| Go fish
A new refinery
is keeping an old industry afloat
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plant goes high tech
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launched
by
Garry Kranz
Virginia Business
November
2004
The
menhaden always has been a money fish to the people
of Reedville. Situated at the tip of Virginia’s
Northern Neck, this salty tidewater hamlet emerged as
the main processing station for Atlantic menhaden shortly
after its founding in 1874. Eventually more than 20
menhaden-reduction plants sprang up along Reedville’s
picturesque shoreline, stinking up the air but providing
stable jobs. Oil-rich menhaden became the maritime equivalent
of a cash crop, sold for fuel, lamp oil, soaps, fishmeal
and preservatives.
Reedville reputedly had the highest per capita income
in the U.S. at the turn of the 20th century. Attesting
to the wealth are stately mansions that still stand
along Main Street, built by Reedville’s first
boat captains and factory owners. The prosperous times,
however, did not last. By the 1980s
the menhaden industry was all but gone. Over-fishing
forced many plants to shut down. Regulations on commercial
fishing placed much of the menhaden stock off limits.
Industry
consolidation gobbled up the few remaining
competitors.
Just as it provides a link to that gloomy past, the
menhaden holds the key to a brighter economic future
for Reedville and surrounding Northumberland County.
The oil in menhaden provides a natural source of Omega-3
compounds, the healthful fatty acids touted for stemming
heart disease and other ailments. Menhaden are the only
marine source of Omega-3 regarded as a safe ingredient
in human food, according to the U.S. government. And
no company catches more menhaden than Omega Protein
Corp., the sole survivor from Reedville’s former
era.
Now, a new refinery positions Reedville to be a major
center for Omega-3 production. Furnished with high-tech
equipment and relying heavily on automation, Omega Protein’s
92,000-square-foot plant replaces an older refinery
cobbled together from disparate parts. It also triples
the output of refined oil to meet pent-up demand by
food manufacturers eager to cash in on the Omega-3 health
craze. “We’ll have the ability to produce
three times the amount of refined oil that it now takes
us seven days to produce,” says Jane Crowther,
a scientist and Omega’s senior director of technology
for refined oils.
Automated equipment will package oils in jugs and tankers
for shipment to food-makers. Refrigerated on-site storage
capacity keeps the oil fresher. Patented refining processes
remove fishy tastes and odors while distilling the fish
oil into various formulations, from ingestible caplets
to powders to soluble-based materials. All this occurs
while retaining about 98 percent of the Omega-3 compounds
of unrefined fish oil, Crowther says.
The goal: fatten margins by selling its edible oil,
marketed under the brand name OmegaPure, for use in
pasta sauces, yogurt, bread mixes, dietary supplements
and any number of other foods. Products enriched with
Omega-3 have made their way onto grocery shelves and
health-food stores in record numbers in recent years.
So, the expansion is welcome news. Built at a cost of
$22.5 million, the refinery is the largest business
investment ever in Northumberland County, which depends
heavily on seasonal fishing for jobs. Omega Protein
is the region’s largest company with nearly 250
full-time employees and a $10 million payroll. “We
think this Omega-3 thing is really going to take off,”
says Northumberland County Administrator Kenneth Eades.
Such talk may be more than a mere fish tale. For Houston-based
Omega Protein, the Reedville facility is the key to
new consumer markets. Within its grasp are two explosive
segments: functional foods and fortified foods. These
sectors include human foods with special ingredients
added to aid bodily functions. Fortified foods differ
from functional foods insofar as they carry minimum
daily intake recommendations, which are established
by government nutrition experts. Notes Elizabeth Sloan,
an independent food industry analyst from Escondido,
Calif.: “Omega Protein is in a brilliant position,
with its toe in two really big markets,” with
combined worldwide sales projected to top $52 billion
in 2005 alone.
Aiding the adoption of Omega-3 is the U.S. Food and
Drug Administration, which in September released a much-anticipated
health claim that long-chain fatty acids — those
found in fish oils but not produced by the human body
— may reduce the risk of heart disease. Although
present in flax, nuts and some vegetables, Omega-3 compounds
are found most abundantly in fish oil, especially menhaden.
Fish oils contain molecules for two long-chain fatty
acids: DHA, short for docosahexaenoic acid, and eicosapentaenoic
acid, or EPA. Other sources of Omega-3 may contain one,
but not both, types of acid.
The Reedville complex is a big fish in a little sea.
Crucial to its success is a ready supply of menhaden,
the herbivorous little fish found abundantly near inland
and estuarine waters of the Atlantic and Gulf coasts.
Known as distant cousin to the herring, menhaden feed
on phytoplankton and other microorganisms, filter impurities
from seawater and provide the main source of food for
red striper, weakfish and other migratory fish. Bony,
foul-smelling and oozing with oil, menhaden are unfit
for human consumption, at least without first being
refined.
Reedville’s gleaming new refinery contrasts starkly
with the company’s existing reduction plant, which
has been in continuous operation since 1913. Publicly
traded Omega Protein bought the Reedville fishery about
five years ago, and it’s the big daddy of its
operations. More than 367 million pounds of menhaden
were brought ashore at Reedville in 2002, making it
the third-largest fishing port in the U.S., according
to the National Oceanic & Atmospheric Administration.
The fish never get a sporting chance. Omega Protein
mans a fleet of 10 fishing vessels that trawl the Atlantic
Ocean from May to December. The company also owns seven
“spotter” airplanes, which aid fishing crews
from the air. Pilots pinpoint shallow schools of fish
and use radio communications to direct crews where to
cast their huge nets, capable of hauling in millions
of fish at a time.+
At Reedville, menhaden are rendered with ruthless efficiency.
Steam-heated cookers break down fat cells and coagulate
proteins. Skin, scales and bones are ground into powder
that is sold into fishmeal, feedstock, pet food and
inorganic fertilizers. Various grades of refined oil
are used in paints, printing inks and tanning products.
Crude oil is marketed for production in margarines and
shortenings. Virtually every part of the fish is converted
for some sort of commercial application. “We use
the entire fish. We waste nothing,” says Crowther.
Omega Protein plans to aggressively market refined fish
oil as a functional ingredient in foods, exploiting
the new FDA health claim. The market has plenty of upside:
refined fish oil accounted for a fraction of the company’s
$118 million in 2003 sales, or about $4 million.
GFA Brands Inc. of Cresskill, N.J., uses Omega Protein’s
fish oil as an ingredient in its SmartBalance OmegaPlus
Buttery Spread, which TV ads are making a household
name. Another customer is Custom Blends Inc. of Brockton,
Mass., which has used Omega Protein’s fish oil
in its line of salad dressings since its inception in
1997.
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