Egg&Smolt® 1.1

U.S. Salmon Digest
Volume 1, Number 1
Fall 1988

A candid conversation with Peter Hjul

Peter Hjul, editor of Fish Farming International and keynote speaker at the International Aquaculture Conference in Vancouver; British Columbia, spoke to Egg&Smolt from his London office in August.

E&S - What do you consider the major factors in the success of European salmon farming?

Hjul - The Norwegians and the Scots have steadily perfected salmon culture because they have all the incentive to do so. They have an excellent market and well-priced products, and they make good money off their farms. No one's getting enormously rich, but they have the incentive to invest in the science and technology to do well with the product. On the other hand, on the West Coast there isn't quite that amount of incentive yet.

Another important fact is that there has been less financial speculation in aquaculture in Europe than on the West Coast, where I think a lot of people view salmon farming as a way to raise money on the stock exchange. That's not conducive to the technical development of the product.

You see, in Norway every small producer goes to the research organization and depends a lot on cooperative research. This of course creates excellent feedback to the farms. If each company develops its own thing and keeps it all secret, which is what was happening in Scotland until a few years ago -then some producers will be lucky and a lot will fail.

Now the Scots have a very strong growers' organization that spreads the knowledge around, and there is much more even development. I think that's a lesson for the West Coast of America, and particularly for Canada. The stronger the association, the B.C. organization for example, the better quality farming you will have. This is a message I wish we could get to the farming industry.

One of the great strengths and hopes of the salmon industry is the strengths of the organizations in it. John Joyce, a very able person, was just appointed chief executive of the Irish Salmon Producers Association, and the Scots just appointed a couple of experts who will run a competent, full time organization. I am beginning to hear some good news from Canada, too. I'm encouraged to see that they are strengthening the organization. That's one of the best hopes of the industry.


E&S - Farmed Atlantic salmon has been the market leader for the past ten years. Do you think that Atlantics will maintain this position, or will farmed Pacific species take the lead role?

Hjul - Atlantic at the moment looks the better farmed fish, but that needn't necessarily carry on. I don't think that farmed Atlantic salmon is a better quality fish than wild Atlantic salmon. It's just the most available one. All the farmers around here produce a salmon of comparable quality, which is accepted by all the restaurants and fish shop trade. I think it will happen in the same way across the Atlantic Ocean; you will be creating a farmed Pacific that is a substitute for the wild product.

The point is that we have succeeded in developing the farmed Atlantic salmon through all its growth stages. We've got a good hatchery animal. We can manipulate the smolt; have S1 and S2 smolt and so on. The technology is very good. In Norway now, they are working on a broodstock farm, refining the stocks, and gradually eliminating inadequate stock. By the middle of the 1990's they expect to have an outstanding stock from which to run all the farm operations.

So when you ask about comparing Atlantics to the Pacific salmon or any other species, the real future of any farming operation is developing high quality broodstock, so that each one of your eggs will meet a uniform standard. They possibly haven't quite reached this level in Scotland, but they certainly have in Norway, where the fish farming council operate a very highly financed broodstock farm up near Trondheim. Up there they are actually building up the broodstock by pooling the stock from all over Norway and then doing selective breeding, and that of course means healthier and faster-growing production fish.

One of the key factors in farming Pacifics will be developing a uniformly high quality broodstock that can compete with 800 thousand tons of wild fish of various qualities. That's where the strength of Pacific farming will be.

E&S - On the West Coast, there has been more success with chinook than coho. The reason is perhaps that chinook, rather than coho, is more like Atlantics.

Hjul - Yes, the chinook grows slowly, and it grows well into a very high quality fish. I wouldn't say they are exactly the same, but Atlantics and chinooks probably have more in common than, say, coho and Atlantics. It looks like the relatively slow growers seem to be better farm candidates than some of the more unusual fast-growing fish. We've got to learn from experience. I wouldn't say that the Atlantic is just a naturally superior farmed fish, it probably isn't. Ten years ago, they were saying Atlantics were useless and the Pacifics were going to be the good ones.

E&S - How will the regulatory frameworks of Europe and North America deal with the next step, the introduction of transgenic salmon and designer species in the future?

Hjul - This is the difficult part, isn't it? We don't know enough about genetic engineering and its consequences. I am more concerned, immediately, about what I call nuts and bolts regulations. One of the things that's coming up a great deal here at the moment is the coloring in the feed. Resistance is building to the use of cantaxanthin; the whole trend is toward the use of natural coloring or astaxanthin. The EEC has a regulation that restricts cantaxathin, but they've allowed deviations from this for a couple of years. Eventually, they're going to tell the salmon farmers that their products can't have it.

The 1992 Common Market (EEC) regulations will probably strengthen hygiene controls and health controls. They will make a big difference to people from the outside. American exporters will have to meet a whole new string of regulations. It will be like the American Food and Drug Administration.

E&S - Salmon is the only major commercial fishery that is on the U. S. federal government's list of endangered species. Environmental concerns and wild life classifications seem to function as non-tariff barriers.

Hjul - The more farmers cooperate and find common cause, the more they can respond to strong environmental pressures. That's what's happening in Scotland now. As the pressures grow on the farmer from the fishermen or the environmental groups, the farmers tend to unite, and out of that unity come conferences like the Vancouver meeting with the exchange of information, and from that you get what happened in Norway - a very good high technology industry.

Now about this issue of endangered species, here in Europe we will be growing 110 thousand tons of salmon this year, and the wild catch is about 8 to 10 thousand tons. So how can you say this is a threatened stock? What the conservationists say is probably right, it's the wild genetic stock that's under threat. If you fish out the wild salmon by gill netting and so on, you're reducing your genetic base. Some people, of course, say that they're satisfied that the farm stock has a broad genetic base. After all, they say that all the racehorses in Europe were bred from two horses originally.

Others say that you shouldn't threaten any stock with extinction, or reduce it to a domestic animal. We haven't done that with salmon yet, although with salmon the current issue seems to be the possibility of excessive fishing of river stock. I'm one of those who supports conservation measures. The fish hunter is more and more an enthusiastic conservationist, and I think the fish farmer has to be one as well.

E&S - Could you expand on the whole subject of importing live species?

Hjul - Interesting things are happening in this area. They hatch turbots up in power station waters in Scotland, then sell them to Spanish farms. Redfish and seabass are being grown down in the Mediterranean. They are doing much more transplanting of species in shrimp farming.

E&S - How does wildlife regulation affect these transfers?

Hjul - The Asians, for example, get on with the job. They tend to move very quickly on these things. Besides, the importation is not large, and most species are being grown in their own regions. Atlantic salmon are being grown all over the world. At this point, the trade is developing faster than regulations can keep up.

E&S - In your judgment, what are the key issues in salmon farming?

Hjul - The old thing about salmon farming, and a point I will make in Vancouver, is that it's not enough to have the technology. You must have market leaders in the fish you farm. Take the Arctic char, for example. The char can be grown in colder waters than salmon, so it would be a good fish for those areas where they can't farm salmon through the year. But the char doesn't have nearly the reputation of the salmon as a consumer fish.

The basic lesson is this. You can't separate farm development from promotion, and that might become the problem for Arctic char. The technology is moving, but the marketing and promotion incentives are not there. So while I think the char will be a good farm species; it certainly doesn't look like frankly challenging salmon.

Most of the failures I have seen in aquaculture are due to three things: ignorance of the technology, misunderstanding the demand for the product, and excessive expectations.

There have been examples in the shrimp industry of giant shrimp that are perfect for farming, except the only trouble is there is limited demand. You can grow it all you want, but you are not going to get the price.

The investment issue is a serious one. Some people start farms, raise the money, and expect a quick return on what is basically a slow and patient process. And then they fall flat on their faces. Every month we have farms going bust simply because they have overestimated the markets and underestimated their sources of money. Farms seldom fail technically these days, with what we now know about aquaculture. Most farm projects are technically possible.

The Norwegian banks, now, understand how long it takes to get a return. But if you go into some other part of the world, money investors expect a quick return, and farming is not going to provide it.

E&S - Do you see the same problem with the Pacific salmon? That the Canadians need to promote it better?

Hjul - I would compare Pacific salmon to the work they have done on cod over here. You have some 800 thousand tons of wild Pacific salmon competing with the farmed fish. Now with cod you have an abundance of wild fish, which becomes available only at certain times of the year. If you farm cod, you can harvest them when there is a falloff in the market of wild fish, feed the public interest in the product, and keep a continuity of supply. The fisherman, of course, doesn't like that, because he likes the benefit of high price with scarcity. We've got a lot in our next issue of Fish Farming International about cod.

You see with Pacific salmon you've got an enormous supply that you don't have all year round, and the farmed Pacific will cover the market in other months.

E&S - The farmed fish, then, both provides a year-round supply and at the same time maintains a continuity of consumer demand. Do you see a time coming, though, when you foresee a major collapse of salmon prices?

Hjul - Take a look at the figures. If the Pacific production continues at 800 thousand tons, with a small contribution from farming, and the Atlantics by 1990 may be touching 200 thousand tons, then farming will account for about 20% of the total production. I remember when, not so long ago, the Norwegians were producing 4,000 tons of Atlantic salmon and were wondering where they would find markets for an increase to 6,000 tons. Then they were worrying about outlets for 20,000 tons and then 30,000 tons. And this year the harvest will be around 80,000 tons.

But the fish keeps selling, and I think what's actually happened is that this magnificent animal and wonderful food product called Atlantic salmon used to be a gourmet product. Now more and more middle and upper income people are asking for it, and it's so popular and so well promoted that it just keeps selling. They are selling all they can produce.

E&S - But what about price expectations?

Hjul - Prices are holding. What has happened here with Atlantic salmon is that the price has not gone up with inflation. In fact, if there hadn't been the fish farming industry, I should imagine that a pound of Atlantic salmon in the retail fish shop would have cost as much as £l0/pound, whereas it was selling this morning in London for about £4/pound, which is pretty high and a profitable sale for the fish farmer. The quality of the product is high, and the promotions and marketing are very intensive.

I think the whole key here is to harvest steadily throughout the year, feed the product into the market at a steady rate, and never harvest out of desperation.

The only time we had a glut of farm salmon in the market with a drastic price drop was January 1987, when Hitra disease hit Norway. A lot of salmon farmers panicked and harvested their fish in November and December. And remember that the wild catch of 1986 was shooting up to the skies unexpectedly, and there was a great quantity of Norwegian farmed salmon in the London market for the first time. One fish farmer told me he went to deliver his trout to the market, and the people told him if he could drive a pound of salmon away, he could have it for £1/pound. That shows that you must have proper coordination and market organization.

In Scotland, now, if someone floats a salmon company or tries to get a stock market bargain, first thing people will do is pick up a telephone and ring the salmon growers to find out whether they know anything about them. Your organization has to insist on certain standards of quality and certain norms of operation, which is what they do in Norway, too. But that's what they do in all farming, isn't it?

E&S - Back to prices, we have seen the prices of wild salmon going up and up here on the West Coast. Its amazing what the Japanese are paying for it, and it appears that the Japanese will have a strong interest in buying Donaldson steelhead, the salmon trout, because it's the least expensive of the red meated salmonids. All of a sudden we are going to have a completely new market opening up for the frozen product.

Hjul - Product development also is a very big thing. People are even looking at ways to improve the color of salmon products.

E&S - What's your last word on the future of salmon farming?

Hjul - I think the general picture is optimistic. At the same time, you don't want to encourage the idea that people can jump into this industry and make a fortune overnight. The people who have succeeded have been the people who persevered through great patience and effort, and those are the ones who will be there in 20 years time.




Bountiful breeders: Farming the money fish
The U.S. National Marine Fisheries Services, in its April 1988 report, repeated what the experts have known for thirty years. From the Northern California coast to the southern waters of British Columbia, ideal temperatures prevail for maximal growth of Atlantic salmon. Along the northwest coast, these ideal thermal patterns can "produce better than 80% of the maximum attainable growth for Atlantic salmon for twelve months each year," said the federal report.

Atlantics can grow to twenty pounds in captivity, compared to an average weight limit of about six pounds for the two farmed Pacific species, coho and chinook. Another significant difference is that Atlantics don't die after spawning like the Pacifics. Thus the Atlantic salmon can be reconditioned after spawning and then marketed. Moreover, as one farmer testified, Atlantics are tame. "You can pick one up in your hands, inspect it, and return it to the pen. It's virtually impossible to dip-net a Pacific."

The post-spawning survivability of Atlantic salmon will in the future become important in broodstock management and genetic selection. Then breeders will undertake what they now consider a very time consuming process of recovering the spawned salmon in their hatcheries, because of the availability of commercial strains of genetically selected and hybridized fish. At that point it will become a matter of economic importance to strip salmon more than once as it will reduce the fixed cost per egg.

Along the Northwest coast, Atlantic salmon are not subject to Hitra, the cold-water disease that has damaged populations of pen-raised salmon in Norway. Also the available stocks of Atlantic eggs and smolts have been selected for domestication, for disease resistance, and for excellent production characteristics. As Conrad Mahnken of the National Marine Fisheries Services reported to Seafood Leader in a recent article, while Atlantics continue to grow normally to great sizes, pen-raised cohos and chinooks have shown a tendency to develop previously unknown diseases after only two years of growth.

What is the likely competition for the pen-raised Atlantics? Dan Swecker, of Washington's Swecker Farms, has reported that the Finnish Donaldson steelhead hybrid can grow twice as fast as Atlantic salmon. But until we know the full story on this hybrid, the Atlantic seems to be the top-money fish for Northwest salmon farmers.



Atlantic salmon market trends and prices
Drastic price increases have taken place over the last three years, both for wild Pacific salmon, such as troll chinook, and for farmed Atlantic salmon.

Atlantics displayed their largest price hike last year. As shown in the chart, farmed Atlantic salmon went from an average price of $3.40/lb in August 1986 to $5.25/lb one year later. In relative terms that represented a price increase of 54 percent. Since that time Atlantic salmon prices have remained fairly stable except for a short-lived price spike following the recent algae bloom in Norway.

While Atlantics have maintained relatively stable prices during the last 12 months, troll chinook prices have increased steadily. In fact, as shown in the chart, troll chinook has gone up by $2.00/lb or 77 percent since 1986.

The price increase for troll chinook is good news for farmed Atlantic salmon. The price differential between these two species was $0.80/lb in 1986, $1.75/lb last year, and now is only $0.50/lb. Thus in the short term, Atlantics could be knocking at the $6.00/lb level. In the long term, however, prices will probably stabilize at the present level as Norway unloads its predicted 100 million pounds of Atlantics onto the market late this Fall.



Hardy immigrants: Atlantic salmon in the Pacific Northwest
Atlantic salmon have a long history in the Pacific Northwest a history that provides experience for the culture of Atlantics today and that casts light on the current debate over transporting healthy Atlantic eggs and smolts across national borders.

Attempts to augment and enhance natural runs of Pacific salmon along the Northwest coast began as early as 1895. In 1905, British Columbia biologists even tried to start runs of imported Atlantic salmon. Between 1922 and 1928, the most active release period in the Pacific Northwest, over 500,000 Atlantic fry were released each year on Vancouver Island. When these early attempts met with little measurable success, they were abandoned. Half a century later, Atlantic salmon became one focus of the effort to diversify the salmon resource.

Several further attempts were made to introduce Atlantic salmon into Washington, Oregon, and British Columbia, but self-sustaining wild populations of Atlantics were never established. At the same time, all of the attempts to establish Atlantic runs confirmed in the environment what biologists have argued on the basis of chromosomal analysis: that due to significantly different chromosome counts the presence of Atlantic salmon in Pacific Northwest waters did not pose a genetic risk to the native species. Moreover, there was no evidence of diseases being transmitted from Atlantics to native salmonid species.

During the 1960's Lauren Donaldson of the University of Washington and other researchers of the U.S. National Marine Fisheries Service developed successful pen-rearing methods, and these efforts led in 1970 to the first pilot projects to raise coho and chinook salmon commercially in Puget Sound.

The success of this effort led to the commercial raising of pan-sized coho by Domsea International, a subsidiary of Union Carbide. While many of the existing aquaculture firms have raised pan-sized and full growth Pacific salmon, the economic advantages of the domesticated Atlantic salmon have captured the attention of many large and small farms. Atlantics, "the money fish ", have a long pedigree as domesticated fish, with thirty years of careful selection for health and production characteristics.

In Washington, Global Aqua, the new owner of Domsea's facility and the largest net pen operator in the United States, has abandoned coho for Atlantic salmon. Dan Swecker, of Swecker Farms, will double his production of Atlantic smolts to 800,000 by 1989, and Seafood Leader estimates that enough smolts will be produced in Washington State to breed ten thousand tons of Atlantic salmon by late 1989. That's equal to the tonnage Norway exports to the United States.

While the prospects for Atlantics look good in Washington, the British Columbia government, citing fears of genetic pollution and disease, has placed a limit on the import of Atlantic salmon eggs, with the intention to cut all imports by March 1989. At present, only a few Canadian farms rear Atlantic salmon, and only under strict quarantine conditions. The United States National Marine Fishery Service reported in April 1988 that the few Atlantic eggs allowed into Canada were subject to "extraordinary" screening measures.

Meanwhile, just south of the border in Washington State, a similar political battle may be drawing to an end. In October 1987, Island County commissioners extended a moratorium on aquaculture permits. Two months later, however, in response to a question from the Honorable Doug Sayan, Washington State Representative, the Washington State Attorney General's office issued an opinion that restricts the use of moratoria against sea farms. Then, in January 1988, Governor Booth Gardner of Washington sponsored a conference on aquaculture issues and lent his support to the development of aquaculture in Puget Sound. The Governor believes the economic resource can grow without harm to the environment.

While Atlantic salmon will never become a wild species in Puget Sound waters, the species has a future in Pacific Northwest aquaculture and may soon become a major contributor to the economies of the North Pacific rim.