Regardless of the present uncertainty round Norway’s incoming floor lease tax on salmon farming, 2023 ought to nonetheless be a very good 12 months for the nation’s salmon farmers, in response to one analyst that tracks the sector.
Talking throughout the Sjomatdagene convention in Norway on Tuesday, Knut-Ivar Bakken, seafood analyst at Sparebank 1 Markets, mentioned it’s clear that salmon’s rise will not be over.
“In actual fact, we imagine that 2023 would be the third or fourth-best 12 months ever, behind, amongst others, 2022 and 2017,” he mentioned.
Whereas final 12 months was nice for the farming business, the sector’s success has been overshadowed by discussions across the introduction of a brand new 40 % tax on Norway’s salmon farming firms and the uncertainty it has created.
“Now we have a product with very excessive demand and comparatively low provide development within the coming years, which is able to present sturdy costs and robust earnings for the sector,” Bakken mentioned.
Nonetheless excessive feed costs
Bakken mentioned the sector is at the moment seeing a barely decrease stage of long-term provide contracts, however “though we count on barely decrease spot costs in 2023, the value achieved will likely be larger than in 2022.”
Article continues beneath the advert
However there are some clouds on the horizon. Notably prices are excessive and feed costs have been rising for the previous 4 years for all proteins.
“We had an expectation that feed costs would come down a little bit now,” he mentioned.
“You’ll proceed to have excessive feed costs and prices sooner or later, which is able to scale back the entire a little bit.”
Annual export development in worth
The worth of salmon from Norway measured in euros has risen each single 12 months besides 2020.
From 2011 to 2019, there was a median annual development of round 9 %, mentioned Bakken.
“If we glance additional forward, and if we get the chance to interact in product growth, the prepare will proceed to run,” he mentioned. “That’s the benefit of a product that’s in excessive demand.”
The demand for salmon was helped by the pandemic with extra individuals making ready salmon at residence.
“[The pandemic] was a unbelievable advertising marketing campaign for Norwegian salmon,” mentioned Bakken. “When the restaurant market was closed down, individuals needed to eat at residence, and we gained many new customers.”
The restaurant business has additionally bounced again, and robust inflation has not affected orders considerably, Bakken mentioned, however he predicted a “slight decline” this 12 months.
Low quantity development
Decrease salmon biomass is indicating a sluggish development 12 months for the business, Bakken famous. Biomass was down 3.5 % on the finish of November, and down 7 % in Chile.
Sparkebank 1 Market estimates a complete of two.9 % international provide development in 2023.
“It’s in all probability a little bit larger than what Kontali and the farmers current,” mentioned Bakken. “Many imagine that there will likely be unfavorable development in Chile.”
However he famous that Chile can typically produce greater than analysts mission.
Including to the amount drag, Bakken famous that there’s little or no new capability coming from authorities in any international locations.