DNB: Estimated salmon volumes from land-based production at 500,000t by 2026

DNB: Estimated salmon volumes from land-based production at 500,000t by 2026

February 12, 2019 0 By Tariq Altararwa

Analysts with lender DNB estimate there is around 500,000 metric tons of new planned production in the land-based salmon sector now; more than double the figure of just two years ago.

In 2017 it issued a report on the sector, which found the numbers were beginning to make sense for the land-based sector in terms of financials and scale.

“Following up…we continue to see solid rationale for land-based fish farming given rising costs in – and ongoing challenges to – traditional methods,” wrote Alexander Aukner and Tone Bjornstad Hanstad. While some of the now-estimated 500,000t is delayed projects, “generally developments have grown in number and scale”.


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The number of new projects has more than doubled from the roughly 150,000t of planned production volume identified in 2016, fuelled by ongoing challenges in traditional fish farming and expectations of high salmon prices. Developments totaling around 500,000t in annual production are now expected by 2026.

“Comparing current developments we identified with the numbers two years ago, we note volumes have been pushed out in time, and projects have increased in number and scale,” wrote the analysts. “We believe several of the new and revised projects are also likely to fail due to a lack of financing or other challenges; of more interest to us is the backlog growth trajectory.”

If the backlog has more than doubled in two years, DNB wonders where it could be in another two years. Another doubling in another two years would imply some 800,000t of planned land-based capacity by 2021, equating to 35% of 2017 global production of 2.3 million metric tons, it wrote.

The analysts quoted Bill Gates’ book ‘The Road Ahead’: “We overestimate the change that will occur in the next two years and underestimate what will change in the next ten.”

The bank feels the reasons it gave in 2017 as to land-based production being interesting all still stand. “Land-based salmon farming is perhaps the most interesting alternative production method, and we believe will contribute to volumes.”

“Salmon farmers have already invested heavily in land-based production (smolt), and we see many full-scale salmon projects being developed, some of which are already harvesting salmon at 3–5 kilograms.”

It listed five reasons to think land-based production will remain on the rise:

  • Improved visibility on pricing – stronger for longer means less probability of a collapse in prices before land-based volumes hit the market. DNB estimates a salmon price of NOK 60/kg in 2019 and NOK 59/kg in 2020.
  • Improved “new” land-based technology – enables increased scale and quality issues are addressed. The large equipment providers and salmon farmers report sizeable investments in recirculating aquaculture systems.
  • In-sea production costs rising – NOK 5/kg increase just in sea-lice-related costs. Average production costs have not come down, but look fairly “stable and high”.
  • Increasing “upfront investment” for traditional growth – license prices increased in the latest auctions in Norway, but the appetite for licenses was high, with the traffic-light auction implying a figure of around NOK 120/kg.
  • Demand in remote markets picking up – land-based farming has an advantage in transport and freshness if production is close to the end-consumer. US consumption of salmon is continuing to rise, while prices in Miami were fairly stable throughout 2018.

All go in RAS

The pace at which new land-based salmon projects are announced seems to be picking up. Since the turn of the year alone Nordic Aquafarms and Pure Salmon have announced new developments, while Salmon Evolution secured funding for its first round of planning.

Nordic Aquafarms, the Norwegian company that’s already planning to build an Atlantic salmon recirculating aquaculture system in Belfast, Maine, made official its plans for another land-based farm in Humboldt, California, last week.

The company has not yet decided what kind of fish it will raise on the site, though it said it is considering both Atlantic salmon and steelhead trout. A final decision will be based on market considerations and further discussions with the local permitting authorities, sources said.

Earlier in February Pure Salmon announced the latest details of its ambitious American and European expansion plans.

In addition to its existing recirculating aquaculture system (RAS) farm in Poland and recently announced a 10,000t project in Japan, Pure Salmon has confirmed its American site will be in Tazewell County in the US state of Virginia. This will be the company’s largest facility to date, with 20,000t of production per annum. The project also comes with $20m of financial assistance from local development agencies, it said.

In Europe, two locations are being considered for an additional 10,000t facility. The first is Boulogne-sur-Mer, a major fishing port on the Northern coast of France with “excellent connectivity within France and neighboring countries”.

The second is Olbia in the north of Sardinia, Italy, a project which has attracted significant support at a national and local level, both politically and financially, said Pure Salmon. The new sites will be fully integrated with on-site hatcheries, grow-out systems, and processing facilities.

Norway’s Salmon Evolution — which aims to be Europe’s largest land-based salmon farm — has raised NOK 50m ($5.8m) through a private placement.

The firm, based in Haroysund, outside Molde, will use the share capital to design the first construction phase, organizational development, and the appointment of key personnel, as well as general company purposes, it said.

“The issue fully finances the current phase up to the next share issue in the course of 2019.”

With a planned standing biomass of 13,300t, and an annual salmon production capacity of 28,800t, the project will become the largest land-based salmon farm in Europe upon completion.

Source: https://www.undercurrentnews.com/2019/02/11/dnb-estimated-salmon-volumes-from-land-based-production-at-500000t-by-2026/?fbclid=IwAR1cloyQetcG4PGK_c5OT4dCX_CM-QlTttaGN0tHuZ7qmG4_LrzkyVN9RmA