Bakkafrost to radically transform its Scottish business by 2028

At today's Capital Markets Day, the Faroe Islands salmon farmer Bakkafrost presents its plans for “transformational investment” in its Scottish operations, while it "optimizes" existing Faroe Islands farms.
Farmed salmon from Bakkafrost Scotland. Photo: Bakkafrost Scotland.
Farmed salmon from Bakkafrost Scotland. Photo: Bakkafrost Scotland.

"There is not a single aspect of the Scottish operation that we have not looked at, and we have not changed," said Ian Laister, Bakkafrost Scotland's Managing Director, at today's Bakkafrost Capital Markets Day in Inverness, Scotland.

Bakkafrost Scotland, formerly The Scottish Salmon Company until it was acquired by Bakkafrost in 2019, has faced significant challenges in survivability over the past two years, principally due to gill health problems.

However, while biology was the key cause of Bakkafrost Scotland's woes, it is also the key to its recovery.

"In Scotland, gill health is by far the most significant factor that affects survivability," said Dave Cockerill, the company's biology director. "It's only in the last 6 months that we've been able to take control with sufficient resources in the marine environment," said Laister, referring to the company's investment in two wellboats dedicated to year-round gill cleaning and sea-lice removal.

Bakkafrost bets on "large smolt" strategy

To achieve better survivability and higher production, the core of Bakkafrost Scotland's new strategy is large smolt, Laister said.

"Our peers produce high quality, healthy, robust smolt. How do we know that? Because we bought them, we've farmed them, and our best performance ever has come from those smolt. That's the journey that we're on."

The company is now in the build-phase of new state-of-the-art smolt facilities at its Applecross site on the west coast of Scotland. Laister said that by larger smolt means higher weights, vastly improved survivability, and a reduced production cycle of approximately 12 months. This in turn, he said, would enable the company to achieve higher production and secure higher prices for a better quality product, at a lower cost.

6.2 billion Danish kroner invested in Bakkafrost's Faroe Islands and Scottish operations

In pursuit of this strategy, Bakkafrost Scotland is aiming for a hatchery capacity of 15 million smolt at 500g weight in 2027, with the company intending to move all of its smolt production to its Applecross site.

Bakkafrost will make other significant structural investments in Scotland, building a state-of-the-art harvest and processing plant and undertaking site expansions for its aquaculture operations. The company will focus "especially on more exposed areas and deeper water," said Bakkafrost CEO Regin Jacobsen.

The salmon company will also invest in increasing vessel capacity for transport and treatment in its Scottish operation, as well as marine site development.

Offshore "put on hold", while Bakkafrost "optimizes" existing farming operations

Meanwhile, in the Faroe Islands, Bakkafrost intends to increase its hatchery capacity to 24 million smolt at 500g weight by 2028, equivalent to 12,000 tonnes of biomass. However, instead of building a new broodstock station at Skálavík as originally planned, Jacobsen said the company can achieve more cost-efficient broodstock by repurposing old hatcheries.

"This will be much lower cost than previously planned, but we expect to achieve the same outcome," he explained. The company will also double its feed capacity to 280,000 tonnes, as well as expanding feed storage and logistics.

Jacobsen said Bakkafrost will focus on "optimizing existing farming sites" in the Faroe Islands by investing in infrastructure and equipment. It also expects to achieve "organic growth in existing licenses" by utilizing new technology.

However, Bakkafrost's offshore developments are "put on hold for now", Jacobsen said. "We think there are more low-hanging fruits, and with the current system, we think the time is not right to go really offshore," he added.

About Bakkafrost

P/F Bakkafrost is a Faroese salmon farming company based in Glyvrar on the island of Eysturoy in the Faroe Islands. Bakkafrost is the largest fish farming company in the Faroe Islands, and is the biggest private employer in the islands. Bakkafrost is the third-largest fish farming company in the world.

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