Aquaculture

See all articles

Will rising production costs change the competitive landscape for salmon farming?

While production costs are rising globally, some countries are seeing a higher rate of increase than others.

Salmon is becoming increasingly expensive to farm but local variables are shifting the competitive landscape of the global industry according to scientists from Norwegian research institute Nofima.

Tough quarter for salmon farmer SalMar as group continues push to offshore

Read more

Analysis: Mowi CEO Alf-Helge Aarskog oversaw golden period of growth at salmon farming giant

Read more

Will GM salmon ever pay off for AquaBounty?

Read more

“The driving forces behind the increase in cost are the same in all countries but are of different strengths," said Nofima Scientist Audun Iversen.

"Chile has had a considerable improvement in biological results, clearly visible in costs. The Faroe Islands have lost some ground after experiencing larger challenges with lice and disease. Scotland and Canada have the highest costs, and while the increase has been moderate in Canada in recent years, it has been very large in Scotland."

On behalf of the Norwegian Seafood Research Fund (FHF), Iversen has joined forces with his Nofima colleague Oystein Hermansen and Kontali analysts Ragnar Nystøyl, Knut Henrik Rolland and Lars Daniel Garshol and compiled a new report: “Competitiveness of Norwegian farmed salmon: Cost and cost drivers in competitor countries”.

From the late 1970s, when the aquaculture industry really got going up until 2005, productivity increased and costs decreased fairly uniformly. But in recent years there has been a marked increase in the level of costs.

"This increase has made many people worried about the competitiveness of the [Norwegian] industry in relation to other competitor countries, other fish species and other sources of protein, such as chicken and pork," said Iversen.

Chile sees considerable improvement; Scotland flounders

While Norwegian producers pegged up costs of NOK 37.85 (€3.80/$4.20) per kilogram in 2018 (slaughtered and packed salmon, excluding interest), Chilean producers are now down to NOK 35.40 (€3.50/$3.90), 6 percent lower than in Norway and a marked shift from a previous analysis in 2015, when Chile had a production cost NOK 1 (€0.10/$0.11) higher than Norway.

Can this algae-based salmon feed keep sea lice at bay?

Read more

Was I wrong about salmon farming?

Read more

“Chile has experienced a considerable improvement in biological results, clearly seen in costs," said Oystein Hermansen, with particular impact from the work done to reduce disease.

The Faroe Islands, meanwhile, has cost levels 2.5 percent above that of Norway at NOK 38.8 (€3.80/$4.30) per kilogram.

"[The Faroes] have had challenges both with the transition to very large smolt and the implementation of new lice treatment methods. However, there is still a gap up to Canada and Scotland, which have the highest costs,” said Hermansen.

While the increase has been moderate in Canada in recent years, it has been very large in Scotland. Canada has costs of NOK 41.80 (€4.10/$4.60) per kilogram (11 percent higher than Norway), while Scotland has substantially higher costs at NOK 48.20 (€4.80/$5.30) per kilogram, or 28 percent above Norway's.

“In Canada, we also see a modernization of the industry, and there is still considerable potential for growth, especially on the east coast," said Iversen. Scotland,meanwhile, has a few biological challenges, including gill problems and suffered a decline in production in 2018, giving fixed costs greater significance.

The two industrial economics researchers at Nofima conclude that there are complex explanations for the differences in costs between the five producer countries.

“Higher costs are caused by slightly less favorable natural conditions, higher mortality rates, more disease, less scale and less advanced technology," said Iversen.

"Norway still has among the best natural conditions, good infrastructure, large facilities, efficient technology and a well-developed service industry. This means that Norwegian producers are competitive, even with a high Norwegian level of costs."

Who are the top land-based salmon suppliers?

Check out IntraFish's analysis on the land-based companies and the sector's technology: Download a free sample report here or reach out to us at Campaigns@IntraFish.com

Latest news
Most read