Two Minnesota food companies are joining forces to expand indoor shrimp farming in the state's landlocked southwest corner.
Marshall-based Schwan's Co. is taking a minority stake in Tru Shrimp Co., an affiliate of Ralco, a maker of animal feed. Tru Shrimp uses technology to simulate a natural bayou where it then grows shrimp that the company says is safe and affordable for human consumption.
Headquartered in Balaton, a town of about 600 residents about 20 miles south of Marshall, Tru Shrimp announced earlier this summer plans to build a 4,000-square-foot shrimp hatchery in Marshall.
At the same time, the company also committed to building a $50 million facility in Luverne, about 60 miles south of Marshall, where the baby shrimp will be transported for feeding and growth.
The Schwan's deal announced Monday revealed the final step in production. Schwan's will lease a portion of one of its processing plants in Marshall to Tru Shrimp. Once the shrimp reach full maturity in Luverne, they will be transported back to the Schwan's plant for final processing and packaging.
Schwan's would not provide a specific investment amount other than calling it "significant."
Executives at Schwan's, a maker of frozen foods and a specialist in home delivery with $3 billion in annual sales, have been watching Tru Shrimp's development for some time, chief executive Dimitrios Smyrnios said.
"We are intrigued and excited about the possibilities of inland shrimp production and view this as an excellent opportunity to provide consumers with a predictable and traceable supply of nutritious shrimp," Smyrnios said in a statement. "We are also proud to work with Tru Shrimp as it develops its core business in our hometown of Marshall to the benefit of the southwest Minnesota area."
Schwan's was also given a seat on Tru Shrimp's board of directors. The partnership improves the frozen-food maker's access to Tru Shrimp's supply once production ramps up.
Tru Shrimp chose to locate in Minnesota because of the abundance of shrimp feed ingredients, like corn and soybeans.
"Economically and environmentally it makes much more sense to raise shrimp near their food source than to ship feed to shrimp raised in coastal ponds thousands of miles from the U.S. market," Tru Shrimp CEO Michael Ziebell said in June. "Until now, the technology to effectively raise shrimp in the Midwest … on a large scale did not exist."
Ziebell said the Schwan's investment "completes the capital footing" it needed. Once the facilities are complete, the company estimates it will produce up to 8 million pounds of shrimp annually. The company is exploring additional sites in Minnesota for other bayous, or harbors, like the one being built in Luverne.
Tru Shrimp believes its methods are a sustainable and environmentally responsible alternative for U.S. consumers. The company said the U.S. consumes 1.6 billion pounds of shrimp annually, with 80 percent coming from Southeast Asia. A special report published in 2015 by Consumer Reports found that shrimp produced in many of these global plants contained harmful bacteria and residue of antibiotics.
The company is also building a training facility for its workers in Balaton. Construction on the hatchery and training facility, as well renovations on the Schwan's processing facility, will begin this year. Construction of the Luverne plant will begin early next year.