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Manuel Fernandez de Sousa Assembles
the Largest Shrimp Farming Venture in the Western Hemisphere

Larry Drazba Put It Together and Tells the Story



On April 1, 2008, at the World Wildlife Fund’s Shrimp Dialogue Meeting in Belize City, Belize, I interviewed Larry Drazba, general manager of Camanica, a large, integrated shrimp farm in Nicaragua.  In 2006, Camanica was purchased by Pescanova, a Spanish company that operates the largest fishing/aquaculture operation in the world!



Shrimp News: Tell me about Pescanova and its plans for shrimp farming in the Western Hemisphere.


Larry Drazba: Pescanova got started as a fishing company about forty-five or fifty years ago.  Previous to that, it was in the meat packing industry, importing first-class, frozen beef into Spain from Australia and Argentina.  At the time, Spain had a huge fishing fleet, but had trouble delivering a decent product to the mass market.  Back then, before fishing fleets had freezing capacity, a lot of fish went bad on the way back to port.  Pescanova was one of the first companies to put freezing capacity on its fleet, which turned out to be a very profitable strategy.


Currently, it owns a fleet of 120 fishing boats, most of them state-of-the-art factory ships.  It dispatches them worldwide and they return with frozen product, originally from the North Atlantic, but now from all over the world.  Major catches are toothfish, hake and roughie.  It markets premium products and has been very prosperous over the last two decades.


In 1985, Manuel Fernandez de Sousa, my current boss and the founder’s son, became president of Pescanova and took the company public on the Spanish stock exchange.  Since then, the company’s capital assets have grown to over $2.4 billion, almost exclusively from seafood products.  We process surimi, squid and all kinds of fish.  We have fleets that fish off Africa, Australia and South America.


After taking Pescanova public, Manuel introduced Pescanova to aquaculture with the purchase of a turbot farm in Spain.  Twenty-seven years later, Pescanova’s aquaculture operations are larger than its fishing operations!  Right now, it’s making a $275-million investment in a turbot farm in Portugal with a state-of-the-art processing plant.  It farms golden bream in the Mediterranean, salmon in Chile, and tilapia in Brazil.  It even grows Penaeus japonicus for the live market in Spain.  Now, it’s entered the shrimp farming and shrimp marketing business in a big way.


Its move into the shrimp industry started about two or three years ago with the purchase in Europe of Antártida, the major shrimp cooker in Spain.  Most shrimp in Spain is imported fresh, then cooked, usually in a brine solution, and sold on ice as a cooked head-on product.


Pescanova knows how to produce, process and market seafood products and felt that it was time to get into the shrimp business.  Manuel is a visionary.  He knows fishing and the seafood industry.  Now, he’s looking for the chickens of the sea.  He’s looking for the species that are going to be the leaders over the next decade and beyond.  Right now, fish are his big product, but he’s betting a bundle that one of the future’s successful products is going to be shrimp.  He owns the largest shrimp cooking plant in Spain.  He has the largest cooking plant in France.  He’s already the largest seller of Penaeus vannamei in Europe.  He’s selling cooked shrimp to Greece, Italy, and I don’t know how many other countries in Europe.  His strategy has always been to diversify risk by having operations in many developing countries.  We probably have over a hundred companies in the fisheries group right now.  We sell products in sixty countries around the globe.


Manuel says it’s no longer profitable to develop fishing, aquaculture and processing operations in developed countries because the costs are just too high.  As far as shrimp farming is concerned, he thinks the best opportunities are in Latin America.  So, in early 2005, he looked around the western hemisphere, studied the situation closely, and decided to start in Nicaragua, with the purchase of a 33% interest in a small shrimp farm.  That interest later grew to 66%, and the farm now has 1,000 hectares of ponds.



In 2006, when I heard that Pescanova was interested in purchasing a processing plant in Nicaragua, I approached Manuel with the idea of purchasing Camanica—the hatchery, farm and processing plant that I managed, owned by Eastern Fish Company and the Bloom family in Teaneck, New Jersey, USA.  I knew the Blooms were interested in recovering some of the capital they had invested in Camanica.  As a major shrimp importer, it needed capital to cover the bonding costs associated with the tariffs on its shrimp imports.  In December 2006, I heard that Pescanova was going to come to Nicaragua and make an offer on one of the other two shrimp processing plants that were available.  They were not interested in Camanica’s processing plant, but they wanted one of the other two.  I asked them for ten minutes.  For the last five or six years, I had been purchasing small farms in Nicaragua to increase our economics of scale.  I told Pescanova that I had contracts with or owned a number of small shrimp farms that I could quickly put back into operation.  Within ten days, Manuel and Eric Bloom negotiated a deal for Camanica.  I did the due diligence and pulled all the loose ends together.  Manuel sent in a team from Uruguay and Spain to look at the books and the legal situation and within ten days all of Camanica belonged to Pescanova.


Shrimp News: Is Eastern Fish out of shrimp farming in Nicaragua now?


Larry Drazba: Yes, completely out of it.  We all made money on the deal.  It was a mutually beneficial arrangement for all of us.  Eastern Fish was happy with its side of the deal.  Camanica had just had its best year ever, and we had paid off a lot of our long-term debt.  Pescanova got Camanica at a lower price per hectare than any of the subsequent farms that it purchased.  More about them in a minute.  Everyone stuffed money into their pockets.


I was invited to run Pescanova’s shrimp farming operations in Central America.  Manuel came back to Nicaragua in March 2007, looked around, kicked some tires—and two months later said: Here’s the deal.  The biggest player in the United States shrimp market right now has only eight percent of the market.  With our experience in sourcing, processing and marketing frozen seafood, we have a good chance of becoming a very important player in the USA shrimp market.  To accomplish that, we’ll need a lot of shrimp farms and processing plants.  What’s available here?  I showed him all the good operations that were available, and he gave me the authority to buy them.  At the time, Camanica managed 1,500 hectares of ponds and owned 1,200 hectares of them.  Manuel said he wanted to have 4,000 hectares in Nicaragua within a year if possible, but within two years at the most.  I bought about 1,500 hectares of ponds within three months.  Pescanova already had a 1,000-hectare farm when it bought Camanica, so we’ve already reached the 4,000-hectare goal.  We hope to have 5,000 hectares of shrimp ponds in Nicaragua by the end of 2009, about half the shrimp ponds in the country and about 60 to 65 percent of the production capacity.


Manuel said he needed more shrimp farms to make his plan work.  He wanted to know where else I would go to buy ponds.  We looked at Nova in Belize and decided that it was not the best option.  We looked at Guatemala, but found that farming costs are much higher there than in Nicaragua.


In May 2007, we bought the marketing arm of Ladex, which has offices in Guatemala and Miami, Florida, USA.  We did not buy its shrimp farming operations in Guatemala.


Next we looked at Honduras.  We thought we could pick up great economies of scale if we purchased operations in Honduras, but there would be risks there, too, disease risks, because it’s on the same body of water, the Gulf of Fonseca, as our farms in Nicaragua.


Manuel is very interested in Granjas Marinas San Bernardo in Honduras, one of the largest shrimp farms in the world, because of its size and the immediate impact it could have on Pescanova’s in-house production.  He’s been trying to negotiate that deal for a couple of years, but because of the large number of partners at GMSB and the banking arrangements, he has not been able to make it work, yet.  We continue to negotiate with GMSB; we would like to have it as part of Pescanova, but for the moment we have not been able to make the deal work.  That farm is 7,000 hectares (over 17,000 acres).  Manuel is the kind of guy that doesn’t like to sit around and wait, so he gave me the option to purchase up to 2,000 hectares of other farms in Honduras, better producing farms than GMSB that are not on that same watershed, farms that have a different set of risks, but that produce up to 5,000 to 6,000 pounds of shrimp per hectare per crop.  We’ve already bought 1,500 hectares there, and we’re in the process of buying 500 hectares right now, so we’re going to wind up with abut 2,000 hectares in Honduras, in some of the best shrimp growing areas of the country.  And that’s with the GMSB deal still pending.


Shrimp News: Did you attempt to purchase Peder Jacobson’s shrimp farms in Honduras?


Larry Drazba: Yes, we made an offer, and Peder decided not to sell.  He said he’s still having too much fun running his own operation.


Shrimp News: What have you done in Ecuador?


Larry Drazba: We wanted some production facilities in Ecuador to diversify our risks.  When we have small shrimp in Nicaragua and Honduras, Ecuador has large shrimp, when Ecuador has El Niños, we have La Niñas.  It’s not good to have all your eggs in one basket.  We wanted shrimp farms and processing plants in Ecuador to balance out our production.


In January 2008, we bought Promarisco, an integrated shrimp farm in Ecuador, not a very big or very good farm, but its plant processed over 20 million pounds of value-added shrimp in 2007.  We bought the whole operation and the property next door on which we’re going to build another processing plant.  It’s already being designed.  The biggest news out of Ecuador that I can now officially comment on is that we also bought El Rosario, a 3,500-hectare shrimp farm and merged El Rosario’s farms with Promarisco’s farms.  Up until March 25, 2008, we couldn’t tell anybody about El Rosario, but it’s now official.  We got all its maturation facilities, hatchery, farm and processing plant.  We also bought several smaller operations in Ecuador.  So we have about 5,500 hectares in Ecuador right now, with two processing plants.  El Rosario processes head-on product, and Promarisco processes value-added, a nice balance.  And, as I said, Promarisco is going to get a brand new, state-of-the-art processing plant.  Our most recent purchase was the Balrosario feed mill.


I don’t manage anything in South America, but I’m in the loop on the chatter.  I run all of Honduras and Nicaragua.


In Nicaragua, we’re also building a new processing plant that will handle 350,000 pounds a day, all IQF product.  At that site, we already have cold storage capacity of 2,000 metric tons.  We’re going to finish the new plant in thirty days; the cold storage is already operational.  The plant itself will probably be ready sometime in August 2008.  Manuel is very much involved with the design of the processing plant; he knows plants inside and out.  His personnel in Spain designed the plant, sent us the plans, and we’re responsible for putting it together.


At Camanica, we have a great team of people, and we’re ecstatic about all these new opportunities.  Everybody in the company is burning on all cylinders right now.  They’re all talented people with proven records and are showing what they are made of right now.  I spend all my time on three items: completing the pending deals, making sure that the legal and accounting documentation is in order and training and hiring people.


Shrimp News: You’re spending two days here at the World Wildlife Fund’s shrimp dialogue.  How do you find time to come to something like this?


Larry Drazba: This is one of the most important things that I have to do.  This is an opportunity to find out about the future.  We need to know what the environmental groups are planning so that we can adjust our strategies.  From what they are saying at this meeting, we think we’ll be okay.  We want to be part of the game; we want to help set the rules.  You can do all the biology and management and building, but if you don’t comply with what will be demanded by the environmental groups, you’re dead in the water.  We have to know where they’re going to place the bar so that we can get under it.  After what I’ve seen today, we going to be able to comply with the eventual standards that WWF creates.  It’s worth two days of my time to see where they are in their thinking so that we can plan for the future.


Shrimp News: How close are you to your goal of 20,000 hectares of ponds in the western hemisphere?


Larry Drazba: We have 5,000 hectares in Nicaragua and 2,000 in Honduras without GMSB, so we’re up to 7,000.  GMSB will be another 7,000 hectares, so that’s 14,000 hectares.  Ecuador’s 4,500 hectares brings it up to 18,500 hectares.  Plus we bought into Pesca’s super-intensive farm in Guatemala.  We’re lining all of its ponds, so we’re going to have 250 hectares of super-intensive ponds in Guatemala.  We’re pretty close to our goal of 20,000 hectares already and will probably achieve it by the end of 2008.


In Guatemala, we tried to buy the Aquamaya/Mayasal group (250 hectares) and the Tecojate/Esteromar group (650 hectares), but the deals did not work.


Shrimp News: Are you going to buy anything else in Ecuador?


Larry Drazba: No, I think we’re about done in Ecuador.  With what we have in Ecuador, we’ll be able to keep our processing plants full with our own production and third-party product, and there’s plenty of third-party product available there.  I think we’re also done in Nicaragua.  In Honduras, if we get GMSB, I think we’re done there, too, except for the fact that we formed a strategic alliance with Sea Joy, Peter Jacobson’s group, to do all our maturation and broodstock work together.  We’ll probably develop a nucleus breeding center with Peter.  We know that we need to produce enough broodstock and nauplii to bring costs down, so that we can compete with Thailand, Indonesia and Brazil.


Shrimp News: How will all this shrimp be marketed, as one brand?


Larry Drazba: For most of the world, it will be marketed under Pescanova’s brand names: in the United States, under the Ladex’s brands, until we pick up another marketing company in the United States.  If we purchase GMSB, my guess is that Manuel will purchase another marketing/distribution company in the United States.


Shrimp News: Has the price for shrimp farms gone up as a result of all your purchases in Latin America?


Larry Drazba: Yes, but I made some moves to keep prices down.  In Honduras, for example, I bought everything in nine hours because I knew the word was going to get out.  When Manuel gave me the go ahead to make the purchases, I had already done all the legwork and due diligence, so I scheduled all the meetings for a Friday, and between breakfast and dinner, I bought six or seven farms, about 1,500 hectares of shrimp ponds.


Shrimp News: Did you have carte blanche to make the deals yourself?


Larry Drazba: Yes, I had already given Manuel the numbers, and none of the deals exceeded the numbers that I had given him.


Shrimp News: If the GMSB deal goes through, will you be done making purchases?


Larry Drazba: You never know, but, yes, I think so, in the Americas, at least.  Manuel might still do something in Asia, but I don’t get involved in that.


Shrimp News: Are you doing any genetics work at your shrimp maturation facilities?


Larry Drazba: We’ve been given the go ahead to develop a genetics program.  We have several offers on the table right now; all of them include a strategic alliance with Deli/SeaJoy, Peter Jacobson’s group.


Shrimp News: Why did you choose Deli/SeaJoy?


Larry Drazba: Because they share our values.  They’ve been doing business in Latin America for over thirty years.  They have good people—Peter Jacobson, Ismael Wong and Brad Price—they really know the business.  We already purchase a lot of product from them and have been doing business with them for a number of years, so it’s a very good fit for us.


We tried to do a deal with Bolivar Martinez in Nicaragua (Farallon); in fact, we tried to buy his entire hatchery operation, but we could not come together on price, so we’re building a big hatchery in Nicaragua, and I have a site ready for another big hatchery if we buy GMSB.  Currently, GMSB doesn’t have the capacity to produce all the seedstock that its farm requires.  It has a good maturation facility and Deli has a great maturation facility.  We’re also converting our current hatchery into a maturation facility and building three farms for broodstock production.  After that, I plan to build a nuclear breeding facility.


Also, don’t be surprised to see Camanica with 100 to 150 hectares of hyper-intensive, plastic-lined ponds within the next two or three months.  Manuel thinks this is something we should know about, knowing full well that there are a couple of mitigating factors.  For one, it doesn’t look like it’s cost effective yet.  But there are many positives, and we are working on a system.


In Mexico and Central America, farmers stock everything over a 15-day period and then a few months later harvest everything over a 15-day period, which doesn’t make a lot of business sense because you then have long periods when your hatchery and processing plant are idle, monster facilities that work less than a month a year.  Our Guatemala farm uses zero-exchange and plastic-lined ponds, and the health of the animals in those systems, especially during the cooler months, is much better than the health of the animals in earthen ponds, so we’re looking at that type of production to keep our hatcheries and processing plants operational during the cooler months, when production drops in large, earthen ponds.


Shrimp News: You must be hiring new people all the time.


Larry Drazba: Yes, all the time, all Latinos, all home grown from facilities in Latin America.  We’re starting to get to the point where we have to look farther afield.  I brought in one technician who was with me at AquaNova in Mexico; I rehired a technician who was with me when we started Camanica; and I hired a pathologist from Honduras.  Everyone else is from Nicaragua, people who have come up through the ranks, young tigers, who want the opportunity to run their own farms.  We’re doing a lot of middle management training to get these people ready to move into the new installations.  I’m adding another 1,000 hectares to Camanica this year, and we’ll have two processing plants and two hatcheries so we need a lot of good people.


Shrimp News: Are you doing anything new at the processing plant in Chinandega?


Larry Drazba: Yes, I’m running all the waste from the processing plant onto about 15 to 20 hectares of land where I grow tropical flowers.  I got rid of all my oxidation lagoons and now clean up all my processing wastes on a tropical flower farm.  It’s not much of a business, but it resolves a disposal problem and allows us to give away a lot of flowers to retirement homes, churches and places like that.


We’re tackling all our solid waste issues.  I have a machine that squeezes the juices out of the shrimp heads.  From the dry material that remains, I extract chitosan, a component of the shrimp’s shell, and sell it to a company in Costa Rica.  It has lots of uses in the pharmaceutical and chemical industries.  Since we sell a lot of whole shrimp, we don’t have that much yet, but at the new plant, we’re going to produce a lot of value-added products so we’ll have much more shell to deal with.  The fats that come out of the squeezing process contain red pigments that I’m going to incorporate into our feeds to make the shrimp redder.  We ferment the juices and sell it for fertilizer, or I boil it down to a gel and sell it to a company that uses it in cat food.  We have made a substantial investment in our processing plant and hatchery in Chinandega, on the order of $20 million.


Shrimp News: We haven’t talked about shrimp feeds and feed plants.  Do you own any feed plants?


Larry Drazba: Yes, we recently bought Balrosario in Ecuador, and Pesca, a Caminica affliate in Guatemala, has a large, modern, multi-species feed mill.


Shrimp News: Do you purchase shrimp feed from other feed companies?


Larry Drazba: Currently, we’re buying from Cargill in Honduras and Nicaragua and bringing feed into Central America from Ecuador and elsewhere.


Shrimp News: How do you see the evolution of the shrimp farming industry?


Larry Drazba: I think you are already beginning to see the future of the shrimp farming industry: consolidation of farms, integration from the hatchery right through to international marketing, big companies coming in with a technology packages for shrimp farming that work, that encourage investment.  They will buy up the marketing and importing companies.  Hundreds of small importers and marketers will disappear.  The industry will boil down to a few, well capitalized big companies that will walk in and say, “This is not an auction anymore, these are my prices, what do you want to buy.”  They will know their production costs; they will know what their margins are; and they will know how to set the market price to make a profit.  Pescanova exemplifies that philosophy.  Charoen Pokphand Foods in Thailand is another good example, and several other companies just like them will develop around the world.


Shrimp News: Larry, you told a great story and really deserve a huge pat on the back for all that you have accomplished.  I wish you the very, very best.


Information: Larry Drazba, General Manager, Camanica, Km. 130 Carretera León-Chinandega, Chinandega, Nicaragua (phone 505-342-9000, fax 505-341-1628, email ldrazba@ibw.com.ni).


Sources: 1. Larry Drazba, interview by Bob Rosenberry, Shrimp News International, Belize City, Belize.  April 1, 2008.  2. Updated June 25, 2008.

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