The arrival of the Ronja Star, left, has been a boon for Bakkafrost Scotland.

Bakkafrost sees better times ahead in Scotland despite losses

Extra treatment capacity has already reduced biological impacts and larger smolts will change the game, says Faroese fish farmer

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Salmon farmer Bakkafrost today highlighted positive developments for its loss-making Scottish operation despite a difficult fourth quarter last year.

Bakkafrost Scotland, formerly the Scottish Salmon Company, made an operating loss of almost DKK 149 million (£17.6 m) in the quarter and had costs of DKK 81 m related to incident-based mortality.

But losses were lower than in Q4 2021, when the Scottish operation lost DKK 214 m and costs related to incident-based mortality amounted to DKK 179 m.

“In Scotland, farming conditions in Q4 2022 have followed the normal seasonal pattern with more biological challenges compared to the first half of the year in particular,” Faroes-headquartered Bakkafrost said in its report for Q4 2022.

Slowed down harvest

An improved biological situation has enabled Bakkafrost to keep fish in the water longer and achieve harvest weights above 5kg in Q1 2023 (orange line).

“However, the biological situation improved considerably in the second half of Q4, and Bakkafrost decided to slow down harvest to let the fish continue growing and gain weight. This reduced the harvest volume in Q4 2022 but will increase value with harvesting larger fish in Q1 2023.

“Overall, the mortality in Q4 2022 was lower than the year before, and from the beginning of December 2022, mortality levels have been at the same level as normally found in the first half of the year.”

Bakkafrost said one contributing factor to the improved biological development in late Q4 in Scotland was the arrival of the new 4,000m³-capacity wellboat, Ronja Star, in late September 2022.

The vessel, on a long-term contract from Sølvtrans, is equipped with freshwater treatment capacity as well as an innovative in-line freshwater-based sea lice removal system and can efficiently do dual treatments for gill-related issues as well as sea lice removal in one operation.

The operation has proven to be efficient and Bakkafrost has decided to implement the same systems on its other Scotland wellboat, the 2,500m³-capacity Ronjafisk, as well as on the new 10,000m³ Bakkafossur in the Faroe Islands.

Risk still higher

“The biological risk in Scotland is still higher than in the Faroe Islands but is expected to be transformed with the implementation of Bakkafrost’s large-smolt strategy,” stated Bakkafrost.

“As demonstrated in the Faroe Islands, large high-quality and robust smolt will have a lower risk exposure in the marine environment due to shorter production cycles in the sea. This is expected to significantly reduce the biological risk in Scotland and is fundamental to the turnaround of the farming operation. Therefore, it is Bakkafrost’s topmost priority in Scotland to build new modern hatcheries.

“The ongoing expansion of the Applecross hatchery is progressing well, and the Applecross 4 expansion is expected to be operational with fish in the tanks in March 2023. The first batch of large smolt (200-300 grams) delivered from Applecross 4 is planned for Q2 2023 and will contribute to increasing the mean weights and quality of the smolt stocked in Scotland in 2023.”

Bakkafrost said the full capacity of the Applecross hatchery, including the next expansions, will be in operation in mid-2024, bringing the overall annual production capacity from Applecross to around 10 million high-quality smolts of around 500g.

In Q4 2022, the average weight of released smolt in Scotland was 115g, which is 10% higher than in Q4 2021.

Bakkafrost plans to build three large hatcheries in Scotland, which will increase the total annual production capacity to around 18 million smolts of around 500g in 2026.

Three hatcheries

The company intends to apply for permission to build its second large hatchery on industrial land at Hunterston in North Ayrshire and has issued a Proposal of Application Notice that provides community councils and the general public with the opportunity of expressing an opinion on the proposals prior to the formal submission.

The third hatchery is expected to be built in Bakkafrost Scotland’s northern region.

Bakkafrost Scotland harvested 5,198 gutted weight tonnes of salmon in Q4 2022, slightly more than the 5,122 gwt harvested in the same period in 2021. The harvested volume for 2022 was 23,917 gtw (2021: 29,672 gwt), lower than planned. Bakkafrost plans to harvest 30,000 gwt in Scotland this year.

The company made an operating loss of DKK 298 m (£35.3 m) in Scotland in 2022, compared to a loss of DKK 249 m the year before.