Wednesday, February 17, 2010

Disease sends salmon prices leaping

By Anjli Raval in London, Financial Times

Published: February 17 2010 20:16 | Last updated: February 17 2010 20:16

Salmon prices are jumping after the collapse of the Chilean industry through fish disease caused a sharp decline in global supply.

Wholesale prices for Norwegian-produced Atlantic salmon have risen 20.6 per cent since the start of the year , says Statistics Norway.

That has extended a year-long rally in prices, which have risen 32.5 per cent to NKr37 a kilo. Industry analysts expect the surge to feed through to what people pay for salmon steaks and fillets.

Chile’s output, the world’s second largest, has been been hammered by the virus that causes infectious salmon anaemia, which emerged in 2007.

The disease, which does not affects humans if afflicted fish are consumed, kills off salmon by attacking their red blood cells.

Aslak Berge at First Securities in Norway said: “Chile, which was the second biggest producer of salmon, has seen its output plunge more than 75 per cent in two years.

“During peak production in 2008, Chile sold 403,000 tonnes but we forecast a sales estimate of 90,000 tonnes this year.”

Norway, the biggest producer, has had to take up the slack. In 2008 it accounted for about half global volumes – 1.5m tonnes – of Atlantic salmon.

This is expected to increase to approach 70 per cent in 2010.

Canada and the UK, which collectively account for about 20 per cent of the market, are also expected to see their shares expand.

Sjur Malm, analyst at SEB Enskilda in Norway, said: “We have never seen a year-on-year decline in global supply before, and this is happening in a market where the willingness to pay is increasing.

“We estimate a global supply decline of 6 per cent year-on-year.”

The industry has been rapidly growing in recent years as increased production allowed prices for a product once considered a luxury to fall to a more affordable level for consumers.

The boom in demand and prices has driven the shares of Norway’s Marine Harvest, the world’s biggest producer of farmed salmon, more than 400 per cent higher since January 2009.

However, analysts expect wholesale salmon prices to decline again in 2011 and 2012 as production recovers.

Environmental groups accuse Chile’s salmon industry of overcrowding its cages for salmon and using too many chemicals. Industry analysts said salmon would have to be farmed at a much lower density in Chile in the future.

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