Norwegian capacity increase and global production growth

Norwegian salmon farmers paid more than NOK 6,5 billion for additional capacity while global production is increasing. 

Despite the lower price level (8-10%) for Norwegian salmon in July and the first half of August compared to last year, the interest in purchasing available maximum allowable biomass (MAB) capacity was certainly present in last week’s auction organized by the Norwegian government. 

Last week’s auction and the fixed price offering earlier this year resulted in a total payment of more than NOK 6,5 billion for increased license capacity, representing an average price of approximately NOK 210.000 (EUR 19.900) per tonne MAB. 
 
The price-achievement in the auction also places a value indication on the temporary 6% downwards adjustment of the capacity in PO’s 4 and 5. The approximately 9.400 tonnes of reduced capacity corresponds to a loss of almost NOK 2 billion (EUR 190.000), albeit with the potential of being temporary. 
 
Inexpensive growth opportunities for the salmon industry are hard to come by today. Still, it is interesting to notice that of our estimated 3% growth in the first half of 2020, roughly 40% comes from “newer” growth areas such as Iceland, Russia and Australia. 
 
For the second half of 2020 we anticipate a slightly higher increase in global harvest volume of Atlantic salmon. Norwegian output has its fair share of these volumes, although the harvest pace during August is proceeding with somewhat lower volumes than anticipated. 

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