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.

Kim Jong-Un, On-land Fish Farmer, North Korea!

Surprise, surprise! Even North Korea, one of the least technically advanced nations on earth (only 1000 computers connected to the internet) has on-land, closed-containment fish farms.

The big dude himself can be seen looking down to the fish in the tank. Lovingly? Can’t say, but it has to be said: even the most technology-challenged of countries put fish farms on land where they belong. Even dictators with no sense of humour are doing it.

Marine Harvest, Cermaq, Grieg Seafood, it’s time to get out of the water and quit using the world’s pristine oceans as free, open sewers.

See: http://www.dailymail.co.uk/news/article-2885133/So-kill-time-North-Korea-internet-goes-Kim-Jong-visits-fish-farm-country-s-web-access-cut-off.html. 


See my link for 70 fish farm systems, now 71, on land, comprising more than 8,000 on land fish farms around the world. There is no need anymore for the excessive environmental damage caused by in-ocean fish farms: http://fishfarmnews.blogspot.ca/2012/01/key-document-34-mostly-on-land-closed.html. 

NB - Wild Atlantic Salmon Decline - Miramichi

In New Brunswick, wild salmon declines have occurred in many of its rivers. In the Miramichi, here is some information from the Atlantic Salmon Federation:

Of course, any salmon river is a valuable asset to the region through which it flows. In 2011, a Gardner Pinfold report (Economic Value of Wild Atlantic Salmon) estimated the total annual economic value for wild Atlantic salmon at $255 million, supporting over 3,800 full-time equivalent jobs. One of their four case study rivers was the Miramichi (the other three were the Exploits, Margaree and Grand Cascapedia), where they pegged annual spending related to wild Atlantic salmon at $20 million, supporting 637 full-time equivalent jobs.

See more at:http://asf.ca/voices-of-the-valley-in-winter-14-asj.html#sthash.VTx6x59d.dpuf. 

By October 15, only 198 grilse had passed through the Northwest Cassilis trapnet compared to 230 on the same date last year. For salmon, the numbers were worse, 83 compared to 196 in 2013. Salmon and grilse numbers at the Millerton on the Southwest Miramichi had recovered by October and 743 salmon passed through the Southwest’s indicator trapnet (466 on same date in 2013) with 568 grilse (versus 371, same date ’13).  

The numbers become ever more startling with a quick glance back through earlier years. Average counts at the Northwest Cassilis trapnet between 2001 and 2010 were in the 400 range for salmon and 1100 for grilse. This is in stark contrast to the 83 salmon and 198 grilse counted by the same time period in 2014. While the salmon counts at the Millerton trapnet on the Southwest are somewhat closer to the averages for the same time period, the grilse numbers, while up from 2013, are very depressed. From 2001-2010, average grilse counts at Millerton ranged from 1,935 (2006-2010) to 2,663 (2001-2005).

The trapnet numbers are not complete counts of what is in the river, but rather are partial counts that provide an indication of fish that are entering the Northwest and Southwest systems respectively.   - See more at: http://asf.ca/voices-of-the-valley-in-winter-14-asj.html#sthash.VTx6x59d.dpuf

The average number of salmon returns to the Miramichi River has declined rapidly from 82,000 annually in the 19902 to 53,000 in the first decade of this century, to 23,000 a year since 2011. Preliminary numbers from DFO indicate even further declines in 2014.

A Gardner Pinfold report estimated the toal economic value for wild Atlantic salmon in 2010 at $255 million, with the recreational fishery alone worth nearly $130 million, supporting nearly 4,000 full time equivalent jobs.

See more at: http://www.thefishsite.com/fishnews/24809/government-to-set-up-wild-salmon-decline-committee#sthash.rmhiBeCk.dpuf

In BC, in an average year, there are 100,000,000 salmon that return. This shows that wild Pacific salmon in BC, are in far larger numbers than Atlantic salmon on the east coast, that resemble more, in their habits and numbers, our BC steelhead. BC salmon are far more important to the province of BC than salmon in other jurisdictions. 

Study: On Land Fish Farm Systems Make More Money

Here is another article that shows that on-land closed recirculating fish farms make more money and shield the environment from sewage, disease, lice and the other problems associated with the old-tech in-ocean methods employed, particularly by the Norwegian companies, Marine Harvest, Cermq and Grieg Seafood.

Abstract

Research into the use of recirculating aquaculture systems (RAS) addresses the question of how to achieve profitable production while consistently recycling water and nutrients with minimal fresh water demand and waste production. The RAS facilities require an adequate supply of fingerlings, and a facility for fingerling production in conjunction with each RAS can prevent disease transfer and ensure quality and continuous production. The time, space, and financial investment can be eliminated by hatching (purchased disease free ova) and rearing of fingerlings every 2-3 months. The present study evaluated (water quality assessment, feed utilization, production cycle duration) a simple low cost recirculating hatchery for salmonids as a safe and continuous source of fingerlings for further rearing in RAS. The tested recirculating hatchery enabled low cost efficient production on a small scale (at least 5 production cycles per year, > 63 000 fingerlings per each cycle), low fresh water demand (0.05 l.sec-1) with maintaining good rearing conditions, and environmental and zoohygiene safety. Such simple facilities can support the sustainability of inland aquaculture and strengthen the effort to deliver quality products with minimal operational and environmental costs.

See: http://omicsonline.org/open-access/a-simple-and-effective-recirculating-hatchery-for-salmonids-2155-9546-5-271.php?aid=31145.

See my link for 70 fish farm systems on land, comprising more than 8,000 on land fish farms around the world. There is no need anymore for the excessive environmental damage caused by in-ocean fish farms: http://fishfarmnews.blogspot.ca/2012/01/key-document-34-mostly-on-land-closed.html. 

Some more text from the study:

The positive results obtained in a simple recirculating system call into question the reported need to use additional technologies for hatcheries such as UV treatment, ozone application, microsieve filtration, oxygenation, and aeration. The RHS was fully functional without such treatments, thus is more efficient with respect to initial investment as well as operating costs. Nevertheless, potential use of additional technologies in enhance the RHS should be discussed. Added aeration and oxygenation may increase the capacity of RHS, but benefits such as increased production and increased biofiltration rate are cancelled out by increased operating costs. Oxygen level and biofiltration efficacy were found to be sufficient in the current study. -

 See more at: http://www.thefishsite.com/articles/2001/a-simple-and-effective-recirculating-hatchery-for-salmonids#sthash.sdp4Ved9.dpuf.