The cod farming industry has been gaining momentum as an excellent opportunity to provide sustainable and healthy protein to the world. We had the opportunity to talk to Ola Kvalheim, CEO of former Gadus Group, now Ode, the Norwegian-based cod farming company, and discussed the challenges and opportunities in the industry.
How did the idea of starting with cod farming come about?
The world needs more healthy and sustainable protein, and farming cod is an excellent opportunity to solve both the need for more protein and the need for more sustainable food production. I grew up in a small rural community along the Norwegian coastline, with a long heritage of exporting cod. Before the tremendous success of the salmon industry, cod was the most important seafood option from Norway. Now we are finally able to successfully farm the iconic Atlantic cod.
What is the biggest challenge of cod farming compared to salmon farming?
At Ode we have been building a company, organisation and structure from the ground to almost 100 employees in less than 3 years. People often talk about licenses, farms, and boats, and seem to somehow forget that we are building completely new organisations, a new culture and creating solid structures. Salmon companies are large and have a long history with the existing set-up. We are young and innovative with tremendous growth and dynamism.
How do you see the competition evolving in the future, with more and more players trying their hand at cod farming?
We think the publicly available projections of growth of the industry over the next 3-5 years is greatly overestimated. Publicly announced estimated harvest volumes for 2023-2025 have already started coming down and we expect more negative revisions to growth outlook through 2023. In the long run, the industry has fantastic potential for growth and value creation, and we expect to be the key driver of that growth. It’s the typical problem of overestimating short-term changes and underestimating long-term changes.
What are your thoughts on going public in the near future, like Norcod?
We are very pleased with our shareholder structure and currently do not foresee any changes. Our structure provides a stable and long-term foundation for developing our company. This long-term orientation allows us to build organisational structure, improve our value chain, develop our operations and scale according to the relevant input factors. Put together, that is a key differentiating factor for us.
What measures have been taken to prevent unfortunate incidents like the escaped cod from the Volda location?
We run our operations according to the same high standards as the rest of the aquaculture industry in Norway, are certified and have invested significantly in new and modern equipment. The most important strategy is always to have competent and experienced people that have the right mindset, the right culture and work well together. We are very data-driven and have more than 100 sensors in each of our farms. Together with our underwater cameras, this connects our control room and feeding central to our farms and ensures we monitor key aspects live. It also enables us to gather and analyse data to learn and improve faster all the time. We spend significant time getting to the bottom of any type of incident impacting our company negatively. For the incident at Volda we did that, found the cause and have now made the necessary changes.
What are Ode’s overall future plans?
We are sticking to the ambitious growth-plan we set back in 2020. We are very long term oriented and aim to be a leading seafood company in the future. Initially we had a clear focus on building our organisation, our value chain, establishing best-in-class operations and positioning our product in the market. Based on very strong operations and biology coupled with solid demand for our products, we are now scaling significantly up.
Have there been no investment stoppages in the cod industry?
Investment is drying up everywhere – salmon, other species, land-based. Risk premium for investments in Norway has gone materially up due to increased political risk. Specialty taxes imposed ex-post change behaviour and make people think twice about investing in new projects and new companies.