Salmon farming feels the squeeze

Government-commissioned research paints a pessimistic picture of this country's salmon farming prospects and does not recommend investment in the sector due to uncertainty around securing the space the industry needs to grow.

Investment Opportunities in the New Zealand Salmon Industry, a report by market research firm Coriolis for the Ministry of Business, Innovation and Employment, says this country has strong "hypothetical potential" to increase its harvest of the high-value fish species.

Similar-sized Norway produces 75 times as much salmon as this country, the report says.

According to Aquaculture NZ, this country's salmon exports were worth $63.4 million last year.

But the Coriolis report said that while there was strong potential for growing the local salmon farming sector, large-scale growth was "unlikely to be realised".

"The fundamental issue is that New Zealand as a society has yet to come to a consensus on salmon aquaculture, with proponents arguing for it to become a billion dollar industry, while a wide-ranging opposition of recreational fishermen, inshore fishing companies, holiday home owners and environmental advocates oppose its growth."

The report said it was difficult to recommend investment in the sector due to the high levels of risk, uncertainty and cost around ocean space tenure and renewability of tenure.

New Zealand King Salmon - which accounts for around 68 per cent of the country's production - has an application lodged with the Environmental Protection Authority to expand its farming area to 206ha of water space in the Marlborough Sounds, allowing for the construction of nine new fish farms.

Chief executive Grant Rosewarne said the extra space would allow the firm to grow revenue from its $120 million to $500 million over the next five to 10 years.

Only 12ha of the 206ha would be farmed at any one time, he said.

"We are confident that we will be granted some space but it is in the hands of a board on inquiry who are currently considering the matter."

An interim ruling on the application is due on December 19.

Rosewarne said he was confident that salmon farming could become a $1 billion industry in New Zealand if it secured the extra water space needed.

"There's no other primary agricultural industry that can reap such rich rewards for New Zealand, requiring such little space and conducted in a completely sustainable way," he said.

Opponents of aquaculture, including Greenpeace, argue that the industry is not wholly sustainable and is damaging to the environment.

Coriolis analyst Tim Morris, who wrote the report, said the New Zealand salmon farming sector had the potential to grow to a $2 to $3 billion industry if enough space was granted.

"We could pay half of our [national] petrol bill with salmon."

Mt Cook Alpine Salmon, which farms in hydro power canals in the South Island's MacKenzie Basin, is more than halfway through a $20 million expansion plan aimed at fuelling a 1400 per cent production increase over the next four years.

Eric Barrett, chief executive of Sanford, said the company had modest growth plans for farming salmon.

High value

"Farmgate" value of an additional 700ha of farming space

* Cattle/sheep farming $500,000

* Salmon farming $1 billion.

Source: Coriolis report.