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On June 30, 2004, I interviewed Jim Heerin, co-chairman of Sea Farms International, Inc., the management company for one of the largest shrimp farming operations in the Western Hemisphere. I asked Jim about his 37 years in shrimp farming and the history of Sea Farms International, which, at the time, operated research facilities in the United States and hatcheries, processing plants and shrimp farms in Venezuela and Honduras. Its primary holdings were in Honduras where it had over 16,000 acres of shrimp ponds. Currently, Jim is president of the Aquaculture Certification Council.
Shrimp News: Tell me a little about your education and how you got started in shrimp farming?
Jim Heerin: I graduated from the University of Pennsylvania and then the University of Connecticut Law School. In 1965 after finishing a stint in the Air Force, I joined a law firm in Philadelphia, in the corporate department. One of my early assignments was to form a company for a client of the firm, Bill Hannum, who had developed an interest in shrimp farming.
While vacationing in the Florida Keys, Bill had observed shrimp passing between the islands in the Keys and thought it might be possible to farm them. His early interest turned into an avocation and he eventually decided to attempt it on a full time basis. In 1966 he raised about $250,000 from friends and neighbors in the Philadelphia area and came to my law firm to form a company to do research and development in shrimp farming. The more senior people in our department thought it was a bizarre idea, so as the new kid on the block, I got the job, and on September 21, 1966, Sea Farms, Inc., was incorporated in Delaware. That was some time ago, so what follows is my best recollection after reviewing what records I still have.
The company purchased two small islands in the Florida Keys. On one, Tarpon Belly Key, we dug two canals about 100 feet wide, 500 feet long and about 20 feet deep and netted off the ends. If you tried to do that today, you would probably be put in jail, but back then, the rules were more permissive and we were able to get permits for all the work. In the beginning, we netted juvenile pink shrimp, Penaeus duorarum, and stocked them in the canals.
While still employed by the law firm, I served as general counsel and secretary of Sea Farms. I attended the directors’, shareholders’ and other meetings, took the minutes and gradually developed a good relationship with Bill and the other directors and investors. Bill retired in Key West in the mid 1970s and eventually returned to Pennsylvania. We lost touch with each other by the early 1980s, and he has since passed away. Bill was a true pioneer of the business.
In 1968 Sea Farms purchased Thompson Enterprises, a long-established fishing company in Key West. This gave Sea Farms a land base for operations and provided some financial support for our shrimp farming research.
At about the same time, Marifarms, another one of the early shrimp farming operations in the United States, netted off a bay in the Florida Panhandle. It stocked shrimp in the bay and harvested them with a small trawler. I’m not sure who got started first, but I think we were in business a couple of months ahead of them, making us one of the first companies in the United States that was formed to farm shrimp.
Also during this period Ralston Purina got involved in shrimp farming research. I believe the initial impetus was its interest in the shrimp feed business. In 1968/69, Ralston built a shrimp research facility in Crystal River, Florida. Over the next few years, particularly after I moved to Key West in 1971, I met most of the people involved with Ralston, including Dennis Zensen, who was in charge of the project early on, Bill MacGrath, Yoshi Hirono, Bill More, Padge Beasley, John Bargate and Harvey Persyn. We all enjoyed and benefited from a free exchange of ideas about shrimp farming.
Also in the late 1960s, Armour/United Fruit Company had a shrimp farming joint venture on the north coast of Honduras, where it was raising P. occidentalis under the management of Jerry Broom, who reported some very encouraging results in some small scale tests. I recall that these tests had considerable impact on the feasibility of shrimp farming as a commercial enterprise.
In 1968 Sea Farms hired Don Sweat as its first director of aquaculture, and in 1969 constructed a lab and research facilities in Key West on the land acquired with Thompson Enterprises. Billy Drummond and Linda Davis joined Don as assistants, and the three of them got the true research project started. Don was another important early player in the business. They started sourcing gravid duorarum off Key West. Through the acquisition of Thompson Enterprises, we acquired a fleet of shrimp boats. On one of the boats, we installed aerated holding tanks and taught the captain how to catch and identify gravid females. The gravids were brought into the lab, spawned, and the larvae were raised in large, rectangular concrete tanks. The postlarvae or juveniles were subsequently harvested and stocked in the canals in the Keys.
We weren’t the only ones with a shrimp hatchery at that time. Marifarms had one, Ralston had one and so did the University of Miami, under the direction of Tom Costello. I think Tom was one of the first academicians involved in shrimp farming.
We got pretty good at growing pink shrimp postlarvae, most likely because we had great water. We had a well that had hydrogen sulfide in it. When we bubbled it off, the resulting water was virtually sterile. There’s nothing like good water quality at a hatchery, as we learned later. We had good luck spawning the shrimp and raising the larvae, but we weren’t getting good results in the growout canals. The shrimp were probably getting out through the nets at the ends of the canals, or fish that we could not keep out of the canals were eating them. We had little tangible to show for all the money we spent, but we were learning a lot about shrimp farming.
In 1968, when Sea Farms bought Thompson Enterprises, we brought in additional shareholders, some from the Philadelphia area, and some investment companies also became shareholders. Those were the days when venture capital was popular and companies were looking for exciting new investments, such as aquaculture.
By 1969 we had a working hatchery in Key West and the canals on the island, but we weren’t showing much progress with growout in the canals. So in 1970 we bought a piece of property on Summerland Key, where we built eleven one-eighth acre ponds and began stocking the ponds as well as the canals. Survivals improved dramatically in the ponds, though growth was slower than we had hoped. We learned a great deal about stocking, feeding and husbandry, but being belowground ponds in the coral of the Florida Keys, they were very difficult to harvest. As fast as we pumped the water out, it would seep back in. We were learning as we went. Duorarum proved to be a very hardy animal, easy to spawn and easy to raise in the hatchery. We thought we were home free, but as it turned out, duorarum was not a good animal in growout. It never produced good yields in ponds.
During this time, we were working with Ralston Purina on feed studies, and from them we heard about work being done with white shrimp species native to the Pacific coast of Central America. In 1971 we entered into a joint venture hatchery project with Ralston Purina in the Republic of Panama. We rented National Geographic Magazine’s marine lab in Panama. The idea was to source gravid shrimp, spawn them at the hatchery and ship the larvae to our stateside hatcheries. Dave Drennan was in charge of the operation. We operated the joint venture with Ralston for about two years. We actually obtained a joint patent with Ralston for the long distance shipment of shrimp larvae.
In 1971 I left the law firm and joined Sea Farms full-time as executive vice president. Sea Farms made the offer in the winter of 1970. You know what the winters are like in the Northeast. It was an offer I couldn’t refuse. So in June 1971, my wife, Sue, and I packed up our two young sons and moved to Key West.
By 1972 we had pretty much decided that we could raise shrimp in captivity, but we didn’t think it could be done commercially in the United States because temperatures restricted year round growth, suitable land was too expensive, and environmental restrictions were already becoming a factor. The board of directors and investors agreed, and we began to look for sites outside the United States. For shrimp farming to be profitable, we felt it would need to be conducted within twenty degrees of the equator. With Don Sweat in charge, we began to look at sites in Latin America. Don and others traveled all over Central America and northern South America searching for the right site. After a long process of elimination, we narrowed it down to two sites, one in Nicaragua and one in Honduras, both on the Pacific side. We eliminated Nicaragua largely because of what we viewed as the overly acquisitive tentacles of the Somoza government, which we thought would be in power forever. A good example of making the right decision for the wrong reason.
In April 1973, we formed Sea Farms De Honduras (SFH) and signed a long-term lease with private landowners in Honduras for approximately 1,200 acres. About 130 acres of this land had been used as salt evaporation ponds, which we easily converted into our first shrimp ponds. We hired Jerry Broom and Billy Drummond as our first on-site managers in Honduras and started construction of a hatchery.
When we first set up operations, toward the end of 1973, we wanted to do a little show and tell for the local community members, many of whom I’m sure thought we were CIA agents running some sort of secret lab. Since the hatchery was not yet operational, we netted shrimp (probably stylirostris) out of the estuary, stocked a few of the ponds and grew them out. They did marvelously. We harvested the ponds and had an impressive shrimp feast with the local dignitaries. After that, we did not use wild stock for about seven years. It was not scientific enough. For those seven years, we struggled with the hatchery. We had water quality problems, diseases—fungi, bacteria, viruses, who knows what—and we didn’t know how to deal effectively with them at the time. In 1974 we hired Jim Norris as hatchery manager and he spent almost a decade fighting his way up the learning curve and in the process becoming, in my opinion at least, the finest hatchery manager in this hemisphere. Jim is still with Sea Farms International as head of our genetics research and development operation in Florida.
In 1974 Billy Drummond and Jerry Broom left Sea Farms and went to work for the Maricultura project in Costa Rica. We hired Chuck Hamlin as general manager and Bill Rudd as construction and services manager, as their replacements, and they, along with Jim Norris, formed the management team that really got SFH established firmly in Honduras.
At about the same time, Ralston Purina started its Agromarina farm in Aquadulce, Panama. Bill More was general manager and Yoshi Hirono was technical director. We worked closely with Ralston, especially Bill MacGrath who was in charge of Ralston’s aquaculture projects at that time.
In 1973 I was named president of Sea Farms. Within a year, the conventional fishing business that Sea Farms operated in Key West and elsewhere was affected adversely by the oil embargo, resulting recession and overexpansion in South America and Key West, and by other factors (not including, I like to think, my stewardship).
Accordingly, in 1975, we transferred the shrimp farming assets, including SFH, into a new company, Shrimp Culture, Inc. (SCI). I became president of SCI as well as continuing with Sea Farms, Inc., where my only task was to sell the conventional fishing assets, which we were able to do in 1976 to Singleton Shrimp Company. Since then I’ve concentrated on shrimp farming.
From 1973 to nearly the end of the decade, we struggled with water quality problems at the SFH hatchery in Honduras. Located away from the coast, up an estuary, it was, in hindsight, simply not a good location for a shrimp hatchery. By developing a water filtration and improvement system nearly large enough to serve the city of Los Angeles, we were able to attain good enough water quality to continue our efforts. We weren’t doing any maturation at this time. Using two trawlers, we sourced gravid females from the Gulf of Fonseca, brought the females into the hatchery, spawned them, grew the spawns through to postlarvae and stocked the postlarvae in the ponds.
In 1976 Padge Beasley joined us as pond manager, and we began to see gradual improvement in growout. Within a couple of years, after almost ten years of research and development, we were beginning to produce significant amounts of shrimp—not commercial quantities, but we had a system that worked.
During the 1970s we brought all our technical people in from the United States. We considered what we were doing as technology; shrimp farming was “black box” at the time. We didn’t think the future was in a concept where you harvested juvenile shrimp from the estuary or coastline and stocked them in ponds. The hatchery end of the business we believed to be one of our big selling points. We were trying to demonstrate the scientific way of doing shrimp farming.
As a result, by 1979 we had eleven, non-Honduran families living at the site in Honduras. We had a little community, a primary school with an American schoolteacher, volleyball court, and all the neighborhood “issues” you would have in a small subdivision. Jim Norris, Chuck Hamlin, Bill Rudd, Padge Beasley, Ralph Parkman, Bill MacGrath, Ben Ribelen—all had families with them during their tours, so we had to have facilities for them. We were located on the Pacific coast of Honduras at a remote site on the Gulf of Fonseca, a 45-minute drive from Choluteca, three hours south of Tegucigalpa, the capital, which itself is rather remote.
In 1979 Chuck Hamlin transferred to Nicaragua to look for new sites, and I hired Bill MacGrath from Ralston Purina to take his place. The same year, Ralph Parkman, now CEO at Sea Farms International, was hired as Padge Beasley’s assistant pond manager.
Ralph began his aquaculture career in 1972-75 in the Peace Corp in El Salvador, working to implement talapia production on family farms. After that, he completed his graduate work at Auburn University in 1977, and then spent two years with ConAgra’s catfish operations. ConAgra was an investor in SCI then, and we were fortunate to learn about Ralph and persuade him that the south coast of Honduras was at least as attractive as the Mississippi delta. It may have helped that Ralph had met his wife Norma while in El Salvador and this was a whole lot closer to home for her. Ralph was in Honduras for over nine years and has made a tremendous contribution to SFI over the years.
In 1979 Ben Ribelin was hired to head up a maturation program at SFH. By 1982 we were relying entirely on wild stock for our ponds, so we closed the hatchery at SFH and Ben moved back to the Keys where he continued to develop our maturation system at the Summerland Key hatchery we had refurbished for that purpose. This continued until 1985, when we closed the Summerland hatchery for a period of time.
In mid-1980 we shifted our strategy. We needed to generate some cash. We didn’t shut the door on the hatchery, but we did go back to stocking wild seed so we could get commercial sacle production from the farm. That decision, based primarily on the encouragement of Bill MacGrath, turned out to be very wise. It allowed us to reduce the research staff and lower expenses. In 1980 we shifted from an R&D company to a commercial business with about 1,000 acres in production, most of it built between 1978 and 1980.
In 1981 we opened an administrative office in Miami, and Bill MacGrath left Honduras and moved to Florida to run it.
After we closed the SFH hatchery in 1982, we showed steady growth using all wild seedstock (stylirostris) through 1985.
In 1983 we entered into a joint venture with Santiago Maspons to develop a farm in Ecuador. SCI had a 49% interest in that project for about four years, and then sold its interest back to Santiago, primarily because we were pursuing different strategies.
We were pleased enough with our progress that in 1984 we formed Granjas Marinas San Bernardo, a new Honduran company with local shareholders, negotiated a lease from the Honduran government of about 15,000 acres—and began to build ponds. SCI was a major shareholder. By the end of 1984, the new San Bernardo farm had 1,200 acres of ponds. By 1986 we had about 3,700 acres of ponds and were producing about 3 million pounds of shrimp a year.
In 1987 we acquired and renovated an existing facility as our first processing plant, Empacadora San Lorenzo. By 1990 we had 5,000 acres of ponds and were producing about 5 million pounds of shrimp a year.
Those were good years for the growth of our company. By 1993 we had 9,000 acres of ponds and produced 9 million pounds of shrimp. In 1988 we had reactivated our hatchery in Summerland Key, Florida, which had been mothballed for several years. With our pond expansions, we needed a more reliable supply of postlarvae than we were getting from the wild stock. We still had the original hatchery facilities in Honduras, but with the water quality issues and the state-of-the-art at the time, it was more efficient to operate a hatchery in the Florida Keys and fly the seedstock to Honduras, which we did for a good many years. In fact, we only stopped doing that a couple of years ago. Our new hatchery and maturation facilities in Honduras, which are located on the Gulf of Fonseca where the water quality is much better than it was at our original facilities on the estuary, are able to supply all our needs with improved postlarvae, and we no longer source any of our shrimp from the wild.
Another important milestone in the early 1990s was formation of Shrimp Culture Technologies (SCT), a joint venture between SCI and Dr. Rolland Laramore to develop and commercialize new technologies. Subsequently, SCI acquired Rolland’s interest in SCT and he became SCI’s Director of Research and Development.
In Honduras, we instituted a labor relations program that was developed in Costa Rica called “Solidarity”. Basically it is a self-governing, employee association where both management and labor are represented. It has worked out very well. The association has grown to the point that it now provides food service and bus transportation for the employees and trash collection and recycling for our facilities—and it gets paid for all of these services. It operates a cooperative store that we believe is the best stocked and most reasonably priced outlet in the Choluteca area. The Association pays dividends to its members, provides loans and a medical program and organizes social and cultural events for members and the local community. Labor relations can sometimes be adversarial in Latin America. Thanks in large part to the Solidarity program and an effective management team led by Carlos Lara, we have never lost a day to labor strife in Honduras. It has never been an us-against-them situation. It’s been a wonderful win-win for the company and our employees.
In 1992 we brought in additional local investors and merged the San Bernardo farm, Sea Farms de Honduras and other farms owned by some of the San Bernardo shareholders into one company, Grupo Granjas Marinas (GGM). Up to this point, we had never had a serious disease problem in the ponds. Once we stocked the animals from the hatcheries or estuary into the ponds, they grew at about a gram a week with 70% survival. We harvested them, we processed them and we sold them. We had arrived in the land of milk and honey.
Then in 1994 we began to notice a sharp drop in survivals, from 70%, to 60%, to 50%, all the way down to below 20%. We were on the slippery slope and headed south. At the time, Dr. Rolland Laramore was the head of our research operation in Vero Beach, Florida. I asked him what was going on. Rolland assured me that whatever was killing the shrimp would not kill all of them because if it did, it would not survive. He said overall survivals would probably not fall below 5%. He was trying to reassure me, but this was not much reassurance.
The Taura virus had arrived. We got hit hard and spent the next six years reducing costs and learning to live with and manage around Taura. Slowly, over the next several years, we began to see some improvement. By 1998 survivals had risen to 40% and we had reduced our costs significantly.
By October 1998, we were getting back to normal and anticipating a big harvest when Hurricane Mitch arrived.
In mid-1999 the GGM shareholders formed Sea Farms International, Ltd, in the Cayman Islands, to serve as the holding company for existing and future investments in our shrimp aquaculture business worldwide.
Later in 1999 as we were continuing to recover from Taura, along came the whitespot virus, which I am glad to say did not hit us as hard as Taura. Whitespot seems to be a problem only when water temperatures drop in the winter.
In 2000, SFI made its first investment in Venezuela. We needed to diversify geographically. We have about 16,000 acres of ponds in Honduras, all in the same general location, making us vulnerable to disasters like Taura and Mitch. Venezuela to date has not had significant virus problems! In Venezuela, we have higher survivals, like those we had in Honduras pre-Taura.
At our research facilities in Vero Beach, Florida, we have a genetic improvement program. We have maturation and hatchery facilities in Venezuela and Honduras and no longer fly larvae out of Florida. We no longer stock wild seedstock, and we don’t use antibiotics during the hatchery or growout phases. In Honduras, we are testing our specific pathogen free and specific pathogen resistant animals. We hope to implement a similar program in Venezuela to assure long term viability of the industry and are working with the government on that.