The falling growth rate in salmon production

Norwegian seafood producers are earning more than ever despite significant reductions in amounts sold, both because of a weak currency and high seafood prices. The value of the Norwegian seafood export has hit a new record at 15.7 billion NOK in March. This is a 26 percent increase in revenue from the same time last year. Meanwhile, export volume has fallen by 25 percent compared to the same period last year. The issue is production rather than demand, which has remained high.

Export volume has fallen since the talks about the salmon tax began, giving credence to predictions that it will reduce investment in the industry. There has been heavy debate about the tax, many arguing that it will reduce the competitiveness of Norwegian producers. Norwegian banks have also indicated that they will be less inclined to lend money to the industry because of the salmon tax, creating more investment difficulties. The aquaculture growth has however been declining for several years even without the salmon tax.

New research by the University of British Columbia is arguing that there is over-optimism in the market regarding the ability of aquaculture to meet the growing demand with growing production. The growth rate of the aquaculture industry, and Atlantic salmon farming especially, is falling and may turn into a decline.

The data from Sumaila et al. (2022) (“Aquaculture over-optimism?”) shows a drop in the growth rate of Chinese aquaculture production from 46.1% the five years leading up to the growth rate peak in 1954 to 2.6% in the five years up to 2018. Norway’s growth rate was 1.3% on average the five years leading up to the peak in 1968, compared to 0.5% up to 2018. For Atlantic salmon, the global production numbers show that it went from a growth rate of 314% on average the five years leading up to the peak in 1970, compared to a 0.9% the five years leading up to 2018.

The research suggests that technological development will not be enough to push aquaculture production to the levels needed to avoid a fish food shortage in 2030, as projected by the FAO, the World Bank and the OECD.

Government regulation is clearly not the only source of the low growth rate of the industry. Available production area is also shrinking along the coasts. It appears that Norwegian salmon producers are less willing to invest in production. Despite earning more than ever currently, the situation can easily change if currency value returns to a normal level. The indication from British Columbia is higher salmon prices towards 2030.