Very few seafood products can rival the international demand that salmon has. According to the Food and Agriculture Organization of the United Nations (FAO), in value terms, the trade in salmon has increased at an average of 10% per year since 1976, and since 2013, it has been the largest single fish commodity by value.

This significant growth has been partially driven by rising incomes and urbanisation in emerging markets, particularly in parts of Asia. But salmon has also retained a large and growing consumer base in large developed markets, including the EU, the United States and Japan. Most of the salmon consumed today is the Atlantic variety and comes from aquaculture – supplied by the likes of Norway, Chile, Scotland and Canada.

It is estimated that some 2.1 million tonnes of Atlantic salmon were harvested in 2018, which equates to just over 1.4 million tonnes of products being made available to world markets.

SUPPLY-DEMAND IMBALANCE

The phenomenal increase in this fish’s appeal is attributed to multiple factors; not least the international promotional campaigns that have grown established salmon markets and opened up new ones, as well as the waves of new consumer products resulting from increased investment in sophisticated, value-added processing lines.

In the EU, which is the No.1 market for Atlantic salmon, sales are expected to increase in the relatively new markets of Spain, Germany and Italy where consumption is increasing in line with increased imports. The US is the second-largest market for farmed salmon, and while this market is still relatively new with lower per capita consumption rates, in the last couple of years it has overtaken canned tuna to become the second most popular seafood after shrimp. And as Pittman Seafoods has previously documented (see ‘A global fish: No slowdown in sight for Atlantic salmon’s popularity’), most of the new salmon consumers are expected to be in emerging economies like China and Brazil.

However, Atlantic salmon is not without its problems – salmon farmers have not been able to elevate supply growth to a level commensurate with the rising global demand. This failing has driven up prices to unprecedented levels in recent times.

THE NEW NORM

Between 2005 and 2017, the global supply of Atlantic salmon increased by around 5% annually and this is expected to diminish further to 4% through to 2021. The reason for the slowdown is that the salmon farming industry has reached a level where the biological boundaries have been reached. At the same time, authorities want the footprint of these activities to be reduced and are therefore reluctant to issue additional farm licences.

Salmon prices, meanwhile, have been increasing at greater rates than most other centreplate proteins for the past few years, with export/imports surpassing NOK 70 or EUR 7.20 per kg on occasion last year. Aligned with the demand, analysts expect NOK 60 (EUR 6.15) to be the new norm, which is double the price of ten years ago.

Some stakeholders have also stated that if the high price trend was to continue for too long there could be some market resistance and even contraction. This could potentially trigger substitution with alternative fish species or perhaps with products outside the seafood category. However, it’s thought that any dramatic shifts would take a few years to manifest.

ALTERNATIVE PRODUCTION

To overcome the supply challenge, salmon producers have been looking to increase production along other suitable farming coastlines. But as such locations are few and far between and will only provide modest additional supplies, considerable new investment is also being made in a number of land-based and fully enclosed or submersible offshore systems.

Again, the first of these new systems are still a few years away from bringing final products to market, but it does demonstrate that there’s a determination in the salmon industry to ramp up harvests and continue to capture new market opportunities. This in turn should eventually lead to some reduction in prices.