The Big Bite

by GUSTAV-ERIK BLAALID, gustav@fishfarmingxpert.com

Cermaq has come into play. The direct cause is probably parliamentary elections in Norway in September 2013, three months ahead. The conservative parties are scoring very well in the polls, and a purely conservative victory is not unrealistic. What does this have to do with Cermaq? In Norway there is controversy about government involvement in business. Where the social democratic and left side wants to have an active state in business, the conservatives wish for a less active state. Cermaq, where the Norwegian state owns over 40%, is an example of a business that a conservative government would not have trouble selling if the price was good. But now, before the election, the social democrats hurry to please the voters, both right and left. Marine Harvest has chosen a good timing. If the social democratic government refuses sale now, a conservative government will say yes if and when the victory is a fact in September. If the social democratic government says yes now, they might win some voters from the conservative side. They are dependent on such votes to stay in government. The social democrats are in a squeeze, and have so far said that the offer from Marine Harvest is too low. At the same time, the case has evolved into a public issue where supporters and opponents of the sale reflect left-right dimensions in politics.

What if, or when, Marine Harvest and Cermaq merge? Marine Harvest will then be an even larger company. They will be controlling close to 25% of salmon production worldwide. They will get a big feed manufacturer in their portfolio (Ewos) which will save Marine Harvest for huge expenses in developing feed production themselves, as they have planned. Cermaq is a medium-sized producer of farmed salmon in Norway, but a giant in Chile. After a merger Marine Harvest will get the same position in Chile as they have in Norway. Largest. By far the largest. But is there any significance beyond being greater than the greatest? Hardly. But it must be allowed to make some wishes. A giant like Marine Harvest must take more responsibility for the development of aquaculture than smaller players. We point out three factors: availability of feed resources, fish health and responsibility for the development of costal areas. The most pressing issue is the lack of marine oils, and that there are no good substitutes yet. Here scientists have to make a much more concerted effort. The driving force behind this must be companies like Marine Harvest. This is not first and foremost a question of governmental money, but private investments. Fish health must be improved, and here Marine Harvest has achieved a lot. The latest addition to this development is the pioneer project of trials with closed containment facilities which will be launched in June this year. Initially, this is for post-smolt production, but given successful results, we do not think it stops there. This matter will have major implications for better fish health, zero escapes, and low mortality. In financial terms it will mean a significant reduction in production costs. Last but not least, coastal development is important. Fish farming takes place along the coast. Access to labour demands vibrant coastal communities with good infrastructure. Here, we expect a more spirited Marine Harvest which can be innovative and contribute to job creation. The company possesses enormous aqua-skills that can be used for much more than salmon production. In particular there is a need for smart IT solutions and technical innovations that can be developed well with funds from Marine Harvest.

By all means: These conditions apply just as much to Chile, Canada and Scotland as to Norway.