Category Archives: wild salmon

this is your second disconnection notice.

In my post earlier today, I highlighted an article on Bloomberg.com (World Salmon Supply to Drop Most Since 1990 on Virus) regarding the declining world farmed supply due to a devastating outbreak of disease in Chilean salmon farms.

As mentioned there are some serious disconnects in this issue. Let me highlight this further by pointing to the Globe and Mail’s coverage of this issue yesterday:

Salmon virus tilts scales in favour of British Columbia

Globe and Mail article - Vancouver Is. salmon farm

First off, the Globe labeled the article as: “Fishing Industry“. Salmon farming is about as much a “fishing industry” as cattle farming is “cow hunting”.

Secondly, I am flummoxed by the various articles on this issue.

Chilean salmon farms — also largely owned by Norwegian companies — have a major breakout of infectious salmon anemia. This significantly drops world supply of farmed salmon and thus higher prices. According to the Bloomberg article this means higher revenues for salmon farming companies and higher returns for investors.

Market analysts are increasing ratings of companies like Marine Harvest (Norwegian company with huge operations in British Columbia) and Cermaq (Norwegian-based company specializing in fish feed and salmon farming). Profits are up.

This = good.

Bloomberg article:

Marine Harvest reported fourth-quarter net income of 520 million kroner on Feb. 10, compared with a year-earlier loss, and predicted a “good” first quarter. Cermaq last week posted a 141.1 million-krone fourth-quarter profit, beating analysts’ expectations.

Cermaq climbed 10 percent this year in Oslo trading after doubling last year. It fell 2.4 percent to 61.75 kroner in Oslo today. Marine Harvest advanced 22 percent after a fourfold surge in 2009 and dropped 5 percent to 5.15 kroner today after saying it intends to issue convertible bonds.

Meanwhile in Chile:

Farmers won’t release more young fish into ocean cages until congress legislates to improve industry practices, Cesar Barros, president of industry association SalmonChile, said last month.

Empresas AquaChile SA, Chile’s largest salmon producer, said in November that it was preparing for its “worst year” ever. Output will drop to less than 50,000 metric tons this year, compared with 150,000 tons last year, Chairman Victor Hugo Puchi said Nov. 10.

Oh, so what you’re saying is the locals are getting screwed while the foreigners are seeing 22 percent growth after a four-fold growth period last year.

Chilean locals are being laid off in droves, communities hammered, local companies gutted, and the multinationals are seeing increasing profits.

The Chilean government is trying to improve legislation so that this can’t happen again and the multinationals are looking to screw British Columbia waters, communities, and governments.

The Bloomberg article:

…according to a report in 2004 from the U.S. Geological Survey. The virus can kill fish but is not harmful to people, according to a 2002 report from the U.S. Department of Agriculture.

Well, gee, thank ghad it’s not harmful to humans but only kills fish.

Oh wait, you mean those wild salmon that British Columbia has that Chile does not?

But wait… the Globe and Mail is suggesting that the “salmon virus tilts the scale in favour of British Columbia”.

Are you fricking kidding?!

Bloomberg article:

Infectious salmon anemia was first reported within Norwegian aquaculture facilities and has also been found in Canada, Scotland and the U.S.

Oh, you mean the same Norwegian companies that control over ninety percent of the British Columbia salmon farming industry?

Globe and Mail article opening:

A virus that devastated the Chilean salmon industry is driving up global prices, bringing an unintended boon to British Columbia’s embattled farmed-salmon business.

Salmon spot prices have nearly doubled in the past year, following a sharp drop in global supply because of the outbreak of infectious salmon anemia in Chile, the world’s second-biggest source.

But the benefits for British Columbia, the fourth-largest producer globally, will go only so far because of a recent moratorium on the expansion of fish farms in the province.

…a spokesman for Marine Harvest’s operations in British Columbia, said that while higher prices are good for profits, the business can only grow so much because of the provincial restrictions

Well, gee, stupid B.C.’ers!

Why can’t we see the boom here? Increased prices for farmed salmon, great local Norwegian companies providing all this work and benefits, why can’t we just loosen those provincial restrictions and lift the moratorium – and stop being so concerned about those silly wild fish and coastal ecosystems?

Yeah, gee, you know salmon farming has done wonders for wild salmon in Norway and Scotland and other places.

I don’t think I can even send another disconnection notice –because this is about as bad as it gets.

It seems that a much larger percentage of folks now recognize that slashing and burning the Amazon rainforest to raise cattle which is in turn ground into burgers for the voracious North American and European McMarkets — is not such a good idea.

So, why is it any better to put B.C. coastal ecosystems in jeopardy to feed farmed salmon to the Wal-Marts of the U.S. and supermarkets of Europe (like Asda’s in the U.K. — Wal-Mart’s European subsidiary)?

Yeah, I also hear the market for enriched plutonium is booming right now — shit, Vancouver Island you should get into that market… that’ll improve those coastal economies.

Disconnection notice sent.

this is your disconnection notice.

Yesterday, some headlines in various newspapers and media sites highlighted the recent jump in salmon prices. The main reason? — a drop in world supply. The reason for the drop in supply? A major outbreak of disease in Chilean salmon farms — infectious salmon anemia.

Bloomberg.com reported:

World Salmon Supply to Drop Most Since 1990 on Virus

Feb. 24 (Bloomberg) — Global supply of Atlantic salmon will decline the most in two decades this year after a virus decimated output in Chile, bolstering the steepest advance in Norwegian prices since at least 2000.

The harvest will drop 5 percent to 9 percent, the first “significant” decline since 1990, said Joergen Christiansen, a spokesman for Oslo-based Marine Harvest ASA, the world’s largest salmon farmer. Norwegian export prices for fresh salmon rose 14 percent to 34.88 kroner ($5.86) a kilogram (2.2 pounds) this year, according to Statistics Norway.

Salmon output in Chile, the second-biggest source, may slide 38 percent this year, the national industry association said last month. The volume of fish harvested in Chile plunged 65 percent in the fourth quarter, Marine Harvest said Feb. 10. Fish farms in the country have been hurt by outbreaks of infectious salmon anemia.

“The main explanation behind the strong salmon prices is the dramatic supply fall from Chile,” said Aslak Berge, an analyst at First Securities ASA in Oslo. “Given that Atlantic salmon is among the world’s most rapidly growing food industries, the fall has boosted prices.”

Right, so if you are one that subscribes to “supply and demand” theories then there seems to be a connection here. Supply drops, prices rise. If this is the case — could commercial fishermen see a rise in prices for wild-caught salmon in the upcoming season?

Most likely not.

Take a look at wild salmon prices for fishermen in Alaska over the last several years (from G. Knapp and co. – The Great Salmon Run).

As, Knapp and co. point out:

The salmon industry has experienced dramatic change over the past two decades. Two major trends gave rise to many of the issues discussed in this report. The first trend is the rapid and sustained growth in world farmed salmon and salmon trout production, from two percent of world supply in 1980 to 65 percent of world supply in 2004…

This development has fundamentally transformed world salmon markets—not only because of the dramatic growth in total supply, but also because of changes in the kinds of salmon products which are available, the timing of production, market quality standards and organization of the industry.

The curious part about this:

The second trend is a steep decline in the value of North American wild fisheries, as seen in the decline in the value of annual Alaska salmon catches from more than $800 million in the late 1980s to less than $300 million for the period 2000-04 expressed in 2005 dollars…

Most of this decline in value was due to a decline in prices (rather than catches), and much of the decline in prices was due to competition from farmed salmon.

However, it’s not just farmed salmon, as the text that accompanies the above graph points out:

…between 1988 and 2002 there was a steep decline in the real ex-vessel value of Alaska commercial salmon catches (“ex-vessel value” is the value paid to fishermen). British Columbia salmon fishermen have experienced an even more dramatic decline. More than half of this decline was in the value of sockeye salmon catches. The decline in value of sockeye catches resulted from a decline in both sockeye prices and sockeye catches. The modest rebound in value since 2002 has also resulted primarily from an increase in sockeye catches and prices.

I’m a bit confused by all this…

When disease rips through salmon farms in Chile – the world price of farmed salmon goes up. But, when there is a decline in sockeye catches the price went down? And, then when the catch goes up there is a “modest rebound in value”?

Is this not the opposite of the typical supply and demand theory?

Maybe there’s a bit more light provided by G. Knapp and co.:

This role of sockeye salmon is important to emphasize, because until recently almost all Alaska sockeye salmon was either frozen and sold in Japan or canned. Only a very small share was sold in the U.S. fresh and frozen market. Thus much of the decline in sockeye catch value (and the total Alaska catch value) had very little to do with competition between farmed and wild salmon in the U.S. fresh and frozen salmon market—but resulted rather from changes in other markets. (my emphasis)

As pointed out in earlier posts (there is probably no connection…Wal-Mart, MSC, 2011…), there is a worrisome relationship between the Marine Stewardship Council and Wal-Mart.

The Marine Stewardship Council has “eco-certified” Alaskan salmon fisheries and is close to “eco-certifying” British Columbia sockeye fisheries as “well managed and sustainable” — despite the fact that there has been no sockeye fishery on the Fraser River for three years due to conservation concerns.

Wal-Mart has suggested all of their seafood products will be from “sustainable” sources by 2011 — one of their more popular products: frozen “Alaskan sockeye salmon”.(They also sell a lot of farmed salmon)

Yes, Wal-Mart — the basically glorified dollar store, the “low-cost” leader, the sultan of cheap. Do you think Wal-Mart is going to pay top-dollar for “wild” products that they’re going to turn around and try to sell cheap?

Highly doubtful.

If Wal-Mart could figure out a way to have wild Alaskan sockeye salmon “made in China” at the cheapest price — they would.

Added further to this equation — Target, another U.S. low cost seller with over 1700 retail outlets, has committed to no longer selling farmed salmon at of their stores. Gee… this will be a boom for commercial salmon fishermen in Alaska and British Columbia. Two major U.S. low-cost, super-retailers looking to buy wild salmon at the lowest possible price…

Yup — this is your disconnection notice.

There are some serious disconnects here… (look for more in upcoming posts).