Darde will start farming lobsters in a farm to be built in Semporna, Malaysia. (Photo: Stock File/Darden/FIS)
Darden to build world's biggest lobster farm
Tuesday, April 10, 2012, 04:10 (GMT + 9)
Orlando-based Darden Restaurants wants to build the world's largest lobster farm in Malaysia to sell the crustaceans in Asia and supply them to the company’s chains.
The lobster farm would partly protect Darden from rising seafood prices while creating a new revenue stream.
But lobster farming could also keep prices lower for consumers and make competition harder for fishers, Orlando Sentinel reports.
"If there's a way to do lobster this way, it increases the supply of lobster," said Mark Kalinowski, a restaurant analyst for Janney Capital Markets. "It doesn't necessarily increase the demand for lobster. All else equal, the cost of lobster drops."
Through a subsidiary called Darden Aquafarm, the company will work with a Malaysian group to build the 23,000-ac production facility. The farm will employ 12,000 workers and eventually produce 40 million lb of lobsters yearly -- about USD 1 billion worth.
The process will take until at least 2029.
As the spiny lobsters Darden will farm are different from those Americans are used to, the chain will still use the North American species for its customers in the US.
The taste of the different species varies. Spiny lobsters' texture can be more rubbery if not prepared properly, said Tom Matthews, an associate research scientist at the Florida Fish and Wildlife Conservation Commission.
Still, Maine lobster fishers worry about competition and potentially lower prices.
"It does put additional supply out there, and when you have oversupply, you can see a softening of the price," said Patrice McCaron, executive director of the Maine Lobstermen's Association.
Bill Herzig, Darden's senior vice president of purchasing and supply-chain innovation, insists that lobster farmers and fishers can coexist.
"There's a growing world demand for lobster products of all types," he said.
Darden said it chose Malaysia partly for its farm because tropical storms are infrequent, lobsters there reach maturity quicker and the government encourages economic growth.
Darden also plans to establish a purchasing and operations centre there to help manage its expanding international presence. The company began building Middle Eastern restaurants in 2011 and is exploring other markets.
The lobster-farming project will be built in Semporna and cost USD 650 million to develop, of which Darden would provide up to USD 300 million over 20 years.
Once the USD 819.9 million Integrated Lobster Aquaculture Park (iLAP) deal takes off in Semporna, Sabah will become a major lobster producer. Yayasan Sabah, through its subsidiary Inno Fisheries Sdn Bhd, will ink the contract to set up the world's first iLAP with Darden Aquafarm, New Straits Times reports.
Once Darden hatches lobster eggs in its facilities, independent contractors would buy the lobsters, raise them to maturity in thousands of cages in Darvel Bay and sell them back to Darden.
Construction should start next year and the company hopes to start producing lobsters by 2017.
Darden will start out mainly selling the lobsters to other companies in Asia, and eventually turn more to its farmed lobsters to serve in its restaurants.
By Natalia Real