Wal-Mart Stops Buying Chile Salmon

Wal-Mart switched to "Atlantic" suppliers of salmon after the fish became "unavailable" in Chile, Caren Epstein, a spokeswoman with the Bentonville, Arkansas-based company, said in an e-mailed response to questions July 8. She declined to be more specific on the other countries it was buying from.

Norway is the world's largest supplier of salmon, ranked ahead of Chile and the U.K. Chilean supplies of the fish will slump 59 percent this year because of the virus, according to Norwegian industry consultant Kontali Analyse AG.

A growing shortage of salmon in the world market has boosted Norwegian salmon export prices 21 percent this year, according to Statistics Norway. Wal-Mart hasn't increased salmon prices "at the current time," according to Epstein.

Marine Harvest ASA, the world's largest salmon supplier, started sending Norwegian salmon to the U.S. market two weeks ago to keep up supplies to clients who were buying fish from its Chilean farms, said Jorgen Christiansen, a spokesman for the Oslo-based company. He declined to name the clients.

"We have our customers screaming for more salmon," Christiansen said.

Marine Harvest

Marine Harvest's production will slump to less than 30,000 metric tons of salmon this year at its farms in Chile, compared with more than 90,000 tons in 2008, country manager Alvaro Jimenez said in an interview. Production in 2010 will be "much less" than this year's output, he said.

World supply will contract 10.3 percent to 1.3 million metric tons this year because of the decline in Chile's industry, according to Kontali.

Chilean salmon farms suffered an outbreak of the virus known as ISA last year because producers held too many fish in farms off the coast of the island of Chiloe in southern Chile, Jimenez said. The outbreak of the virus is linked to the density of fish farmed in offshore areas and the company is working on vaccinations to combat the disease, he said.

Marine Harvest, which supplies a third of the world's salmon, has risen fourfold so far this year. Oslo-based Cermaq, Marine Harvest's nearest rival, is up 75 percent.

‘Too Early'

It's "too early" to take a profit on Marine Harvest because it stands to gain from further declines in Chilean production, David Kerstens, a London-based analyst at UBS AG, wrote in a June 16 research note to clients. Marine Harvest supplies more than half of its production from Norway.

Prices for salmon may rise above 41 euros ($57.31) this week, said Francois Perrone, an analyst at Bergen, Norway-based Fishpool ASA, which provides hedging to buyers and sellers of salmon.

Salmon was a record 43.05 euros on June 25, 2006.

Whole Foods Market Inc., the largest natural-goods grocer in the U.S, is paying more to some of its suppliers even though it doesn't buy from Chile, Ashley Hawkins, a spokeswoman for the Austin, Texas-based chain, said in an e-mail.

Chilean imports into the U.S. market fell 14 percent in the first four months of this year to $213.16 million, according to the U.S. Department of Agriculture. Producers in the Faroe Islands, Norway and the U.K. boosted shipments, according to the USDA.

Revised Law

Chile's producers, including AquaChile SA, await a new government law that will provide tighter industry controls. The law will also provide producers with the opportunity to start new production sites in fjords further south.

"Nobody dares yet put new fish in the water until the government dictates the new law and all the norms that we have are up and running," Cesar Barros, head of Chilean salmon industry chamber SalmonChile, said in an interview.

Any recovery in Chile's salmon industry may be delayed if banks don't provide sufficient loans for farmers to replenish their production sites, said Christiansen.

Privately held AquaChile, Marine Harvest's nearest rival in Chile, reached a deal July 7 with a group of banks that included Banco Santander SA to reschedule payments on loans worth $378 million.

To contact the reporters responsible for this story: Matthew Craze in Santiago at mcraze@bloomberg.netJames Attwood in Santiago at jattwood3@bloomberg.net