Scientists Øystein Hermansen (right) and Audun Iversen have analysed costs in the aquaculture industry for several years to identify drivers. Photo: Jon-Are Berg-Jacobsen © Nofima

Project Year 2017

High lice costs, rising feed prices – and expensive land-based facilities

 Industrial economics  

The costs of fighting sea lice may have passed the peak. Expensive closed facilities are nevertheless more relevant than ever.

From 2012 to 2016 production costs in the aquaculture industry rose some 50%. The costs of fighting sea lice have received by far the most attention. However, the main reason for the increased costs was rising fish feed prices.

“The challenges linked to sea lice have a huge impact on the industry’s reputation and opportunities for continued growth – plus there is very little fish farmers can do about rising feed prices,” says Nofima scientist Audun Iversen.

Together with his colleague Øystein Hermansen, he has analysed costs in the aquaculture industry over several years to identify the drivers.

The largest single increase in production costs is rising feed costs, up from NOK 14 a kilo of slaughtered Atlantic salmon in 2014 to NOK 18 in 2016. However, feed’s share of the total costs has still declined from 54% to 50%, due to larger relative increases in other costs.

NOK 4.5 billion per year

“The total cost of sea lice is around NOK 4.5 billion per year, not taking the cost of reduced growth rate into account. Nor have the challenges sea lice represent for the industry’s reputation and opportunities for further growth been taken into account,” says Audun Iversen.

The cost of fighting sea lice can be broken down thus:

  • Cleaner fish, such as lumpfish and wrasse, cost a little over NOK 1 per kilo of produced salmon – a total of almost NOK 1 billion
  • Treating salmon for lice costs close to 2 billion NOK
  • In addition there is the economic effect of starvation prior to treatment, which we have estimated to around 700 million NOK

From 2015 to 2016, however, there was a small decrease in the cost of fighting lice.

“It looks like we may have passed the peak for costs, although this depends on how much more treatment is still required,” says Øystein Hermansen.

Can closed farming be profitable?

In light of these lice costs, there is growing interest in closed containment facilities.

In financial terms, the sea pen system we have used since the 1970s is quite unique, with very low costs for keeping the salmon in one place. A large facility costs around NOK 50 million, including all the pens, feed barges, working boats, moorings and other equipment. This provides a fish farming capacity of 1 million m3, i.e. an investment cost of NOK 50 per cubic metre of farming volume.

Farming in closed facilities requires a significantly larger investment. New closed containment facilities in the sea cost around NOK 5,000 per m3 of farming volume, while land-based facilities can cost more than NOK 20,000.

“This does not mean that closed facilities cannot be profitable, but the way fish farming is done must be changed. In short: operations must be much more intensive,” says Audun Iversen.

Ideal timing

Among other things, stock density must be much higher than it is today, and good systems must be found to make full use of the available capacity.

“This will require new systems to ensure fish growth and welfare,” the scientist explains.

There are still many unresolved issues related to both biology and economics in closed facilities, and in order for it to be profitable to produce large salmon in closed facilities, more knowledge is needed.

“As with all new technology also, closed fish farms need time to mature to become financially efficient. In light of the prices we have seen in recent years, however, the time is right to succeed with this type of technology,” says Audun Iversen.

Kontali analyse

The Fiskery and Aquaculture Research Fund (FHF)

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