Prices, prospects and predictions

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Many features in this issue – from Scotland, Chile, Norway and Canada – focus on the hard financial facts of the salmon sector and it is clear that, throughout most of the Northern Hemisphere at least, it is an industry that is in rude health. Indeed, production levels in Scotland, Canada and Norway are all on the increase and, what’s more, some of the seafood world’s most trusted commentators and analysts are currently predicting great prices for 2016, especially in Norway.

Salmon farming is, however, well known to be a cyclical business and while price predictions might be positive, production costs are proving to be tough to keep down. Indeed, the most recent (Q2) reports from Scotland’s salmon producers show that several producers posted poor results due to biological challenges encountered at the end of 2014. Moreover, in Chile, only one of the six listed companies achieved a positive EBIT per kg in Q2 – with companies suffering from the combination of high production costs and poor prices on the US market, where they are now facing greater competition from Norwegian and Canadian producers.

It will be interesting to see how the Chilean reaction to the situation, which has helped to unleash a wave of retrenchment, marked by reduced levels of smolt stocking, will affect the industry and whether the lower biomass at sea will help to improve the overall health status of fish in Chilean waters or whether a more proactive approach, that perhaps relies on some form of further government-led intervention and reorganisation, will be required.

In Scotland, while biological challenges – largely caused by high lice levels and gill-related problems – have indeed led to a poor Q2, there is still plenty of money in the industry and plenty of investments in new equipment, new sites and new research projects.

Indeed, two of the latter – one involving marine renewables and the other involving IMTA – are featured in this issue and show an impressive willingness of Scottish salmon farmers to look beyond short-term profits and think about projects that might have a longer term impact on the industry. Both of these schemes show the sector’s willingness to invest in/encourage green initiatives and, particularly if 2016 proves to be as profitable as predicted, it would be good to see similarly pioneering projects being launched in the year ahead.