The structure of the Scottish salmon farming industry 2013

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Siri Elise Dybdal

At the end of 2012, Marine Harvest announced that it was buying stakes in competing salmon farming and processing firm Morpol. Morpol, founded in 1996 in Poland, is a major supplier of smoked salmon to Germany. It employs more than 3000 people across eight countries including Scotland.

Its subsidiary Meridian Salmon Group has its headquarters in Rosyth, Fife. Morpol also has further sites on Shetland and Orkney, and the Scottish operation is planning to harvest around 23,500 tonnes of salmon in 2013.

Marine Harvest will not currently comment on the acquisition, but says it is expecting competition clearance in Q3 2013.

For the Scottish salmon farming industry, the takeover means a further decrease in the number of producers operating in the country. It is another step towards an industry that consists of only a handful of “super-producers” that generate the majority of the tonnage.

2012 figures According to the recently released 2012 Annual Fish Farm Production Survey published by the Scottish Government, there were 28 companies and 100 sites involved in freshwater production of salmon. 22 companies were actively involved in sea water production of salmon farming in 257 active sites, an increase from 254 in 2011.

The trend towards concentrating production in larger sites was maintained last year with 78.8% of production being concentrated in the sites producing over 1,000 tonnes per annum.

In total, the Scottish industry produced 162,223 tonnes of Atlantic salmon in 2012. This follows on from a 2.5% increase in 2011 and is the highest production recorded since 2003. Estimated harvest for 2013 is 152,507 – a decrease compared to last year.

Development activities Outside of the Morpol takeover, 2013 has so far been a very steady time for the Scottish salmon farming industry with no changes to report in terms of ownership or other structural issues, according to the Scottish Salmon Producers’ Organisation.SSPO members continue with development activities including three new sites approved so far this year.

“Yield is anticipated to be slightly above 2012 levels, with a similar increase anticipated in 2014,” a spokesperson said. The Scottish salmon industry has outlined a strategic plan to achieve annual production of 210,000 tonnes by 2020. Scottish Farmed Salmon exports continue to grow, with marked growth in the Middle East and Far East (64% and 95% respectively) over the last 12 months.

Scott Landsburgh, chief executive of SSPO, said: “Export sales of Scottish salmon are currently buoyant, with particular success in the Asian market. We want to ensure that this becomes an established market and are therefore very pleased to be supporting a second development campaign in these locations.”

Marine Harvest (Scotland) Ltd Marine Harvest Scotland (MHS) is the leading Scottish salmon farming company. The company has five hatcheries, four freshwater loch sites and 25 sea farms situated in the Western Isles, Skye, Wester Ross and Lochaber. Live fish are harvested at Mallaig and processed at the Blar Mhor processing plant in Fort William. The head office is situated in Edinburgh. In total 460 employees are employed at these locations. MHS expects to harvest 45,000 tonnes of salmon in 2013. This is an increase of 5000 tonnes compared to 40,000 tonnes harvested in 2012.

According to the company’s Q2 statement, the market is currently strong and there have been operational improvements. MHS has also seen improvements to costs this year, with the exception of feed raw material cost.

There is a high awareness to amoebic gill disease (AGD) in Scotland and the risk of reappearance is deemed high. There are outbreaks of clinical AGD at some sites across Scotland, but none of these are Marine Harvest sites. The situation can change rapidly at high temperatures and the health team and seawater production department remain vigilant in order to take immediate action if problems should arise, the company states.

In June the First Minister Alex Salmond officially opened the new state of the art recirculation unit at Lochailort, one of the biggest and most advanced of its kind. The recirculation unit is currently stocked with 8 million fish. Performance and survival have been very positive and the first planned seawater transfer is in November 2013.

Marine Harvest has acquired rival firm Morpol. Morpol will have been fully consolidated into Marine Harvest in the third quarter of the year.

Scottish Sea Farms Norskott Havbruk AS today owns 100 per cent of Scottish Sea Farms Ltd (SSF), the second largest fish farming company in Scotland. Norskott Havbruk AS is 50 per cent owned by Lerøy Seafood Group ASA and the fish farming company SalMar ASA respectively.

SSF has 66 marine sites, 5 freshwater sites and 5 hatcheries on the West Coast of Scotland and throughout the northern isles of Shetland and Orkney. In addition, it has processing in Orkney and Argyll.

The company produced 27,100 tonnes in 2012, but volume is expected to decrease this year. Estimates production for 2013 is 25,000– a reduction of 2,100 tonnes. SSF says strong sale prices have been achieved so far in 2013. Production costs are however slightly up due to the lower seasonal volume. The biological situation is currently well managed and under control.

SSF is planning to further develop in order to consolidate its position as the leading and most cost-effective producer of quality Atlantic salmon within the EU, the company says in a statement. SSF has a high contract share and already holds a strong position in several high-quality market segments, for instance under the respected brand name Label Rouge. It is sole supplier of Lochmuir™ Salmon to Marks & Spencer.

The Scottish Salmon Company The Scottish Salmon Company (SSC) operates around 50 sites including marine farms, freshwater hatcheries, harvesting and processing facilities and offices in the Highlands, Hebrides and Argyll. It is currently implementing a £40m investment programme to develop its farming and supply chain infrastructure.

SSC employs 382 staff across and is the largest private employer in the Hebrides. In 2012, production volumes reached around 23,000 tonnes. The current harvest forecast for 2013 is 21,000 tonnes, with harvest guidance for 2014 at approximately 27,000 tonnes. The company’s five-year growth strategy aims to increase production levels to 40,000 tonnes annually.

Investment in new sites continues and Q2 2013 saw the development of a new site and an extension of an existing site at Loch Striven. Consent for a new site at Reibinish in the Hebrides was also secured in this period.

The company is also recruiting for its processing facility in Stornoway and hiring around 25 staff as it prepares to re-open its gutting line at Marybank in early autumn.

The biological development of current stock is good and performing normally, but against this positive backdrop the company says it expects higher production costs in the second half of 2013 because of historic issues with AGD.

The Meridan Salmon Group Meridian Salmon Group was formed at the beginning of 2011 by the integration of two well established major farming companies, Northern Isles Salmon (formerly Mainstream Scotland) owned by Cermaq and The Lakeland Group owned by Marine Farms. They were joined by Westray Salmon and Rysa Salmon in 2010 and Uyeasound Salmon Company in March 2012. It is owned by Morpol. However, in the third quarter of the year, Morpol will have been fully consolidated into rival firm Marine Harvest. Meridian Salmon has two Broodstock facilities, five egg incubation sites and four sites for fry production. For smolt production, Meridian Salmon has 10 freshwater loch sites on the west coast of Scotland and on the Shetland Islands. For ongrowing there are 43 licensed sites; 10 on the west coast of Scotland, 16 on the Orkney Isles and 17 on the Shetland Isles. There are three primary processing plants serving the three farming clusters.

In 2012, the company harvested 23,033 tonnes of salmon and this is estimated to increase a little in 2013 to 23,635 tonnes. In the UK the underlying performance was good in 2Q 2013, although volumes harvested were lower than initially planned (harvests were postponed to try to compensate for slow growth). Higher costs of production have been compensated by higher prices.

Hjaltland Seafarm Grieg Seafood Hjaltland Ltd is a wholly owned subsidiary of Grieg Seafood ASA of Norway. The group consists of Hjaltland Hatcheries (smolt production); Hjaltland Seafarms (farming and production); Lerwick Fish Traders (processing) and Shetland Products (sales and marketing). It has 30 sites around the Shetland coastline, and is the leading salmon producer in Shetland, rearing over one third and processing over 60 per cent of the islands’ total production. The company employs around 200 people and produced.

The cost of fish harvested in Shetland in 2012 was higher due to negative biological events in previous periods and low volumes. The result in Shetland is still very weak. Regional director Michael Stark in Grieg Seafood Hjaltland (UK) has resigned as regional director from ultimo August 2013. Sigurd Pettersen has been engaged as new regional director in a transitional period and will lead the continued biological turnaround in Shetland. The biological status in Shetland has improved compared to the same period in 2012. Over time the results from Grieg Seafood Hjaltland have been too weak, due to an overall weak biological performance, the company says. The biological situation in Shetland this year has improved on the same period last year, in relation to both AGD and salmon lice, thanks to the initiatives that have been implemented. There is, however, great scope and a great need for operational improvements at Grieg Seafood Hjaltland through measures to improve the biological performance and seawater production. The on-going turnaround in Shetland will be further intensified in the period ahead, Grieg Seafood stated in the Q2 2013 report. MG 6593- Marine Harvest Scotland is the leading Scottish salmon farming company and expects to harvest 45,000 tonnes of salmon in 2013.

Marine Harvest: The trend towards concentrating production in larger sites was maintained last year with 78.8% of production being concentrated in the sites producing over 1,000 tonnes per annum.