Cossack Caviar attempts a comeback
Ron Decker, chief executive of Cossack Caviar Inc. of Arlington, Wash., has lost millions while trying something new in the Alaska fishing industry. If his idea gets the backing he needs, however, he could become a pioneer in eliminating waste in the processing of Alaska salmon.
Decker and a partner, Dave Ederer, bought Cossack Caviar three years ago from its founder, Garry Shaw. For 30 years, Shaw had built up a successful business that bought salmon eggs from Southeast Alaska processors and fishermen and turned them into two products: frozen eggs for the Japanese market and heavily salted caviar for the American and European markets.
Decker soon found that processors were becoming less willing to sell eggs, since they were the highest value part of the pink and chum salmon typically harvested in Southeast. He could buy salmon directly from fishermen, but that created a problem: What to do with the meat?
Decker said he investigated producing fish meal, which is made by incinerating fish. The downside of fish meal is that it’s a low-value product, and Decker was looking for something else that would generate more revenue.
He found it in a product called hydrolysate. Developed for use in the fishing industry by Canadian scientists, it’s created by grinding and heating the fish, then adding a natural enzyme to the fish and essentially digesting it, Decker said. The resulting product is high-quality protein with a shelf life of up to a year. It is used as animal feed, fertilizer and as feed for farmed shellfish.
To commercialize the idea, Cossack formed a joint venture with a Canadian firm, Ocean Biosource Inc. of Vancouver, British Columbia, to build a floating hydrolysate plant on a barge. The concept was to process caviar at one end of the barge and create hydrolysate at the other.
The barge, called the Alaskan Venturer, was ready by the 2000 fishing season. Capable of processing 450,000 pounds of fish a day, it was to be stationed at the fishing grounds near Juneau, Ketchikan and Sitka during the salmon openings in those areas.
"It was a disaster the first year," Decker said. The plant did not work right. "We bought millions of pounds of fish and didn’t produce a pound of good product."
At that point, Decker says, Ocean Biosource pulled out of the joint venture. Cossack was on his own, with no markets for a product it couldn’t make. Decker wondered if the company should pull out, too.
In February 2001, Decker decided to go for it. He spent the rest of the winter refitting the plant and headed north to the fishing grounds last summer. The plant still had problems, but they were finally solved near the end of the fishing season.
"By mid-August, it was running at full capacity," he said.
By then, Cossack had spent a lot of money. Decker said the company had spent $4.2 million buying and outfitting the barge and the plant, plus about $2 million in what he called the "learning curve" of making it work. He said Cossack was left owing a total of $8 million to numerous creditors, including a bank and fishermen.
"We made some big mistakes and dug a big hole, financially speaking," Decker said.
Without Ocean Biosource, Decker had no distribution channel and no customers for the hydosylate product.
"We had to learn the business," he said.
Decker’s comeback plan was to locate investors willing to kick in about $2 million, enough to outfit the barge and buy fish this summer, along with paying off some creditors. He said he’s making the rounds of potential funding sources ranging from Native corporations to the state of Alaska.
Decker has also been invited to make a presentation to investors during the InvestNet Capital Investment Conference later this month in Anchorage.
In the face of all these difficulties, why is Decker still trying to make his venture work? He has several reasons.
One reason is because his process doesn’t generate waste.
"The environmentalists like it because we use all the fish," he said. He said he also has support in Southeast from the state Department of Environmental Conservation and the Alaska Department of Fish and Game.
Even more important is the lesson Decker learned when he visited the archenemy of the Alaska fishing industry: Chile’s fish farms. There, he observed a process that is fast, has extensive quality control, and which generates revenue from every bit of a farmed salmon in the form of bone meal, fish meal and fish oils.
In other words, using all of the fish is efficient and makes it competitive on the world markets. Decker believes Cossack’s process can do the same for the Alaska salmon business, where currently 35 percent of the fish is not used.
"It speaks directly to an industry that’s dying," he said. "Waste isn’t a problem, it’s an opportunity."
So Decker keeps knocking on doors and continues to work on selling the product he was finally able to make last summer so he can raise some cash.
"I’m selling the product to the shrimp farming industry in Thailand," he said. "Then we can come back to Alaska."