, noting that lawsuits and a judge's orders for extended fallowing periods of salmon sites have created a difficult environment for the industry. "We're very committed to the future of the industry in Maine and the working waterfront, and in New Brunswick, too."

     "We believe the acquisition of Heritage Salmon will help to secure a long-term future for the east coast salmon farming industry," says Cooke. "It will allow us to implement an aggressive turnaround plan to reduce costs, improve efficiency, improve fish health management in the region and properly align the resources of Heritage Salmon with Cooke Aquaculture's approach to profitability."

     In February, Heritage had been placed on the market by George Weston Limited. The salmon farming company had previously been up for sale three years ago, but a potential sale ended up being cancelled.

     The Heritage acquisition will provide Cooke with a number of assets: a strong sales and marketing team, the Heritage brand, additional aquaculture sites, and modern freshwater and plant facilities. Cooke expects that the plan will involve the consolidation of operations in order to improve operating performance, to stem the flow of financial losses and to secure jobs for the region's coastal communities.

     In New Brunswick, Heritage Salmon has 20 salmon farm sites, a hatchery at Lake Utopia, and a processing plant at Blacks Harbour. In Maine, Heritage has nine farm sites, a hatchery at East Machias and a processing plant in Eastport, which ended operations in the fall of 2003.

     With the Heritage, Stolt and Atlantic Salmon of Maine acquisitions, Cooke will have two major processing plants in Maine, at Eastport and Machiasport, along with a small facility in North Lubec, all of which are presently closed. Glenn Cooke says that the company "probably" would reopen the Machiasport plant, since it is a newer facility. "I don't see the Eastport plant reopening at this point."

     Commenting on Cooke's acquisition of Heritage, Sebastian Belle says, "It's a family-owned company, regionally based, that's proven to be competitive. It will make the region more competitive, so we view it as a good thing." Belle comments that as more sites in the state become owned by Cooke Aquaculture, the company will have a greater impetus to use a Maine-based processing plant, "so it's a plus for Maine."

     The total number of fish being stocked will "stay the same" in New Brunswick, while stocking in Maine will be increased, Cooke says. "We would like to start stocking more in Maine and get back to where it was. We want to move the production capacity to where we can open a plant." During the past couple of years, salmon production has dropped off significantly in Maine, from a high of 36 million pounds in 2000. In 2004, production was 18.8 million pounds, but by 2006 the numbers will be much lower. This year Cooke Aquaculture will be stocking only one site in Maine, Spectacle Island near Beals Island.

     Cooke says the other sites are not being stocked because of year-class separation requirements. As part of a bay management agreement initiated by the salmon farmers and supported by the Department of Marine Resources and the U.S. Department of Agriculture veterinarians, Cobscook Bay, which had been divided into two sections for stocking in an effort to control infectious salmon anemia (ISA) outbreaks, will now be converted to a single year-class stocking strategy. The Heritage site in Broad Cove has fish that were stocked in the spring of 2004, and its farms off Birch Point and in South Bay still have second-year fish that are being harvested.

Financial impact on Eastport
     Eastport City Manager George Finch confirms that the city and the port authority had considered purchasing the Heritage Salmon processing plant in Eastport. A potential offer was in place in an effort "to protect the property from being purchased for non-industrial purposes," he says. "The property borders the Estes Head cargo port facilities, contains a freezer plant and has warehouse capacity as well as pier access. In addition, it is one of only a very few industrial facilities available for growth in the marine fisheries industry."

     He says the purchase option fell through as the deal by Cooke became apparent, and requirements for environmental assessment and the title search for the purchase exceeded the deadline for completing any final business deal.

     Concerning the financial impact on the city, Finch states, "The loss of assessed value to Eastport with the demise of the aquaculture industry has been and will continue to hurt the city financially. The loss of over 100 jobs over the past few years alone is a terrible blow to the economic stability of the area." The Heritage operations in Eastport had employed nearly 150 people in the past.

     According to Finch, the dismantling of the processing operations at Estes Head and of a number of aquaculture pen sites will amount to over a $4 million loss in city property valuation this year. That loss, along with additional cuts in state funding, could result in an additional $1.50 per thousand on the mill rate. Finch will present information at the July 11 council meeting about the lost revenue and its impact on the approved budget for this year.

Restructuring in New Brunswick
     In New Brunswick, Cooke says there will be some restructuring to address fish health issues, but "we don't see a reduction in the number of sites." Cooke Aquaculture will continue to use the Heritage Salmon plant at Blacks Harbour. "They're a valuable workforce," says Cooke.

     Although Cooke Aquaculture will now be nearly the only salmon farming company in Maine, Glenn Cooke notes that there are still a number of independent companies in New Brunswick. "We want to see them survive. It's very important for us," he says. "It's not healthy for the economy for there to be only one company." He says that Cooke Aquaculture wants to partner with those companies in efforts such as government policy.

     Cooke is also "very committed" to the coordination of year-class stocking at salmon farms in the ongoing bay management effort to address ISA management.

     Like Belle, Hugh Moran, general manager of the New Brunswick Salmon Growers' Association, believes the acquisition is good for the industry, noting that there was some concern that, if Heritage Salmon was not sold, its operations would be shut down or sold in pieces.

     He notes that the acquisition will make it easier to implement the Atlantic Canada Salmon Farming Sustainability Plan and a federal/provincial task force report for marketing and raising salmon. Under that plan, a three-site system will be set up for each company so that every year one site will be fallowed. "Farmers can then hold fish for a period to respond to market conditions," he notes. Also, fish health concerns will be easier to deal with, since fish farmers will not have to place smolts in the water at sites where there already are fish.

     For the industry's long-term future, farm support programs are needed to help fish farmers deal with the risks they face. "It will enable us to attract more farmers into the business," Moran says. The industry is presently awaiting an announcement from the federal government on an emergency financing package, which will determine how many companies will remain in the province. With the financing, there will be 15 to 20 companies; without it, some companies will not survive. "Everyone in the industry is counting on that support," he says, pointing to the difficulties faced in the past few years: ISA, superchill losses from abnormally cold winters, competition from Chile, the rising Canadian dollar, low prices and the PCB scare.