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Atlantic salmon

With farmed salmon in demand, buyers look to Canada

- James Wright
November 01, 2006

As farmed salmon prices reached record highs in 2006, U.S. buyers relied more on whole fish from Canada, where a newly consolidated pool of suppliers produced large volumes with limited processing capabilities. Whole salmon imports from Canada this year are up 26 percent.

Meanwhile, consumer demand for farmed salmon will be driven by the overall health of the U.S. economy, according to the October report released by the U.S. Department of Agri­culture's Economic Research Service, "Aquaculture Outlook."

The federal government's assessment is logical: With demand higher than ever, only exorbitant prices could slow consumption. But price doesn't seem to be stopping seafood buyers or consumers at this point.

Prices for farmed salmon aren't about to drop. According to a Sep­tember report by the Food and Agriculture Organization of the United Nations, prices in the U.S. market will remain under pressure because global supplies are being diverted to the European Union and Japan, where salmon fetches top dollar.

In the United States, the average price of whole fish in mid-2006 was $2.36, 12.9 percent higher than July 2005 and higher than the average price of fillets at this point two years ago.

Despite the higher price, whole fish imports are driving the market for salmon - and Canadian producers are reaping the benefits.

Through July, U.S. buyers have snapped up more than 93 million pounds of fresh, whole Atlantics from Canada, a 26 percent increase from 2005, according to the National Marine Fisheries Service.

Alan Craig, director of sales and marketing for Cooke Aquaculture in St. George, New Brunswick, says whole-fish sales are higher because of increased inventories due to recent acquisitions. Cooke, which ships 50 to 55 percent of its salmon to the United States, acquired Stolt Sea Farm's East Coast operations in April 2005.

"That trend will come back to normal. I suspect there will be quite a drop in whole-fish sales on the horizon," says Craig, adding that prices will likely be trending 
upward.

"Growth of seafood in general will be significant over the next few years," says Craig.

In mid-October, whole fish from Canada were priced in the mid-$1 range for 4- to 6-pounders; in the low-$2 range for 6- to 8-pounders; in the mid-$2 range for 8- to 10-pounders; and in the high-$2 to low-$3 range for fish 10 pounds and up, according to Urner Barry.

Last year at this time, 6- to 8-pound fish were barely at $2 a pound, while most sizes 10 pounds and up were in the low- to mid-$2 range.

Chile focuses on fresh

Total imports of farmed salmon this year are on a record-breaking pace. The USDA estimates that total Atlantic salmon imports will be up 5 percent this year compared to last year, reaching 435 million to 445 million pounds.

For several years, Chile has sat in the driver's seat for farmed salmon demand in the United States, supplying a bounty of fresh and frozen fillets to the market. However, as Canada's production of whole fish has strengthened, imports from Chile have decreased.

Through July, imports of fresh fillets from Chile totaled 93.1 million pounds, down 17.5 percent from last year, according to NMFS.

Still, Chile accounts for about 87 percent of U.S. fresh fillet imports - and about 80 percent of frozen fillet imports - and continues to feed on strong consumer demand for salmon.

"The room for growth and expansion is by far the largest in Chile than anywhere else in the world," says Jason Paine, VP of Aquafarms International of Miami.

Chilean salmon is now a mainstay in the European market, and in September Japan and Chile hammered out a bilateral trade agreement that is expected to free the flow of salmon into Japan. But 2006 has been a difficult year for Chilean producers.

A two-week labor strike slowed summer production by an estimated 40 percent at AquaChile in Puerto Montt, the nation's top salmon producer. FAO reported that labor strikes in the Chilean salmon industry could cause reductions in supplies and exports in the near future, but Paine says it should not be a problem.

"[Chilean] farms are fairly progressive in terms of social climate and labor relations. It seems to be a fairly stable and healthy situation for the most part," Paine says.

Chile's salmon farms have also reportedly struggled with inconsistent water temperatures that led to slow growth rates and reduced production. According to the FAO report, Chile's farmed salmon production this year will "expand, but at a slower rate than in the past.

"Demand is expected to shift to value-added salmon products such as fresh and frozen fillets, smoked, dried and salted and canned salmon," according to the report, which added that Chile's farmed salmon output in 2005 was 440,000 metric tons.

In early October, fresh PBO fillets from Chile were in the high-$3 range for 2- to 3-pound fillets and in the low-$4 range for 3- to 4-pound and 4- to 5-pound fillets, f.o.b. Miami.

Last year, the price for 2- to 3-pound fillets was in the low-$3 range, while 3- to 4-pound and 4- to 5-pound fillets were in the mid-$3 range.

Still in the crosshairs

Salmon is the third-most-popular seafood species with U.S. consumers, who ate 2.154 pounds per capita in 2004, behind only shrimp and canned tuna. Expect the 2005 consumption number to be higher after NMFS releases official U.S. landings statistics for that year.

Despite high consumer demand for salmon, it's rarely smooth sailing for farmed salmon when it comes to media coverage. The industry continues to be a target for environmental groups and this year has been no different. Early last month, a team of Canadian researchers released a study that indicates sea lice from farmed-salmon pens in British Columbia's Broughton Archipelago are infecting and killing wild salmon that migrate nearby (see Newsline, page 6).

Soon after the Canadian study was released, 35 international partner organizations launched "Farmed Salmon Exposed," a series of events intended to show how current aquaculture practices are harmful to the environment and threaten the safety and lives of workers.

The group organized protests outside of supermarkets in Canada and distributed literature at more than a dozen retailers in the United States.

"We're not opposed to farmed salmon, but the industry needs to adopt major reforms now," says Andrea Kavanaugh, director of the Pure Salmon Campaign for Na­tional Environmental Trust of Washington, D.C.

"When current practices threaten the lives and livelihoods of people as well as kill marine mammals, it's time for substantial changes," says Kavanaugh.

Alex Trent, executive director of Salmon of the Americas, a marketing organization supported by salmon producers in Chile, Canada and the United States, says agenda-driven NGO studies about farmed fish hurt the entire salmon industry.

"Anything that says 'farmed salmon hurt wild salmon and hurt the environment and salmon farmers don't care' gives us a black eye," says Trent. "Those kinds of allegations tarnish all salmon."

"All salmon growers have a deep vested concern in the environment," says Paine of Aquafarms International. "The only way this industry will remain viable is if we practice good culture techniques." - James Wright

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