Welsh Ragworm Farm Scandal

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It is believed that the global market for marine worms for sea fishing is worth £5.9 billion (1). The USA, with its multi-billion dollar recreational fishing industry accounts for much of this, but European companies such as Topsy Baits in the Netherlands produce over one hundred tons of worms a year and export their products to over forty countries (1). Britain has been slow to capitalise on this market, with the collection and supply of marine worms for recreational anglers being mostly made up of small-scale enterprises.

Bait Digging and Collection
Bait digging and collection is a huge industry across the world.

However, the last few decades have seen British companies attempt to capitalise on this market and begin to produce worms – mostly ragworms – on a large scale. Commercially produced ragworms could be used to supply the angling market, but the increasing amount of farmed fish, and the corresponding demand for sustainably produced feed for these fish, means that ragworm farms could become extremely lucrative in coming years. Indeed, the farming of ragworm could also have significant environmental benefits. Currently small forage fish such as sandeels are caught in huge numbers and turned into fishmeal to supply feed to the fish farming industry. If this could be replaced with farmed ragworm it would negate the need to catch wild fish for feed and reduce the impact which fish farming has on wild fish stocks.

Many areas of the UK which suffer from high unemployment and deprivation have expressed interest in establishing a ragworm farm, seeing it as a way of directly creating jobs and the revitalising the wider area through the supply lines and connected businesses which would service the farm. Wales has been highlighted as an area which would benefit from the development of an industrial scale ragworm farm, with speculation that a large-scale farm would be built in Carmarthenshire dating back to 2002 (2). The reality is that many companies which have attempted to break into this industry have, after a period of initial success, ended in failure. SeaBait was a company based in Northumberland which used heat from Lynemouth Power Station to breed and grow large quantities of ragworm to supply the fishing bait market and provide feed for fish farms. Established in the 1980s the company won Queen’s Awards for enterprise but went out of business in 2008 (1).

Another company which also ended up going out of business, but in much more controversial circumstances was Dragon Feeds. According to records filed with Companies House the company was incorporated in 2002 and in 2006 was granted permission to build a huge ragworm farm near Port Talbot in Wales. The farm would consist of 270 breeding ponds was set to create more than seventy jobs (2). Over £1 million was provided in funding from the Welsh European Funding Office to help establish the farm (1).

Dragon Feeds never reached the size or scale originally planned, or created anywhere near the number of jobs promised. In 2011 the company went into liquidation with only seventy-four of the 270 ponds being built, and only a small number of people being employed at the farm (3). The BBC reported that the Welsh government was attempting to claim back the funding it had supplied the company with from the liquidators, and the Tony Smith, the managing director of Dragon Feeds said that he could not comment on the situation due to “legal reasons” (3).

Fish Farm
The ragworm farm would have provided feed for fish farms.

Shortly after Dragon Feeds closed South Wales Police began an eight-year investigation into a number of grant funded businesses which eventually led to the truth about Dragon Feeds coming to light. In an article published on the BBC website it was revealed that only seven people had ever been employed at the farm and much of the money which was provided in funding had been used for other purposes (4). Janet Potter, deputy head of the Crown Prosecution Specialist Fraud Division, told the BBC that Smith had:

“…promised to make Wales a world leader in the aquaculture industry, but instead he abused the system. Not only did Anthony Smith wildly overstate how much money had been spent, but he made up stories about projects which never existed” (4).

It emerged that Smith lied on grant applications and falsified information so that he could run the business using the grants which were effectively taxpayer’s money (5). This meant that practically none of his own money was at risk if the company failed and he was able to take a salary. False expenses made it look as if money was leaving the company when it was in fact circulating back in, meaning that the company would not have been eligible for many of the grants it received. The grants had been approved by the Welsh government due to the environmental benefits which farmed ragworms would bring and the fact that Smith promised to create jobs in parts of Wales which were experiencing high unemployment levels. It was also revealed that Smith had consistently posed as a legitimate businessman, winning awards for the ragworm products his company produced and supplying feed to fish which were served at celebrity-owned restaurants and to the Queen. This led to Smith being praised by Prince Charles and being invited to a private lunch at Windsor Castle (5).

In 2019 Tony Smith admitted defrauding the Welsh government and the EU of £4.7 million in grants funding (4). He was jailed for three years and nine months, while two accomplices were given suspended sentences for fraudulent trading and false accounting (5).

A following article on the BBC website looked at how Smith had been so successful in duping people and continuing with the fraud. Kit Smith and his business partner Malcolm Stewart were two people who invested £250,000 into Smith’s business. They told the BBC that Smith’s plans were not “too good to be true” and were in fact logical and filled a very real need for farmed ragworm to replace wild-caught fish as feed for farmed fish. They went on to say that Smith was “very charismatic … very genuine, but he was an extremely effective liar” (6). Mr Stewart went on to say:

“The biggest tragedy of this whole thing is that he didn’t use the money for what it was for. To this day there’s a huge gap in the market to create fish feed without fishmeal in it … there’s a huge opportunity and also a huge need for a fishmeal-free fish feed, and he was on the cusp of having it” (6).

References

  1. The early bird catches the worm to sell for billions, The Independent, 12 January 2017.
  2. Villagers back ragworm farm plan, BBC News, 12 August 2002.
  3. Port Talbot ragworm firm Dragon Feeds in liquidation, BBC News, 3 August 2011.
  4. Fish feed boss Anthony Smith admits £4.7m grants fraud, BBC News, 28 March 2019.
  5. Fish feed grants fraud boss Anthony Smith jailed, BBC News, 10 May 2019.
  6. Tony Smith’s saving the oceans plan was one big fraud, BBC News, 10 May 2019.