Norway is Europe’s largest salmon producer, followed closely by Scotland. Norwegian firms operate around the world, in South America, North America, and elsewhere, as do major feed producers. Salmon prices and volumes (and thus feed demand) can be quite volatile, as supply and demand conditions in one market ripple across the globe. Companies like Skretting, which says it is the global leader in aquafeed, face complicated challenges, as salmon prices can fall, putting pressure on feed prices, but encouraging salmon consumption, which increases demand for more farmed salmon, requiring more feed, and so on.
Norway: Salmon feed company to close UK operations
The overcapacity in Europe’s salmon feed market is causing at least one major feed producer to close its production operations in the UK. Norway-based Skretting, a Nutreco subsidiary, operates production facilities in 19 countries worldwide, including one each in Scotland and England. However, a rival, Marine Harvest Scotland, is opening a plant in the spring of 2019, which Skretting estimates will raise UK capacity by more than 50% over market demand, leading to unsustainably low prices.
Skretting said it isn’t planning on stopping production in other EU markets; indeed, the company continues to grow, based on a strategy of matching local aquafeed markets with local production is closely as possible. The principal market, the global farmed salmon sector, is as highly competitive as the feed sector, and experiences production shifts of its own, which feed suppliers must adapt to. “Aquaculture is an increasingly important and attractive solution to meet growing demand for healthy food,” the company’s announcement said, but to ensure sustained profitability “tough decisions” must be made, referring to the impacts on around 100 employees as well as customers and suppliers.