Economic analysis of land based farming of salmon

Abstract

Land-based farming of salmon is emerging for a number of reasons. The demand for salmon is increasing in many parts of the world. In recent years there has been limited growth in production due to binding government regulations and environmental challenges in sea-based salmon aquaculture. This is true both for Norway (sea lice, salmon escapes) and Chile (sea lice, disease problems), the two largest producers of salmon. Growing demand and limited expansion in production have made for a very profitable industry. At the same time, there have been technological developments when it comes to land-based farming (a technology used for smolt production and species such as sole and turbot), and cost of production has changed. Currently, land-based salmon farming is in operation or in development in several countries including the USA, Denmark, and Norway. In this paper, the economics of land-based salmon farming in a Norwegian context is presented, with an emphasis on the relative competitiveness of this vis-à-vis sea-based farming. If successful, land-based farming could potentially have an important impact on the dynamics of the salmon market.     

A Review of Factors Influencing Maturation of Atlantic Salmon,Salmo salar,with Focus on Water Recirculation Aquaculture System Environments

Sexual maturation of Atlantic salmon, Salmo salar, is a complex process, with many variables having the capacity to influence the timing and prevalence of maturation and acting as promoters and/or inhibitors of sexual development. Precocious maturation has the capacity to seriously impact production in commercial aquaculture settings, and in response there has been a significant amount of research devoted to understanding this issue in order to develop remedial strategies. Very little research has been conducted specifically examining salmon maturation in land‐based, closed containment water recirculation aquaculture systems, which have recently received attention as an alternative technology for the sustainable production of market‐size Atlantic salmon. Unfortunately, the nascent closed containment salmon industry has thus far experienced high levels of precocious maturation, for reasons that are presently unclear. Given the economic challenges facing the closed containment industry's expansion, it is imperative that best management practices be developed to reduce economic losses from early maturation, in order to assist the sustainable growth of farmed Atlantic salmon production. This review provides a brief summary of published research on factors associated with early salmonid maturation, as well as information from research examining maturation and growout performance of Atlantic salmon in closed containment aquaculture systems.     

Level up or game over: the implications of levels of impact in certification schemes for salmon aquaculture

Abstract

Certification schemes are becoming increasingly important within aquaculture management, but the indicators that are used by these schemes are subject to considerable debate. Many have questioned their actual impact on improving the industry, and whether they effectively address the many externalities of aquaculture production. In this paper, we study the choice of indicators in eight major certification scheme standards for salmon aquaculture and examine to what degree they manage to address impacts beyond individual production sites. We find that, in accordance with the criticism, the majority of indicators pertain only to the site-level. However, indicators related to traceability, and to coordination and sharing of information among producers can elevate local concerns to a higher level of impact. We, therefore, argue that among all the certification scheme standards considered here, these types of indicators should be emphasized to a larger extent.     

CHANGING SUPPLY AND DEMAND FOR FISH OIL

Competition for fish oil from human nutritional supplements (nutraceuticals) is starting to threaten its supply for aquaculture feeds. World supply of fish oil is not increasing but is the main source of healthy omega-3 fats (n-3 LC-PUFA). Fish oil demand by nutraceuticals is a derived demand for such fats. Demand growth and insecure supply are causing price inflation of fish oil, helping to drive its substitution in aquaculture feeds by vegetable oils. This is reducing the content of n-3 LC-PUFA in aquaculture products, especially salmon, with potentially negative health implications. Given the scope for further substitution of fish oil, it is unlikely that future growth of global aquaculture will be constrained by reducing omega-3 content, although it will complicate consumer marketing of salmon. Nutraceuticals is paying more than aquaculture for fish oil based on omega-3 content, but novel sources of n-3 LC-PUFA will become available in the medium term.     

ECONOMIC ANALYSIS OF NETCAGE VERSUS SEA-BAG PRODUCTION SYSTEMS FOR SALMON AQUACULTURE IN BRITISH COLUMBIA

Conventional open netcage systems for salmon aquaculture are under scrutiny and criticism partially because they are believed to generate adverse environmental impacts on other resource users and the surrounding environment. One alternative to preventing or miniming these impacts is to use enclosed systems. Experience indicates that these enclosed systems are technically feasible and environmentally promising, but they are economically demanding because of high capital and operating costs. Therefore, an economic analysis of open netcage and sea-bag systems for salmon aquaculture was conducted to examine the profitability of salmon aquaculture operations between these two systems. The study shows that netcage systems are more financially profitable than sea-bag systems when environmental costs are either not or only partially considered. Sea-bag systems can be financially profitable only when they produce fish that achieve a price premium. Sensitivity analyses reveal that market price has the most important impact on the profitability of both systems; changes in discount rates, fish density, feed costs, and environmental costs also have major impacts on the profitability of netcage systems. Changes in the length of the growth cycle, survival rate, and feed conversion ratio have minor impacts on the profitability of sea-bag systems.     

Comparative economic performance and carbon footprint of two farming models for producing Atlantic salmon (Salmo salar): Land-based closed containment system in freshwater and open net pen in seawater

Ocean net pen production of Atlantic salmon is approaching 2 million metric tons (MT) annually and has proven to be cost- and energy-efficient. Recently, with technology improvements, freshwater aquaculture of Atlantic salmon from eggs to harvestable size of 4–5 kg in land-based closed containment (LBCC) water recirculating aquaculture systems (RAS) has been demonstrated as a viable production technology. Land-based, closed containment water recirculating aquaculture systems technology offers the ability to fully control the rearing environment and provides flexibility in locating a production facility close to the market and on sites where cost of land and power are competitive. This flexibility offers distinct advantages over Atlantic salmon produced in open net pen systems, which is dependent on access to suitable coastal waters and a relatively long transport distance to supply the US market. Consequently, in this paper we present an analysis of the investment needed, the production cost, the profitability and the carbon footprint of producing 3300 MT of head-on gutted (HOG) Atlantic salmon from eggs to US market (wholesale) using two different production systems—LBCC-RAS technology and open net pen (ONP) technology using enterprise budget analysis and carbon footprint with the LCA method. In our analysis we compare the traditional open net pen production system in Norway and a model freshwater LBCC-RAS facility in the US. The model ONP is small compared to the most ONP systems in Norway, but the LBCC-RAS is large compared to any existing LBCC-RAS for Atlantic salmon. The results need to be interpreted with this in mind. Results of the financial analysis indicate that the total production costs for two systems are relatively similar, with LBCC-RAS only 10% higher than the ONP system on a head-on gutted basis (5.60 US$/kg versus 5.08 US$/kg, respectively). Without interest and depreciation, the two production systems have an almost equal operating cost (4.30 US$/kg for ONP versus 4.37 US$/kg for LBCC-RAS). Capital costs of the two systems are not similar for the same 3300 MT of head-on gutted salmon. The capital cost of the LBCC-RAS model system is approximately 54,000,000 US$ and the capital cost of the ONP system is approximately 30,000,000 US$, a difference of 80%. However, the LBCC-RAS model system selling salmon at a 30% price premium is comparatively as profitable as the ONP model system (profit margin of 18% versus 24%, respectively), even though its 15-year net present value is negative and its return on investment is lower than ONP system (9% versus 18%, respectively). The results of the carbon footprint analysis confirmed that production of feed is the dominating climate aspect for both production methods, but also showed that energy source and transport methods are important. It was shown that fresh salmon produced in LBCC-RAS systems close to a US market that use an average US electricity mix have a much lower carbon footprint than fresh salmon produced in Norway in ONP systems shipped to the same market by airfreight, 7.41 versus 15.22 kg CO₂eq/kg salmon HOG, respectively. When comparing the carbon footprint of production-only, the LBCC-RAS-produced salmon has a carbon footprint that is double that of the ONP-produced salmon, 7.01 versus 3.39 kg CO₂eq/kg salmon live-weight, respectively.     

The rise of fish oil: From feed to human nutritional supplement

ABSTRACT

This article tells the story of how fish oil has gone from an inferior to a premium oil product. With the growth of aquaculture, fish oil became a valuable feed component. Its value increased further as the belief in the health benefit of Omega-3 opened the market for direct human consumption through nutritional supplements. Strong demand, limited supply growth and weaker substitution between Omega-3 and Omega-6 has led to diverging trends between fish oil and vegetable oil prices, with fish oil now a premium oil product. We also investigated how the salmon aquaculture industry has responded to the challenge of rising fish oil prices. Concerted effort in nutrition and feed research is shown to have allowed a reduction in the share of fish oil in feed from around 25% in the early 2000s to around 12% today. This substitution effort has allowed salmon production to grow without using substantially more fish oil.     

Aquaculture and international trade

Abstract

In contrast to the stabilization or decline of wild fishery harvests, aquaculture's contribution to the world fish supply is steadily increasing. Aquaculture has begun to have a major influence on the trade of export‐orientated species such as salmon and shrimp. This paper reviews the role of aquaculture in international trade and the research which has been conducted to examine its influence. Despite the growing significance of aquaculture on international trade, especially for shrimp and salmon, formal analysis of the shrimp trade is sparse, only moderate for salmon, and essentially nonexistent for other species. This paper also presents specific examples of how aquaculture has played an important role in international trade. These include an examination of: (1) the influence of shrimp aquaculture and trade on the development of a shrimp futures contract; and (2) the countervailing duty and antidumping case against the Norwegian farmed salmon industry.     

A comparison of traditional and modified inland artisanal aquaculture systems

Traditional artisanal aquaculture systems are commonly assumed to be mainly for subsistence, to use predominantly on-farm inputs, and to have been developed by farmers themselves. Such systems with a long history in South East Asia exist mainly in northern Lao PDR, northern Vietnam and in West Java. In most other areas the traditional fish supply, wild fish, has declined only relatively recently, providing a stimulus for growth of aquaculture over the past few decades. An overview of artisanal aquaculture so defined in the South East Asian region is presented from a systems context considering social and economic aspects (micro- and macro-level perspectives), production technology (rice fields, ponds, cages), and environmental aspects (fitting into the local resource base without adverse environmental impact). Most artisanal aquaculture systems are integrated with crops and livestock but generally resource-poor farms constrain production. Rising expectations mean that productivity must be enhanced by off-farm inputs for aquaculture to contribute significantly to the farm household livelihood system. It is proposed that the term ‘small-scale’ be used rather than ‘artisanal’ because of increasing farmer interest in income rather than subsistence, because of increasing use of off-farm inputs, and because of the increasingly important role of science in the promotion of such systems.     

INLAND AQUACULTURE IN INDIA: PAST TREND,PRESENT STATUS AND FUTURE PROSPECTS

ABSTRACT

In India, inland aquaculture has emerged as a fast-growing enterprise and a viable alternative to the declining capture fisheries. The present paper is an attempt to assess Indian inland aquaculture with respect to its resource base, output trends, systems and activities, yield gaps, adoption and impact on aquaculturists, economics, returns to inputs, investment needs, and future prospects. The paper is largely based on existing literature and observations made as part of an ICAR-WorldFish demand supply project. Indian aquaculture is primarily limited to inland sector and carp-oriented; for that reason, this activity received special attention. Freshwater aquaculture observed tremendous growth in the past 15 years, but immense scope still exists for horizontal expansion and increases in productivity (vertical expansion). This is evidenced by the fact that the average farm fish yield is only one-third of that achieved in farm trials. The difference was mainly due to much higher input use in on-farm trials. Most of the aquaculturists were practicing extensive aquaculture, but aquaculturists with semi-intensive operations benefited most from adoption of technology. The benefit:cost ratios for different systems of aquaculture varied between 1.22 to 1.86. The return to capital was much higher than the return to labor, due to the low labor input. The semi-intensive aquaculture system would receive the greatest return from projected macrolevel investments, followed by extensive and intensive systems. Dedicated efforts are needed to meet the demand for quality fish seed and feed in order to achieve the desired 45% increase in area and greater than 50% increase in productivity. Based on the observations, activities designed to foster inland aquacultural development in India are recommended.     

Fillet Quality and Processing Attributes of Postsmolt Atlantic Salmon,Salmo salar,Fed a Fishmeal‐free Diet and a Fishmeal‐based Diet in Recirculation Aquaculture Systems

Many studies have evaluated the adequacy of alternate ingredient diets for Atlantic salmon, Salmo salar, mainly with focus on fish performance and health; however, comprehensive analysis of fillet quality is lacking, particularly for salmon fed these diets in recirculation aquaculture systems (RAS). To this end, a study was conducted comparing fillet quality and processing attributes of postsmolt Atlantic salmon fed a fishmeal‐free diet (FMF) versus a standard fishmeal‐based diet, in replicate RAS. Mean weight of Atlantic salmon fed both diets was 1.72 kg following the 6‐mo trial and survival was >99%. Diet did not affect (P > 0.05) processing and fillet yields, whole‐body proximate composition(fat, moisture, protein), fillet proximate composition, cook yield, fillet texture, color, or omega‐3 fatty acid fillet content, including eicosapentaenoic acid and docosahexaenoic acid levels. Whole‐body ash content was greater in salmon fed the FMF diet. The FMF diet resulted in a wild fish‐in to farmed fish‐out ratio of 0:1 per Monterey Bay Aquarium's Seafood Watch criteria due to its fishmeal‐free status and use of lipids from fishery byproduct. Overall, fillet quality and processing attributes were generally unaffected when feeding a diet devoid of fishmeal to postsmolt Atlantic salmon cultured in RAS. [Correction added on 7 September 2017, after first online publication: the P value in Abstract has been changed from “P < 0.05” to “P > 0.05”.].     

A model to assess trade-offs between environmental impact and profitability of offshore salmon farms: A case study on Chile

ABSTRACT

In recent decades, aquaculture has emerged as a viable method to help supply the growing global demand for seafood; however, expansion of the industry comes with potential negative impacts. Regulatory decisions governing aspects like aquaculture farming practices and farm siting inherently lead to trade-offs between profitability and the health of the surrounding environment through impacts including pollution, disease, and disturbance from escaped fish. Efficiently and sustainably scaling up aquaculture will require the development of methods for explicitly examining the trade-offs among these impacts and socioeconomic objectives. We developed a model to assess these trade-offs and illustrate the approach with a case study of salmon aquaculture in southern Chile. In the case study we found evidence that all 21 farms with approved permits may be underperforming on both profitability and the protection of ecosystem health. Our model suggests that explicit evaluation of trade-offs can illuminate the potential for improvements on multiple outcomes simultaneously.     

The development of the Norwegian wrasse fishery and the use of wrasses as cleaner fish in the salmon aquaculture industry

Norway leads the world aquaculture production of Atlantic salmon Salmo salar and farmed Norwegian Atlantic salmon is currently consumed around the globe. However, sea lice infestation is a major problem faced by the salmon aquaculture industry in Norway and elsewhere. The use of wild-caught cleaner fish, mainly wrasses, has been recommended over the other available methods as the most economical and environmentally friendly option to control sea lice infestation in salmon farming. Here, we review the development of the Norwegian wrasse fishery and the use of wrasses as cleaner fish. In this document, we address the sea lice problem and introduce the main wrasse species employed as cleaner fish, document the cleaning behaviour of wrasses, present the development of a new wrasse fishery associated with the salmon aquaculture industry, and finally, we identify the main challenges associated with the intensive use of wild-caught cleaner wrasses and provide some insight for future directions of the wrasse fishery and further development of aquaculture techniques to supply salmon facilities with domesticated cleaner fish.     

Approaches for delaying sexual maturation in salmon and their possible ecological and ethical implications

ABSTRACT

The aquaculture industry is under pressure to satisfy global demand for marine foods. Atlantic salmon has been bred for more than 40 years, and substantial progress has been made within the culturing and breeding programs. The improved growth rate of Atlantic salmon has been accompanied by an earlier onset of maturation. Among the factors controlling maturation in salmon are photoperiod, temperature, and body composition. Early sexual maturation is detrimental to fish health and quality when viewed from an aquacultural viewpoint. There are several approaches for alleviating this problem: (1) traditional selection, (2) manipulation of external factors affecting puberty (e.g., light), (3) novel biotechnological methods for improving breeding methods, (4) induction of polyploidy, and (5) genetic modification controlling maturation. This article presents the ecological and ethical issues connected to these approaches and argues the importance of acknowledging and discussing such issues in order to ensure that all stakeholder concerns are considered.     

Production of market-size European strain Atlantic salmon (Salmo salar) in land-based freshwater closed containment aquaculture systems

Interest in land-based farms using recirculating aquaculture systems (RAS) for market-size Atlantic salmon (Salmo salar) continues to grow, and several commercial facilities are already rearing fish. Performance data for commercially available mixed-sex, all-female, and triploid all-female Atlantic salmon reared to market-size in freshwater land-based facilities, however, are limited, particularly for European strain fish. Accordingly, eight groups of European-sourced Atlantic salmon (five groups of diploid mixed-sex, two groups of diploid all-female, and one group of triploid all-female fish) were reared from eyed egg to market-size in a semi-commercial scale land-based aquaculture systems over five separate production cycles to quantify performance metrics. Fish reached market-size (4−5 kg) in 24.7–26.3 months post-hatch. Fish were reared at a mean water temperature of 12.3–13.7 °C from first feeding to a mean size of 466–1265 g, then 13.3–15.1 °C during growout. On average, all-female groups grew faster than mixed-sex groups; however, environmental conditions and performance of individual cohorts varied. In a comingled production cycle, diploid all-female salmon grew faster than triploid counterparts. Early maturation rates ranged from 0 % to 67 %, with a mean maturation rate of 34 % for diploid mixed-sex fish and 67 % and 13 % for two diploid all-female groups, respectively. Triploid all-female Atlantic salmon did not mature. This research confirms biological and technological feasibility of growing Atlantic salmon to market-size in land-based systems but controlling early maturation of diploid salmon remained a challenge under the conditions utilized in these trials. This research provides important data inputs to optimize operational and financial projections for existing and potential land-based Atlantic salmon farms.     

Media Coverage of PCB Contamination of Farmed Salmon: The Response of U.S. Import Demand

This article evaluates the effects of extensive media coverage of a study published in 2004 regarding the presence of polychlorinated biphenyls (PCBs) and other organic contaminates in farmed salmon on U.S. import demand for fresh farmed salmon. The study indicated that levels of PCBs differed according to source, with highest PCB levels found in salmon from Northern Europe and lowest in those from Chile. Using a newspaper article index as a proxy for information, a two-stage demand model is estimated. In the first stage, total U.S. import demand for fresh farmed salmon is estimated to determine the overall effect of the information, while the second stage determines if there were any significant changes in market shares of source countries. Results indicate that imports declined by approximately one-third of what would have been in the absence of the PCB media stories during 2004–2006, and that some changes in exporters’ market shares occurred. Health implications for U.S. seafood consumers are discussed.     

基于物联网智慧服务的中华绒螯蟹蟹种质量动态追溯系统研究

为确保中华绒螯蟹蟹种培育全程的质量控制并优质高效地完成上海蟹种输台任务,本文基于物联网、智慧服务技术,研究并开发了蟹种质量动态追溯系统。针对两岸复杂的网络环境和多变的运输环节,该系统采用多种计算节点和软件形态采集应用信息,并通过统一的协同服务空间与智能资源库完成数据与信息交换,成功实现了基于两岸的蟹种质量全程质量监控、动态追溯和智慧服务,在中华绒螯蟹蟹种精细养殖领域起到了示范性作用。该系统已在2013年上海中华绒螯蟹蟹种养殖与输送台湾苗栗的全程中成功应用,为9批次695箱77万只蟹种提供了质量追溯智慧服务,台湾30家示范养殖户成功实现了蟹种质量溯源,蟹种箱和蟹种网袋可溯源率100%,取得了政治、经济双重效果。     

Economic Analysis of Japanese Household Demand for Salmon

The recent glut of both wild and farmed salmon in world markets has forced producers to become aware of the need to expand their marketing efforts to ensure that demand is not outpaced by supply resulting in a further decline in prices. Japan has been a major market for wild salmon, particularly sockeye salmon from North America, since the introduction of the 200 mile Exclusive Economic Zone. As farmed supplies have continued to increase, exporters such as Norway and Chile have turned their attention to this market as well. Up until now, most of the farmed salmon exported to Japan has been targeted to the restaurant market. If exporters wish to expand their market in Japan, they may focus also on the retail market. Prior to any assessment of the potential of the retail market for fresh farmed salmon, it is useful to understand the role that salmon plays in Japanese household seafood consumption.
This paper examines household consumption patterns of salmon in Japan. An econometric model is presented which estimates household demand for fresh and salted salmon focusing specifically on the effects of seasonality, regional location, and prices of other seafood products. Two systems of demand equations, one for each of two regions of Japan, are specified and estimated using monthly data on prices and expenditures to capture the effects on household demand for 12 seafood products. Results indicate that seasonality plays a significant role in the demand for many seafood products, particularly fresh and salted salmon. In addition, these seasonal effects are not necessarily the same between regions of Japan. Salmon competes with different seafood products during different times of the year. A rich variety of factors should be considered when marketing fresh aquacultured salmon in the Japanese retail market.     

A comprehensive survey on selective breeding programs and seed market in the European aquaculture fish industry

The use of selective breeding is still relatively limited in aquaculture species. Information on such activities is sparse, hindering an overall evaluation of their success. Here, we report on the results of an online survey of the major aquaculture breeding companies operating in Europe. Six main reared fish species were targeted. A total of 31 respondents contributed to the survey, representing 75 % of European breeding organizations. Family-based breeding schemes were predominant, but individual selection was more frequently applied in marine species. Artificial fertilization is the preferred means of reproduction; however, mass spawning is often used as a fallback method. The most frequently selected trait is growth performance, but the number of selected traits has been increasing over the years through the addition of traits such as disease resistance or product quality. The use of molecular tools is now common in all programs, mainly for pedigree traceability. An increasing number of programs use either genomic or marker-assisted selection. Results related to the seed production market confirmed that for Atlantic salmon there are a few dominant players at the European level, with 30–50 % market share. Only part of the European fish aquaculture industry today fully exploits selective breeding to the best advantage. A larger impact assessment still needs to be made by the remainder, particularly on the market share of fish seed (eggs, larvae or juveniles) and its consequences for hatchery stability.