Expectations of supply growth close to 4% after a weak 2022, strong demand and prices to continue to be good despite the recession, and all eyes on the new salmon tax in Norway, are, according to the latest Rabobank report, the key points of the salmon market forecast for 2023. Added to this is a possible change in the type of consumption, which would move from foodservice to retail, but, as the experts told us a couple of months ago, we can trust salmon.
In 2022, there was a significant deficit in salmon supply, particularly in the first half of the year, due to various factors such as disease outbreaks and production challenges. This imbalance between supply and demand led to unprecedented market prices.
However, as the year progressed, supply began to recover, and coupled with the economic recession resulting in a decrease in demand, market prices began to moderate but still remained at elevated levels in comparison to pre-pandemic levels.
Looking forward to 2023, it is anticipated that the supply of salmon will return to more normalized levels. However, both Norway and Chile, key players in the global salmon industry, will have limited options for further expansion of their production capabilities with existing licenses, and thus, will need to invest in new technologies such as post-smolt production in order to increase incremental supply growth. Overall, the industry projection for 2023 and 2024 is for a supply growth of approximately 4%.
Despite the economic downturn and the return of food service industry, salmon has managed to maintain its position as a popular seafood choice at retail, thanks to the introduction of convenient products and its association with healthy eating. This has allowed the demand for salmon to remain stable, even during these difficult times.
Rabobank forecasts that there is a potential for a further shift in salmon consumption from food service to retail in 2023, as a result of the economic downturn. Nevertheless, salmon has proven to be one of the most resilient seafood species in terms of demand, and the expected weak supply growth is likely to continue to support prices.
The Norwegian salmon farming industry has been thrown into turmoil following the government's proposed new resource tax. If implemented, this tax would add a 40% levy on top of the existing 22% corporate tax that salmon farmers already pay.
This significant increase has led to most major investment plans by leading players in the industry being put on hold. While it's possible that the proposal may be amended before it is presented to parliament in January 2023, at this stage it's uncertain what the final outcome will be. However, if a substantial additional tax is imposed on salmon farmers, it is likely to have a detrimental impact on the industry's growth and innovation in the long term.
