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The Canadian salmon aquaculture industry.

Introduction

Commercial salmon aquaculture in Canada began in 1972 when the first salmon farm was established in British Columbia (B.C.) using surplus eggs from a Canadian Government salmon hatchery. Between 1972 and 1984, however, the industry remained undeveloped and produced only small quantities of salmon; only 107 metric tons (t) of coho and chinook salmon were produced in 1984. Norwegian fish farmers, however, began to invest in Canada in 1984, and the "gold rush" to establish salmon farms began. Two years later, in 1986, Canada produced 786 t of farmed salmon, only a modest amount in comparison to production in Norway, the United Kingdom, Japan, Chile, Ireland, and the Faroe Islands. However, the stage was being set for the production of salmon to expand rapidly. In 1987, farmed salmon production was worth about C$29 million, or about one-half of the value of total Canadian aquacultural production for that year, and total Canadian production of farmed salmon was projected to reach 23,000 t with an estimated value of over C$150 million by 1990.

Background

Salmon culture is viewed as a benefit to the Canadian economy because fish farms can be located in less populated areas where they can contribute significantly to regional economic development. Additionaly, Canada's fisheries are not unlimited, and catches of certain groundfish and shellfish have declined in recent years; fish farming is viewed as an alternative source of high-valued species that does not compete with existing fisheries. These a food products generated by fish farms generate export earnings when exported, particularly to the United States. These factors have generated support from the Canadian Department of Fisheries and Oceans (DFO), from provincial governments, and from local business interests.

The Canadian salmon culture industry is competitive. Site capacity is not restricted in Canada as it is in Norway; thus the number and the size of salmon pens differ among sites. Multisite farms are common in British Columbia because of the abundance of isolated bays and islands where fish farming can take place. Multisite farming reduces the chance of disease spreading and limits the effects of natural disasters. In Atlantic Canada, in contrast, the growth of multisite farms is not prevalent as there are fewer suitable sites for raising salmon. Atlantic salmon, Salmo salar, is raised in Atlantic Canada, but small quantities (less than 2 percent) are also being raised in British Columbia where coho salmon, Oncorhynchus kisutch, and chum salmon, O. keta, are more popular.

Production of both Atlantic salmon and Pacific salmon on both coasts of Canada has gone from 157 t in 1980 to 1,115 t in 1986. At one time it was thought that production of farmed salmon might reach 30,000t by 1990, but those estimates now appear too high. It is likely that Canada's production of farmed salmon will reach 23,000 t by 1990, provided the surge in Norwegian farmed salmon does not disrupt world markets in 1989-90. Most of the expansion will occur in British Columbia where production of 20,000 t of farmed salmon is being projected for 1990. Production in Atlantic Canada will grow at a more modest pace and is expected to reach about 3,000 t by 1990.

The force behind Canada's drive to establish salmon aquaculture on both coasts is the enormous United States market, scarcely a few hundred miles to the south of many Canadian salmon farms. Low transportation costs to the U. S. market guarantee Canadians a very important competitive edge, compared with more efficient Norwegian producers who must fly their salmon across the Atlantic Ocean to make deliveries. The first exports of farmed salmon to the United States began in 1981; 7 years later, Canadian exports of fresh salmon to the United States amounted to 6,460 t worth $39 million.

Impediments to Expansion

Despite the rapid growth that has taken place in the past few years, Canada's salmon aquaculture industry is limited by 6 important impediments. These include: Availability of smolts, feed supplies, bio-technical expertise, availability of capital, growing public resistance, and economic competition.

Until recently, the Federal Government was the main supplier of smolts to the private sector. These smolts included surplus fish used primarily to enhance or maintain wild stocks. The Canadian Department of Fisheries and Oceans (DFO) decided in the mid- 1980's to allow private hatcheries to raise salmon smolts for sale to commercial fish farmers. This allowed the DFO to concentrate on raising smolts for rebuilding wild stocks in both the Pacific and Atlantic Oceans. In 1987 there were 37 hatcheries in B.C., of which about half were owned by salmon farmers. Atlantic salmon farms also face a smolt shortage, but to a lesser degree than Pacific farmers. Privately owned hatcheries in Atlantic Canada supply 80-85 percent of demand. The remainder is provided from excess DFO stocks of "wild" salmon smolts that are bred to survive in the open sea. By contrast, fish farmers prefer a "domesticated" strain of salmon that will adapt and thrive in tightly confined spaces, with thousands of other fish, while feeding on an artificial diet. The ready supply of smolts from private hatcheries is important for future growth in Canada's salmon farming.

The availability of low-cost feed for hungry (and expensive) inventories of fish is a key constraint. Feed is typically the single largest cost facing salmon farmers, and Canadian fish farmers hope to produce 23,000 t of farmed salmon by 1990. It takes about 2 kg of feed to produce a fish that weighs 1 kg. Thus, to reach its 1990 production goal, Canadian fish farmers must have a minimum of 46,000 t of feed. The Canadian aquaculture industry buys its food primarily from local producers and imports the remainder from suppliers in the United States and Europe. Currently there are 3 feed producers in Pacific Canada, two of which are Norwegian owned and one of which is a subsidiary of a U.S. firm. Most of the fish food used in Atlantic Canada is produced locally. Dry feed has been recently introduced to Canadian fish farmers. Abundant stocks of herring and capelin in Canadian waters are an important long-term asset that will benefit Canadian fish farmers in the future. Inexpensive sources of high-protein herring and capelin meal will provide Canadians with an independent supply of inexpensive feed as the cost of feed continues to grow in world markets.

Canadian fishery biologists and scientists have a reputation for excellence which should serve their salmon industry in the future. However, some of the knowledge of nutrition, diagnostics, diseases, and genetics of salmon farming (particularly for Pacific species) is only now evolving in Canada as compared with over 20 years experience in Norway. The Federal DFO undertakes extensive research at biological stations located throughout Canada and is rapidly expanding its ability to provide meaningful support to the industry. In Atlantic Canada the Salmonid Demonstration and Development Farm was established to help local salmon farmers. The farm was part of a 3-year program to study salmon farming in Atlantic Canada, and that project reportedly ended in July 1989. The DFO also has extensive support programs in other areas of aquaculture which help support the salmon farming industry. As the body of scientific data expands, the knowledge will provide Canada with a clear advantage over other salmon producing nations.

The availability of both start-up capital and working capital remains an important constraint limiting the expansion of salmon culture in Canada. The average time that it takes a smolt to grow to market size is 2-3 years. Salmon farmers, thus, do not receive a return on their investment for at least 2 years after beginning operations. Lack of knowledge about fish farming, and uncertainties about future prices for fresh salmon, have made many bankers reluctant to lend prospective farmers money to begin farming, and established farmers funds to maintain their operations. Foreign investment (mostly from Norway and the United States) has provided some assistance, particularly in B.C., but the problem remains.

Aquaculture is meeting resistance from fishermen, homeowners, environmentalists, and other interests who oppose the further expansion. Commercial fishermen, for example, fear that disease may be transmitted from farmed to wild stocks. Sport fishermen are concerned about nets and pens blocking access to local fishing grounds. Homeowners are concerned about the value of their property declining with the influx of fish farms obstructing views and polluting pristine waters. Environmentalists are worried about the accumulation of wastes and the use of chemicals affecting the natural environment. Others are concerned about genetic changes in wild fish if farmed fish escape and breed with wild varieties. Government officials are concerned about the introduction of aquatic parasites that could upset the natural balance of life of the area. Thus, despite rapid growth, problems have arisen which could slow future expansion.

Despite the advantage of close proximity to the U.S. market, Canadian salmon farmers are subject to world-wide competition. World production of salmon has gone from 7,200 t in 1980 to over 200,000 t in less than a decade. The increase in Norway's production of salmon, in particular, has been so sharp that markets will either become saturated or prices will begin to collapse. Canadian fish farmers will have to be able to meet the challenge from Norway as well as the threat from Chile and other countries where lower production costs might undermine Canada's advantages.

Despite these impediments to growth, Canada's farmed salmon industry has shown determination and resiliency in meeting various challenges. This growth follows a two-pronged approach: The rapid, almost "gold-rush" mentality that characterized the development of salmon culture in British Columbia and the more conservative approach (marked by a moratorium on expansion) that characterized the development of Atlantic Canada's salmon farming industry. Both approaches have encountered problems and both have succeeded, although to a lesser degree than was anticipated only a few years ago when Canadian sources confidently projected salmon production exceeding 30,000 t by 1990.

B.C. Salmon Farming

Salmon farming is the largest revenue producer in British Columbia's aquaculture industry. In 1987, salmon revenues accounted for C$13 million out of total earnings of C$16 million, or 80 percent of the value of aquaculture production that year. Salmon is expected to continue to dominate the B.C. aquaculture industry for the next few years. Oyster production ranks second, followed by farmed trout. As of January 1989, there were 207 salmon fanning leases and licenses issued by the Provincial Government of British Columbia, with a total holding capacity of about 58,000 t of fish (44 million [m.sup.3] of salmon farm area). However, there were only 105 operating companies farming salmon in the province. The B.C. salmon farming industry is located primarily along the Sunshine Coast, the Campbell River, and the West Coast of Vancouver Island. Production focuses on chinook, O. tshawytscha, and coho salmon and Atlantic salmon to a modest degree. Most salmon farmers specialize in the grow-out phase of smolts from hatcheries, but many have recently begun to enter the hatchery business in an attempt to vertically integrate.

Historical

Salmon farming in B.C. started in 1972 when a private venture began raising salmon using surplus eggs obtained from a DFO salmon hatchery. In 1975, four new salmon farms were established, which also obtained surplus salmon eggs from the DFO hatchery. Progress remained slow during this initial period, attracting little interest and producing only small quantities of farmed salmon. In early 1980, the first exports of farmed salmon to the United States began. By 1984, when Norwegian fish farmers (restricted by Norwegian government regulations) began to invest in B.C., there were 10 salmon farms operating in British Columbia. According to the B.C. Ministry of Agriculture and Fisheries, this increased to 37 salmon farms in 1985, 82 farms in 1986, and 118 farms with fish in the water (including 10 with Norwegian investments) in 1987. In 1989, there were 150 operating farms and over 200 holding licenses to operate.

Production

The B.C. Salmon Farmers Association[1] expects farmed salmon production to reach 20,000 t by 1990. The primary species harvested will be chinook salmon. The shift in production from coho to chinook salmon reflects the U.S. consumers' preference for larger sizes of fresh salmon. Only small quantities of wild salmon are sold fresh; the majority of farmed salmon are sold fresh. Fanned salmon prices are slightly higher then the wild salmon prices, reflecting the premium paid for freshness and a willingness to pay for fresh salmon when wild salmon are not available. B.C. salmon growers are trying to shift the market to a futures market, where consumers will tell the growers what they want and then the farms will produce to meet demand.

[1] Mention of trade names, organizations, or commercial firms does not imply endorsement by the National Marine Fisheries Service, NOAA.

Government Support

Government/industry relations in the B.C. aquaculture industry are notable for the spirit of cooperation that exists. The Provincial Government of British Columbia, with the assistance of the Federal Government of Canada, has established many local and regional assistance programs to assure the safe development of the industry. In September 1988, the B.C. Provincial Government and the Federal Department of Fisheries and Oceans signed a Memorandum of Understanding which: 1) Clarifies Federal and Provincial responsibilities, 2) Streamlines application procedures and reduces administrative and legal burdens on the aquaculture industry, 3) Establishes one-stop leasing mechanisms for commercial aquaculture ventures, and 4) Sets out a cooperative and coordinated approach for government support of industry, including research and development, training, education, leasing and licensing, health, and stock monitoring.

There are also several programs designed to benefit specific, smaller communities. The Community Economic Development Program (CEDP) in B. C. consists of 28 projects established in cooperation with the DFO's Salmonid Enhancement Program. The aim of the program is to increase the population of salmon while fostering local employment. Through the CEDP, Canadians receive training and employment, while enhancing the growth potential of the salmon stock. A primary example of the CEDP initiative is a small salmon hatchery started in Fort Babine, B.C. where unemployment was high. The salmon hatchery now produces over 7,000 individual coho and 2,500 chinook annually, providing a small number of permanent jobs as well as numerous seasonal positions.

Salmon Farmers Association

The B.C. Salmon Farmers Association (BCSFA) was incorporated in 1984 under the Societies Act of British Columbia. It began with nine members, but now represents over 95 percent of all Pacific salmon farmers. The BCSFA has a Board of Directors and a full time staff which implement policies developed by the Board. The major objectives of the BCSFA are to maximize the financial returns to salmon farmers, promote the production of a quality product, and to set and maintain standards to ensure the safe development of the industry. The BCSFA has introduced several programs to assist salmon farmers. These programs include: Egg allocation, broodstock development, disease screening, marketing studies, and education. In May 1989, the Government of British Columbia announced the formation of the British Columbia Aquaculture Research and Development Council (BCARDC). B.C.'s first privately funded salmon research farm, the Ewos Pacific Research Farm was opened on Denman Island on 16 June 1989. The new C$1.5 million facility will examine nutrition, health, and feeding efficiency at the 20-pen farm and its laboratory.

Salmon Farming Industry

There are over 150 salmon farming operations registered in B. C. which include many different individuals and companies. The largest producers of farmed salmon in the B.C. industry include the following firms. Aquarius Sea Farms is the largest producer of farmed salmon in Canada. It was established with Norwegian investment. Aquarius produced about 2,000 t of salmon in 1988. Aquarius opened a processing plant in 1988. Royal Pacific is the first salmon farm to go public on the Vancouver stock market. Public stock is the most viable form of investment, as commercial banks in Canada do not recognize fish farms and their stock as collateral; this might be changed in 1990 if Canadian banking laws are changed.

Pacific Aqua Sea Farms has an interest in both Pacific and Atlantic salmon farming operations. The firm owns several processors and marketers including Tidal Rush Marine Farms (pen-raised salmon) and Deluxe Seafood (producer and marketer), representing the increasing number of firms who find it most profitable to vertically integrate their operations. Hardy Sea Farms is affiliated with Saga Seafoods A/S of Norway. It was founded by Thor Mowinckle after he established the successful A/S Mowi, the leading salmon producer and marketer in Norway. It emphasizes the production of coho and chinook salmon. The Fanny Bay-Rosewall United Hatchery is a hatchery with approximately 100 fiberglass tanks used to raise chinook, coho, and a chinook/coho hybrid called a "conook." Each of the tanks hold about 50,000 smolts. Start-up costs for the hatchery were about C$2 million. Smolts will be ferried from the hatchery to some 120 farms by helicopter. The farm is the first to use a new computer system which allows instant access to water temperatures, oxygen content, and other important data. The General Sea Harvest Corporation was established when the Finnish Sugar Company took control of Sea Aquafarms Ltd. as a majority shareholder. Finnish Sugar is the parent company of EWOS, the large international feed and aquaculture supply firm which supplies much of the B. C. salmon farming industry with feed. The new company owns three hatcheries and fish farms, Tranquil Inlet Marine Farms, Sea Ventures, and Cameleon Aquaculture. The takeover took place in 1989.

The rapid development of the aquaculture industry in B.C. has introduced many problems to the fishing industry. Environmentalists and residents near fish farms complain of improper disposal of fish waste. Many environmentalists and community residents fear that the waste problem is a sign that the industry is growing too fast for safety regulations to keep pace. The Provincial Government recently introduced stiff penalties for fish farmers who violate existing waste disposal regulations. In April 1989, two companies, Aquarius Sea Farmers and WestShore Ltd., were fined for violating B.C.'s Waste Management Act. The Act prohibits unsafe dumping of waste into the environment. The two firms were charged with dumping dead fish into open pits.

The long-term outlook for salmon farming in B. C. remains excellent. The ability to produce large quantities of chinook and coho salmon will provide Canadian fish farmers with a specialty product that will not compete with the famous Norwegian salmon. B.C. fish farmers, however, are also expected to begin to raise increasing quantities of Atlantic salmon which will provide them with a popular, alternative product. In the near-term, B.C. fish farmers will experience difficulties as market prices for salmon continue to decline as greater quantities of Norwegian farmed salmon enter the market. The U.S. market will continue to dominate B.C. salmon marketing strategies and patterns. It is likely that the demand for salmon will continue to grow in the United States in the next few years, even though prices may decline. Some B.C. fish farmers already expect salmon to become as common as chicken in the diet of American consumers. If this develops, B.C. salmon farmers can anticipate a steady long-term growth.

Salmon Farming in Atlantic Canada

Historical Background

The first experiments with raising Atlantic salmon were carried out in an experimental sea cage operation by the St. Andrew's Biological Station of the DFO in the early 1970's. Salmon farming began in the early 1980's, but it was not until Stolt-Nielson Sea Farms A/S of Norway established a C$2.0 million salmon smolt hatchery near St. George, New Brunswick, that salmon farming began in earnest. The new company, Sea Farms (New Brunswick) was expected to produce 500,000 smolts annually by 1986 providing the region with the potential of harvesting 1,300 t of adult salmon within 2-3 years.

Salmon farmers in Atlantic Canada benefit from the research conducted by the Salmonid Demonstration and Development Farm (SDDF), located at Lime Kiln Bay, New Brunswick, which was opened in 1986. The Development Farm was established with funding from the Fisheries Subsidiary Agreement of the Canada-New Brunswick Economic and Regional Development Agreement. The center is run by an advisory committee of Federal, Provincial, and industrial representatives. The purpose of SDDF was to facilitate the transfer of salmonid sea cage culture technology to the aquaculture industry in the Bay of Fundy. The emphasis was on fish nutrition, salmon genetics research, and the monitoring of commercial salmon cages. The Department of Fisheries and Oceans has also signed Memorandums of Understanding with the various Provincial Governments in Atlantic Canada, similar to the agreement signed with the B.C. Provincial Government. These agreements also outline cooperative approaches to salmon farming in Eastern Canada. This series of agreements establishes a cohesive framework for Federal-Provincial cooperation in all of Canada's salmon growing areas.

Salmon Production

There were 34 firms using 525 sea cages to raise 1.3 million salmon for harvest in 1987-88. The 1987 salmon harvest of 1,400 t, had an estimated value of $15-$17 million. The 1988 harvest of 1,600 t of salmon resulted in a market value of $34 million to 46 million. By 1989, a total of 38 salmon farms were raising Atlantic salmon in the Bay of Fundy region, and that number was expected to increase to 44 farms by the end of the year. By 1990, the value of all salmon aquaculture production in Atlantic Canada was expected to exceed C$100 million.

The "Scotia-Fundy" region is the most important region for salmon farming in Atlantic Canada. This area includes the provinces of Nova Scotia and New Brunswick. Lesser quantities of salmon are being raised in Newfoundland and in Quebec. Figure 3 provides a view of Atlantic Canada's farmed salmon production while Table 3 provides statistical data on this production.

Aquaculture in New Brunswick

New Brunswick is the largest producer of aquaculture products in the Maritime Provinces. In 1987, 32 privately owned farms in New Brunswick produced 1,300 t of Atlantic salmon worth C$18 million. Forecasts call for production of between 2,800 and 3,200 t worth C$33-43 million in 1988; about twice the levels reached in 1987. By 1990, the aquaculture harvest is expected to generate C$100 million. The New Brunswick industry is dominated by many small farms (average production is 200 t) and two large farms, Connors Brothers and Sea Farms. The lower Bay of Fundy, from Deer Island to Eastport, is dotted with small islands and sheltered bays which are ideal for salmon farming. Upwellings keep water temperatures above freezing in the winter while huge tides sweep waste products away from the cages and keep the waters free from massive algae blooms like those which affected Norwegian farmers in 1987.

The primary markets for New Brunswick farmed salmon are the northeastern United States and central Canada. The New Brunswick aquaculture industry received about 900,500 smolts in 1987. These smolts were supplied by two hatcheries operated by the Federal DFO, the Atlantic Salmon Federation, and 10 private hatcheries. New Brunswick salmon farmers can obtain seed money, salmon smolts, and technical assistance from the Canadian Government. By comparison, Maine salmon farmers must fend for themselves and rely almost exclusively on private initiative.

On 27 February 1988, the Provincial Government implemented the New Brunswick Aquaculture Act. The Provincial Department of Fisheries and Aquaculture was entrusted with the sole responsibility for the promotion of aquaculture, including development of new species. Previously, control of aquaculture was divided among different agencies of the Provincial Government, including those dealing with fisheries, natural resources, energy, and technology. There is a cooperation between the Provincial Government, the salmon farming industry in New Brunswick, and the academic community and private sector. Unlike in B.C., salmon farming in New Brunswick has grown at a very orderly pace. This is due, in part, to the cautious approach taken by Provincial authorities. The New Brunswick Government placed a moratorium on the issuance of farming licenses in 1986 to ensure that the government had time to integrate aquaculture with the traditional fisheries. The moratorium was lifted in the fall of 1988 as projected, but the Provincial Department of Fisheries and Aquaculture is careful about awarding licenses for salmon farms. The net result is that no salmon farms have failed in New Brunswick. Many traditional fishermen in the Bay of Fundy have branched into salmon farming as an additional source of income to supplement a fishery which is not thriving.

There are three major players in the salmon farming industry in New Brunswick: Connors Brothers, Sea Farms, and Atlantic Silver. Connors Brothers is the leading sardine canner in North America and entered the salmon farming industry after it noticed several small salmon farms being established in the area around it's canneries. Besides its salmon farm near its Deer Island cannery, Connors has established a 400,000 smolt hatchery at Lake Utopia and utilized by-product from traditional fish processing operations to set up a new fish meal plant to provide wet feed for salmon. Connors is the largest supplier of fish food to New Brunswick's salmon farming industry. In addition, Connors markets salmon from other farmers. Connors Brothers is owned by George Weston Ltd., a C$11 billion food conglomerate.

Sea Farms is a joint venture between Norway's Sea Farm A/S and Canada Packers, a C$3 billion food distribution company. Sea Farm, which began by selling smolts in Norway and Scotland, now sells smolts and raises salmon. By 1990, the company's hatcheries should be capable of producing more than 1.5 million smolts and 1,000 t of farmed salmon. At present, Sea Farms operates three hatcheries, three marine farms, a processing plant in Maine, and opened a C$1 million processing plant in St. Georges, New Brunswick, in July 1989. The new facility will be able to process and package up to 10 t of fresh farmed salmon each day. The processing facility makes Sea Farm totally integrated, with hatchery, marine farm, and processing.

Atlantic Silver is a marketing cooperative composed of 20 members which was established in 1985. The cooperative markets salmon for its members for a commission of 1-2 percent of the gross sales prices. The fish are sold under the Atlantic Silver label to establish brand loyalty which will be based on the consistently high quality that a consortium can supply. Atlantic Silver members are mostly small farms (100-200 t annually) that dominate the industry in New Brunswick.

Aquaculture in Newfoundland

Salmon culture in Newfoundland consists of two private operations, a provincial demonstration farm and two experimental facilities operated by development associations. They are located in the Bay d'Espoir in southern Newfoundland. The private farms were opened in 1987 and were expected to have their first harvest in the fall of 1988. The two facilities operated by the development associations are involved in experimentation, technological development, and evaluation. The industry is expected to expand in the coming years as there are currently ten applications for new licenses. A Memorandum of Understanding was signed in February 1988, between Federal and Provincial Fishery Ministers. It gave the Newfoundland Department of Fisheries the sole responsibility for licensing fish aquaculture sites and clarified Federal and Provincial roles.

One production problem facing Newfoundland growers is the availability of smolts. Newfoundland does not allow the importation of smolts into the province. Currently there is only one salmon hatchery in the province whose capacity is about 200,000 smolts. The Newfoundland Provincial Government provides smolts to farms, but hopes to decrease that role. Other constraints include ice cover and cold water temperatures which prevent raising salmon in outdoor facilities. Research has been conducted into the possibility of raising salmon in the colder northern water of Newfoundland. The Green Bay Development Association is currently developing an overwintering cage for salmon which would enable fish to be raised in these waters. It received funding from the Provincial Government to conduct tests on a cage made of two chambers, one for heating the water and the other for holding fish. This would provide fish year round for the association's customers.

Aquaculture in Nova Scotia

Nova Scotia's Atlantic salmon aquaculture industry is much smaller than NewBrunswick's. In 1987, there were 10 salmon farms whose total production amounted to only 37 t valued at just under C$300,000. Nova Scotia's salmon farms are located primarily in Cape Breton and along the Eastern Shore of the province. Nova Scotia can boast that it is the home of the largest indoor fish farm in the world. Nova Aqua Smolt Farm, in Glace Bay, N.S., is an established joint venture between Seacoast Fish Farming Ltd. and Norsk Aqua A/S of Bergen, Norway. Nova Aqua has several subsidiaries including, Nova Aqua Smolt, Nova Aqua Sea, and Nova Aqua Salmon.

Aquaculture in Quebec

Salmon culture in Quebec remains a small endeavor which began in 1985, when Baie des Chaleurs Aquaculture Inc. began producing farmed salmon in land-based tanks at St. Omer on the Baie des Chaleurs in the Gaspe Peninsula. The firm began by using sea cages, but the waters in the Baie des Chaleurs freeze during the winter, and in 1986, the firm transferred their stock to 3 silo-type tanks. The firm expected to raise 35 t of salmon in 1987, 100 t in 1988, and 250 t by 1990.

Markets for Canadian

Farmed Salmon

Canadian farmed salmon sales are presently limited to the North American market, including restaurants in Toronto and Montreal as well as the huge United States market. Since Canada is the dominant supplier of seafood products to the United States, Canadian farmers enjoy several advantages over their European competitors. These include Canada's familiarity with the U.S. market, as they already have an established market network in the United States. The United States in turn is familiar with Canadian companies, resulting from the long relationship that the two countries have shared. Canadians also have a cost advantage over European competitors in respect to the U.S. market as they enjoy reduced transportation costs and can take advantage of their ability to supply high-quality, fresh salmon on a consistent basis.

Canadian fish farmers see the U.S. market growing by 30,000 t per year, stimulated by a new generation of health-conscious consumers who enjoy low-calorie, low-cholesterol, fresh salmon. The Free Trade Agreement between Canada and the United States is expected to help create new market opportunities in the United States for Canadian farmed salmon. Farm raised salmon receive premium prices when wild salmon is not available; Canadian farmers plan to market their fish November through May before the wild salmon season opens.

Although Canada's best market is the United States, Japan is one of the world's leading importers of salmon, buying high-quality chinook, sockeye, and coho from the wild catch market and some coho from the farmed market. The strong buying power of the yen contributed to higher prices in the fall of 1988. Geographically, B.C.'s location with respect to Japan may provide it with an advantage over Norway. Norway's dominance of the European salmon market, as well as Norway's proximity to the European market makes it too costly for Canadian farmers to enter that market to any significant extent.

In late 1989, it was clear that the increase in Norway's production of farmed salmon had saturated world markets. In response to the growing supplies of salmon reaching the market the Norwegian Fish Farmers Sales Organisation, which regulates Norwegian salmon sales, reduced its minimum price by 16 percent. North American wild salmon freezing and canning companies both witnessed the decline in export sales in Europe as a result of the huge supplies of Norwegian salmon entering the market in the summer of 1989. The outlook for B.C.'s salmon farmers was further complicated by the massive oil spill in Alaska which disrupted (but did not end) the Alaska salmon fishery, and by the strike of B. C. fishermen and processors at the start of the Canadian salmon fishery. The result was an uncertain market.

Future Developments

As the world supply of farmed salmon increases, Canadian farmers will have to become more cost effective. The ability of each farm to survive in the market will depend on its ability to bring relatively low-priced salmon to market. If Canada wants to be an effective player, it will have to capture and maintain a large part of the market now, while it is still growing. It must then maintain that market share into the 1990's when the full effect of the worldwide downward trend on prices will be felt.

Many Canadian fish farmers have realized the need to integrate their operations. Many smaller firms are already being bought out by the larger firms. Smaller farmers (primarily in Atlantic Canada) are using cooperative marketing strategies. The trend towards integration (investing in hatcheries and feed operations) can be seen in British Columbia. Demand for farmed salmon should continue to increase as consumers continue to emphasize nutritious, healthy, tasty, and low-cost seafoods, which will result as production increases. Increased consumption of salmon should result in new value-added forms of salmon. Such products as smoked salmon, marinated salmon, and IQF or fresh fillets and portions will develop new markets for salmon. (Source: IRF-89/99, prepared by William B. Folsom, Foreign Fisheries Analysis Branch F/IA23), National Marine Fisheries Service, NOAA, Silver Spring, MD 20910.)
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Date:Mar 22, 1990
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