Pentair is Closing Urban Organics: A Pioneering Aquaponics Venture

CONTENT SOURCED FROM STAR TRIBUNE

Pentair is closing Urban Organics, a pioneering aquaponics venture that in six years had become a darling of Minnesota’s sustainable-food community.

Urban Organics raised fish and grew salad greens year-round in a closed-loop system in the former Schmidt Brewery in St. Paul. Fish excrement nourished the plants and the plants cleaned the water for the fish, a process known as recirculated aquaculture.

A Pentair spokeswoman said “the realization of the business model did not meet our expectations,” but declined to explain whether the concerns were financial, operational or both..

The company notified employees last week of the decision to shut it down. The final produce will be harvested this week and the last fish will be removed, killed and sold by late next week, a Pentair spokeswoman said.

The news shocked the Twin Cities food community. Tracy Singleton, owner of Birchwood Cafe in Minneapolis, bought winter salad greens for her restaurant from Urban Organics.

“For us, it’s a disappointment. We don’t know why it is closing,” Singleton said. “It just seems like yesterday we catered their grand opening. Everyone was so excited about the potential to scale this supply. It fit our standards and we felt this was a good addition to our local food shed.”

The company was founded in 2013 in the old Hamm’s Brewery by Dave Haider, Kristen Haider, Fred Haberman and Chris Ames. It was a smaller facility, and well-known local chefs were eager to buy the product from the operation. Pentair approached the Haiders, a husband-and-wife duo, several years ago about a potential partnership.

This led to the massive expansion at the Schmidt Brewery, which was heralded as one of the world’s largest commercial aquaponics systems when it opened in 2017. Pentair bought out the founders, becoming the sole owner, a year ago.

Pentair, based in England but largely managed from Golden Valley, has undergone immense change in the past two years.

Last April, it spun off its electrical business into a new entity, nVent. Like its predecessor, it too is officially based in England but largely run out of its U.S. headquarters in St. Louis Park. Last May, Pentair promoted John Stauch to chief executive.

The company declined to outline specifically how Urban Organics failed to meet its expectations, but the water-filtration company has been working to refocus itself.

Urban Organics was its only food-based business and fell outside its core capabilities. Pentair has an interest in seeing indoor aquaponics and aquaculture succeed. It began supplying Urban Organics’ equipment in 2013.

“Our combined goal was to help incubate an industry, and Pentair invested in the venture through technological and scientific expertise, and financial resources,” a Pentair spokeswoman said via e-mail.

Birchwood Cafe bought tilapia from Urban Organics before Pentair’s ownership, Singleton said. In the new facility, Urban Organics focused on arctic char and rainbow trout, but she saw some problems emerge.

“It doesn’t seem like they were ever able to get their fish program online and we don’t know why,” Singleton said. “We were excited about that option and it didn’t materialize.”

The sudden closure raised questions, though, about the viability of the industry.

“We were very supportive of Urban Organics from day one,” said Mike Higgins, chief executive of the Fish Guys, a key Minneapolis-based distributor of fresh, sustainably grown fish to restaurants and retailers in the Upper Midwest. “Globally, people are pursuing [recirculated aquaculture] at a vigorous rate; the science is indeed there.”

There are large facilities being built around the U.S., he said, including massive indoor farms in Maine and South Florida.

He expects aquaponic companies that farm salmon, like Superior Fresh of Hixton, Wis., will be successful given the high demand. That company is financially backed by the Wanek family, owners of Ashley Furniture.

As a buyer, Higgins said, the feasibility of the business comes down to the quality and the selling price of their products to make it accessible to more than a small niche audience.

Pentair said this decision isn’t an indictment on indoor aquaculture as a whole. “We continue to believe there is a long-term strategy for aquaponics in urban areas, however the realization of the business model did not meet our expectations,” Pentair said in an e-mail.

The company doesn’t yet know what it will do with the $12 million, 87,000-square-foot facility at the old Schmidt Brewery in St. Paul. The operations will be completely shut down by June 14, and 27 employees will be affected. Pentair said it is offering transition resources to those workers.

Dave Haider, who became general manager under Pentair’s ownership, declined to comment.