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Top Species: Farmed salmon
Chile's struggles create opportunities for other salmon-exporting countries
By Joanne Friedrick
July 01, 2010
As Chile continues to recover after a serious outbreak of infectious salmon anemia (ISA), other farmed-salmon-producing countries have stepped in to fill the supply gap and establish a presence and identity within the U.S. market.
"ISA had a devastating impact on Atlantic salmon" from Chile, says Jason Paine, U.S. general manager for Multiexport Foods in Miami, which imports salmon from Chile. And this year, he says, the effects are felt more intensely. In 2008, Chile exported 400,000 metric tons of Atlantic farmed salmon. Last year, those numbers fell to 200,000 metric tons, says Paine, and this year the estimate is about 80,000 to 90,000 metric tons.
The supply constraint has resulted in higher prices for all product that is coming to the United States, notes Paine. In January 2009, the wholesale price for trimmed salmon fillets was $3 per pound, f.o.b. Miami, but that has since risen to $6, and was likely to remain firm throughout the summer months, he says.
Even with the onset of the wild salmon season, Paine says there was no reason to expect farmed salmon prices to weaken.
Overall, the Chilean farmed salmon market is bouncing back, and should see production increase later this year and into 2011. With 28 months needed to go from egg stage to market size for farmed salmon, he notes, "it's not a quick recovery." Industry standards put farmed salmon production cycles between 24 and 36 months.
Paine acknowledges that Norway, Canada, Scotland and other salmon-farming regions have substantially increased exports to take advantage of the gap left by Chile. "So as far as the consumer is concerned, it [farmed salmon] is available," but at a higher price.
Coming back after the ISA outbreak not only involves production, but also market perception. Chile has sold millions of pounds of fish into the U.S. market and consumers have embraced the product. Both retailers and foodservice operators have responded to Chilean processors' innovations with boneless and boneless/skinless fillets, he adds.
But Paine notes Chile and all farmed-salmon-producing countries could benefit from touting the improvements in farming practices, sustainability and heightened concern for and protection of the environment, along with the health benefits of salmon consumption related to heart-healthy omega-3 fatty acids.
Welcome back, Norway
One of the countries that have stepped up production and exports to the United States is Norway. In 2009, Norway produced an estimated 860,000 metric tons of farmed salmon, up 110,000 metric tons from the previous year. Approximately 40,000 metric tons found its way to the U.S. market in 2009, versus just 10,000 metric tons in 2008.
Norway's U.S. market share for ocean-farmed salmon is now 20 percent, says Børge Grønbech, U.S. director for the Norwegian Seafood Export Council (NSEC) in Boston.
U.S. retailers don't use country of origin for seafood as a selling point, but Grønbech says it's important to pinpoint origin if the goal is to grow the category. Retailers can show diversity by having salmon from different countries and offering a variety of farmed and wild product.
"One of my most important tasks is to communicate the difference [among salmon varieties] and help retailers grow their Norwegian salmon business," he says.
One of Norway's selling points is its consistent supply. "Norway will produce about 60 percent of the world's salmon," he explains. "So it's important to tell [buyers] we are the largest supplier and they can buy all year-round."
Like Paine, Grønbech sees value in promoting the health benefits related to salmon consumption. If retailers can break down the barriers on how consumers can prepare and serve the product, it will improve sales, he adds.
The NSEC supports this message via its Web site, www.salmoninseconds.com, with information on ease of preparation, serving ideas and recipes. Right now, about 60 to 70 percent of Norwegian farmed salmon is sold at retail in the United States, he says, unlike European countries where the retail sales number is 15 to 20 percentage points higher.
And U.S. farmed salmon consumption has remained stable over the past six to seven years, while it has risen by 70 percent in Europe in the corresponding time period.
The major difference in salmon consumption between the U.S. and European markets, Grønbech adds, is that Norway has been able to successfully tell the story of farmed seafood in Europe, but has had less success in the United States. One explanation to such a big difference in market development is a stronger emphasis on product innovation in some European markets. In France, for instance, a couple of years ago one-third of the product innovations within the seafood category were with salmon, says Grønbech.
Also, market research shows the majority of media coverage about farmed salmon in America is negative, he says, and that consumer perception needs to be addressed.
"We have limited resources to reach 300 million [American] consumers," Grønbech says, so instead NSEC works to provide information to its importers, retailers and foodservice operators that they can share with their customers.
Another key part of the message, he says, is promoting the sustainability and food-safety aspects of farmed salmon. But probably most important of all, he says, is communicating the enjoyment factor. Taste and how consumers feel about farmed salmon is what will create repeat customers, he says.
B.C. branches out
British Columbia has also filled some of the demand for farmed salmon in the
American market, says Mary Ellen Walling, executive director of the British Columbia Salmon Farmers Association (BCSFA) in Campbell River, B.C., Canada.
About 80 to 85 percent of the province's salmon exports are sent to the United States, she says, "and we still haven't been able to meet demand for five years." B.C. farmers produce about 82,000 metric tons of salmon per year.
The market was quite good even before the turndown in the Chilean market, she adds. Most of what is sent to the States is in the form of whole, gutted fish versus Chilean product, which is mostly filleted, she points out.
Even with the surge from Norway and the potential return of Chilean farmed salmon in the coming years, Walling says the BCSFA "still sees a real opportunity in the United States," because its sales are currently focused on either coast, leaving the South, Midwest and mountain states as unexplored territory.
There are several things going on with the B.C. industry now that could have an impact down the road. One of these is the decision to have federal, rather than provincial, oversight of B.C. salmon producers.
"The federal government is coming up with regulations for our industry,"
she says, adding that the changes were being made available for review last month. The current structure involves both local and provincial and federal oversight, she says, "so it may be good to have just one
entity in charge," although "we have a robust foundation with the provincial rules."
B.C. farmers are also looking into closed-containment land-based systems. Walling notes one company, Marine Harvest Canada, is investigating this technology. Already about one-third of a farmed salmon's life is spent in recirculating ponds, "and we're exploring how to use this system to grow the fish to harvest size," she says.
"It's an interesting discussion, and a debate among farmers," she notes. There
are issues with energy use, says Walling, as well as concerns about pen density and the impact of the salmon's health and welfare. And within Canada, she says, there also needs to be consideration of the investment made in salmon farming by the province's First Nation tribes and how this would impact their livelihoods.
As often mentioned with salmon farming, Walling says getting retailers and consumers to understand how the salmon-farming process works goes a long way toward sending the
message of safety and sustainability. The BCSFA opens its farms to tours from June
"We get a real mix of locals, tourists and retailers who take advantage of that," she says. The association also communicates its message about its salmon through both national and local food shows, such as the International Boston Seafood Show, Fancy Food Show and
Variety spices up
As more countries bulk up their farmed salmon exports to the United States, distributors and retailers alike are reveling in the amount of product choices that are available.
Mark Palicki, VP-marketing at Fortune Fish Co., a seafood distributor in Bensenville, Ill., says while the company has always offered Scottish and Canadian farmed salmon, it began stocking Norwegian product to fill
the gap left by the diminished Chilean supply, and picked up others, such as Loch Duart from Scotland and organic Irish salmon as it came onto the market.
Even with prices higher than in the recent past, Palicki says, "It seems like salmon is on every menu." Demand has created some sizing issues, he says, and has upped the competition for what's available.
"About three years ago," he recalls, "you had people begging to sell you salmon. Now they have pre-sold most of it, so you just have to try and find a supply."
Sometimes, he says, customers will buy steelhead trout or Arctic char instead of salmon, "but I don't think the public sees it as an equal substitute" because they aren't familiar with those species.
The majority of Fortune's customers are white tablecloth establishments along with some casinos, country clubs and hotels. For some, price isn't a factor - they want a particular product, such as the branded Loch Duarte, or product from a specific country. Other restaurants, he says, are more price-driven, and care less about origin.
When dealing with the higher-priced options, Palicki says restaurants often tell the story on their menu, so customers can understand the difference.
At Sunshine Foods, a specialty grocery in St. Helena, Calif., Culinary Director Gena Allen has expanded from carrying farmed salmon only in winter in place of wild salmon to offering it year-round.
Farmed outsells wild by a 3-to-1 ratio, she says, in part because of the price difference. Wild salmon retail prices average about 50 percent higher than farmed.
Sunshine Foods' customers will find Scotland's Loch Duarte and farmed chinook from Creative Salmon in British Columbia. What Allen and her customers like about farmed salmon, she says, is its consistency of quality and flavor. "You know what it is going to taste like," she says.
Even though Sunshine customers are frequent buyers of farmed salmon - keeping salmon ranked in the top five of all seafood species sold in the store - there continues to be a need for education.
"We do a lot of educating, but we get educated by our customers as well," many of whom represent local restaurants, wineries and caterers, she says. Although Allen has seen improvements in the farmed salmon industry related to food safety and sustainability, she understands that customers can be leery.
"[The salmon farms that] do it wrong, do it way wrong," she says, and make it difficult for the entire farmed salmon industry.
Contributing Editor Joanne Friedrick lives in Portland, Maine