Prices and green finance options to grow in Chile, say money experts
Finance professionals in Chile have predicted positive progress for the country’s salmon farmers after a tough 2020 marked by low prices and a 2021 first quarter in which companies such as Blumar, Salmones Camanchaca and Multiexport Foods made losses.
Industry statistics provider DataSalmon estimates an annual harvest of 760,164 tonnes of Atlantic salmon in Chile this year. And despite the loss of 6,772 tonnes of fish due to harmful algal blooms (HABs), the harvest in Q1 2021 was almost 10,000 tonnes higher than projected.
Regarding the profitability of salmon farmers listed on the Chilean Stock Exchange in the first quarter, David Falcon, sustainability director at Deloitte, commented that the trend for the first quarter should be upward when compared to the previous quarter.
He also pointed out that there are many companies that are not listed but are relevant players in the world and at the national level, which also show a great potential for growth.
Slow price rebound
Meanwhile, Mario Rodríguez, office managing partner of EY Patagonia, believes the trend set in the fourth quarter of 2020 will continue, with a high sales volume and a price that little by little begins to rebound, “but it is still not clear if it’s enough for companies to present a gross margin or positive Ebitda”.
Red numbers, although unwelcome, are unlikely to cause problems.
“Most of the companies in the sector took advantage of 2020 to restructure their financing structure and generate sufficient liquidity to face the crisis,” said Rodríguez.
More green loans
A move to increasingly sustainable practices is also opening the door to green financing for salmon farmers in Chile. Blumar and Ventisqueros last year received so-called “green credits”, which come with a series of environmental and social sustainability commitments made by the companies to their creditors.
Nicolás Calderón, EY’s senior sustainability manager, believes the salmon farming sector has already set up sustainable initiatives and practices which can be adjusted to the requirements to be able to access this type of credit.
“With this, it is feasible that they can be consolidated and that they become a real financing alternative for companies. The main challenge is that they can strengthen the development of initiatives with environmental benefits and that the use of resources is monitored until the final objective of the initiative is achieved,” he said.
Sustainable production
Falcon is also confident that the industry can access the many environmental, social, and corporate governance-linked (ESG) financing instruments that are available.
“There are several entities that can support the sustainable development of the salmon farming industry based on its environmental and social challenges, both in terms of innovation for sustainable production with less environmental and social risk,” said Falcon.
“These trends are likely to accelerate certain investment decisions which contribute to local production, or closer to the consumption centres, and which at the same time are based on circular economy criteria, and combat climate change through adaptation and mitigation, among other things.”
