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A more sustainable footing for Chilean salmon

Zoom in font  Zoom out font Published: 2013-07-29  Views: 10
Core Tip: New regulations will slow the growth of Chile’s farmed salmon production, but the industry’s future remains bright, according to a new report published by Rabobank International.
New regusalmonlations will slow the growth of Chile’s farmed salmon production, but the industry’s future remains bright, according to a new report published by Rabobank International.

While Chile’s Atlantic salmon production is expected to increase by more than 20 percent this year, the growth will be substantially below initial estimates due to increasing challenges on the production, sanitary and financial fronts, said Rabobank.

In its report, the Netherlands-based banking group states that the growth in Chilean salmon output is also expected to stall between 2014 and 2016, but despite this slowdown, it has an “optimistic view” on the Chilean salmon industry and its ability to create lasting growth.

“Chile has all the prospects of being one of the best places in the world to produce salmon over the long term,” said Valeria Mutis, Rabobank analyst. “Its potential for expansion is greater than any other region in the world. Its natural markets, the America’s and possibly Asia, are where most demand growth will occur. Hopefully, the past five or six years, which has seen the industry affected badly by outbreaks of the ISA (infectious salmon anemia) virus, sea lice and other disease, will be key learning points which will set the industry on a path of more consistent, sustainable and profitable growth.”

In 2008 and 2009, Chilean salmon farmers lost large proportions of their biomass because of ISA. Rabobank believes that a new but more limited outbreak of the disease discovered this year had “rattled” the Chilean salmon industry, saying that even though the outbreak was immediately controlled, it raised doubts over the effectiveness of new regulations put in place following the outbreak in 2008.

“Despite a severe crisis similar to 2008 being unlikely, the latest sanitary and production developments indicate that the industry still has challenges ahead,” said the report.

It said regulation of the Chilean salmon industry requires further improvement based on extensive research to move to a more sustainable “outbreak prevention” model as opposed to the more “outbreak control” orientation of the system now in effect.

Nevertheless, the industry is far different today than it was in 2008, it said, adding that an organized production model, bounded by a strict set of systems and rules and increasingly controlled by the regulatory authority, makes it unlikely that the 2008 disaster will be repeated.

In an attempt to protect the environment and safeguard the sanitary status, the National Fisheries and Aquaculture Service (Sernapesca) is launching new regulations that will come into force in 2014. These new regulations — which include a new density regulation —will likely result in little or no production growth between 2014 and 2016.

Unofficial estimates of Chile’s Atlantic salmon smolt releases put the preliminary harvest forecast for this year at more than 530,000 metric tons (MT). However, considering the increasing production constraints, Rabobank estimates this year’s Atlantic salmon production will be in the range of 450,000 MT to 470,000 MT, which would still represent a more than 20 percent increase compared to 2012. In contrast, coho and trout production are expected to contract by some 40,000 MT and 80,000 MT, respectively, thus reducing Chilean total salmon and trout production by 1 percent compared to last year.

Globally, in 2013, Rabobank expects Atlantic salmon production to expand only slightly, between 1 percent and 2 percent, as supply from Norway is expected to contract by 2 percent to 3 percent.

It said the price outlook for Atlantic salmon remains strong due to a faster growth of demand compared to global supply.

“This also means that the industry’s profitability will begin to improve despite the poor production parameters,” said the report.

 
 
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