Economic analysis of on-growing of salmon post-smolts

Figures & data

Table 1. Assumptions for the production plan.

MTB permits and sites	9 Standard permits, each 780 tonnes, in total 7,020 tonnes MTB. Production in six geographical sites.
Releases per year	4 Releases of 775,000 smolts
Production workers	4.2 per permit: 9*4.2 = 38 (source: Directorate of Fisheries & Norway, 2016).
Release months	January, April, July and October
Regular mortality	0.75% per month
Extra mortality when delousing	0.5% in months when delousing
Growth factor	First month in sea: TGC = 2.2 Subsequently TGC = 2.7
Temperature	Based on temperature conditions at Bud, Western Norway, 5 meters depth (IMR, 2015).

Table 2. Investments in on-growing facility.

Per site	No^a	Price NOK ‘000	Life span (years)
130 m sea-pen incl. anchoring	X	1,375	8
Nets	X	300	3
Lighting, sensorics, feed tube	X	157.5	3
Feed barge	1	20,000	10
Boat (small)	1	450	10
Sum per site
Sum all sites	Y
Boat (large)	1	3,000	10
Admin building	1	15,000	20
Total investments equipment and production facilities
Land and quay	1	20 000 000	–
Electricity provison	1	20 000 000	–
Production permits	9	93 600 000	–
Total land and infrastructure

^aX is the number per site while Y represents the number of sites. As different sizes of post-smolts are considered, e.g., the number of sea-pens will be different for on-growing of 500 g and 1,000 g smolts as well the number of sites.

Source: Akva Group AS (2019, private communication).

Table 3. Assumptions regarding variable and fixed costs.

Variable costs
Wage cost per manyear	NOK 641,000.00 Based on Statistics Norway SSB (2016) category 6,221 aquaculture worker, full time, private sector. Wage for 2015, adjusted to 2017 (CPI 2015 = 100, January 2017 = 104.2).
Feed cost	NOK 12/kg.
Electricity	NOK 0.80/kwh (including line rental) Electricity (sea and admin): 51 kwh per tonne feed.
Diesel	NOK 10.00/l. Diesel use sea farm (without feed barge): 21 per tonne feed.
Service and maintenance	5% of facility investments.
Other costs
Medication, laboratory, veterinary services	NOK 2,500,000
Miscellaneous	NOK 1,000,000
Insurance biomass	2.5% of variable costs
Interest working capital	4%
Fixed costs
Management	5 managers: wage cost NOK 975.000 per annum including social costs
Facility insurance	Insurance premium 0.6 per mille for building; 2.5 per mille for machinery and processing equipment
Interest	4% on all capital

Source: Industry sources.

Figure 1. Weight curves for 500 g smolts.

Table 4. Release program and fish weight over time (gram at beginning of the month).

Month	Site 1	Site 2	Site 3	Site 4	Site 5	Site 6
January	500
February	581
March	797
April	924	500
May	1,056	571
June	1,267	838
July	1,576	1,076	500
August	2,048	1,446	682
September	2,684	1,955	1,193
October	3,390	2,532	1,614	500
November	4,102	3,122	2,056	668
December	4,713	3,633	2,446	1,027
January	5,307	4,134	2,834	1,248	500
February	5,779	4,535	3,146	1,431	581
March	6,197	4,892	3,427	1,598	797
April	6,682	5,307	3,755	1,798	924	500
May	7,164	5,721	4,085	2,001	1,056	571
June		6,356	4,594	2,321	1,267	838
July	500	7,236	5,307	2,778	1,576	1,076
August	682	8,494	6,336	3,457	2,048	1,446
September	1,193		7,647	4,345	2,684	1,955
October	1,614	500	9,033	5,307	3,390	2,532
November	2,056	668	10378	6,258	4,102	3,122
December	2,446	1,027		7,062	4,713	3,633

Table 5. Release program and number of fish per site over time (number of fish at the beginning of the month given 0.75% monthly mortality).

Month	Site 1	Site 2	Site 3	Site 4	Site 5	Site 6
January	775,000
February	769,188
March	763,419
April	757,693	775,000
May	752,010	769,188
June	746,370	763,419
July	740,772	757,693	775,000
August	735,217	752,010	769,188
September	729,702	746,370	763,419
October	724,230	740,772	757,693	775,000
November	718,798	735,217	752,010	769,188
December	713,407	729,702	746,370	763,419
January	708,056	724,230	740,772	757,693	775,000
February	702,746	718,798	735,217	752,010	769,188
March	697,475	713,407	729,702	746,370	763,419
April	692,244	708,056	724,230	740,772	757,693	775,000
May	687,053	702,746	718,798	735,217	752,010	769,188
June		697,475	713,407	729,702	746,370	763,419
July	775,000	692,244	708,056	724,230	740,772	757,693
August	769,188	687,053	702,746	718,798	735,217	752,010
September	763,419		697,475	713,407	729,702	746,370
October	757,693	775,000	692,244	708,056	724,230	740,772
November	752,010	769,188	687,053	702,746	718,798	735,217
December	746,370	763,419		697,475	713,407	729,702

Table 6. Estimated potential biomass based on Tables 5 and 6—before harvesting and adapting to MTB-constraint.

Month	Site 1	Site 2	Site 3	Site 4	Site 5	Site 6	Potential biomass (kg)
January	387,500	–	–	–	–	–	387,500
February	447,252	–	–	–	–	–	447,252
March	608,556	–	–	–	–	–	608,556
April	699,952	387,500	–	–	–	–	1,087,452
May	793,820	439,457	–	–	–	–	1,233,278
June	945,481	639,654	–	–	–	–	1,585,135
July	1,167,777	814,919	387,500	–	–	–	2,370,196
August	1,506,001	1,087,177	524,544	–	–	–	3,117,723
September	1,958,622	1,459,418	910,693	–	–	–	4,328,733
October	2,455,263	1,875,636	1,223,086	387,500	–	–	5,941,486
November	2,948,627	2,295,310	1,546,310	513,543	–	–	7,303,791
December	3,362,180	2,651,202	1,825,812	784,227	–	–	8,623,421
January	3,757,427	2,994,209	2,099,003	945,635	387,500	–	10,183,774
February	4,061,009	3,259,780	2,313,225	1,076,218	447,252	–	11,157,483
March	4,322,318	3,489,739	2,500,478	1,192,987	608,556	–	12,114,078
April	4,625,579	3,757,427	2,719,622	1,331,695	699,952	387,500	13,521,774
May	4,922,312	4,020,504	2,936,523	1,471,411	793,820	439,457	14,584,027
June	–	4,432,898	3,277,646	1,693,653	945,481	639,654	10,989,332
July	387,500	5,008,815	3,757,427	2,012,247	1,167,777	814,919	13,148,684
August	524,544	5,835,595	4,452,470	2,484,633	1,506,001	1,087,177	15,890,421
September	910,693	–	5,333,707	3,099,520	1,958,622	1,459,418	12,761,961
October	1,223,086	387,500	6,253,318	3,757,427	2,455,263	1,875,636	15,952,230
November	1,546,310	513,543	7,129,897	4,397,798	2,948,627	2,295,310	18,831,485
December	1,825,812	784,227	–	4,925,822	3,362,180	2,651,202	13,549,243

Table 7. Development in biomass over time—per site and for the company—adapted to company MTB.

Month	Site 1	Site 2	Site 3	Site 4	Site 5	Site 6	Sum biomass
January	387,500	–	–	–	–	–	387,500
February	447,252	–	–	–	–	–	447,252
March	608,556	–	–	–	–	–	608,556
April	699,952	387,500	–	–	–	–	1,087,452
May	793,820	439,457	–	–	–	–	1,233,278
June	945,481	639,654	–	–	–	–	1,585,135
July	1,167,777	814,919	387,500	–	–	–	2,370,196
August	1,506,001	1,087,177	524,544	–	–	–	3,117,723
September	1,958,622	1,459,418	910,693	–	–	–	4,328,733
October	2,455,263	1,875,636	1,223,086	387,500	–	–	5,941,486
November	2,664,836	2,295,310	1,546,310	513,543	–	–	7,020,000
December	1,758,759	2,651,202	1,825,812	784,227	–	–	7,020,000
January	593,653	2,994,209	2,099,003	945,635	387,500	–	7,020,000
February	–	3,183,305	2,313,225	1,076,218	447,252	–	7,020,000
March	–	2,717,979	2,500,478	1,192,987	608,556	–	7,020,000
April	–	1,881,232	2,719,622	1,331,695	699,952	387,500	7,020,000
May	–	1,378,788	2,936,523	1,471,411	793,820	439,457	7,020,000
June	–	463,567	3,277,646	1,693,653	945,481	639,654	7,020,000
July	387,500	–	2,637,557	2,012,247	1,167,777	814,919	7,020,000
August	524,544	–	1,417,645	2,484,633	1,506,001	1,087,177	7,020,000
September	910,693	–	–	2,691,267	1,958,622	1,459,418	7,020,000
October	1,223,086	387,500	–	1,078,514	2,455,263	1,875,636	7,020,000
November	1,546,310	513,543	–	–	2,664,836	2,295,310	7,020,000
December	1,825,812	784,227	–	–	1,758,759	2,651,202	7,020,000

Table 8. Harvest plan in number of fish per site, given planned standing biomass of 7,020 tonnes at the beginning of each month (“steady state” from year 2 onwards).

Month	Site 1	Site 2	Site 3	Site 4	Site 5	Site 6
January
–
September
October	69,181
November	271,561
December	258,516
January	111,030	16,863
February		141,034
March		196,966
April		110,845
May		166,254
June		72,391	211,030
July			269,548
August			222,073	93,966
September				411,558
October				201,713	69,181
November					271,561
December					258,516

Table 9. Harvest per site and in total per month—based on average monthly weight in kg.

Month	Site 1	Site 2	Site 3	Site 4	Site 5	Site 6	Harvest (average weight)
January	–	–	–	–	–	–	–
–	–	–	–	–	–	–	–
September	–	–	–	–	–	–	–
October	259,162	–	–	–	–	–	259,162
November	1,196,908	–	–	–	–	–	1,196,908
December	1,295,103	–	–	–	–	–	1,295,103
January	615,409	73,096	–	–	–	–	688,505
February	–	664,743	–	–	–	–	664,743
March	–	1,004,362	–	–	–	–	1,004,362
April	–	611,188	–	–	–	–	611,188
May	–	1,003,904	–	–	–	–	1,003,904
June	–	491,941	1,044,709	–	–	–	1,536,650
July	–	–	1,569,103	–	–	–	1,569,103
August	–	–	1,552,619	366,531	–	–	1,919,151
September	–	–	–	1,986,043	–	–	1,986,043
October	–	–	–	1,166,375	259,162	–	1,425,537
November	–	–	–	–	1,196,908	–	1,196,908
December	–	–	–	–	1,295,103	–	1,295,103

Table 10. Annual steady state production.

Harvest per year	14,901.2 tonnes
Average weight	5.28 kg
No. of fish	2,824,528 (91.1% of release)
Production per MTB	2.12 kg per kg MTB
Production per site	2,483.5 tonnes

Table 11. Investments in sea-based on-growing facility (on-growing of 500-g smolts).

Per site		Price NOK ‘000	Total ‘000	Life span (years)	Annual interest and depreciation ‘000
130 sea-pen incl. anchoring	6	1,375	8,250	8	1,225.355
Nets	6	300	1,800	3	648.627
Lighting, sensorics, feed tube	6	157.5	945	3	340.529
Feed barge	1	20,000	20,000	10	2,465.819
Boat (small)	1	450	450	10	55.481
Sum per site			31,445		4,735.811
Sum all sites	6	31,445	188,670		28,414.867
Boat (large)	1	3,000	3,000	10	369.873
Admin building	1	15,000	15,000	20	1,103.726
Total investments equipment and production facilities			206,670		29,888.466
Land and quay	1	20,000	20,000	–	800
Electricity provision	1	20,000	20,000	–	800
Production permissions	9	93,600	842,400	–	33,696
Total land, production permissions and infrastructure			882,400		35,296
Total, firm			1,089,070		65,184.466
Investment per m^3			1.210		0.072

Table 12. Total costs per year and per kg (on-growing of 500 g post-smolts).

	Cost	Per kg (live)	Per kg (round, WFE)^a	Percentage
Smolts	84,940,000	5.7	6.1	21%
Feed	185,326,963	12.4	13.3	46%
Wages	24,354,200	1.6	1.7	6%
Electricity	635,228	0.0	0.05	0%
Diesel	3,316,769	0.2	0.2	1%
Service/maintenance	10,333,500	0.7	0.7	3%
Other operating costs	3,500,000	0.2	0.3	1%
Insurance biomass	7,810,167	0.5	0.6	2%
Interest working capital	13,007,478	0.9	0.9	3%
Sum variable costs	333,224,304	22.4	23.9	83%
Management	4,875,000	0.3	0.3	1%
Insurance facilities	95,113	0.0	0.0	0%
Depreciation and interest charges	65,184,466	4.4	4.7	16%
Sum fixed costs	70,154,579	4.7	5.0	17%
Cost of production	403,378,883	27.1	28.9	100%

^aConverted with a conversion factor of 1.067. Source: Directorate of Fisheries and Norway (2016).

Figure 2. Weight curves for 100 g smolts.

Table 13. Annual production with 100 g smolt.^a

Harvested biomass per year	14,271.3 tonnes
Average weight	5.32 kg
No of fish	2,683 890 (86.6% of release)
Production per MTB	2.03 kg per kg MTB
Production per site	1,783.9 tonnes

^aEight sites are used.

Table 14. Total costs per year and per kg 100 g smolts.

	Costs	Per kg (live)	Per kg (round, WFE)	Percentage
Smolts	37,200,000	2.6	2.8	10%
Feed	193,409,026	13.6	14.5	52%
Wages	24,354,200	1.7	1.8	6%
Electricity	662,930	0.0	0.05	0%
Diesel	3,461,412	0.2	0.3	1%
Service and maintenance	13,478,000	0.9	1.0	4%
Other variable operating costs	3,500,000	0.2	0.3	1%
Insurance biomass	6,901,639	0.5	0.5	2%
Interest working capital	11,541,004	0.8	0.9	3%
Sum variable costs	294,508,212	20.6	22.0	79%
Management	4,875,000	0.3	0.4	1%
Insurance facilities	682,900	0.0	0.05	0%
Depreciation and interest charges	74,656,088	5.2	5.6	20%
Sum fixed costs	80,213,988	5.6	6.0	21%
Cost of production	374,722,201	26.3	28.0	100%

Figure 3. Weight curves for 1,000 g smolt.

Table 15. Annual harvest with 1,000 g smolts.^a

Harvested biomass per year	15,807.1 tonnes
Average weight	5.5 kg
No. of fish	2,875,490 (92.8% of release)
Production per MTB	2.25 kg per kg MTB
Production per site	3,161.4 tonnes

^aFive sites are used.

Table 16. Total costs per year and per kg 1,000-g post-smolts.

	Costs	Per kg (live)	Per kg (round, WFE)	Percentage
Smolts	148,800,000	9.4	10.0	33%
Feed	176,794,815	11.2	11.9	39%
Wages	24,354,200	1.5	1.6	5%
Electricity	605,983	0.04	0.04	0%
Diesel	3,164,070	0.2	0.2	1%
Service and maintenance	8,761,250	0.6	0.6	2%
Other operating costs	3,500,000	0.2	0.2	1%
Insurance biomass	9,149,508	0.6	0.6	2%
Interest working capital	15,218,196	1.0	1.0	3%
Sum variable costs	390,348,022	24.7	26.3	86%
Management	4,875,000	0.3	0.3	1%
Insurance facilities	450,063	0.03	0.03	0%
Depreciation and interest charges	60,448,655	3.8	4.1	13%
Sum fixed costs	65,773,717	4.2	4.4	14%
Cost of production	456,121,739	28.9	30.8	100%

Table 17. Annual steady state production, on-growing of 100, 500 and 1,000 g smolts in open sea-pens.

	100 g smolt	500 g post-smolt	1,000 g post-smolt
Cost of production NOK per kg (round, WFE)	28.00	28.90	30.80
Harvested biomass	14,271.3 tonnes	14,901.2 tonnes	15,807.1 tonnes
Average weight (kg)	5.32	5.28	5.50
No. of fish	2,683,890 (86.6%)	2,824,528 (91.1%)	2,875,490 (92.8%)
Production (kg) per kg MTB	2.03	2.12	2.25
Production (kg) per m^3	11.9	16.6	21.1
No. of sites	8	6	5
Harvest per site	1,783.9 tonnes	2,483.5 tonnes	3,161.4 tonnes
Biomass loss	690.9 tonnes	688.7 tonnes	686.5 tonnes

No delousing.

Table 18. Assumptions regarding costs and losses due to delousing.

Mortality per delousing (%)	0.5% per treatment (at time of treatment).
Growth loss per delousing	4.5 days per treatment
Estimated cost per delousing^a	Thermic: NOK 0.30/kg
	Hosing: NOK 0.23/kg
	Fresh water: NOK 1.11/kg
	Bathing: NOK 0.31/kg
	Hydrogen peroxide (bath): NOK 0.57/kg
	Average: NOK 0.50/kg
Downgrading of quality per delousing (%)	0.5% per treatment.

^aEstimates from Holan et al. (2017) and Iversen et al. (2017). Cost is based on purchases, use of equipment, capital and Labor costs. Per kg for treatment of 4,000 tonne site with fairly large fish.

Table 19. Comparison of estimated development in weight for 100 g smolts before and after five delousings with loss of 4.5 growth days per delousing.

Month	January		April		July		October
	Delousing	Normal	Delousing	Normal	Delousing	Normal	Delousing	Normal
1	100	100	100	100	100	100	100	100
2	129	129	125	125	167	167	161	161
3	213	213	231	231	391	391	314	314
4	268	268	336	336	600	600	417	417
5	327	327	514	514	836	836	507	507
6	426	426	781	781	1,055	1,055	592	592
7	581	581	1,104	1,104	1,279	1,279	696	696
8	832	832	1,451	1,451	1,465	1,465	806	806
9	1,192	1,192	1,762	1,762	1,635	1,635	984	984
10	1,544	1,613	2,027	2,075	1,807	1,837	1,205	1,247
11	1,974	2,054	2,278	2,330	2,011	2,044	1,602	1,653
12	2,294	2,444	2,468	2,560	2,283	2,368	2,061	2,208
13	2,665	2,831	2,733	2,831	2,736	2,831	2,657	2,831
14	2,921	3,144	2,959	3,106	3,304	3,518	3,172	3,465
15	3,188	3,424	3,372	3,531	4,167	4,416	3,689	4,013
16	3,454	3,753	3,863	4,132	4,955	5,388	4,118	4,547
17	3,719	4,083	4,573	5,007	5,726	6,349	4,459	4,974
18	4,197	4,591	5,636	6,134	6,485	7,161	4,811	5,353
19	4,869	5,303	6,774	7,336	7,217	7,941	5,222	5,793
20	5,843	6,332	7,888	8,509	7,795	8,557	5,632	6,232
21	7,087	7,643	8,824	9,493	8,304	9,099	6,260	6,903

Table 20. Costs per delousing and cost of four generations per year in steady state.

No of delousings per generation	Cost per delousing NOK ‘000	Cost of four generations per year NOK ’000
5	4.575	18.297
10	8.409	33.635

Table 21. Production with different scenarios for delousing 100-g smolts.

	No delousing	5 Delousings	10 Delousings
Cost of production NOK/kg WFE	28.00	31.30	33.80
Production per site (kg)	1,783,914	1,595,113	1,518,224
Production (kg per kg MTB)	2.03	1.82	1.73
Average weight per fish (kg)	5.32	4.78	4.66
No of fish harvested per year	2,683,890 (89,6%)	2,666,988 (86,0%)	2,603,859 (84,0%)
Harvest per year (kg)	14,271,311	12,760,905	12,145,792
Biomass loss	690,888	845,000	1,011,999

Table 22. Costs per delousing and cost of four generations per year in steady state.

Scenario	Cost per delicing	Cost of four generations per year
500 g postsmolts: three delousings	3,242	12,977
1,000 g postsmolts: two delousings	2,796	11,184

Table 23. Production with different scenarios for delousing, 500 g and 1,000 g smolts.^a

	500 g post-smolt			1,000 g post-smolt gram
	No delousing		Three treatments	No delousing	Two treatments
Cost of production NOK/kg WFE	28.90	31.00		30.80	32.40
Production per site (kg)	2,483,533	2,320,711		3,161,414	3,031,807
Production (kg per kg MTB)	2.1	2.0		2.25	2.16
Average weight per fish (kg)	5.3	5.0		5.50	5.32
No of fish harvested annually	2,824,528	2,781,862		2,875,490	2,847,254
Harvest per year (kg):	14,901,199	13,924,267		15,807,069	15,159,036
Biomass loss	688,723	803,798		686,477	792,459

^aThe reader is reminded that cost of production for on-growing of 100 g smolts is NOK 28.00/kg with no delousing, NOK 31.30/kg with five delousings and NOK 33.80/kg with 10 delousings (Table 21).

Table 24. Annual steady state production cost, on-growing of 100 g, 500 g and 1,000 g smolts with delousing.

	100 g			500 g	1,000 g
Release weight	No delousing	Five delousings	Ten delousings	Three delousings	Two delousings
Cost of production—no delousing	NOK 28.00			NOK 28.90	NOK 30.80
Cost of production—delousing	–	NOK 31.30	NOK 33.80	NOK 30.70	NOK 32.40
Difference (with/without delousing)	–	NOK 3.30	NOK 5.80	NOK 1.80	NOK 1.60
Direct delousing cost NOK/kg	–	NOK 1.50	NOK 3.00	NOK 1.00	NOK 0.80
Harvested biomass (tonnes)	14 271.3	12 760.9	12,145.8	13 924.3	15 159.0
Average weight (kg)	5.32	4.78	4.66	5.01	5.32

Table 25. Revenue loss due to quality downgrading: 100 g smolts with five and 10 treatments.

	Prod cost per kg—treatment cost NOK 0.50/kg	Prod cost per kg—treatment cost NOK 1.00/kg	Revenue loss, downgrading of 2,5% and 5% respectively NOK ’000	Revenue loss, downgrading of 8% and 12% respectively NOK ’000
No treatment	28.00	28.00 (n/a)	–	–
Five treatments	31.30	33.00	3,997.2	12,790.9
Ten treatments	33.80	36.90	7,287.5	17,490.0

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