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Rising costs in the Norwegian salmon industry are prompting an "open invitation" to new technologies, said consultant Kjell Bjordal at the tenth North Atlantic Seafood Forum (NASF) in Bergen, Norway.
On-land recirculation aquaculture systems (RAS) are the only technology that can be a "serious threat" to traditional salmon farming, said 
former Ewos executive Bjordal on March 4.
From 2005 to 2014, production costs in Norway's salmon industry have increased by 55%, driven by sanitary challenges and stricter regulations, said Bjordal, who now owns the consultancy firm NLK.
To produce a kilo of salmon, farmers spent NOK 28 last year. If production costs continue to increase at the same speed of the last ten years, the cost will increase to NOK 38 in 2020.
"If [production cost] continues at the speed we have seen in the last two years, we will have a cost of NOK 44 five years from now," Bjordal said.

According to the consultant, on-land salmon farming will be competitive if it successes in supplying fish to the market at a similar cost as ocean-based farming today.
This will happen "sooner or later", Bjordal said.

Today, however, the average cost of the
 few RAS pilot facilities around the world is high on average, as RAS producers are on an very early learning stage, Bjordal said.
But the classic arguments against land-based salmon farming -- higher capital expenditure costs and energy consumption, as well as lack of land -- are not necessarily valid, Bjordal said.
"The price of a concession in Norway is kind of stablished -- it is NOK 65 million per paper -- and then you need to have the equipment to be able to farm fish on the sea."
Equipment costs can be valued at a "very modest" figure of NOK 10m, he said.

On the other hand, up to three quarters of investment for on-land farming operations in the EU can be subsidized, which would bring costs down at the maximum of NOK 17m, a much lower investment when compared to the NOK 75m needed to farm the same capacity through ocean-based farming, Bjordal said.

The energy consumption gap between ocean-based and on-land farming is "significantly" lower than is typically argued; while RAS facilities would need approximately 4 square meters to produce a metric ton salmon per year.
This means that a salmon production of 1.2m metric tons requires 4.8 square kilometers of building area, equaling 2% of the surface of Norwegian islands Froya or Askoy, Bjordal said.

Production costs are only "half of the story", though, the consultant said.
Cost, insurance and freight (CIF) varies depending on the market. While CIF Oslo is valued at NOK 30 per kilo, CIF Madrid is at NOK 34; CIF Miami at NOK 45 and CIF Tokyo at NOK 53.

"If someone in China is able to produce fresh fish at NOK 53 [per kilo] in a land-based facility, it will be competitive. And if they do it at NOK 30, they will have an extra margin of NOK 23," Bjordal said.

'Too big to fail'

From 2002 to 2013, Norway's oil production has been reduced by 51%, while the country's salmon industry has increased production by 153% to 1.16m metric tons.

Three years ago, the value of Norwegian salmon exports accounted for 12% of the country's oil exports and it now has climbed to approximately half of the value of oil exports.
Norway's salmon industry has become "too big to fail" and farmers alone cannot make it competitive. "It also requires a national task," Bjordal said.

"If Norwegian politicians have the ambition to be the leading salmon producing country with 5m [metric] tons by 2050, that will be totally dependant on cost control, which means our ability to deal with the sanitary issues," he said.
Bjordal said the cost curve in Norway's salmon industry must be turned downwards again for "what ever it takes" or Norwegian salmon farmers should take their knowhow to dominate the land-based salmon farming globally.

On-land farming discussion at NASF

Echoing Bjordal's words, Akva Group CEO Trond Williksen said on March 12 that a fully-integrated, on-land salmon farm placed beside a major city 
will exist sooner or later.

For the next few years, a ‘post-smolt’ system – in which smolt are grown to perhaps 500g on land before being put to sea – will be the reigning method, because “why should companies jump to new technology, when this exists and works?”.
But in the future, one company will become the first to place a recirculating aquaculture system next to New York, or Singapore, or Bangkok, he said.

“The production costs are not too different. People will say ‘but RAS has huge capex costs’, but then if you eliminate the need to buy farming licenses in the ocean… I think it’s not too different either,” said Williksen.

Marine Harvest CEO Alf-Helge Aarskog, for its part, 
emphatically shot down the concept of a fully integrated, on-land salmon farm in the future.
“70% of the Earth’s surface is water, and currently we produce 2% of our food from the oceans – why on earth would we move salmon farming on land?”
It certainly won’t be any more energy efficient, and tastes no better, he added.

“Even smolt production – now we have to do it on land because of biology. But if we solved those problems, it would be so much cheaper to grow smolt on land to just 100g then put them to sea,” he noted.


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  • Meredith Grey

    These are one of my favorite winter veggies! I stew them with olive oil, salt, orange juice and ghee. The taste is fantastic and everything is healty. Greets from Norway.

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