Demand for Salmon Continues
The two genera of commercially known salmon are Atlantic salmon and Pacific salmon. As their names suggest, Atlantic Salmon are native to the North Atlantic Ocean whereas Pacific salmon are found in the North Pacific Ocean. Atlantic salmon are mostly farmed while most of Pacific salmon are captured from the wild. Such difference exists because wild Atlantic salmon population has been depleted severely due to acid rain, habitat destruction, dams, and historic overfishing. In 2010, Atlantic salmon was added to Greenpeace International’s seafood red list, a list of fish that are commonly consumed and sourced from depleted stocks. In order to save wild Atlantic salmon from extinction, the United States government banned commercial and recreational fishing of wild Atlantic salmon, and it has been working together on Atlantic Salmon Recovery Project with the State of Maine, non-governmental organizations, and educational institutions.
Rich in protein, omega-3 fatty acids, and vitamin D, Atlantic salmon often appears in savory dishes in North America and Europe, such as salmon steaks, smoked salmon, and lox. The top 10 importers of Atlantic salmon, reported by Tridge, demonstrates the demand from North America and Europe. Sweden, Poland, France, and the United Kingdom - the 4 biggest importers of Atlantic salmon in 2016 - accounted for almost half of the total import. Sweden, which ranked 1st place in salmon import, is projected to maintain its top place since Swedish court ordered to halt three domestic fish farms in 2017 and announced its plan to bring to an end all fish farming in open cages negatively affecting water. As Sweden faces more constraints on domestic fish farming, it would need to increase its import to meet domestic demand.
Major importers of Atlantic salmon (source: Tridge)
Atlantic salmon can also be eaten raw as a form of sushi and sashimi. Along with the rising income levels and growing appetite for luxury seafood in Asia, salmon import levels in China, Japan, and South Korea follow after those in European nations.
Salmon Lice Continues to Threat Salmon Production
Worldwide demand for salmon has been increasing significantly, but supply has not caught up with the growing demand, spawning drastic changes in price in the previous years.
Salmon farms are under constant threat of salmon lice that are detrimental to its production
The spread of salmon lice is the major threat to farmed salmon production. Salmon lice, a size of common fly, survive by attaching themselves to the skin of fish in the ocean. They cause a wound on fish skin and make salmons more vulnerable to infections by gnawing their protective skin layers, mucus, and blood. They can also be lethal to salmons depending on the infection rate. Upon their discovery in 1994, farmers tried to control the lice by feeding pesticide to the fish. However, in 2009, the lice were discovered to have already evolved and become resistant to the pesticide. Salmon lice have spread globally since then, constantly causing harm to major salmon producing countries in the North Atlantic ocean, including Norway. To make matters worse, salmon lice have also affected wild salmon passing by fish farms. Though scientists and farmers have come up with innovative methods - such as thermal treatment system, laser system, and ‘cleaner fish’ method - the complete elimination of sea lice is impossible as they are endemic in marine waters of the northern hemisphere.
In the south, the algal bloom has challenged Atlantic salmon production. Chile, the second largest producer of Atlantic salmon, experienced a significant recession in salmon production in 2016 because of an outbreak of red tide. The harmful algal bloom suffocated fish by removing oxygen from water, and some planktons that accompany algal bloom made fish more susceptible to disease by causing damage to their gill tissue. Approximately $800 million dollars worth of salmon were killed in Chile. Scholars ascribe this sudden expansion of algal bloom to the effects of El Niño and rising water temperatures. Though the impact was not as devastating as the crisis in 2016, red tide hit Chile’s farmed salmon industry again last year and earlier this year.
Sea lice infestations and algal blooms not only devastated global salmon production but also added production costs due to the adoption of chemical and non-chemical treatments, which all led to the salmon price surge. For instance, according to the Nasdaq Salmon Index, the average price of fresh whole salmon increased from NOK 56.63 (USD 6.59) per kg. in the first quarter of 2016 to NOK 65.44 (USD 7.61) per kg. after a year. In May 2018, the price range for Norwegian farmed salmon reached between NOK 72 to NOK 80 (between USD 8.87 to USD 9.86). In terms of the unit price of export, all the top 20 exporters of Atlantic salmon, except for New Zealand and Belgium, demonstrated an average of 26.64% increase in 2016 as reported by Tridge.
Norway is the biggest exporter of Atlantic salmon (source: Tridge)
As the price of fresh Atlantic salmon is projected to continue rising, consumers are expected to take an active interest in frozen salmon. China’s growing import of frozen salmon corroborates this forecast.
Unlike fresh fish whose price is vulnerable to change in season and availability, frozen fish is less price-sensitive, and it usually offers better value for money to customers. The global export market for frozen fish has expanded steadily after a sudden recession in 2015. According to the International Trade Center, the global export value reached USD 23.7 billion in 2017, a 7.54% increase over the previous year. China, the second largest importer of frozen salmon in 2016, recognized these merits and expanded its import to meet the growing domestic demand. In 2016, China’s import quantity for fresh Atlantic salmon diminished by 21.02% while frozen salmon import rose by 7.60% in quantity and 24.43% in value. Chile, the current leading exporter of frozen salmon, have maintained a close trade relationship with China since they signed a free trade agreement in 2005. China imported USD 65.2M worth of Chile’s frozen salmon in 2016, a 55.05% growth in value over a year. Continuing this trend, China’s Ministry of Finance announced a reduction in import tariff on frozen Atlantic salmon from 17.3% to 7.7% in late 2017. The biggest beneficiaries of the tariff reduction would be Scotland and Faroe Islands, the second and third closest import partner of China in frozen salmon.
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Reference
1. https://www.greateratlantic.fisheries
2. https://www.undercurrentnews.com