Salmon farms in Chile and Norway are unlikely to keep up with global demand for the next one to two years, supporting analysts' theory of a "supercycle" of higher prices, Cermaq ASA's chief executive officer said.
Chile's supply won't grow over the next two years while Norway's farms are producing near peak capacity, Cermaq CEO Jon Hindar said Friday in an interview in Puerto Montt, Chile. Meanwhile demand is surging in emerging countries as more middle-class residents seek healthier proteins, said the head of the Oslo-based salmon farming company being acquired by Mitsubishi Corp.
The world's leading salmon farmers are meeting in Puerto Montt to deepen an alliance they started a year ago to share data in a bid to reduce outbreaks of infectious salmon anemia and sea lice that disrupted Chile's salmon industry in 2007 and 2008. Governments are reluctant to issue more fishing licences to farmers, limiting global availability of the fish, as long as doubts remain about the health of the supply.
"That means supply will probably not outstrip demand," Hindar said. "That's why we are entering what has been called a supercycle."
Japan's Mitsubishi offered to buy Cermaq on Sept. 22 for about $1.4-billion (U.S.). Cermaq will benefit from the expertise of Mitsubishi, one of the world's biggest traders of seafood, in farmed shrimp and tuna markets, he said.
A cycle of high salmon prices began in 2013 and will continue until 2017 on limited supply, Jeroen Leffelaar, global head of animal protein at Rabobank, said in a presentation at the conference.
Prices will remain above 38 Norwegian krona ($5.76) a kilogram and will sometimes rise as high as 40 krona, Leffelaar said. Salmon farmers, on average, break even at 25 krone, he said.
"The high-price environment is here to stay," Leffelaar said. "Profitability will be strong."