Farmed salmon has been trending downward in terms of its production by volume since 2021, with the total worldwide harvest falling to just over 2.86 million metric tons (MT) whole fish equivalent (WFE) in 2022, and then further still to 2.81 million MT last year as the main producing countries were hit by various biological challenges, according to Filip Szczesny, a senior financial analyst at Norwegian aquaculture and seafood data firm Kontali.
In Kontali’s latest webinar on the farmed salmon industry, Szczesny said that the salmon-farming sector enters 2024 battling some serious headwinds.
“I think it’s going to be challenging, but I am also really excited,” he said.
Specifically, challenges the industry faced last year will bleed into this year, Szczesny said.
Those obstacles in 2023, alongside the biological issues, included important regulatory changes in Norway, composed mainly of the new aquaculture resource rent tax that was approved by Norwegian Parliament on 31 May 2023, and which placed a 25 percent tax on the sea cage grow-out phase of the production cycle. This particularly affected the industry last year by limiting supply, Szczesny said, adding that the supply drop, which the industry experienced through the end of 2023, will also be evident at the start of this year.
Kontali also found that the introduction of the resource tax led companies to change their structures, mainly limiting value creation in the at-sea growth phase of salmon farming. Some businesses started to make changes to adapt in 2022 and continued to do so throughout 2023.
Amid the adjustments and restructuring, which have been largely based on companies’ own assumptions of how the tax might affect their operations, there are still a lot of unknowns surrounding the deferred tax and its scope, and accurately calculating the associated tax burdens and potential deductions will take time. More conversations and decisions on the tax will take place this year, Szczesny said. Despite the added tax, major salmon companies continued to report record profits in 2023.
As for other factors that will affect salmon farming in 2024 ...
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