Norway cuts salmon permit prices after 40% tax plan prompts rush for refunds
Government seeks to tempt farmers following £82m hit on income from biomass allowances
Norway’s government has cut the price of extra salmon farming biomass allowances (MTB) in a bid to claw back some of the income it lost after proposing a 40% “resource” tax on the industry.
The tax announcement was accompanied by a time-limited refund offer to farmers that had bought rights to increase production at a fixed price of NOK 200,000 per tonne before they knew about the resource tax proposal, which will increase their tax burden to 62% if it goes ahead.
By the time the refund offer closed at 23.59 yesterday, farmers had chosen to return biomass allowances worth NOK 980 million (£81.7 m).
New mechanism
Major producers such as Mowi and Scottish Sea Farms co-owners SalMar and Lerøy were among those that chose to return MTB on the grounds that the new tax reduced the value of the extra biomass allowances.
The Ministry of Trade, Industry and Fisheries has now announced that it has decided on a new mechanism for determining the price for extra MTB bought at a fixed price earlier this year.
Extra MTB is sold in two tranches, the majority at a fixed price and the remainder at auction, which will take place on October 12. The new mechanism means that the final price of “fixed price” MTB will be determined after the auction.
The price will be the greater of these two options:
- NOK 100,000 per tonne
- The lowest clock price in the auction that clears a production area, upwards limited to NOK 200,000 per tonne.
This means that farmers who have bought extra MTB are given an option to keep the growth. This option can be triggered after the auction, when the price is known.
Can still cancel
If a farmer does not want to keep the extra MTB after the auction, they can cancel the purchase and receive a refund at the original price of NOK 200,000 per tonne by 17 October at 3pm. Farmers that wish to retain extra MTB after the price is known will be reimbursed for any deposit that was based on NOK 200,000 per tonne.
“Through this change in the pricing of the remuneration for exceptional growth on salmon permits, the government upholds the premise that environmentally sound operations must provide growth at a good price,” said fisheries and oceans minister Bjørnar Skjæran.
“At the same time, we are linking the remuneration to the auction so that the price better reflects the value of capacity. I believe this is a reasonable balance between actors who operate environmentally well and should get something in return for this, and that capacity should be sold at market price.”
Companies that have reported that they wish to withdraw purchased MTB can change their minds by sending a message to the Directorate of Fisheries by Monday, 10 October at 08.00.
