SALMON AQUACULTURE: LARGER COMPANIES AND INCREASED PRODUCTION

Abstract

Salmon farming is among the most successful aquaculture industries with a production growth that is substantially higher than aggregate aquaculture production in recent decades. It is well known that innovations and productivity growth are the main sources for this development. In this article we look closer at two potentially important factors in production growth, development of farm size and company size directly through economies of scale and indirectly through capacity in R&D, innovation, sales and marketing. In Norway, production per license has increased from 26 tons in 1980 to 1,130 tons in 2010, suggesting a substantial intensification in the industry. In all five leading salmon producing countries, the degree of concentration has increased and the large firms have become bigger over time.

Keywords:

• aquaculture
• company size
• productivity
• salmon

ACKNOWLEDGMENTS

The authors would like to thank Gina Shamshak, Ragnar Tveteras and two reviewers for helpful comments and the Norwegian Research Council and the The Norwegian Seafood Research Fund for financial support. Any errors or views expressed in this article are solely the responsibility of the authors.

Notes

Of course, some of the production growth is also due to new production sites (Asche, 2008). However, new sites are likely to be less important for salmon due to regulatory measures such as moratorium in new licenses for longer periods in Canada and few new licenses awarded in most of the other large salmon producing countries (Asche & Bjørndal, 2011).

http://hugin.info/209/R/1652625/533535.pdf (p. 26).

PanFish continued by taking the name Marine Harvest for the merged company (Asche & Bjørndal, 2011).

Salmon trout (Onchorynchus mykiss) is large rainbow trout and are also known as steelhead.

The markets for the different salmon species are well integrated (Asche & Guttormsen, 2001; Asche et al., 2005), in contrast to what is the relationship with other species (Asche, Gordon, & Hannesson, 2002, Nielsen, Smit, & Guillen, 2009). The common price development also provides the species with a similar degree of competitiveness (Tveteras et al., 2012). However, it is also of interest to note that there does not appear to be a central market, a feature that can be observed for many agricultural commodities (Asche, Gjølberg, & Guttormsen, 2012).

See Nielsen (2012) for an interesting discussion of the effects of regulations on emissions in Danish trout aquaculture.

However, there are of course a number of studies for other species. Sharma and Leung (2003) provides a review and Shamshak and Anderson (2009), Shamshak (2011) and Gillespie, Nyaupane, and Boucher (2012) provide some recent examples.

Larger companies that can coordinate harvesting activities can also avoid some of the issues related to seasonality in growth as discussed by Guttormsen (2008), and also reduce risk due to environmental shock due to the diversification implied by different locations (Oglend & Tveteras, 2009; Torrissen et al., 2013).

There were a few exceptions as some companies operated more than one farm when the first set of regulations was implemented in 1973.

This information is provided by Knut Molaug, who was CEO of a leading equipment supplier (AKVA) until 2011.

Olson and Criddle (2009) provide an indication of firm size in Chile using export data by company.

After 1991 the number of licenses has increased to 991 in 2010, having been awarded in three openings (in 1995 only for the two most northern counties, and in 2002 and 2008).

Note that if Asche et al. (2009) is correct in assessing that the disease crisis really started in 2005, the crisis goes a long way to explain the increased production per license in Norway in 2007 (Figure 3), and the productivity slowdown noted by Vassdal and Holst (2011). It is also the most likely cause for the improved conditions for Alaska salmon fishermen (Williams, Herrmann, & Criddle, 2009; Valderrama & Anderson, 2010).

Lerøy and Salmar jointly own the Scottish firm Norskott, but this operation is treated as a separate firm in the data.

It should be noted that the HHI for Chile is computed for a very untypical year as production was very low in 2010 due to disease problems (Asche et al., 2009). However, the main insight, a relatively low concentration level is not likely to change if data for other years were available.