After decades of rapid growth, coastal marine aquaculture is reaching limitations due to a variety of reasons, including legislation restriction and space challenges. Therefore, a natural development is to move farming further out to sea. The entry of the salmon industry into the offshore aquaculture sector is supercharging innovation and scale, with many new projects in the pipeline, especially in Norway. A second and parallel epicenter of offshore aquaculture innovation is China, where the space in coastal areas is restrictive, and the demand for marine proteins is booming.
'While these two development pathways are related, we expect them to progress in different ways,' says Gorjan Nikolik, Senior Global Specialist – Seafood at Rabobank. 'In Norway and the salmon farming sector, the transition to offshore is a natural evolution of the current business model, whereas in China, an industry transformation is needed for offshore farming to be a reality,' Nikolik explains.
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Norway and the evolution of the industry
Norway is the world's largest salmon producer, producing just under 50% of global Atlantic salmon, in a highly regulated environment. In order to ensure growth while maintaining good biological performance, Norwegian salmon farming companies see offshore production as one of the main solutions. 'The fact that there is already a highly developed industry cluster with all inputs, skills, and technologies available makes Norway the ideal location for this development. Not only are the large salmon farmers well-capitalized companies that have the funds to execute the costly R&D for offshore farming, it also fits their business model,' according to Nikolik. Offshore farming can be used as the last step in the farming process, meaning that that the capital-intensive offshore structure is used efficiently at close to full capacity, while license capacity is freed up on the coast, ensuring more growth potential.
The Norwegian government has so far accepted over 70 projects of the more than 200 received so far. At the moment, the expectations are that Norway can potentially produce over 100,000 metric tons of offshore-raised salmon by 2030. Many other salmon-farming regions where offshore aquaculture is also developing look promising for the industry as well, such as Scotland, Canada, Chile, the Faroe Islands, and Australia.
China and the revolution of the industry
China has the largest aquaculture industry in the world, accounting for nearly 60% of global farmed seafood production. Even though most of this is fresh water and mollusk aquaculture, China's marine finfish aquaculture is a large and rapidly expanding industry. However, space constraints for aquaculture on China's coasts are far greater than those of Norway or any other salmon-farming region. There are also significant risks for a young industry growing rapidly in environments with high farming density close to the Chinese coast, along with a number of weather- and safety-related issues that could all find a solution in offshore aquaculture.
From a demand perspective, the need in China for marine protein supply growth is among the highest globally. China is not only the largest seafood-consuming nation in the world, it is also where most incremental seafood demand growth is expected to be, due to the rising middle class and broad appreciation for seafood. With self-sufficiency being a key political priority, offshore aquaculture will likely be an area of focus for the Chinese government.
The future of the aquaculture industry and its impact
The global impact of offshore aquaculture's future success, especially in the longer term, will be a new source of supply growth for healthy and premium marine proteins, as well as a key business opportunity for many in the aquaculture and seafood industry. 'If executed well, offshore aquaculture also has the potential to greatly improve aquaculture's biosecurity, sustainability, and animal welfare, while lowering its environmental footprint,' concludes Nikolik.
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