Periodic Reporting for period 1 - TOPBALAT (Setting up high-value Sea cucumber chain in Europe through a new fishing trawl with no environmental impact and advanced processing equipment) Reporting period: 2017-01-01 to 2017-03-31 Summary of the context and overall objectives of the project The seafood fishery and processing industry are claiming for long-term sustainable and efficient innovations that assure the economical profitability of business. Firstly, the current high percentage of the costs of raw material, due to traditional species low availability at sea, and the high dependency on imports of traditional seafood species from foreign countries is leaving the EU seafood companies very vulnerable in the world markets and creates the need for species diversification. This is important because, while some fish and seafood species have suffered over-exploitation over the past decades (e.g. cod, Norway’s lobster), Europe still has huge potential to exploit other species which are highly valued in international markets. Secondly, the automation of processes poses a solution to intensive manual labour in the production of goods, reducing considerably labour costs and leaving a fit profit margin to invest on more profit-impacting positions. AURORA’s proposition is to incorporate Sea Cucumbers (SC) in the seafood industry. SC have a high commercial value, and global demand is increasing led by China, the first economy of the world. TOPBALAT represents an integrative approach to establish for the first time in Europe an advanced sea cucumber value chain comprising SC fisheries and processing industry. TOPBALAT will allow the introduction of European processed dry SC at competitive prices in the Asian market, thanks to its two technology components specific to SC business case: a novel fishing dredge and an advanced processing equipment. TOPBALAT’s technology saves costs of fishing and processing SC (20% less total costs due to increased manoeuvrability, catching efficiency and reduced by-catches), and in distribution (dried SC is only 5% of SC raw weight). TOPBALAT’s technical objectives are to implement and validate the novel fishing gear’s effectiveness and its reduced impact on seabeds, and to develop a SC-dedicated processing line and validate its performance. AURORA’s target users are final SC consumers and European seafood companies. The commercial objectives are to create awareness of our Icelandic SC product in Asia to sell via current distributors and progressively reach end consumers directly, and to disclose our enabling technology amongst seafood companies. The impact of TOPBALAT will also allow the establishment of a European SC fishery by providing seafood industry with effective means to tap on the profitable SC business. Work performed from the beginning of the project to the end of the period covered by the report and main results achieved so far TOPBALAT innovation project consists of two technical innovations: the fishing SC dredge is currently (at the TRL 7 - operationally validated) and the automated processing line (TRL 6 – prototype verified). (1) AURORA has designed, developed and implemented a novel SC fishing gear that comprises the structure of a traditional fishing dredge, albeit modified to reduce impact on seabed, to achieve higher catching efficiency of adult sea cucumbers (SC) and to reduce other species by-catches. In January 2017, AURORA implemented some technological adaptations to the SC dredge prototype: the implementation of a one-way valve to prevent spillage of catch and a line of rubber wheels in the mouth of the dredge to absorb impacts, and the attachment of high-end sensors to the fishing gear that provides the skipper with a range of information on the gear’s position and fishing performance that was previously unavailable. In February 2017, a technical feasibility trial was conducted in offshore Icelandic waters to assess the degree of fishing efficiency, whose results indicate considerable savings in time and effort with increased catching efficiency. (2) A small-scale test has been conducted in AURORA’s processing facilities in Iceland to assess the cutting accuracy and performance of the new SC flower-cutting equipment. Results showed we already are at a high readiness level and that the prototype needs to be improved per health and safety, and per efficiency. This led to the reformulation of the processing steps to reduce meat discards to an acceptable 7-5% (currently at 15%): implementation of controlled execution of SC. (3) Commercially, we have worked on the assessment of the market needs and the product demand, and on the establishment of commercial agreements with subcontractors (Hampidjan and Valka) to participate in the Ph II project. We defined the business model that will allow us to exploit TOPBALAT results: i) AURORA will sell the final SC product to its current Asian distributors while works to progressively reach final consumers (retail price is some 10 times higher than wholesale price), increasing considerably profit. Ii) Technology producers will produce and include our technology in their portfolio, while AURORA will benefit from royalties. (4) We assessed the regulatory landscape (fisheries & seafood processing regulations, machinery standards) and found no specific restrictions that may affect negatively our business case. Progress beyond the state of the art and expected potential impact (including the socio-economic impact and the wider societal implications of the project so far) TOPBALAT has high innovation potential and is beyond the state of the art. The innovation of TOPBALAT lies in the novelty of the resource exploited and the sea cucumber (SC) specificity of the technology, and the way our technology components set up a value chain for the whole business: our approach tackles fishing, processing and distribution, and makes it very easy to other seafood companies to start tapping on this market opportunity. (1) Due to the low value that SC have traditionally had in western cultures (traditionally been fishermen cheap source of proteins), only some few have tried to make profit out of it. Where harvested, it is done by professional or air surface-supplied diving (in-shore), and with conventional heavy unspecific dredges (off-shore). (2) The SC specific processing equipment provide a high-value product out of SC. Processing technology is the key to making the SC business profitable, as the value and quality of the SC is based on a combination of the raw material quality and the processing methods for its market acceptance. The processing of SC is somewhat intensive, requiring great effort in every step, with particularities related to handling and evisceration (flower, or tentacles, are connected to the guts: bad removal leads to discards). Because of this high labour effort, most western exporters perform a light processing (only essential cleaning steps to prevent degradation) and trade them frozen, resulting in low-graded product with less demand. (3) TOPBALAT’s processing impacts very positively on the distribution, as shipping dried SC is much more efficient cost-wise than frozen (95% less weight), with profit up to a 60%. (4) We expect TOPBALAT will allow for the establishment of a new business for European seafood companies worth some € 70 M. Other positive impact of TOPBALAT include the displacement of traditional seabed-damaging fishing dredges for our advanced low-impact SC dredge, and the reduce of by-catches.AURORA will commercialise both the final product (dried whole fully processed SC) and the technology to harvest and produce it. By 2022, we expect to have sold some 325 tonnes of processed SC, with expected accumulated gross revenues of €25.2 M, a ROI of 2.61 and some 7-10 new jobs. The support of the original equipment manufacturers involved will guarantee regulations compliance, help reduce time-to-market and maximise the impact of TOPBALAT’s technology in the target countries (Norway, Scotland, Ireland). image-aurora.png
