Salmon fish farm with floating cages in Greece. Aerial view
Salmon fish farm with floating cages in Greece. Aerial view

Investors look expectantly at Norwegian government’s proposed resource tax

WeAreAquaculture had the chance to discuss with different aquaculture agents how they feel about the announcement of the Norwegian government's proposed resource tax, the attitude may other countries adopt in this regard, and if this scenario allows inversions in other farming methods.

Everyone in the industry is worried about this tax, assures the CEO and Founder of BioFeyn, Timothy A. Bouley. The market understands the seriousness of this position. Within days of announcing the tax, the industry lost billions of dollars in publicly traded positions and farms froze others billions in investment – both very clear signs that investors are worried.

Because BioFeyn is a start-up that seeks investment, Bouley sees an open window. On the one hand, we are aligned with the health of the industry. What is good for the Norwegian salmon market is ultimately good for us because more dollars flowing in means more dollars flowing out for innovation.

On the other hand, our technology increases efficiency and resource use, so if margins are thinner, there is more reason to use a technology like ours. All things equal, we would much rather be working in an industry that is healthy and growing rather than one that is suffering and constrained, he opposes.

In more detail, Bouley explains why he thinks this task would not proliferate in the United States. A US tax would have a negligible impact on American tax revenues. The tax in Norway was motivated by politics and policy; the political climate in the US has nothing to do with these Norwegian drivers. A 40% tax increase in the US is simply misaligned with American values that favor corporate innovation and development.

Contrary, he indicates this Norwegian tax increases the potential for other countries, like the US or Iceland, the Faroe Islands, Ireland, Scotland, Canada, and Chile, to increase salmon production. Norway has been dominant in the salmon industry for decades and comprises more than 50% of the market.

The need to stimulate alternatives

Finally, BioFeyn's CEO fears the inconvenience may have the agents active in farming methods innovations. Salmon farming is one of the most innovative agricultural industries on earth. It has been expanding in new ways for years. And much of this new development has been driven by farmers who make most of their profit with net-pen farming. This new tax proposal may stands to significantly undercut new investment in the space.

All things considered, Mike Velings, Managing Partner at Aqua-Spark, understands the nature of the measure. If you use resources, you should pay for them. And make sure some of that payment lands with the owners of the resource. In essence, it is a good thing. One can discuss how much and how, but the idea is not bad at all. We think our societies must become more just and sustainable long term. Whether the Netherlands will follow and when, we have no idea.

Moreover, he notes inversions in other farming methods may be promoted. The difference in cost will stimulate alternatives. That is a good thing. In the end, all scenarios will/should incur a cost for externalities though. Just for one system, it will be higher than for another.

Finally, the Director of Marketing in Atlantic Sapphire, Max Francia states that choosing Florida to build our Bluehouse is due to its unique geological conditions and low electricity prices that will allow us to scale up our production in the US in a cost-competitive way, but also because Florida is very business friendly so a similar tax is not a topic here.