A perfect storm: Why salmon prices are soaring in 2016
As a consumer product, very few types of seafood are able to compete on the same levels of supply and international demand as farmed Atlantic salmon. The increasing global appetite for this fish has seen exports grow rapidly in the last two decades, reaching a record 2.3 million tonnes with a value in excess of €13 billion last year.
Collectively, the salmon farming industry’s output has grown 7-8% annually since 1997. However, this year’s total is expected to decline to around 2.2 million tonnes with many stakeholders not expecting any increase for at least another two years.
There are a number of reasons for this supply decrease, but the biggest impacts have come from naturally occurring biological challenges in key farming areas – predominantly sea lice infestations in Norway and algal blooms in Chile. Historically, these two countries account for around two-thirds of the world’s salmon production, but both are forecast to see their respective outputs fall by 100,000 tonnes in 2016.
While there is some good news in the market in terms of salmon supply, such as higher output from Scotland this year, these contributions do very little to offset the overall decline. Therefore, combining the reduced availability with the unprecedented demand for salmon, a perfect storm has emerged whereby at numerous stages this year salmon prices have been 30-40% more than they were in the corresponding period of 2015.
Unfortunately, the high prices and declining availability of farmed salmon have left many buyers and processors in key markets struggling to fill orders in recent months. With sea lice, algal blooms and other biological challenges remaining unwanted forces to be reckoned with, not to mention fast-growing demand from existing and new regions, the market should be prepared to pay more for salmon in the future. We will all simply have to wait to see by how much and for how long.
Some comfort should be taken from the salmon industry’s determination to quickly get production back on a growth trend. As the aquaculture sector’s technological frontrunner, it is actively seeking, through heavy investment, new production areas, alternative feed sources, new technologies etc. that can help solve its biological challenges cost-effectively and bring greater stability to the market.