Texas Aquaculture Cooperative

October 2008

Markham, Texas

With catfish farmers scattered throughout parts of southern Texas, a dozen banded together in 2002 to create the Texas Aquaculture Cooperative, which has grown to include 35 producers and a frozen catfish processing plant.

Steve Klingaman, a catfish farmer and secretary of the co-op’s board of directors, said several individual catfish farmers were operating independently in the area. Some had catfish ponds and others were building them, while several more people were interested in launching such a venture. Texas Aquaculture Cooperative grew out of the partnership of its 12 original members.

The first plant was located in Palacios, Texas, in Matagorda County. It was later moved to its permanent facility in Markham, Texas, a small south Texas community whose other major industries include a nuclear plant, Oxea Chemical and Texas brine. The plant now has a staff of 30 employees.

When the plant began its operations, the co-op producers cut about 10,000 pounds of fresh fish a week. Today, the Markham plant is turning out as much as 30,000 pounds of finished product weekly.

In 2003, Texas Aquaculture received a USDA Value Added Producer Grant that enabled the co-op to purchase a freezer tunnel. Having previously only processed fresh catfish, the freezer tunnel allowed for the expansion into frozen fish. That expansion allowed the plant to increase production from 60,000 pounds of live product a week to 100,000 pounds of live product a week. Klingaman said the co-op’s emergence in the frozen fish market has been one of its greatest successes in its six-year history.

But there have also been several challenges and setbacks for Texas Aquaculture. Klingaman said the co-op has been in business long enough to overcome some growing pains, only to be faced by the challenges of an economic downturn.

Perhaps even more challenging, however, is overcoming the competitive disadvantage that comes with being a smaller processor. Large processors often stand to benefit from discounts, which therefore affect pricing. Price gouging has also drawn the attention of Texas Aquaculture.

“Since the seafood industry is small, finding wholesalers and working those contacts have been our biggest concern and taken the majority of our time,” Klingaman said.

The group is now focused on what it must do to stay in business in spite of the U.S. and world economy’s ups and downs. He said decisions about what direction to take in the future will also need to be made. The co-op will need to purchase equipment in order to enter the whole-dressed market.

Additionally, Texas Aquaculture must determine the course of its future – whether it should take a slow-growth approach and stay in a niche market, or make efforts to grow and compete with a larger processing plant that turns out 300,000 pounds a day.