The Salmon Aquaculture Industry
- Data methodology
- Salmon losses: The term ‘losses’ refers to salmon that could not be harvested and sold due to factors such as premature death from disease and escape from fish pens. It also includes salmon that did not reach expected or optimal harvest weight due to factors such as sea lice infestations.
- Expected harvest: Most companies in our salmon universe, for at least one year, state in their annual and/or sustainability reports what they expect their salmon harvest to be for the following financial year. Some also state this for their subsidiaries. When a company has either not disclosed their expected harvest or Planet Tracker could not find a disclosure, data for actual harvest has been removed from the charts. Actual harvest data was removed in these instances because their inclusion materially changed the calculation of the ratio between expected and actual harvest, which provided misleading results.
- The ten largest aquaculture listed companies that account for nearly 50% of salmon production in Norway, Chile, the United Kingdom and Canada with a combined market capitalisation value of $30 billion. Five of the ten firms analysed are pure-play salmon production companies and, overall, 92% of revenue generated by the ten companies is from salmon aquaculture.
- FX Rates
- Information has been taken directly from company annual and/or sustainability reports.
- Key terms – No technical jargon on dashboard
The ten largest aquaculture listed companies that account for nearly 50% of salmon production in Norway, Chile, the United Kingdom and Canada with a combined market capitalisation value of $30 billion. Five of the ten firms analysed are pure-play salmon production companies and, overall, 92% of revenue generated by the ten companies is from salmon aquaculture.
- These companies experienced aggregated production and earnings losses as a result of environmental constraints between 2010 and 2019 of 291,000 tonnes with a market value of $1.8 billion.
- Algal Blooms: Nitrate and phosphate runoff from agriculture negatively impact the health of farmed salmon. Increases in phosphate levels in runoff lead to algal blooms, which cause hypoxia. In 2019, algal blooms in Norway led to the elimination of 11,600 tonnes of salmon by the end of Q2. Total annual losses are expected to rise to 40,000 tonnes by the end of the season – representing lost revenues of up to $223 million. Similarly, in 2016 algal blooms decreased Chilean salmon industry revenue by $800 million.
- Disease: Infectious salmon anaemia (ISA) and other diseases are estimated to cause over $6 billion in industry losses annually.
- Parasites: Sea lice infestations are one of the costliest challenges to the industry and have been calculated to cause yearly losses of up to $1 billion.
- Optimal Water Temperature: The optimal temperature range for Atlantic salmon aquaculture is 8⁰C to 14⁰C. The Intergovernmental Panel on Climate Change (IPCC) Representative Concentration Pathway 6.0 report forecasts an average coastal seawater temperature increase of approximately 1.6⁰C between 2000 and 2050 for Norway and Scotland, and 1.1⁰C for Chile across the same period.
Assess the competitiveness of salmon farming companies through production volatility, directly influenced by environmental performance
The planetary boundaries concept, introduced by the Stockholm Resilience Centre in 2009, presents a set of nine quantitative planetary boundaries that regulate the stability and resilience of the Earth system. The cost to the planet of reaching and exceeding these planetary boundaries is high and may in fact be irreversible with unknown consequences.
- Investors should weigh up the higher operating costs of offshore farming with the risk mitigation benefits that new offshore technology can bring in reducing production losses. Evidence to date demonstrates to investors that fast growth at all costs is not sustainable. Investing now in making the industry more sustainable will enable sustainable growth to continue whilst mitigating environmental risks.
- With an industry whose ownership is increasingly concentrated amongst a few key investors, it is imperative that institutional and other investors demand long-term sustainable industry growth through the implementation of effective environmental and financial risk management policies within a sustainable business model.
- Investors may positively impact the industry by championing the development of sustainable management regimes and also supporting technical innovations that work to mitigate environmental constraints such as recirculating aquaculture systems (RAS) or offshore farm systems.
Maintain or increase research and development spending ratios. Continue to uphold and manage comprehensive feed sustainability policies. Publish sustainability reports or integrate key financial metrics into annual reports.
Planet Tracker is a non-profit financial think tank aligning capital markets with planetary limits. It was created in 2018 to investigate the risk of market failure related to ecological limits, focusing on oceans, food & land use and materials such as textiles and plastics. Planet Tracker intends:
- To generate breakthrough analytics
- To redefine how financial and environmental data interact
- To change the practices of financial decision makers to help avoid ecological collapse
- The Finance Hub, the Gordon and Betty Moore Foundation, which was created to advance sustainable finance, and the Oak Foundation.
- Seafood Tracker investigates the impact that financial institutions have in funding publicly listed wild catch and aquaculture companies. Our aim is to align capital markets with the sustainable management of ocean resources. This briefing paper focuses on financial risks to aquaculture expansion – in particular, salmon farming. As the aquaculture sector is forecast to experience double digit growth through to 2050, capital markets should be thinking about key sustainability issues in their investments. Seafood Tracker is a part of the wider Planet Tracker Group of Initiatives.