Johnson Seafarms is an enterprise investment scheme promoted by Kreis Consulting that aims to raise up to £1m to invest in a cod-farming venture.
This EIS will raise up to £1m to buy up to £200,000 cod hatchlings which will be raised to maturity over two or three years, then sold.
There are two hatcheries in the UK and Johnson Seafarms has contracts with both, guaranteeing the company 90 per cent of all cod hatchlings over the next five years. The projected return is at least 50 per cent after three years excluding tax reliefs and the Cod stocks will be insured against events such as disease and natural disaster.
Johnson Seafarms is based in Shetland, and owned by two brothers who have over 20 years' experience of fish farming. The company has already produced its first harvest of famed cod following a pilot scheme last year, when the cod was sold to US restaurants. It also develops products to improve fish farming, such as the flexipanel. This is a net system allowing accurate size grading of live fish in the water.
Stocks of wild cod are falling as a result of heavy over-fishing to the point of extinction, particularly around the North Sea. Meanwhile, the demand for cod is exceeding supply and farmed cod may be the only solution to the shortfall.
Currently, the number of farmed cod in the UK is small because it used to be difficult to prevent young cod from eating other. However scientists have solved this by developing a feeding system using sea cages, where cod are fed plankton and shrimps.
This enterprise investment scheme may be worthwhile for investors seeking tax relief because it builds on a genuine need to develop cod supplies. However, investors should take on board that they will have to wait at least three years before seeing any profit, as dividends will not be generated until the cod has been sold.