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Misreporting mortalities is about much more than fuzzy math

An over-focus on 'zero-antibiotic' as a marketing tool might have come at the expense of sustainability, while tipping the playing field in Nova Austral's favor.

Chilean salmon farmer Nova Austral’s misreporting of fish mortalities on its farms is about much more than just poor accounting.

The repercussions of the company's behavior have poured over the past few weeks, with the latest news being the exit of CEO Nicos Nicolaides, and the Aquaculture Stewardship Council's (ASC) decision to suspend its logo contract with the company.

On Tuesday, Chile’s Sernapesca decided to file three lawsuits against Nova Austral after its two-week investigation into alleged misreporting of mortalities at its farms, prompted by a media report from El Mostrador accusing the company of falsifying its records.

Just hours after Sernapesca’s announcement Tuesday, Nova Austral admitted in a statement to having identified “occasions of misreported mortalities,” during its own internal investigation.

The company continues to highlight its commitment to antibiotic-free production, its most widely recognized unique selling proposition.

But in doing this, it is missing the point. The company's behavior is actually shining a light on its antibiotic-free marketing strategy and the competitive advantage the claim gives it in the market.

Foregoing the use of antibiotics at the expense of excessive mortality is a flawed approach, and it is inconsistent with Chile’s upgraded farming regulations that are designed to promote sustainable salmon farming – ever more critical given the historic ups and downs of Chile’s industry and its struggle with sanitary issues.

Fish mortality is one of the main elements in the Chilean aquaculture regulatory system to determine the biological performance of salmon farms.

For example, when applying the Rule of Densities, the existing model applicable in Magallanes where Nova Austral operates, companies need to submit information on three elements: environmental, which measures the neighborhoods’s impact on the natural surroundings; sanitary, which is a calculation of mortalities by company; and productive, which is based on information on projected stocking and actual stocking in the previous cycle by neighborhood.

The alternative stocking regulation implemented in Chile’s Aysen and Los Lagos regions, known as the Stocking Reduction Plan (PRS), recently introduced the element of antibiotic use to incentivize companies to reduce the number of treatments.

However, this factor is only beneficial to companies when they do not exceed a certain level of mortality, and sea lice treatment.

This was done precisely to "avoid incentivizing the perverse use of ‘antibiotic-free’ production, and to avoid oversights in the sanitary conditions of the farms,” according to a presentation by Subpesca, Chile's Subsecretariat of Fisheries and Aquaculture, of the program.

“Mortality will continue to be the main element to assess companies sanitary performance,” it emphasized.

Following the admission of the identified misreporting, Nova Austral said this did not affect the quality or integrity of the company’s salmon and reiterated that it complies with antibiotic-free production standards. However, it did not talk about the damage it might have caused to the industry at large.

Under-reporting mortalities while not using antibiotics gave the company an apparent success in sustainability and sanitary performance that put competitors at a disadvantage.

By misreporting mortalities, the firm got the government's backing on its zero-antibiotic claim. Nova Austral's salmon has a premium price in the market — in between Norwegian and Chilean salmon prices as stated by the CEO — unattainable to others.

This over-focus on zero antibiotics use as a marketing tool might have come at the expense of sustainability, resulting in significant risks to both the company and the Chilean salmon sector’s reputation, especially in Magallanes, a new area of expansion for the farming sector and one that is being closely monitored by NGOs and others that are not friendly to the industry.

So, even if consumers can be reassured that their salmon was never treated with antibiotics, a company misreporting mortalities -- so it can back that claim -- is not in a position to say it is producing sustainably.

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