Economics
BY VINCE MCDONAGH
Profits under
pressure Salmon farmers in Norway are being squeezed by falling prices and higher costs, a new study finds
S
ALMON farming is not the licence to print money some cri�cs seem to think, recent data from Norway’s Directorate of Fisheries shows. Although the industry generally remains in good financial health, it is facing the prospect of a double whammy from rising costs and declining revenues. And while the study focuses on Norwegian producers, there is every reason to believe that other regions will be facing the same pressures. And with the price of energy and feed expected to increase sharply this year, the worst may be yet to come. The Directorate has recently published its latest profitability survey on the salmon and trout sectors, and it offers a sober analysis. The period covered is up to the end of 2020 which also takes in the first full year of the pandemic and its impact on the industry. The Directorate has been carrying profitability surveys since 1982, making it one of the most experienced organisa�ons in this area. The survey includes informa�on from all types and size of businesses producing Atlan�c salmon and rainbow trout. Presented figures are arithme�c averages based on all surveyed companies in the sample They show that profits dropped by almost 40% in the 12 months between 2019 and 2020.
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Rising Costs v2.indd 36
While lower salmon prices can be partly blamed on a drop in demand due to Covid, the real villain was higher costs which have li�le to do with the virus. The Directorate says they were star�ng to eat into profits three years before the pandemic struck. The data also shows that salmon and rainbow trout producers (in both hatchery and food fish produc�on) reported pre-tax profits had declined by 38.7% to NOK 14.1bn (£1.17bn) over the same period. “Further to our calcula�ons and if one adjusts for infla�on, the figures show that the overall ordinary profit has been declining over the past four years,” the report con�nues. The average sale price of salmon fell by 6.1% between 2019 and 2020 bo�oming out at NOK 47.21 per kilo at the end of 2020. The average price is currently around NOK 78 per kilo. At the same �me, the average total cost per kilo rose by 4.9% from NOK 38.26 in 2019 to NOK 40.15 per kilo at the end of 2020.
Overall “ordinary
profit has been declining over the past four years
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www.fishfarmermagazine.com
07/02/2022 14:38:35
