From fry to fillets ready for the fry pan.

• Position: REGIONALREPORT Eastern

Once touted as a growth industry, the number of Tar Heel fish farms has sunk by a fourth in five years, from 200 to 150, due largely to soaring prices of corn and soybeans, the primary ingredients of fish feed. But vertical integration--controlling every aspect of production--has allowed Carolina Classics Catfish Inc. to keep revenue and profit stable.

Started in 1985 and based in Ayden, it has more than 2,000 acres of ponds, employs 125 and has a network of contract farmers. It's the biggest player in North Carolina's $25 million-a-year aquaculture industry, with about $15 million in sales forecast this year to restaurants, processors and retailers such as Matthews-based Harris Teeter Inc. and Austin, Texas-based Whole Foods Market Inc.

Founder Rob Mayo began building ponds, about 10 acres each, in 1986, added a processing plant in 1987, a hatchery in 1989 and a feed factory 10 years later. The gradual expansion, financed with loans and private revenue bonds, allows fish to be raised, harvested and processed into fillets and nuggets...