One comment on “Reedsport.info for November 17, 2016
  1. Umpqua River Free-Range Salmon Project

    By A’eron Blackman
    Jan 2016

    Abstract
    The purpose of this document is to provide information on the opportunities afforded by free-range salmon rearing/harvesting near Steamboat Island in the lower tidewater area of the Umpqua River of Douglas County Oregon and persuade potential investors to make available capital for the estimated 15 million dollars required to develop facilities and infrastructure required for a viably profitable industry within 8 years.

    Contents
    1.0 Executive Summary
    1.1 Objectives
    1.2 Mission
    1.3 Keys to Success
    2.0 Company Summary
    2.1 Company Ownership
    2.2 Start-up Plan
    2.3 Company Locations and Facilities
    3.0 Products and Services
    3.1 Product and Service Description
    3.2 Competitive Comparison
    3.3 Sales Literature
    3.4 Sourcing and Fulfillment
    3.5 Technology
    3.6 Future Products and Services
    4.0 Market Analysis Summary
    4.1 Market Segmentation
    4.2 Target Market Segment Strategy
    4.2.1 Market Needs
    4.2.2 Market Trends
    4.2.3 Market Growth
    4.3 Industry Analysis
    4.3.1 Industry Participants
    4.3.2 Distribution Patterns
    4.3.3 Competition and Buying Patterns
    4.3.4 Main Competitors
    5.0 Strategy and Implementation Summary
    5.1 Strategy Pyramids
    5.2 Value Proposition
    5.3 Competitive Edge
    5.4 Marketing Strategy
    5.4.1 Positioning Statements
    5.4.2 Pricing Strategy
    5.4.3 Promotion Strategy
    5.4.4 Distribution Patterns
    5.4.5 Marketing Programs
    5.5 Sales Strategy
    5.5.1 Sales Forecast
    5.5.2 Sales Programs
    5.6 Strategic Alliances
    5.7 Milestones
    6.0 Management Summary
    6.1 Organizational Structure
    6.2 Management Team
    6.3 Management Team Gaps
    6.4 Personnel Plan
    7.0 Financial Plan
    7.1 Important Assumptions
    7.2 Key Financial Indicators
    7.3 Break-even Analysis
    7.4 Projected Profit and Loss
    7.5 Projected Cash Flow
    7.6 Projected Balance Sheet
    7.7 Business Ratios
    7.8 Long-term Plan
    8.0 Appendix

    1.0 Executive Summary
    1.1 Objectives
    The primary objective of the business will be to raise, rear, release, and harvest Chinook and Steelhead salmon for the purpose of selling the harvest on the wholesale market at a profit and propagating future raisings, releases, and harvests in perpetuity.

    1.2 Mission

    It is the mission of this business to restore critically threatened Chinook and Steelhead populations in the Lower Umpqua tidewater area to commercially viable and profitable levels. With a secondary mission on educating the public as to the marine biology required to maintain the facility.

    1.3 Keys to Success
    The keys to success are: 1) Get a change (or exemption) in federal law concerning the ownership of the salmon released so returning fish may be harvested without regard to existing salmon harvesting regulation in time for the first harvest. 2) Gaining ownership or long-term use of the parcel of land near Steamboat Island needed to build the required facility and infrastructure to achieve the business’s objectives and mission. 3) Raising the incremental finances needed to accomplish each of the sequential phases require to accomplish the business objectives and mission. 4) Complete each of the sequential phases successfully until a profitable harvest in perpetuity is accomplished.

    2.0 Company Summary
    2.1 Company Ownership
    Preferred share investors as and S corp. or C corp. (if needed) will initially own the company. Upon reaching profitability the Corporations board will begin buying back/replacing preferred shares at cost with a 6.5% annual interest rate and a share of common stock on a first in first out order. The initial amount of common stock will be twice the total of preferred share stock with the unclaimed common shares being owned and controlled by the company’s board. Dividends are expected to begin being paid annually as soon as all preferred shares are repurchases and replaced with common shares. The projected yearly dividends is .13 cents a share.

    2.2 Start-up Plan
    In the first quarter of the first year beginning Jan 1, 2017 the board will: 1) draw up articles of incorporation, 2) begin the investor search, 3) begin grant search, 4) make inquiries into obtaining the required land, 5) identify the process, time line, and requirement for changes (or exemptions) to federal and state salmon harvesting regulations, 6) inquire into possible ways of getting Chinook and steelhead brood stock.
    In the first week of the second quarter the board will hold a meeting to discuss the business progress and set the second quarter and third quarter goals and update the business plan as needed.
    In the first quarter of the second year the board will prepare to break ground on the facility and infrastructure required for in the first year rearing of the salmon. Equipment purchasing will begin and employee hiring may be required.
    In the second quarter of the second year the site will begin operating and construction will continue as needed meet the rearing requirements of the smolt.
    In the third quarter of the second year site construction will continue and the first of the Chinook smolt can be freed.
    In the fourth quarter of the second year construction needs for Chinook rearing will be completed and further construction will only be required for the steelhead.
    In the first quarter of the third year preparations for the second series of Chinook will begin as the construction needs for the steelhead will continue.
    In the second, and third quarter of the third year the second series of Chinook will be reared and construction of rearing facilitates will reach final phases.
    I the fourth quarter of the third year, the second series of the Chinook smolt will be freed and the first half of the first series of steelhead will be released to range freely. All required rearing pond would be in place.
    In the first second quarter of the fourth year final preparation for the harvesting facility construction will be made and all laws/regulation changes/waivers would need to have been accomplished or nearly accomplished.
    In the third quarter of the fourth year the third series of Chinook will be reared, the second release of the first series of steelhead will be released and preparations for the first harvest will begin. All construction should be complete and expected losses will decrease significantly.
    In the fourth quarter of the fourth year 500,000 pounds of marketable unreleased steelhead will be ready to harvest. The facility should be able to maintain and repeat this marketable capacity every quarter in perpetuity. Additionally a 5% return of released steelhead can be expected to begin returning annually. There may also begin a return of Chinook.
    In the fifth year a 500,000 pound per year of marketable steelhead will continue and a semi-annual return of free range Chinook and Steelhead is expected to begin with a 5% return rate. With an estimated release of 5 million smolt returning at a average weight of 20 lbs (200,000 x 20= 4 mil lbs annually) in perpetuity.

    2.3 Company Locations and Facilities
    The Companies facilities will be located near Steamboat Island in Douglas County, Oregon.

    3.0 Products
    3.1 Products
    The Company will offer: 500,000 lbs of tank raised ‘trout’ weighting approximately 10 lbs each annually, Approximately 4 million lbs of free range Chinook and Steelhead weighing approximately 20 to 30 lbs each.

    3.2 Competitive Comparison
    There is essentially no difference between our free-range salmon and those caught commercially in the pacific oceans. Our farm trout will be essentially the same as other farmed trout.

    3.3 Sales Literature
    Sales literature will be unnecessary, as we will sale to the same wholesale buyers as the local commercial fisherman.

    3.4 Sourcing and Fulfillment
    Sourcing and fulfillment will most likely come initially from the Bonneville Fish Hatchery in Turner Creek, Oregon however we hope to get some from local fishermen if possible. Initial eggs may also be purchased from other fish farms.

    3.5 Technology
    The only technological difference between the Bonneville fish hatchery and us will be a preferred reliance on wind too meet out water pump requirements.

    3.6 Future Products and Services
    A brand of canned or perhaps frozen products would be possible with addition possible secondary product like crab bait of pet food as well as tourism if additional land could be optioned.

    4.0 Market Analysis Summary
    4.1 Market Segmentation
    The market segments breakdown includes salmon , consumer or commercial processor at city, county, state, regional, and international markets by species and designation of farmed or unfarmed. Our target market is intended to be local and regional wholesale commercial processors.

    4.2 Target Market Segment Strategy
    Local and regional commercial processing buyers in Winchester Bay, and Charleston will make up the initial target market until capacity is reached at which time consistent excess may be optioned to out of state, offshore, or international markets.

    4.2.1 Market Needs
    The local and regional market needs are not at facility capacity. The need for product to reach an economy of scale is required especially for unfarmed commercial salmon
    .
    4.2.2 Market Trends
    Demand for salmon is growing as the supply of naturally occurring ocean stock is depleting. Demand for farmed salmon is on the raise but demand for unfarmed salmon is greater. Demand for steelhead is growing in line with market trends but because of the Chinook threatened status; demand for them is greater in both markets and the supply of farmed Chinook in nearly non-existent.

    4.2.3 Market Growth
    The market growth potential is at least as great as is was in it’s peak. Because demand has exceeded supply for decades, our projected capacity of a 5% return of salmon release could quadruple and still be absorbed at current market prices.

    4.3 Industry Analysis
    Free-range salmon rearing is at best a fledgling industry due to current international, federal, and state regulations. Failure to get changed or exemptions to theses regulations at the Federal and state level will poison the industry to the point in inviability.

    4.3.1 Industry Participants
    Currently the federal government is the only agency participation in this industry in the lower 48 states but their entry into the commercial market is a relatively new development. There are rumors of tribal participation at non-commercial levels in the state of Alaska that are worthy of note.

    4.3.2 Distribution Patterns
    Industry distribution is limited to watersheds capable of supporting them. The Columbia River is the largest with the Sacramento River being the second largest where Chinook runs have had significant decline do to drought.

    4.3.3 Competition and Buying Patterns
    Aside from the federal facilities and a few non-commercial tribal participants, there is currently no competition in this specific market. Commercial fishing boats will make a dent in possible returns and be selling to the same whole sellers as us however because federal facilities are responsible to stocking what commercial boats catch using Federal hatchery return rates when developing our business model makes commercial boats inconsequential so long as the Umpqua River is not open to commercial fishing.

    4.3.4 Main Competitors
    The main competitors are farm salmon operations in nations like Ireland, Chille, etc which are currently unable to meet demand are not meeting and of the demands for unfarmed demands. Aside from the US federal government, which is not really competing for the commercial market share, there are no real competitors at this time with a possible exception of Mother Nature.

    5.0 Strategy and Implementation Summary
    5.1 Strategy Pyramids
    See attachment

    5.2 Value Proposition
    In ten years or less the company intend to offer investors the following ratio values.

    Gross profitability of .80
    Net profitability of 1.00
    Return on investment of 100% by year 10 plus an additional 7% annually
    Earnings per share of .17 cents annually
    Investment turnover of .33 annually for 10 years
    Sales per employee of $200,000
    Current ratio of 5
    Quick ratio of 4
    Cash to assets of .53
    Debt to equity ration of 0
    Common stock value of $1.95 per share

    5.3 Competitive Edge
    Competitive edges include: being a pioneering industry leader, aiding in the recovery of a threatened food source, being self-perpetuating.

    5.4 Marketing Strategy
    Because we are going to be initially selling to the wholesale market that already exist the only real marketing strategy needed will be that of acquiring the necessary fund to prove the concept. A total of $15,000,000 in cash or line of credit will be needed to be fully operational over a three to four year period a maximum of 100 investors contributing an minimum of $150,000 each is the goal.

    5.4.1 Positioning Statements
    Because this company will be a pioneer in the field of free-range commercial salmon rearing, once the concept is proven we will hold the only commercial position in the industry.

    5.4.2 Pricing Strategy
    We will be subject to the wholesale commodities pricing, but based on demand and lack of supply we can expect to prices to be in line with current market pricing aided by both inflation and a continued pressure on a decreasing natural supply.

    5.4.3 Promotion Strategy
    Because we will be selling to the wholesale commodities market, promotion will be virtually unnecessary.

    5.4.4 Distribution Patterns
    Distribution will begin in Winchester Bay until their capacity and economy of scale is reached at which point transportation to Charleston is needed in the 5th or sixth year of operation. When capacities of those to facilities are reached reevaluation of our entire market will be needed.

    5.4.5 Marketing Programs
    Marketing programs will no be necessary for the first few to several years as we will be selling to the wholesale commercial market already established in the region.

    5.5 Sales Strategy
    Initial sales strategy will need to be focused on preferred stock sales rather than product sales. Preferred stock sales will be directed at foundations and individual who share an interest in our company’s goals and mission.

    5.5.1 Sales Forecast
    The forecast for preferred share stock will be challenging.

    5.5.2 Sales Programs

    5.6 Strategic Alliances

    5.7 Milestones

    6.0 Management Summary
    6.1 Organizational Structure
    The organization will be made up of a board of directors. The board will consist of: CEO, COO, CMO, CLO, CFO, CSO, CHRO. Other officers may be added as needed.

    6.2 Management Team
    A’eron Blackman will initially act as CEO, COO, and CMO.

    6.3 Management Team Gaps
    A CFO will need to be filled as soon as investment starts. A CSO and CHRO once operation begins and may be the same person.
    6.4 Personnel Plan
    The CEO and CLO will work together to fill the CFO, CSO. The CEO, CLO, CFO, and CSO will work together to fill the CHRO slot. The CHRO will work with the other officers to fill additional employee slots as needed.

    7.0 Financial Plan
    7.1 Important Assumptions
    Assumes that a change or exemption in Federal and state regulations governing the harvesting of salmon can and will occur within three years of breaking ground on this project. Assumes at least 5% of the smolt released will return will return. Assumes the first generation of smolt will begin to return within three years of release. Assumes six million smolt can be reared and released in the first year of operation and in each year following until first generation of salmon return. Assumes a wholesale market price of at least $3 a pound for Chinook and that returning Chinook will weight at least 20lbs.

    7.2 Key Financial Indicators

    7.3 Break-even Analysis
    Company is expected to break even in no later than year ten but perhaps as early as year seven.

    7.4 Projected Profit and Loss
    Year one projected loss of $1,000,000
    Year two projected loss total of $3,000,000
    Year three projected loss total of $7,000,000
    Year four projected loss total of $15,000,000
    Year five projected loss total of $11,000,000
    Year six projected loss total of $7,000,000
    Year seven projected loss total of $3,000,000
    Year eight projected profit of $1,000,000
    Year nine projected total profit of $5,000,000
    Year ten projected total profits of $9,000,000

    7.5 Projected Cash Flow
    Year one cash flow -$1,000,000
    Year two cash flow -$2,000,000
    Year three cash flow -$4,000000
    Year four cash flow -$7,500,000
    Year five cash flow +$5,000,000
    Year six cash flow +$5,000,000
    Year seven cash flow +5,000,000
    Year eight cash flow +5,000,000
    Year nine cash flow +$5,000,000
    Year ten cash flow +$5,000,000

    7.6 Projected Balance Sheet
    See attachment

    7.7 Business Ratios
    See attachments

    7.8 Long-term Plan
    8.0 Appendix

    For more information and inquires contact me at ajblackman@rocketmail.com

    #salmonfarming #Reedsport #Gardiner #Oregon #salmon #steelhead #trout #investment #profit #aquaculture #farming 

Comments are closed.

%d bloggers like this: