Agribusiness hopes shrimp is Minnesota's newest crop

Minnesota is known for its lakes and freshwater fishing. Now, a big agribusiness hopes to make the state a leader in producing America's favorite seafood, shrimp.

Marshall, Minn.-based Ralco Nutrition has been in the livestock feed business for more than 40 years, producing mainly hog, cattle and poultry food. But the firm wants to expand and has set its sights on producing seafood.

It might seem like an odd project for this part of the country, but the firm already has a pilot Pacific white shrimp operation up and running on the southwest Minnesota prairie — one of the driest parts of the state — 1,000 miles from the nearest ocean.

Inside the company's test shrimp production facility in the community of Balaton are rows of shrimp rearing basins. Each has a footprint about as big as a school bus and holds a foot of water.

"This is where we really do a lot of the hard work in terms of the husbandry of the shrimp," Michael Ziebell, general manager of Ralco's seafood production division, named "tru Shrimp Systems," said during a recent visit to the operation. "Studying their growth, perfecting our processes and methods. This is where it happens."

The room in Balaton is just a rough draft. Ziebell hopes construction will begin by next spring on the company's first commercial-sized shrimp production facility. It will be a massive, $54 million, nine-acre building roughly twice the size of a Walmart supercenter filled with basins two football fields long and stacked six high.

"We're not here to build what the world calls a shrimp farm, we're here to build an industry here in the Upper Midwest," said Ziebell.

That may sound like folly, but Ziebell is not kidding. The firm hopes to capitalize on shifting consumer preferences.

In decades past, most shrimp consumed in the U.S. were raised or caught domestically; 90 percent now come from low-cost producers abroad, said David Veal, head of the American Shrimp Processors Association.

"It's because of the success of the pond-raised shrimp industry in Asia and in Central and South America," said Veal. "They are hugely competitive. They now dominate the U.S. market."

Ralco believes it can beat foreign competitors on quality. Its shrimp will be raised antibiotic free, something the company thinks will attract consumer interest in an era when sustainability is an important value. Company officials also believe their product will benefit from the local foods movement, and from the backlash over a slavery scandal in Thailand's shrimp industry.

"If you could produce locally sourced fresh shrimp with great quality, flavor, at a reasonable price point; that would be a great thing. I think consumers would really like it," said Tim Lauer, who runs one of Minnesota's largest seafood sellers, Fortune Minnesota, formerly Coastal Seafoods.

Ralco also believes it can make money on its shrimp operations by beating the foreign competition through productivity. Pond-raised shrimp farms abroad typically have two shrimp harvests a year but Ralco can double that, said Ziebell.

Ralco still needs to deliver for investors. Veal, with the shrimp trade association, says he has no doubt that the Minnesota company can successfully grow millions of shrimp. Selling them at a profit, however, will be a challenge.

These are multi-million dollar investments, he added, and "we're operating on a very few percent margin of profit."