More sites still needed to reach expansion goal

Siri Elise Dybdal siri@fishfarmingxpert.com

2014 has continued to bring about new developments in the Scottish salmon farming industry. New companies who want to invest in Scotland have emerged. Earlier this year, the Canadian farming company Cooke Aquaculture signed an agreement with Marine Harvest to buy its wholly-owned subsidiary Meridian Salmon Farms Ltd. This was due to the European Commission requiring Marine Harvest to divest farming capacity on the Shetland and Orkney Islands.

A number of new planning applications have been approved with several other locations identified as potential areas for development, and companies are expanding their current operation.

The Scottish Government recently announced £700,000 in Scottish Government funding to back an industry action plan to achieve a more profitable and sustainable seafood sector.

“This plan places seafood firmly where it belongs – as an integral and central part of the success story which is Scotland’s food and drink sector. I’m confident it will build on this strong base to achieve an ever more sustainable and profitable seafood sector,” said Cabinet Secretary for Rural Affairs and Environment, Richard Lochhead.

Aims to grow In the last year, farm gate value for Scottish farmed salmon has increased by 18 per cent - almost £100 million – bringing the total value to £633 million in 2013. Over the past 21 years the farm gate value has grown from £130 million in 1993 by nearly 400 per cent. Production tonnage has increased from 36,000 tonnes in 1992 to 152,000 in 2013, according to the Scottish Salmon Producers’ Organisation.

A key driver for the growth is the continued success of Scottish farmed salmon in export markets. Around 60 countries now buy Scottish salmon, resulting in its position as Scotland’s largest food export. Recent exhibitions and trade missions to new markets such as Singapore and India, indicate a significant interest from chefs, hotels, retailers and consumers, SSPO claims.

Chief executive of SSPO, Scott Landsburgh, says there is a desire to grow is an attempt to keep up with ever-increasing demand for Scottish farmed salmon from markets across the world.

“Ideally, the industry in Scotland will grow by 50,000 tonnes over the next six years but we need more sites to achieve this,” he says However, the application process is a time consuming affair with no guarantees, Landsburgh points out: “Applying for new sites is not for the faint hearted. It takes a vast amount of time, money and effort before planning applications can reach approval stage and even then, there is no guarantee,”

Still, there is currently many planning applications already underway, “with a number of other locations identified as potential areas for development,” he says.

“The industry is committed to growing sustainably by creating long-term, skilled jobs in rural communities, whilst preserving the unique Scottish environment which is vital to the health and quality of the fish growing within it,” Landsburgh claims.

New farm in Orkney Recent announcements from the industry include Scottish Sea Farms approval for a site at Wyre, Orkney. “This new site will create five new jobs locally, in addition to the 32 employees Scottish Sea Farms already employs on the island. The investment of £2.5 million will significantly increase Scottish salmon production in Orkney and offers potential economic opportunities for Orkney based companies and other Scottish suppliers,” Landburgh reveals.

According to Jim Gallagher, managing director, Scottish Sea Farms, this is good news for both Scottish Sea Farms and the local community. “The new site at Wyre, made up of 12 x 100m cages, will secure the long-term future of our Eday site and increased Orkney salmon sales could now reach £10.7 million in both the UK and international markets. “We want to continue to build relationships locally and will bring skilled employment with training packages for local people. Our Heart of the Community Trust is also there to support community initiatives that make a real difference to people’s lives.”

40 new jobs The Scottish Salmon Company (SSC) is another producer that has announced that it is expanding the operation this year: “The Scottish Salmon Company (SSC) has announced it is creating 40 new jobs in Stornoway and the Isle of Lewis, taking its workforce in the Hebrides to over 200. SSC employs more than 400 staff at 60 separate sites across the Highlands and Islands and West Coast, 90 per cent of them living and working in remote rural communities. In the last three years, the company has invested £9 million in the Western Isles, spending £3.5 million with local suppliers,” says Landsburgh.

According to SSC, the expansion is a result of a growing demand for its high quality product in Europe, America and the Far East. The company revealed that overseas exports has seen an increase in the first three months of 2014 with more than 40 per cent of its sales going to high-end retailers and restaurateurs in France and the US and also the emerging markets of Thailand, Malaysia, Singapore, Japan, Taiwan and China.

£80 million expansion plan Last year Marine Harvest Scotland opened a£16m smolt hatchery, as part of the continued £80 million expansion by Marine Harvest in Scotland which is essential for meeting the company’s growth targets and the increasing global demand for Scottish Salmon. Over the coming years, the salmon farming firm also has plans of opening two new farms.

Steve Bracken, business support manager for Marine Harvest Scotland says the company have a dialogue with the local communities as part of the process of applying for new sites:

“Our approach to new farm development has been to engage in open and honest dialogue from the outset with local communities.”

According to Bracken, the company is opening new farms on the Isle of Muck in 2014 and Colonsay in 2015.

“In both cases we approached these island communities with the opportunity to establish a salmon farm off their coasts, but only if the communities were keen to support the idea. We embarked on a series of community meetings and public information sessions to explain how a salmon farm works, the environmental impacts and the benefits.

“After providing Environmental Impact Assessments, we encouraged each community to take a vote, using the Electoral Reform Society, to determine in principle whether they would support a salmon farm. In both cases a supportive vote gave us a mandate to proceed with formal applications,” he says.

Following the recent take-over of Morpol including Meridian Salmon, marine Harvest Scotland now also have a hatchery and four sea water farms in Argyll.

Meridian was originally created through the acquisition of multiple farming operations by Polish processing giant Morpol, starting in 2010. These included The Lakeland Group, Northern Isles Salmon (formerly Mainstream Scotland) as well as Westray Salmon and Rysa Salmon in Orkney.

New Canadian owner However, the European Commission ordered Marine Harvest to divest itself of some of Morpol’s fish farms as the deal last year gave it more than a 40 per cent share of UK salmon production, which is the maximum allowed under EU guidelines.

As a result, Meridian’s Orkney and Shetland operations were put on the market and, earlier this year, Cooke Aquaculture, signed an agreement with Marine Harvest to buy its wholly-owned subsidiary Meridian Salmon Farms Ltd. in the Orkney and Shetland Islands. The deal was closed in the middle of May 2014.

Cooke Aquaculture is a Canadian family-owned company with a head office in Black’s

Harbour New Brunswick Canada and North American salmon farming operations in Atlantic Canada and Maine. It also owns Salmones Cupquelan, a salmon farming company in southern Chile and Culmarex, a sea bass and sea bream farming company in southern Spain.

Developing marketing strategy “We believe this investment in the well respected Scottish industry creates value for our entire group and strengthens our European foothold, which already includes Culmarex, our sea bass and bream farming company in Spain,” said CEO Glenn Cooke. “The company is highly profitable and is a cost effective producer with a dedicated management team and employee base. We will build on their experience and expertise as we further strengthen and grow this company as Cooke Aquaculture Scotland.

“We are fortunate that there are many similarities between our corporate cultures and the high environmental standard of our farming operations. Members of the Cooke team will work together with our highly qualified management in Scotland to develop an operational and marketing strategy for the future. It will be business as usual during this transition period,” Cooke revealed.

He added that the transaction is consistent with Cooke Aquaculture’s focus on vertical integration and diversification in terms of geography, products and markets: “Cooke’s strategy has been to achieve growth through acquisitions and organic growth that is both sustainable and responsibly managed to meet a growing market demand for healthy, fresh seafood.

Manager of Scottish Salmon Producers’ Association’s Shetland office David Sandison told local newspapers that the news would put rest to a period of uncertainty over Meridian and demonstrated the solid investment represented by Shetland salmon: “We welcome the news that there seems to be a final outcome to the process. It will be a relief to all the staff in the company who have been waiting a long time to see what’s happening. “What this shows is the value being placed on assets in Orkney and Shetland is very solid. The industry has been very profitable over the last couple of years,” Sandison said.

Landsburgh added: “The announcement made by Cooke Aquaculture today will provide reassurances for the people of Orkney and Shetland. We look forward to working with the company and its officers in the coming years.”