Atlantic Salmon Guide

The global salmon sector has felt the impact of Covid-19 all along the supply chain, with production, processing, logistics, and markets all suffering to varying degrees. However, some observers are pointing to the lower prices and shift in focus to retail as an important opportunity that will benefit the sector in the long term.

The ongoing pandemic has introduced a large amount of uncertainty and led to some significant changes at the farm level. Poor market conditions and logistical challenges have seen many producers delay harvesting as long as possible, which means that supply in the first half of 2020 has been tighter than expected. The key markets for exported salmon have been heavily impacted by Covid-19. Market weakness and restrictions on movements affecting seasonal labor in processing plants and aboard fishing vessels are contributing to the reduction in supply.

Any distribution channel that can accommodate the needs of consumers that are conscious of the need to remain socially distant is now accounting for a steadily growing share of the market. The fresh segment, which is of key importance to the salmon sector, is suffering due to soaring logistical costs and a general preference for frozen and prepared foods amidst a general atmosphere of uncertainty. The retail sector saw a slowdown in demand for salmon due to the Covid-19 pandemic, particularly for fresh fillets as well as in the whole fresh fish segment. The impact of Covid-19 is driving some unusual dynamics. Firstly, the closure of foodservice is dragging down the prices of larger fish favored by the restaurant trade, which otherwise command a significant premium.

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As per 2019 data, the world Atlantic salmon production was 2.32 million MT (metric ton). The supply of Atlantic salmon has increased by 478% since 1995 (annual growth of 8%). The annual growth has diminished in recent years with 7% annual growth in the period 2010-2019. Kontali Analyse expects growth to diminish further, and has projected 3% annual growth from 2019 to 2023.

The background for this trend is that the industry has reached a production level where biological boundaries are being pushed. It is therefore expected that future growth can no longer be driven only by the industry and regulators as measures are implemented to reduce its ecological footprint. This requires progress in technology, development of improved pharmaceutical products, implementation of non-pharmaceutical techniques, improved industry regulations, and intercompany cooperation.

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There are two methods in producing salmon, Includes fishing (wild-caught) and farming.

• Salmon Fishing (Wild Caught)
  

Fishermen use a wide range of gear to catch salmon. Every type has its own effects on the ocean. By selecting the right gear for the right job, the fishing industry can help minimize its impact on the environment. The gears are as follows:

- Beach and Boat Seines

- Bottom Trawls

- Dredges

- Gillnets

- Handlines and Jigs

- Harpoons

- Longlines

- Midwater Trawls

- Pole-and-lines

- Pots

- Purse Seines

- Trolling Lines

• Salmon Farming
  

Salmon fish farming is a three-stage process. Salmon eggs are hatched in freshwater tanks. The young salmon are raised in the tanks or in channels of running water for twelve to eighteen months. Then transferred to cages along the seashore where the salmons are grown to maturity. The salmon farming production cycle lasts about 3 years. The first year of production takes place in controlled freshwater environments, and then the farmed salmon are transported to seawater cages. Once the farmed salmon reach a harvestable size, It will be transported to processing plants to be prepared for sale. For consumers, most farmed salmon is sold as salmon fillets, although people can also purchase the whole fish.

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There are 6 top varieties of salmon based on consumer choice and its taste, including:

• Chinook Salmon / King Salmon
  

Oncorhynchus tschawytscha, also known as King salmon, is considered by many to be the best-tasting of the salmon bunch. It has a high-fat content and corresponding rich flesh that ranges from white to a deep red color.

• Coho Salmon / Silver Salmon
  

Oncorhynchus kisutch are sometimes called silver salmon or "silvers" because of the silver skin. It has bright red flesh and a slightly more delicate texture than Chinook salmon but a similar flavor.

• Pink Salmon / Humpies / Humpback Salmon
  

Oncorhynchus gorbusha are the most common Pacific salmon. It has a very light-colored, flavored flesh and low-fat content. Pink salmon are often canned but also sold fresh, frozen, and smoked. Sometimes called "humpies" or humpback salmon due to the distinctive hump that is developed on the back when laying eggs.

• Red Salmon / Sockeye Salmon
  

Oncorhynchus nerka salmon are noted for the bright red-orange flesh and deep rich flavor. It also known as "reds" both for the dark flesh color and because the salmon can turn deep red when moving upstream to spawn.

• Salmo Salar / Atlantic Salmon
  

While the Pacific is home to several species of salmon, the Atlantic has but one, the species Salmo salar, commonly known simply as Atlantic salmon. All commercially available Atlantic salmon is farmed.

• Silverbrite Salmon / Chum Salmon / Keta Salmon / Dog Salmon
  

Oncorhynchus keta is also called dog salmon for its dog-like teeth. Keta comes from its species name and is a way to get away from the negative association chum sometimes has. Keta is a smaller fish—averaging about 8 pounds—with pale to medium-colored flesh and a lower fat content than other salmon.

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As per 2019 data, Norway is in the first position as a salmon producer with a production volume of 1.2 million MT and representing 51.6% of salmon production worldwide. This is followed by Chile in the second position with 621,200 MT and contributing 26.71%, Scotland (7.4%) with a production volume of 166,100 MT, North America continent (6.35%) with a production volume of 147,600 MT, and Faroe Islands (3.36%) with a production volume of 78,200 MT.

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The development of the global salmon market in the second half of 2020 is difficult to predict given the number of unknowns facing the industry. With the notable exception of the United States of America and Brazil, most of the major salmon markets are staging a gradual recovery. The spike in supply volumes of 5 to 10 percent in the second half of the year from delayed harvests will likely keep prices down, even if the positive demand trend continues. Export revenues for the year are also set to take a significant hit. FishPool forward prices for Q3 and Q4 2020 are stable at NOK 48.45 (USD 5.63) per/KG and NOK 52.60 (USD 6.12) per/KG respectively, which is well below figures for the same period in 2019.

The financial challenges associated with the difficult market environment will see smaller businesses along the supply chain, particularly processors, acquired by larger entities if survived. In the longer term, however, there are potentially some positives to be taken from the upheaval of 2020. Lower prices, good volumes, and a boost to retail could create new sources of demand as well as act as a catalyst for product and distribution innovation.

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