New Chilean salmon production figures change growth picture

Atlantic salmon
Official figures re-frame outlook for 2017 growth.
by Lola Navarro

Chile’s Atlantic salmon harvests in 2016 amounted to 502,400 metric tons, a 17.2 percent
decrease compared with the year prior, according to the latest official data by the country’s
Undersecretary of Fisheries (Subpesca).

As salmon producers enjoy high prices and processors struggle to get raw material, all
industry stakeholders are as eager as ever to see where prices are going.
The main reason behind the spike in Atlantic salmon prices over the past year was a supply
shortage due to the algal bloom and, under normal circumstances, supply should normalize
this year and prices should react accordingly.

According to recent analyst reports, the global salmon industry is expected to produce around
2.2 million metric tons in 2017, something the industry generally agrees on, while Chile’s
production is expected to hit 540,000 metric tons.

This, all in all, is an increase in supply levels. However, estimates of 2016 production 50,000
metric tons below actual harvests led to conclusions that year-on-year growth percentage
would be higher than it will be, based on official figures.

According to Subpesca’s figures and if the circumstances allow for the growth company’s are
planning, Chile’s Atlantic salmon production will grow around 7.5 percent in 2017, from
502,400 metric tons to 540,000 metric tons.

In a recent report, analysts estimated total production of Atlantic salmon in Chile for 2016 was 451,000 metric tons, showing Chile’s production would grow as much as 19.7 percent this year.

In global terms, this nearly 20 percent growth in Chile would contribute to a 5.5 percent
increase in global production, considering global harvests are expected to be 2.2 million
metric tons in 2017.

However, the latest official data by Chile’s Undersecretary of Fisheries and Aquaculture
(Subpesca) adds another 50,000 metric tons to Chile’s 2016 production — to a total 502,000
metric tons — narrowing expected growth margins for 2017 to around 7 percent.
Why were the estimates off?

One of the most reliable data analysts in Chile, AquaBench, gathers information from the
companies that are in partnership with them, representing a high percentage of the industry,
but leaving outside some important volumes in an industry that produces 500,000 metric
tons.

In particular, AquaBench does not take into account production from Nova Austral and
Salmones Magallanes, two medium-size companies located in Region XII with an actual
production of around 42,000 metric tons a year, over 8 percent of Chile’s total production.

Analysts at AquaBench confirmed to IntraFish there are two companies that are not included
in their reports.

Speaking to IntraFish, Kolbjorn Giskeodegaard, director of seafood at Nordea and author of
the latest report by the company, said the data gathered for this report came partly from
AquaBench, “which indeed doesn’t include all companies.”

Giskeodegaard insisted, though, that the conclusion of his report is accurate as prices are
expected to fall in the second half of the year following a recovery of supply and a decrease in demand caused by the high prices.

“Yes, it can be argued that not all companies are included in the report, those are
technicalities, but what we know is that we will see a change from negative growth in the
second half of 2016 to positive growth in the second half of 2017,” Giskeodegaard said.

Despite the expected growth in 2017, production will not go back to levels prior to the algal
bloom — in 2015, output reached 606,453 metric tons — but will rather show a moderate
increase compared with this year’s figures.

For years, the industry in Chile has asked for production limits, with many claiming it should
never exceed 600,000 metric tons. For the second year in a row, it seems farmers will manage
to produce within that limit, allowing prices to stabilize at strong levels, while lowering health risks for the fish, and financial risks for the rest of stakeholders

In numbers
Table Capture

* Figure based on companies’ production estimates shared with IntraFish, however, last week,
Chilean company Nova Austral reported losses of 149,000 salmon due to a new algal outbreak
in the region of Magallanes.

Nordea ventured the largest growth, based on 451,000 metric tons harvested in 2016, and the
540,000 metric tons Chilean companies plan to produce in 2017.

DnB’s estimates for 467,000 metric tons were lower than official data, and forecasts of 2017
are much lower than salmon farmers expect in 2017.

ABG and Pareto’s, with lower growth figures, also fell short in 2016 estimations, compared
with official data.

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