June 23, 2006
Investors Welcome Salmon Farm King, Ecologists Worry
By James Kilner
STAVANGER, Norway -- From a large, sparsely decorated office overlooking a warehouse and a busy main road, Atle Eide controls a quarter of the world's salmon production.
Now it is a multibillion dollar business spanning the globe and, after a series of takeovers, it has a true market leader -- Norway's Pan Fish.
"It's one of the most fascinating industries in the world," Eide, Pan Fish's chief executive, told Reuters in an interview.
Fascinating, but for all the wrong reasons environmentalists say. They argue fish farmers produce battery salmon, poison the seabed and destroy wild migratory salmon and other fish stocks.
Investors, though, have been siding with Eide.
Pan Fish's share price has more than tripled this year after the long awaited consolidation of the sector, and the price of fresh salmon has shot up by around 60 percent in the past 12 months due to strong demand, partly fueled by bird flu fears.
Pan Fish, with a market value of around $4 billion, jumped from a market share of 5 percent to 25 percent in three months by buying rival Marine Harvest from Dutch food group Nutreco for 1.3 billion euros ($1.64 billion) and Norwegian firm Fjord Seafood for about $770 million.
For Eide, the business rationale is simple. Pan Fish is mass producing previously expensive healthy food for a hungry market.
"People want to eat more seafood at the same time as the level of wild catches can't grow, so it has to come from aquaculture (fish farming)," he said.
This year, fish farms will produce around 1.3 million tonnes of salmon, up from around 550,000 tonnes ten years ago, a small amount compared to the world's poultry production but still enough to supply over 8 billion meal portions in a year.
A 45-minute boat ride north from Stavanger, past heavily wooded islands, is a Pan Fish salmon farm run by Trina Danielsen.
Nestling at the entrance to a deep fjord, it looks like a floating warehouse with a grid of 12 underwater cages -- about half the size of a soccer pitch.
Danielsen says modern technology contains any potential damage to the environment and that the farm does not use chemicals. She can watch her 650,000 fish on closed-circuit cameras, look for excessive sea lice or strange behavior which might be evidence of disease or tears in the nets.
Sound sensors warn if any of the fish feed pellets escape the cages and divers check for damage to the seabed.
The farm uses 12 to 15 tonnes of fish feed a day for the salmon. The constant drone of the overhead red tubes pumping the feed to the fish forces workers to speak with raised voices.
Fish farming is a maturing industry that has learned from past mistakes and is now properly regulated and environmentally safe, Danielsen and Eide say.
But environmentalists, locals and fly fishermen say the industry is destroying nature's equilibrium, tarnishing the environment and wiping out wild salmon stocks.
Fly fishermen say stocks of wild salmon are plummeting as flabby fish farm escapees dilute the natural gene poll and spread mass quantities of flesh-eating sea lice.
Eide says Norway had its best run of wild salmon for two decades last year, adding there is an equal amount of research that shows farmed salmon do not mix with wild salmon.
Orri Vigfusson, head of the North Atlantic Salmon Fund (NASF) and standard-bearer of the fly fishing lobby, said the rise in Norwegian wild salmon stocks may possibly be explained by NASF buying up drift net rights and leaving them unused.
"You have to be very careful," he said. "We want to see far more checks on the farms."
A couple of days before Reuters' interview with Eide, two leaders from the indigenous communities of Canada's west coast travelled to Pan Fish's first quarter results meeting in Oslo.
Bob Chamberlin, sitting in the lobby of Oslo's Grand Hotel with his tribal pendant hanging around his neck, listed the problems he believes are caused by fish farming.
"Increasing mercury levels in ground fish, black clams, and contaminated, deserted beaches," he said.
Eide says the debate is being manipulated.
"Most hostile against salmon farming aren't the people living (near the farms), it's the people from NGOs (non governmental organisations) in New York and people from London with summer houses in Scotland," he said, arguing that the industry creates thousands of jobs.
"They (the NGOs) have their own agenda. They are against it, we think it's great for food and employment."