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Top Species: Farmed salmon

Norwegian product fills in where Chilean salmon farmers left off

By Joanne Friedrick
December 01, 2009

With Chilean Atlantic salmon farmers still trying to recoup from the outbreak of infectious salmon anemia (ISA) that harshly curtailed production 
beginning in 2008 and all of 2009, other producing countries are stepping forward, hoping to fill the supply gap.

Over the past 10 years, Chile has continued to build its 
salmon industry, competing with Canada for top honors in the U.S. market.

"Going into 2009, the industry had been severely hit, but we have come to terms with it," says Bert Bachmann, VP and general manager for Camanchaca in Miami, which operates salmon farms and processing facilities in Chile. He says even sites that companies thought were free of the disease became infected via transport of the virus through equipment.

The unaffected fish were subject to accelerated harvests and frozen, explains Bachmann, "so there is a frozen inventory in play today that wasn't a year ago."

In addition, some farming and production sites have been shut down, resulting in layoffs to thousands of workers in Chile. But the infrastructure remains in place, ready for when business resumes. At its peak, says Bachmann, Camanchaca's main plant was processing about 1 million pounds a week. In October, that number was down to about 100,000 pounds a week, followed by a two-week layoff.

The salmon coming out of the water now, he says, is supplying the spot market, while the frozen inventories are fulfilling standing orders. Prices have risen, he says, as programs have been dropped and restaurants and others have had to renegotiate deals. Two- to 3-pound fillets that sold for $3.77 in 2008 are now going for $4.50.

On the bright side, says Bachmann, overseers of the Chilean farmed salmon industry are implementing new rules, regulations and protocols to prevent a repeat of the ISA outbreak. That's important, he says, because nothing can really replace the salmon business in Chile.

"The people in Chile look at this as a learning opportunity," he says. Energy within the government has been spent on getting bills related to site and egg inspections passed, so companies can get back to business.

For Camanchaca, Bachmann says new fish will likely go into the water between the first and second quarter of 2010. Right now, he says, "bankers aren't eager to finance because of the losses. We're in a 'go cautious' approach at this point."

While the ISA issue will change the face of the Chilean farmed salmon industry in the short term with less production than in the past, Bachmann says Chile still will be competitive. "I don't think the industry will run at the same rate," he acknowledges, "but Chile will still have a price advantage." Also, Chile has taken a lead position in value-adding its salmon, he says, which separates it from producing countries that are focused on whole fish.

 

Expanding the market

Norway is one of those countries poised to fill the void left by Chile. In just the first nine months of this year, Norway exported 24.4 million pounds of farmed salmon fillets versus just 4.8 million pounds during all of 2008, according to National Marine Fisheries Service data. Canada, meanwhile, seems to be on pace to achieve the same numbers as last year, having exported approximately 166 million pounds of farmed whole and filleted salmon in 2008. Through August 2009, Canada had exported about 109 million pounds.

Paul Aandahl, market analyst for the Norwegian Seafood Export Council (NSEC) in Tromso, Norway, says the United States now accounts for 5 percent of total Norwegian salmon exports, up from just 1 percent a year ago.

"This is the most important change in the global salmon trade caused by the Chilean reduction in Atlantic salmon production," explains Aandahl.

The drop in Chilean fillets has led to increased exports of salmon from throughout Europe, he says, including Norway.

On the price side, Aandahl says Norway has experienced a "huge increase," especially in the spot price, with prices around 50 kroner a kilo (or about $4.08 a pound). Higher volumes of exports have brought prices down this fall from summer highs, notes Aandahl.

Even with the improved market for Norwegian imports, Borge Gronbech, U.S. director of the NSEC in Boston, says education is still required to build a market for salmon.

"One of the main barriers for increased consumption of seafood in general and salmon in particular is lack of knowledge on how to handle and prepare it," he says. "Consumers, quite simply, do not buy it because they wonder how to cook and serve [salmon]."

Understanding this, Gronbech says the next step is to offer "meal solutions, variations and occasions" to convince consumers how simple it is to succeed with Norwegian salmon throughout the year.

He says both retail and foodservice are target audiences for Norwegian salmon promotions. "However, compared with the European market, a larger share of salmon is consumed at restaurants and foodservice in the United States, so foodservice will probably get more attention." The council plans to market Norwegian salmon using recipe leaflets and probably education programs at the retail and foodservice level, he says.

 

Making the sale

A believer in the farmed salmon experience, retailer Chris Arseneault, who owns Seafood @ West Main in Charlottesville, Va., says farmed salmon "is the greatest seafood advancement in 50 years." The consistency, nutritional value and ability to fit 
consumers' lifestyles has made it the best seller at his retail store.

The store stocks farmed Atlantic salmon from Canada and Scotland, along with chinook salmon from British Columbia that he sells when the wild season has ended. The Canadian and Scottish products serve different constituencies, says Arseneault, with the Scottish having a higher fat content, and the Canadian more competitive pricewise. The chinook is sourced from Creative Salmon, which is seeking organ-ic certification.

Headlines like those associated with the ISA outbreak always raise consumer questions about farmed salmon, notes Arseneault. "Those articles don't always 
resonate with people in terms of location [of the problem], so 
we have to dismantle their negative myths."

Fortunately, he says, the pluses of the product - nutrition, value and cost - helps salmon rebound when issues do arise.

Arseneault makes it a practice to buy from companies that are conscious of the farming methods used. "I have to trust that my suppliers are making the visits and doing due diligence on their end," he says.

Customers are chiefly concerned with antibiotics and the environmental impact of fish farming. "They want the fish to be wholesome and pure," 
he says.

While wild salmon has its proponents, price is usually a deciding factor, says Arseneault, with farmed selling for $4 to $5 per pound less than wild.

"We let customers make the decision, giving the benefits 
of both," he notes.

Kyle Krieger, executive chef and managing chef partner at Noble's Restaurant in Atlanta, provides a mix of wild and farmed salmon on the menu, including Loch Duart salmon farmed in Scotland. Like Arseneault, Krieger finds the Scottish fish to be a fatty, flavorful salmon that stands up to wood grilling. But in the spring, when the 
Scottish product is scarce, he fills in with smaller Faroe Island ocean trout.

Both fish are sourced through CleanFish, a brokerage and branding company in San Francisco that specializes in sustainable seafood.

Using an extensive vetting process that looks at the hatcheries, farm and feed, CleanFish works with a half-dozen or so salmon producers from Ireland, Tasmania, New Zealand, Scotland 
and Canada.

"We don't have a structure that producers follow," explains Dale Sims, CleanFish VP and co-founder, "but rather we look for decisions around practices, such as what the salmon are fed." 
And CleanFish does require that the fish feed come from sustainable sources.

"We don't object to certain practices," he say, "but it all comes down to the quality of the fish."

Working with the suppliers, CleanFish creates a marketing program that is used to promote the seafood to distributors, 
 retailers and restaurants, explained Beth Rostan, VP-marketing.

"If you don't make a market for them, there's no impetus for them [the farmers] to improve their practices." Branding also can bring a price premium, says Sims, with CleanFish products selling for 20 percent to 40 percent more than other farmed salmon.

The various producers affiliated with CleanFish range from large operations to boutique producers, such as Loch Duart, which harvests just 5,400 metric tons a year.

While sustainability is a key message for the CleanFish brands, Rostan says neither the company nor its clients would be successful if the fish didn't taste good.

"When we have tastings, customers can taste the differences among the fish," says Sims. "It's an eye opener for me. The locale, the feed, it all goes into making the fish what it is."

 

Contributing Editor Joanne Friedrick lives in South Portland, Maine

 

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