Thursday, 9 July 2015

Norwegian Fish Farms at the Tipping Point

My list of on-land fish farms is now at 85 different systems, comprising more than 10,000 actual, on-land fish farms around the globe right now. See:

But the CEO of Marine Harvest, Alf Aarskog says that it just isn’t possible to farm fish on land. Well, my list says he’s wrong and Kjell Bjordal, a former EWOS feed giant executive, says he is too.

Bjordal has some good arguments. The cost of a licence/concession is listed at NOK 65 million or $10.4 Million Canadian. By comparison, we only charge $5,000 in BC, and at 130 licences, we should be charging $1.352 Billion. Also by comparison, there is zero cost for a licence on-land in Norway, so that’s a huge difference.

Then there is the difference that fish are raised faster on land because you can control the photo-period of the day and keep the water temperature the same, rather than seasonal fluctuations, and, in addition to adding a current that results in higher concentration of fish in the RAS system, fish are grown to market size in a little over half the time of in-ocean farms.

Well run recirculating systems are low on water consumption because it is reused, have no diseases, have no lice, result in no wild salmonid deaths, no sea lions are shot, and the huge sewage load is eliminated. Waste is used to produce energy, methane and aquaponics, resulting in much cheaper electricity costs than claimed by detractors, and so on.

Bjordal points out that the costs of raising salmon in saltwater is rising at a steep rate of 55% from 2004 to 2014 driven by sanitary problems (a polite way of saying fish sewage, uneaten food, lice problems and diseases).

The cost of producing a kilo of salmon in ocean will have risen from 28NOK/kg in 2014 to, by 2020, 38 NOK/kg. That’s 44 NOK in five years. In other words, on land salmon will be cost competitive with in-ocean – even without the other factors. No one will buy in-ocean fish once they understand the environmental degradation of in-ocean feed lots.

There is also the cost of equipment, in-ocean at $10M NOK, but with the 75% subsidization for on-land systems in the EU, the result is a net $17M NOK for capital. And there are even more cost savings to be had.

Bjorsdal points out that the investment for in-ocean for the same production is actually $75M NOK (65 + 10M = 75), so on land is cheap cheap.

Other savings include yield per area, for example, 4 square metres can produce a metric tonne of salmon on-land. That means 1.2M metric tonnes can be produced on just 4.8 square kms of buildings. By comparison, the BC industry puts out only 83,000 metric tonnes from its in-ocean farms. BC could really use this on land and make more money and employ more people.

But, Bjordal points out, there is still another significant issue that is going to tip markets away from Norway’s polluting in ocean fish: cost, insurance and freight cost to ship salmon to market. The CIF in Oslo is 30NOK/kg; in Miami it is 45; Tokyo is 53.

What does this mean? It means that a big company that puts a big plant in a big city on land can sew up the salmon market for good. The margin in Tokyo is 23NOK/kg if the company can put product on the market for the Oslo CIF of 30. That’s a lot of room to work with.

And what does that room mean? It means that Norway cannot grow its fish and market unless it gets rid of the ‘sanitary’ issue, according to Bjordal. And, those costs are associated with in-ocean fish farming. And that also means weakening its laws, which is contrary to the public view of Norwegians, meaning: we are clean and wholesome, we have reduced our oil industry dramatically, guess it’s time for fish farming.

That means that Norway has to reduce its cost and lead in the on-land industry if it wants to continue as the world leader in salmon, Bjorsdal said. And that includes being there with on-land system to take control of the New York or Singapore, or Sao Paulo, or, etc. market with food right in the city on land.

Right now, at the tipping point, it looks like Aarskog and Marine Harvest are asleep at the switches.

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