Fish Farm Boom Bust Cycle – Buying up the Competition, Barriers to Entry

Along with the boom bust cycle that drives global fish farming, to the detriment of employees, revenues and the environment, the big get bigger and the smaller companies get bought out; this results in barriers to entry as new fish farm companies cannot compete with the market prices their much larger competitors can produce fish at.

Barriers to entry cause cartels and monopolies. The larger firms, in this case Marine Harvest, keep on getting bigger and competition keeps slipping away.

See: http://www.seafoodnews.com/Story/959989/70688/Marine-Harvest-Buys-Majority-Stake-in-Chiles-Top-Salmon-Producer-AquaChile.

Marine Harvest Buys Majority Stake in Chile's Top Salmon Producer, AquaChile

SEAFOODNEWS.COM [SeafoodNews] January 19, 2015

Marine Harvest has agreed to purchase nearly 43 percent of major Chilean salmon producer AquaChile in a deal that also gives the major Norwegian salmon producer the option to acquire at least 55 percent of the company starting in the middle of 2016.

Under the initial tender offer Marine Harvest will pay $0.8856 per share...

See my recent article on boom bust cycles in fish farms: http://fishfarmnews.blogspot.ca/2015/01/fish-farms-are-boom-bust-industry.html.

Key Document - High Survival Rate for Post-Smolt Atlantic Salmon in Closed Containment Facilities, Updated Nov 5, 2015

Even Norway is getting on the closed-containment, on-land fish farm bandwagon. Even though Marine Harvest, Cermaq (Mitsubishi) and Grieg Seafood don’t seem to notice.

Here are some quotes from a January 26, 2015 article on The Fish Site:

http://www.thefishsite.com/articles/2011/high-survival-rate-for-postsmolt-in-closed-facilties.

“Problems with lice and losses can be heavily reduced by placing farmed fish in closed systems until the fish reach a weight of one kilo. This has been shown by research conducted by scientists at Uni Research in Bergen Norway.”

“The open sea phase is reduced by half by keeping the fish in a closed system until they weigh up to one kilo. Salmon lice consequentially only have half the time they need to complete their life cycles.”

Who’d a thunk it? Keep farmed fish on land in closed containers and they don’t get lice? Brilliant.

“Norway is a fishing and shipping nation and we need to think about the future. By using closed systems we can look after both wild and farmed fish even better than we do today.”

Which means all the wild fish in all the cold water oceans that fish farms have spread to can be saved from fish farms. Good thinking.

“The fish farming industry needs to think about sustainability, but it will undoubtedly benefit from a development which involves improving the health of farmed fish and reducing environmental impact, says Nr. Ebbesson [one of the scientists].”

Sounds good.

“During the first growth phase of up to 1 kilo the losses suffered in the Skanevik tank have been less than one percent. This is actually incredibly low to most ordinary sea systems, the losses can amount to 10- to 12-% and in some cases up to as much as 20%”

The results he is referring to are from the Research Council’s Optimised Post-smolt Production Project (OPP) which has involved cooperation between the industrial partners, Marine Harvest, Leroy, Grieg Seafood and Smola klekllerj og settefish.

Oh, look: Marine Harvest and Grieg Seafood seem to be a part of this. You will recall that Marine Harvest, here in BC, Canada, pulled out of a beneficial relationship – it meant they did not get bad press for almost five years – with CAAR in 2014, on the grounds that there was no point in the five year relationship because CAAR – a Coastal Alliance for Aquaculture Reform, for getting fish farms out of the ocean and on to land in closed containment – was against their business model. That means in-ocean, open net pens that use the ocean as a free, open sewer.

Mr. Handeland said: “In the even longer term we could also discover whether or not closed systems are beneficial for weights of up to 4 kilos.”

You mean, the weight at which fish farms are actually harvested – 4- to 5-kilos? Really. Norway is only finding this out now? Now, if they would only find this out in BC, and put fish farms on land.

As before you will recall my post on this site that now has 73, er 74, er, 125 different fish farm systems on-land in closed-containment around the world and comprising more than 8,000 actual farms. Do note that this figure now exceeds 10,000 as Denmark has 50% of all its farms on land, and the new Kenya post will result in thousands of on-land farms.

See: http://fishfarmnews.blogspot.ca/2012/01/key-document-34-mostly-on-land-closed.html.

To close:

“Mr. Handeland is fully supported by Lars Ebbesson. “The lice problem is one of the big challenges being faced by the industry and one of the biggest threats to fish health. It is otherwise very important to realise that closed systems would not just help the large fish farms along the coast, but the small farms as well.”

Well done. Now send this to the Norwegian government, and all the governments around the world that are reducing effectiveness of environmental laws because fish farms say they are too heavily regulated. As before, my estimate is that fish farms in BC result in $10.4 billion in sewage costs, more than all the sewage put out by all the humans in BC, that we taxpayers, in essence, pay for. We don’t want to pay.

VeroBlue Huge On-land Fish Farm - 40 Million Pounds of Fish

Here is yet another on land fish farm, and this one is massive, ultimately putting out 40,000,000 pounds of barramundi. The Norwegian style in-ocean fish farms are technological dinosaurs and we need them out of our pristine oceans.

This deal is worth $100 million. This should prove to even the most biased fish farm supporter that there is just no longer any reason to have fish farms in the ocean with their lice, feed, sea lion kills, diseases, effects on wild salmonids, escapes and release of sewage problems.

All farms need to be on land. In BC Canada the leases can be cancelled in 60 days. That is all it takes to rid our pristine oceans of in-ocean farms that typically put out the sewage of the entire output of all the humans in the nation where they operate.

In BC, my estimate of the sewage cost (not to mention its polluting effects) is $10.4 billion that we taxpayers shoulder. We don't want to pay. It is the same sewage of all the people in BC - 4.6 million.

See: Seafood news:

VeroBlue to Boost Land-Based Barramundi Production to 40 Million Lbs Yearly With Recirculating Tanks SEAFOODNEWS.COM [SeafoodNews] January 21, 2015 VeroBlue Farms,a barramundi producer based in Iowa that grows its fish using land-based aquaculture systems, has inked a $100 million deal to buy patented recirculating aquaculture tanks that are expected to boost its production to 40 million pounds annually.  Under VeroBlue's deal with Opposing Flows Aquaculture, Inc. the barramuni producer will buy 2,000 patented “opposing flows” technology land-based recirculating aquaculture systems (RAS) tank systems in a transaction valued at more than $100M... http://www.seafoodnews.com/Story/960371/70845/VeroBlue-to-Boost-Land-Based-Barramundi-Production-to-40-Million-Lbs-Yearly-With-Recirculating-Tanks. This is VeroBlue's website: http://verobluefarms.com/. This is my post showing 72 different on-land fish farm systems comprising more than 8000 on land farms aroung the globe: http://fishfarmnews.blogspot.ca/2012/01/key-document-34-mostly-on-land-closed.html.

Fish Farms are a Boom Bust Industry - Updated Jan 24, 2015

I have pointed out in many posts on this blog that in-ocean fish farms are a boom bust industry. And it is the staff who pay the price. They are let go, just as Marine Harvest did in BC, Canada two years ago, just before Christmas. And in Chile where an ISA virus wiped out a quarter of a billion salmon, some 13,000 to 26,000 employees were let go, but the big multi-national companies, like Marine Harvest, Cermaq and Grieg Seafood, just keep rolling on.

Here is another, current article that shows that fish farming is a boom bust industry. Norway has problems with Russian sanctions arising from the west’s placing sanctions on Russia regarding the Crimea and Ukraine. In addition, Norway is having difficulty selling into France because citizens have, in the past year, received the news on the environmental degradation caused by in-ocean fish farms and won’t buy Norwegian farmed salmon.

Elimination of a 26% duty into the USA means Norway can now pump product into that market, and it is still in a slump. And the losers? Their own Canadian operations in BC that sells 85% of their product into the USA because Canadians won't buy it. And Chile, with many of the same multinationals, has a lock on frozen product to the US, is at peak production, but with fears of a new ISA disaster as happened in 2008.

The point is that fish farms are a speculative boom bust industry. They are not about jobs and revenue, because the employees get fired right away in bust periods. More employment is lost when the big companies move to food machines and 24 hour lights. This happens all around the world. Fish farms are not about revenue and employment, they are a net negative to economies because they do not pay for their sewage costs. 

In fact, fish farms put out more sewage than the entire human population in many countries where they operate (Norway, Scotland, Canada). In BC that is more than the entire human population of 4.6 million people. My calculation is that we BC taxpayers are on the hook for $10.4 billion in sewage costs that fish farms don't clean up, which they can completely eliminate by coming on land.

In Chilie, the farms, trying to stay ahead of ISA are buying up pristine Patagonia sites and moving into better water because the rest of Chile is so polluted with fish farm diseases, lice, escapes – up to four million salmon per year - chemicals and sewage.

See this article for a good, wide ranging discussion of the competitive issues faced in this boom bust industry: http://www.undercurrentnews.com/2014/12/29/2014-timelines-russias-import-ban-redraws-seafood-trade-lines/.

This following article quotes that Norwegian salmon prices are slumping in the USA, and reconfirms that Norwegian prices are slumping in France.

Boom. Bust: http://www.seafoodnews.com/Story/959813/70653/Norwegian-Salmon-Prices-Slump-Spurring-Increased-US-Retail-Buying.

Fish farms need to be on land or go back to Norway.

Here is an update to Jan 24, 2015: Norway prices ‘bloodbath’. http://www.intrafish.com/news/article1404714.ece..

Norwegian salmon prices fall sharply. Industry players talk of yet another ‘bloodbath’ as prices for Atlantic salmon drop to new lows.

In other words, Norwegian style in-ocean fish farms are a boom bust industry.