Two proposed RAS salmon farms cause stir in China

Published on
December 22, 2020

Two new recirculating aquaculture system (RAS) salmon-farming projects backed by Norwegian firms are set to be launched in the coming year in China.

Stavanger, Norway-based Norsal appears to be the first major foreign venture into the salmon farming business in China since Canada-based AgriMarine commenced on-land farming of steelhead in China a decade ago. Earlier this month, the company announced its intention to build a RAS salmon-farming project in the Yantai Economic and Technological Development Area, at a cost of USD 400 million (EUR 327.3 million), according to China Daily. The project will be built in two phases, with the first aiming for an output of 10,000 metric tons (MT) and the second upping the farm’s output to 30,000 MT.

And on 2 December, Nordic Aqua Partners was admitted to trading on Euronext Growth after a private stock offering that raised EUR 55.1 million (USD 45.1 million). The company said it plans to start construction on a RAS salmon farm located in Ningbo, China, in January 2021, with its first harvest planned for fall 2023.

“The prospect for land-based salmon farming in China is far-reaching and we are all very enthusiastic and optimistic about being a first-mover into the world’s largest seafood market and about the potential for Nordic Aqua Partners A/S,” NAP Board Chairman Ragnar Joensen said in a press release. “We believe the opportunity is indefinite and with the fantastic support of our staff, investors, bank syndicate, Chinese authorities and advisors, we are finally at the step of making great history. Now, the company is ready to realize a fantastic project in China and in less than three years, we will deliver truly fresh, high-quality and tasty salmon to the Chinese market.”

The farm will be built in three phases, with the first phase having capacity for 8,000 MT of production, the second doubling capacity to 16,000 MT, and the third phase offering expansion up to 40,000 MT.

“Over time, the company sees further scale opportunities from replication near Beijing and Hong Kong. Furthermore, expansion potential within a very attractive downstream value chain for Atlanticsalmon in China with the possibility of realizing a high EBIT per kilogram,” Joensen said.

However, new announcements for salmon farming in China don’t necessarily mean demand for locally produced salmon or trout is soaring, even as consumers have turned away from imported seafood products during the COVID-19 pandemic. According to Alan Xiaoqing Qian, managing director of Biomar Tongwei, a joint venture feed supplier with clients across the premium end of the China’s aquaculture sector, while there has been intensive coverage by the Chinese press of supposed COVID-19 contamination of imported frozen seafood that has clearly softened demand, there has been no corresponding surge in demand for locally produced fish. This may be due to restrictions earlier this year on large banquets, reducing demand in the hospitality sector, Qian told SeafoodSource.

“We have seen the demand for salmon and trout in the Chinese market decrease in 2020 due to COVID,” Qian said.

Qian said Chinese salmon farms could rethink their investments if the impact of the coronavirus pandemic on demand lingers on further.

“Lower harvest volumes result in higher individual weight for stocked fish. Depending on how fast we see the market recover, farmers could change their feeding strategy to keep fish longer on farms,” Qian said. “If the market remains depressed for an extended period, their [farmers’] stocking strategy for the next generation of fish can also be affected.”

On the import side, Norway has experienced a 24 percent year-on-year drop in its seafood shipments to China for the period January to November. Norwegian Seafood Council China Director Victoria Braathen told SeafoodSource she believes demand for imported product will continue to recover after a difficult first half of the year.

“We see some positive recovery for species, including fresh salmon,” Braathen said.

Braathen said local production of salmon will merely complement the imported supply for a share of a growing pie.

“Locally produced salmon will be contributing to broadening the scope and expanding the market,” she said.

Fan Xubing, head of Beijing-based seafood marketing consultancy Seabridge, said RAS-farmed salmon in China has a chance to supplant imported product if producers can achieve scale and quality. The Norwegian salmon brand is not as strong as before, he said, because the NSC “has not carried out generic marketing for salmon in China for many years.”

“I think most Chinese consumers will not mind the salmon they eat is domestic farmed or imported, as long as the domestic farmed salmon quality and price is good enough,” he told SeafoodSource.

Yet Fan conceded that there is no domestic brand in China with a national presence, with the only RAS-based producer to date, Oriental Ocean, selling its salmon business to state-owned Qingdao Guoxin last year after a decade of producing salmon for sale locally.

“In the past, China has worked to expand this industry, but has encountered issues related to proper knowledge and management as well as environmental and government regulations and funding,” Robin Wang, the head of SMH, a food marketing consultancy in Shanghai, told SeafoodSource.

Chinese consumers still distinguish between farmed and wild salmon, such as that sourced from Alaska, he said.

“Product differentiation and exclusivity will still be key principles for the retail landscape,” he said. “With salaries increasing, consumers will still always seek out the highest-quality products.”

Bejamin So, whose firm 178 Degrees imports farmed salmon from New Zealand into Hong Kong, said his home city may hold some clues to the future of China’s salmon market, as Hong Kong has long been a trendsetter for the mainland. A key trading hub, the city didn’t experience the “same level of trepidation” over COVID contamination of imported seafood packaging, he said.

“Sales of our freshwater king salmon remained very strong,” So said. “Hong Kong residents are used to imported seafood products which retain a certain cachet.”

There has of yet been little interest in Hong Kong for locally farmed salmon, suggesting a continued dominance of imported product, So said.

“I don’t see plans for increased mainland production as a major factor in changing our consumers’ purchasing behavior,” he said.

Photo courtesy of Nordic Aqua Partners

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