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Chilean farmers gear up frozen output in catering to Japanese salmon market.

Chilean Farmers Gear Up Frozen Output In Catering to Japanese Salmon Market

Exports double in only one year as production tops 10,500 tons. Foreign investment cited as one reason for boom. On price side, however, profits are pinched as global oversupply takes toll.

With salmon exports of US$ 39 million last year, Chile has emerged from being largely a "seasonal player" that filled fresh demand gaps in the United States to become a supplier of good quality pen-raised frozen coho to Japan. Overall production has skyrocketed from 441 tons in 1982 to 10,565 tons.

The shift took place last year when the level of frozen exports rose to 68% of the total compared to 43% in 1988. In volume, the increase was even more dramatic, zooming from 1,331 tons to 4,349. In absolute terms, though, the fresh segment also gained -- going from 1,782 tons to 1,963.

The change in direction was spurred by Japanese purchases and plant investment, reported Carlos Wurmann Gotfrit, director of marine resources for Santiago-headquartered Fundacion Chile. "They have entered the Chilean market, buying a substantial proportion of whatever has been available," he told international delegates attending the Seafood '90 Japan conference in Kyoto last month.

Indeed, almost 62%, or 3,897 tons, of Chile's cultured salmon output went to Japan in 1989 compared to 35%, or 1,091 tons, the year before. At the same time, exports to the USA slipped percentage wise from 52% to 29%, while tonnage rose from 1,091 to 1,859.

Some Japanese, seeking to diversify sources of supply of coho salmon, have moved from buying raw materials to buying production capability in the southern hemisphere country. Nippon Suisan Kaisha, which acquired Salmones Antartica from Fundacion Chile, processed more than 2,000 tons during the 1988-89 season, making it the largest producer in the nation.

A number of other foreign firms have invested in salmon farming in Chile either individually or through joint ventures, advised Gotfrit. "These projects--mainly with Scottish, Norwegian, American, Canadian and Dutch capital -- not only involve farming itself, but also feed production, consulting services, etc. Marine Harvest of Scotland, Ewos of Sweden/Canada, and Trouw from the Netherlands are several examples of foreign newcomers to the industry."

The marine resources director said that up until now Chilean production has consisted mainly of coho, as the species has shown impressive growth rates, disease resistance, and generally good behavior in captivity.

"Lately, though, increasing numbers of farmers are getting involved in the production of Atlantics, although the availability of smolts for this species is still scarce," he continued. "Nevertheless, it is quite clear that Chile will show substantial production of Atlantics in the coming years, and particularly in and after 1990."

As has been the case with producers of salmon elsewhere, the contemporary global oversupply situation has hurt the profits of farmers in this South American country. While average returns per kilo sold abroad have risen from about $3.90 FOB in 1985 to nearly $6 during the beginning of 1989, the economic realities of supply and demand have seem the minimum asking price slide to $5.10. And it may have to fall further, as Japanese customers have steadfastly balked at paying more than $4.50 in the current buyers' market.

With more than 10,000 tons of Chilean pen-raised salmon produced last year, of which 6,376 were exported, it is apparent that new markets will have to be found to absorb future harvests. And what has been termed as "conservative" estimates of crop sizes ranging from 25,000 to 30,000 tons by 1995 may have to be scaled back in response to the overwhelming production levels in the northern hemisphere.

But with the problems of today's surplus stocks notwithstanding, Chilean producers aim to be permanent players in the international farmed salmon trade. In the long run, low labor rates and the availability of plenty of sites for expansion should give them an edge.

PHOTO : Talking about Chilean salmon farming is Carlos Wurmann Gotfrit.
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Publication:Quick Frozen Foods International
Date:Apr 1, 1990
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