'Lower cost will tip the balance towards deep farming'
Akva Group chief executive Knut Nesse believes that price will have a major impact on technology choices in the sea. He himself has particular faith in two solutions.
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There is a lot of activity around Akva Group's large stand at the AquaNext trade show in Stavanger this week. A little to the side of the busy stand, Fish Farming Expert’s Norwegian sister site Kyst.no meets Akva chief executive Knut Nesse, who describes a market that has gradually recovered.
“We are experiencing good sales and good order intake. We have quite a lot of inquiries out here, and activity is at a good level. We really feel that we are back to normal after the land rent tax (Norway’s 25% tax on the value added to salmon in marine farms),” Nesse tells Kyst.no.
The latest financial figures also point in the same direction. In the second quarter, Akva Group’s order intake increased by 28%, from NOK 1.052 to 1.345 billion. At the end of June, the company had an order backlog of almost NOK 3 billion.
So-called “deep farming” in submersible pens, post-smolts, and digital solutions are among the areas where the company is experiencing good interest. These are also technologies that Akva Group has previously identified as important areas of focus.
For sea-based farming, Nesse is particularly clear on the first two.
“I believe most in deep-water farming and post-smolts when it comes to achieving biological progress.”
The price matters
In recent years, Akva Group has invested heavily in deep farming through the Nautilus system. The principle is to keep salmon deeper in the water column and thereby reduce exposure to sea lice in the upper water layers.
At the same time, several other technologies are being developed and deployed to meet the challenges at sea. Closed systems are among the solutions that have received a lot of attention.
Nesse believes that the cost differences will have a major impact on what farmers actually choose.
“Remember that closed systems are on average 20 times more expensive than deep farming. If deep farming actually solves 80% of the lice problem, then you don't go for a technology that is 20 times more expensive.”
The figures are Akva Group's own assessments, but the CEO believes the difference illustrates why cost will weigh heavily in technology choices.
“The law of economic gravity will apply, and it will promote deep-sea farming to a greater extent than closed-sea farming.”
That doesn't mean he's writing off closed solutions.
“Closed containment may be appropriate in certain situations and at certain locations, but it will not be a solution for everyone.”
If deep farming actually solves 80% of the lice problem, then you don't go for a closed system that is 20 times more expensive.
Wants technology neutrality
How future regulation is designed will also affect which solutions farmers focus on.
“We are concerned that it should be technology-neutral, so that there is no distortion for the farmers because there are different instruments,” says Nesse.
He believes that today's incentives are increasingly pulling in the direction of closed solutions, and wants more technologies to be able to be assessed based on the effect they actually provide.
“Now there is a situation where closed farming is in a way prioritised through incentives. We are concerned that what politicians call low emissions, through Miljøflex (environmental flexibility), must also be able to include deep farming as an example of low emissions technology.”
For Akva group, it is therefore about giving farmers more options when investing to reduce environmental impact.
“We hope that deep farming can be included in the toolbox of the authorities, and that they don't just prioritise certain technologies. It has to be technology-neutral. That’s the main message.”
Technological neutrality is a principle that Akva Group has also highlighted in other contexts. Recently, the company called for faster clarifications regarding automatic lice counting, while also arguing that the authorities should set requirements for, among other things, precision and documentation without choosing technological winners.
An unhelpful background
Unclear framework conditions also make investment decisions more difficult.
“What the future regime will be in terms of regulation and legislation is unfortunately a bit unclear from time to time. That probably makes it a bit challenging to make choices.”
Nesse nevertheless believes that fish farmers already know a lot about the direction the industry must move in.
Lower mortality and better fish welfare are goals he expects will remain firm, regardless of what the details of the upcoming regulations look like.
Here he again highlights larger post-smolts and deep farming.
“If you invest in technologies today that contribute to lower mortality and better fish welfare, it will stand the test of time regardless of what the regulatory regime says.”
He will not speculate further on exactly what the framework conditions will be.
“We cannot know 100% what will come and how it will be regulated. But we know that low mortality, good fish health and good fish welfare will be important,” he concludes.
