Norwegian salmon farmers face challenges from an unusually harsh winter and the El Nino local weather phenomenon which led to file fish mortality and considerations over long-term forecasts forward of a hotter summer time.
El Nino — a local weather sample elevating temperatures throughout the planet — adopted by colder waters and a 20-year excessive in jellyfish assaults have pushed fish mortality to a file 16.7% to this point this yr, the Norwegian Veterinary Institute stated.
“This winter has been one thing near an ideal storm for the trade on the subject of difficult farming situations,” Carnegie analyst Philip Scrase stated.
Norway, the most important producer of farmed Atlantic salmon, accounting for 50% of the worldwide market, hopes for a therapeutic summer time after a tricky first half of the yr.
However file excessive temperatures and hotter waters enhance the specter of sea lice for salmon farmers.
“Treating sea lice (vaccines) typically stresses the fish, posing a risk to its welfare and its resilience to different illnesses,” DNB analyst Alexander Aukner stated.
To guard the fish, corporations like Leroy Seafood are testing particular underwater cages deep within the sea to maintain the lice at bay.
Farmers are additionally preserving younger salmon longer in land-based services to defend them from harsh local weather situations, although this has not improved mortality charges.
Some services are operating at too excessive temperatures, inflicting fish to outgrow their organs and die once they enter seawater, stated Christian Olsen Nordby and Kristoffer Haugland from Arctic Securities.
Export Ban, Processing Jam
Salmon exports make up about 2% of Norway’s annual GDP, with 1.2 million tonnes of salmon valued at $11.2 billion exported final yr, Norwegian Seafood Council said.
To guard the trade’s repute, Norway has banned the export of wounded fish, categorised as low-grade salmon.
This forces farmers to extend home processing of low-grade salmon into premium merchandise like filets or smoked items that they will promote overseas legally.
Earlier than the ban, unprocessed fish bypassed tariff boundaries to achieve European markets, however now farmers must promote the excess injured fish at a reduction to third-party processors, Scrase stated.
These with fileting capability, like SalMar, in the meantime face inefficiencies of their services attributable to an absence of staff wanted to deal with the upper volumes.
To deal with this, world’s largest producer Mowi and smaller rival Grieg Seafood are upgrading their processing services.
Nonetheless, Scrase famous that salmon spot costs had been sliding, as the supply of premium salmon eases provide constraints.
Sufficient for a Steerage Minimize
Regardless of farmers’ efforts, analysts doubt the trade’s skill to take care of harvest volumes.
SalMar lowered its 2024 quantity steerage earlier this yr, whereas different main gamers have stored projections unchanged.
Kontali, an aquaculture information supplier, has revised its 2024 quantity progress estimate for Norway and the worldwide market to only 1%, reflecting decrease sea biomass.
Aukner and Scrase count on many farmers to battle to fulfill their quantity targets this yr, although the summer time is essential to find out full-year volumes.
“We’re but to see materials downgrades in harvest volumes, however the ‘buffer’ in quantity steerage has positively been eaten into and lowered,” Nordby and Haugland stated.
($1 = 10.9335 Norwegian crowns)
(Reporting by Jesus Calero in Gdansk; enhancing by Milla Nissi)
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