Three years has been allocated to a pilot programme for SFG and...

Three years has been allocated to a pilot programme for SFG and PSD. And their project is not financially viable in its current form. Meaning that it would be 2025 at the earliest before any hint of progress is made. Perhaps another review and a small operation in the NT beginning in 2026.

I was concerned about this competitor to Tassal twelve months ago. Now, l can't imagine anyone putting more money into their project. Especially when interest rates start to rise and capital markets tighten. Where they go from here l have no idea, but it's not looking good.

It quickly appeared to me that Project Sea Dragon was a modern-day Darien Scheme -- whereby much of Scotland's wealth in the late-1600s was gambled on a fantastical, grand proposal to settle the area of what is now Panama; and then establish an overland route between the Pacific and Atlantic. Of course, best laid plans ran headlong into reality and it failed spectacularly.

If only SeaFarms Group had put its resources and cap raisings into modestly improving its existing Queensland operation with technology. Then expanding bit by bit with a neighbouring farm purchase and productivity increases. This plan sounds very familiar! In this situation we may have had some legitimate competition in the domestic market. SFG has never been profitable, never paid a dividend, and its key financials are going backwards. It appears to be in much worse financial condition than Huon ever was.

I hope SeaFarms with their Queensland operation continue because we need to grow overall domestic prawn consumption and there's room for them in the market. Increased awareness of prawns as an all-year-round meal is good for us. With our 6,500 tonnes a year we can't be everywhere at once and in every supermarket in Australia for 12 months of the year.

l think back to a pie chart Dabozza shared last year. It showed that whilst a lot of aquaculture companies farm delicious products in Australia, almost all the actual profit comes from just one company -- Tassal. We have the economy of scale, distribution networks, agreements with supermarkets, organisational experience, people, and technology. Whilst we might sell a commodity and have no moat on prawn and salmon meat, I'd argue our recognisable brand names (Tassal & TropicCo ) and the fact that every other aquaculture company in Australia is either tiny or loss-making, means we're in a dominant market position. A few million dollars might set you up with an aquaculture company from scratch, but to have our efficiency, breeding programme, technology, profit margins etc. that can't be replicated easily. We're still learning how to reduce feed input costs to as low as possible. It's a learning curve that takes many years.

SeaFarms Group seems to have realised that even if half a billion dollars were thrown at their proposed 100,000 to 180,000 tonne venture, and even with government support, it still didn't have a guarantee of success. It's a hard lesson for all involved. In a strange way, it's also kind of comforting to us Tassal investors knowing that while the finished product is not a moat, there are almost insurmountable barriers to entry.