After nearly two years of contraction, salmon supply is showing signs of growth. Analysts from Rabobank predict that in the second half of 2023, the salmon market will "normalize", with an "inflection point" expected in the third quarter as supply picks up.
Rabobank's Global Aquaculture Update 2H 2023 predicts that the new growth phase in salmon production will last until at least 2025. The analysis notes that biomass and harvest weights are improving, predicting better biological performance for the industry during 2H 2023.
The salmon industry made record profits during the first half of 2023 which, the analysis notes, were driven by record prices. Although prices are coming down slightly, good price levels are expected to be maintained for the rest of the year, despite more salmon coming onto the market.
"Improving supply should reduce prices to pre-2022 levels, but this will be temporary and marginal. Prices will remain high compared to historical averages," the report states.
Rabobank notes that this continuing profitability comes despite the introduction of the 25% resource tax introduced in Norway – the so-called "salmon tax" – which starts retroactively from 1 January 2023.
However, "much remains unclear", say the analysts.
The combined tax rate for the biggest Norwegian salmon producers will increase to 47% (22% corporate tax plus 25% resource tax). However, it has not yet been confirmed how the government will estimate profitability, or to what extent the new tax regime will apply to land-based, closed-containment or offshore production.
"We expect the tax will have negative effects on investment and supply growth in Norway. The next important event will be the parliamentary election in 2025, as the opposition parties, if victorious, have promised to reverse the tax," the analysts note.
Meanwhile, in the US, increased supply is expected to be met with "solid demand". Good prices are expected to be maintained in 2H, although somewhat lower than the prices during the first half of 2023.
The report notes that in the US, Atlantic salmon has reached its lowest relative price point since the 2020 pandemic.
"In the US, salmon is no longer an expensive product but is competitive versus other animal proteins," the report states, noting that prices have "normalized" due to increased supply of salmon from Chile.
However, one possible bump in the road could come from the effects of El Niño, which may negatively impact salmon and shrimp production in Ecuador and Chile.
