Sanford, Sealord in bid to boost mussel exports value

Photo / Brett Phibbs

Fishing company rivals Sanford and Sealord Group plan to tap government funding for research and development into lifting the value of New Zealand mussel exports.

Sanford managing director Eric Barratt told shareholders in Auckland that the NZX-listed company plans to invest $22 million in R&D if its applications to the Primary Growth Partnership are accepted.

The PGP is a joint scheme between the government and private investors where sectoral investment is matched by tax-payer funding.

The first application with Sealord and Wakatu Inc. to develop a hatchery and life-cycle breeding families to selectively breed shellfish, especially Greenshell mussels, on a commercial basis is over seven years and would cost Sanford $13 million.

The other application, with Sealord and Aoteaora Fisheries Ltd., aims to build on a four-year trial to enable better size and species selection, and would cost the company $9 million over six years.

"The successful outcome of these two projects will result in a significant enhancement to the value of our products and provide a very significant return on investment over a long period of time," Barratt said in speech notes published on the NZX.

"The New Zealand mussel industry has grown to be one of the largest single seafood item exported from New Zealand, but so far only on the basis of wild caught spat harvested from beaches north of Auckland and through spat harvested in the Golden Bay and Marlborough Sounds areas."

Sanford recently bought the Greenshell mussel and Pacifica oyster businesses of Pacifica Seafoods for some $85 million, in a year where it reported a 36 per cent decline in net profit to $25 million for the 12 months ended September 30.

Barratt said Sanford expects a stronger performance in the second half of the year, and strong tuna and squid prices will determine the final outcome for the fishing company.

"A major focus for the remainder of the year is to ensure we keep our working capital within manageable levels, dispose of uneconomic assets and reduce debt with a targeted reduction of $20 million in the current financial year," he said.

The shares gained 3.2 per cent to $4.90 in trading today.