can sustainability become the key strength of the … meal and fish oil used in salmon feed from...
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Rabobank Group
Rabobank Food and Agribusiness Research,
Puerto Mont, Chile, October 2016
Gorjan Nikolik
Can sustainability become the key strength of the Salmon farming industry?
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Toronto
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Amsterdam
Paris
Bangalore
Shanghai
MaputoChimoio
Beira
Tete
Ulónguè
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Maxixe
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Kigali
Asuncion
46 Countries Over 600 Offices Over 55,000 Employees
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Consumption is
concentrated in
developed countries
For instance Sweden is a
market of similar size as
China
There is much more
activists and
sustainability concern in
developed countries then
in developing
Firstly, consumption is mostly in developed western countries
Source: Marine Harvest 2016
Atlantic Salmon market size and per capita consumption (yearly)
1,2
2,5
1,92,3
0,90,5
1,4
0,5
6,2
0,0
1,1
9,5
1,0
6,6
3,22,8
3,1
0,4
1,9
3,5
0,4
0
2
4
6
8
10
12
0
50
100
150
200
250
300
350
400
US
Fra
nce
Germ
any
UK
Russia
Bra
zil
Italy
Japan
Sw
eden
Chin
a
Spain
Norw
ay
Pola
nd
Fin
land
Belg
ium
Isra
el
Hong K
ong
South
Kore
a
Port
ugal
Denm
ark
Ukra
ine
Kg WFEThousands MT
Total Market Consumption Per Capita
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Salmon is a high value
protein consumed by
wealthy consumers
People that buy premium
proteins are also
consumers are far more
concerned with the
environment
It is not just premium
but a protein with a
heathy image. This make
the probably that Salmon
consumers
Secondly, salmon is a premium protein at the top of the price range even in Europe
Source: albert.nl 2016
€ 0,83/100g
€ 0,87/100g
€ 1,28/100g
€ 1,69/100g
€ 2,37/100g
€ 4,29/100g
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There is no back yard
salmon farming or
subsistence salmon
farming. All producers
are large and many are
listed
From an activist point of
view this is a much
better industry to target
then for instance poor
farmers in Asia or Africa,
even if the effect on the
environment of the other
industries is more
significant
There is no moral
dilemma for activists
when targeting salmon
famers
Also there is a lot more
information on this
industry from public
sources
And lastly: The sector is supplied by large listed and corporate companies, there is no back yard or smallholder salmon farming
Who would you focus on if you
were a environmental sustainability
activist?
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Key points
1 Standards and expectations are higher for a protein that is
consumed by wealthy, sustainability and health conscious
consumers
2 Sustainability image has to match the market positioning,
seemingly now it does not
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Criticisms of the salmon industry in the public domain are concerning the effect on the environment and food safety
ENVIRONMENT
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Use of marine
ingredient has
decreased
dramatically
Moreover some
30% of FM globally
is made form
trimmings – not
wild catch
Production of
Salmon is now
largely marine
protein creating
Fish meal and fish
oil used in salmon
feed from well
managed fisheries
With new
ingredients such as
insect meals,
bacterial meals and
algae oil even more
improvements are
on the way
Salmon farming does not contribute to overfishing or is diverting fish away from human use
Source: Marine Harvest 2016
Salmon feed formula
24%
17%59%
Global 1990
8%
49%
9%
21%
13%
Norway 2015
10%
30%
7%19%
22%
12%
Chile 2015
Other Raw Materials Veg Meal Fish Oil Veg Oil Avian Meal Fish Meal
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The low FCR is one of
the main features and
advantages of salmon
farming
This is caused by the
fact that there is no
gravity under water
and the fact that
salmon do not need to
heat their bodies.
These are the two
main energy losses of
any farmed animal.
The small bones
(result of no gravity in
water) and the
streamlined muscular
shape create a very
high edible meat yield
In fact compared to other proteins Salmon looks favourable, mainly due to the low FCR and high edible meat
Source: Marine Harvest 2016
Comparison of Salmon with other proteins
Protein Retention 31% 21% 18% 15%
Energy Retention 23% 10% 14% 27%
Edible Yield 68% 46% 52% 41%
Feed Conversion Ratio (FCR)
1.1 2.2 3.0 4-10
Edible Meat per 100 kg fed
61kg 21kg 17kg 4-10 kg
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Due to low FCR and the recirculation in the fresh water stage very little fresh water is used in salmon production
0
2.000
4.000
6.000
8.000
10.000
12.000
14.000
16.000
Salmon Poultry Pork Beef
Water use in liters per 1 kg of edible weight
Source: Norwegian Seafood Export Council 2015
15
Salmon is the equivalent of a TESLA car in comparison to other proteins when it comes to CO2 emissions per kg
Source: Alf Helge Aarskog NASF 2017
0
5
10
15
20
25
30
35
Salmon Pork Beef
Greenhouse gasses (in kg CO2-equivalents per kg produced)
Kilde: Eurostat aquaculture and Wild catch, Norwegian Seafood Export Council
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Clearly in Norway
Salmon famers do not
use significant
amount of antibiotics
Due to SRS antibiotics
are used in Chile, but
no antibiotic residue
remains in the body of
the Salmon by the
time it is processed.
This is due to the long
production cycle of
salmon and the fact
that antibiotics stay in
the body of the fish
for only a certain
amount of time
Still this is not a
concept that is easily
communicated to the
general public. If
salmon is to become
the leading protein in
terms of sustainability
antibiotic use needs to
be minimised
In Norway antibiotics are not being used in Salmon farming since the 1990s
Source: Marine Harvest 2016
Production of salmon and use of antibiotics in Norway
0
200
400
600
800
1.000
1.200
1.400
0
10
20
30
40
50
60
1979
1980
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
Harvest volume (thousand tonnes GWE)Tonnes active substance
Antibiotics use
17
In EU pigs have to
have a minimum
space requirement
of 0.8m2 per pig
They reach 120 kg
in 6 months
So approximately
10 100kg pigs
would be housed in
a 2mx4m area
The EU is a front
runner in animal
welfare. Other
regions have even
0,6m2 per pig or
less
Pigs have much
less space to move
and exhibit natural
behaviour then
salmon in virtually
any commercial
farm other then the
most organic – free
range
In terms of natural conditions at the farm salmon stand out from other proteins
18
Standard chicken
minimum
requirement: 21
broilers per meter
square
Premium products
are stocked at the
rate of 13 to 17
broilers per m2
So for example in
2X4m enclosure
there could be
approximately 160
to 120 broilers
They reach 2kg in
approximately 6
weeks
Despite major
improvement
happening currently
in the chicken
industry salmon
still compares very
favorably
There is growing criticism on the living conditions in livestock farming
19
In salmon farming the
environment is three
dimensional so it is hard
to compare – but the
ample space is obvious
Salmon are living in their
natural environment, and
exhibit natural behaviour
able to school and jump
Most limits are in the
range of 10kg per m3.
This represents
approximately 1% of the
volume used for farming
The growth is slow
growing to 5kg in nearly
2 years
Perhaps we can call all
farmed salmon – free
range salmon?
Space available for salmon in salmon farms is more then even most free range or biological terrestrial farmed animals
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The pristine environment
where Salmon is farmed
is the most unique
feature of the Salmon
industry
Cold, pure waters, clean
air, strong currents away
from any industry or
major population centres
This is an open natural
environment that only
the most organic, and
free range poultry, pork
or beef can compare too
Most people would
like to move and live
in the area where
salmon is farmed
But it is the region and the farming environment which is the truly unique feature of salmon farming
21
Key point: Salmon is a very sustainable protein
1 Very efficient use of feed commodities and fresh water – salmon is
the Tesla of the farmed proteins
2 All farmed salmon is basically “free range” and most people would
love to live in the pristine areas where salmon are farmed
3 Salmon a heathy protein rich in Omega 3 fatty acids which have
health benefits for both the heart and the brain
23
In 2017 the millennials will be the biggest population cohort in the US accounting for $200 billion in purchasing power
By 2017 they will have
purchasing power of 200
billion USD the largest of
any other population
cohort in the US
The millennials are known
for social media and
preferring artisanal
products to big brands
But they also:
1. Focus on heath
2. By premium (lower
size of meal but higher
quality)
3. Are concerned on
how the food is
farmed
30% by organic v.s. only
15% among baby boomers
EU and other western
countries have similar
patterns
0
0,5
1
1,5
2
2,5
3
3,5
4
4,5
5
15 20 25 30 35 40 45 50 55 60 65 70
Popula
tion in m
illions
Age in 2015
92 MMILLENIALS 61 M
GENERATION X
77 MBABY
BOOMERS
US population by age group in 2015
Source: US Census 2016
24
Salmon farming has a
few excellent
features, such as low
FCR, high edible
protein, low
greenhouse gas
emissions, fresh water
efficacy … but these
are not easy to
communicate to the
general public
Albert Heijn, a Dutch
retailer, has recently
launched a TV
advertisement that
summarises the key
traits of farming
Salmon focusing on
the pristine
environment the
Salmon are farmed in
An example of how to communicate the salmon sustainably message to the general public
Source: Ahold.nl
https://www.youtube.com/watch?v=y3KtRkP-n9Y
25
Biological issue are
correlated with some
sustainability issues such
as lice, antibiotics and
medication use
Better suitability will also
result in better biological
performance
It is important to have
the appropriate
legislation that
emphasises and supports
the industry in this was,
especially in Chile
1. Get biology in
order
2. This will help
improve suitability
image
3. Then resume
growth
Biological performance and sustainability are linked, consequently more legislation is needed to stop the “Chilean roller-coaster”
Source: Kontali, Rabobank 2016
Chilean Atlantic Salmon production in thousand tones and expectation
0
100
200
300
400
500
600
700
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016E 2017E 2018E
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Contact details
Rabobank
Food & Agribusiness
Research
Utrecht Head Office
Office address
Graadt van Roggenweg 400
3500 HG Utrecht
Tel.: +31 7123 807
Rabobank International
Gorjan Nikolik
Senior Analyst Seafood
Telephone +31 30 7123825
Mobile +31 (0) 612432463
E-mail [email protected]