Chile slaps Nova Austral with production cuts following mortality reporting scandal
Chile Sub-Secretary of Fisheries and Aquaculture (Subpesca) has cut salmon farmer Nova Austral’s production permits after it was discovered the latter gave false mortality figures.
Subpesca issued a resolution reducing farm density from 17 kilograms to 13 kilograms per at three centers for salmon farming concession group 54A, belonging to Nova Austral in Chile’s Magallanes region.
In Chile, salmon farmers are required to reduce stocking if mortality surpasses 15 percent.
Nova Austral – which prides itself in providing sustainable, antibiotic-free products by harvesting salmon in the cold waters of Southern Patagonia – has faced scrutiny since June, when Chilean press reported an attempt to manipulate the company’s reported mortality rates. In response, Sernapesca, the country’s fisheries and aquaculture regulator, filed three complaints against the company for knowingly misleading authorities through false reporting of information, and the Aquaculture Stewardship Council terminated a logo licensing agreement on all of Nova Austral’s products while it carries out its own independent investigation. The company fired CEO Nicos Nicolaides in July, referring to “certain irregularities” in the information provided to Sernapesca.
“Nova Austral does not compromise its standards of production, antibiotic-free product integrity, sustainability, and environmental commitment for which it has been recognized internationally,” it said at the time, highlighting its near-completion of the USD 45 million [EUR 41.1 million] hatchery in the Magallanes region designed to improve smolt quality and normalize mortality rates.
Earlier this month Chile’s Superintendency of the Environment (SMA) also announced it will begin sanctioning proceedings against Nova Austral for environmental damage the company caused at four salmon-farming sites in the Magallanes region, citing evidence of overproduction, waste mishandling, inadequate mortality management, breaches in its silage platform allowing runoff, and lacking mandatory equipment to comply with rules pertaining to algal blooms and fish escapes.
A U.S. law firm, Ropes & Gray, was hired by Sernapesca to investigate mortality figures at Nova Austral farms in the wake of newspaper stories alleging that the salmon farmer had submitted fake mortality figures. That firm corroborated the allegations in the newspaper story.
“Our investigation confirmed that in some instances the company misreported mortality rates to Sernapesca to keep below the 15 percent threshold and avoid stocking reductions, the benefit of which largely has not been realized to date,” Ropes & Gray anti-corruption lawyer María González Calvet was quoted as telling investors. “Some employees also reported a related practice of deflating stocking numbers when smolt were delivered, to give the company a buffer in the mortality rate calculations.”
In addition, the company has lost its permission to farm in a fjord in southern Chile, according to a story in The Guardian. That, coupled with the regulatory cut of stocking permitted is expected to hit Nova Austral’s production. In a September 24 updated harvest guidance, the company said it expected to register 18,000 to 20,000 metric tons (MT) next year.
That compares to 23,000 MT it expects for 2019, which was adjusted at the beginning of September from the 30,000 MT it predicted at the start of the year.
According to the 2018 report from the United Nations' Food and Agriculture Organization (FAO), “The State of World Fisheries and Aquaculture (SOFIA),” Chile is expected to increase its fishery/aquaculture exports to 2.1 million tons by 2030, 56 percent above 2016 levels, making it the largest fish exporting country in Latin America and the Caribbean.
Photo courtesy of Chile Superintendency of the Environment
AquaChile publishes 2018 sustainability report
Chilean salmon and trout farmer AquaChile has published its 2018 Sustainability Report, bringing together the operations of the companies under its umbrella: AquaChile, Los Fiordos, Salmones Magallanes and Friosur salmon area assets.
Chile’s salmon sector saw significant consolidation in 2018, with Chilean food giant Agrosuper buying 67 percent of AquaChile in an USD 850 million (EUR 771 million) deal. The same day that deal was announced, AquaChile acquired Salmones Magallanes and Pesquera Eden for USD 255 million (EUR 231 million); weeks previous to that, Agrosuper purchased Friosur through its salmon farmer Los Fiordos.
Calling 2018 “a key year in the history of the company,” AquaChile General Manager Sady Delgado highlighted that the report includes “the sustainability efforts carried out individually by all the companies that today make up AquaChile. At the time when many of these sustainability efforts were carried out, the companies operated independently of each other. Consolidating everything in this report is the first step to towards unifying the sustainability efforts of today’s AquaChile.”
The company is Chile’s largest salmon producer and the second largest worldwide, which “implies opportunities and also huge responsibilities,” he added. “Our focus is to work hard to make salmon production more efficient and sustainable, contribute to the development of the geographical areas where we are present, deliver the highest levels of service to our customers and offer a portfolio of value-added products.”
One area of focus was AquaChile’s officially ending in 2018 its use of Chilean lakes for the farming production process, in which it said would make its operation more efficient and sustainable.
With USD 1.2 billion (EUR 1 billion) in 2018 sales and 188,050 tons of harvested salmon and trout, AquaChile has commercial presence in 40 countries, with more than 350 direct customers. It has 5,515 employees in Chile, 15 freshwater facilities and 139 farming sites at sea. Its main export destinations are the U.S. (36 percent), Japan (20 percent) and Latin America (12 percent).
The company’s sustainability report was prepared following the GRI (Global Reporting Initiative) Essential option standards, incorporating the GSI (Global Salmon Initiative) Sustainability Report indicators, which were audited by Deloitte.
Image courtesy of AquaChile