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Chile fishing for 1st place in salmon production

by 5m Editor
5 June 2006, at 1:00am

CHILE - Chile's salmon industry is hoping to replace Norway as the world's No. 1 producer by 2010, but first it may have to deal with the same environmental challenges that plague the current market leader.

Chile fishing for 1st place in salmon production - CHILE - Chile's salmon industry is hoping to replace Norway as the world's No. 1 producer by 2010, but first it may have to deal with the same environmental challenges that plague the current market leader.

Chilean salmon exports grew from $159 million in 1991 to $1.721 billion in 2005, and the goal is to exceed $3.0 billion by 2010, according to trade association SalmonChile.

Despite explosive growth, the sector's business owners say that for now they are more concerned with being recognized for product quality than with leading world production. "Our focus is not on competing with Norway, but on the quality of our production, providing more added value, differentiating our products and continuing to innovate," SalmonChile representative Carlos Odebret told Reuters.

Salmon, first produced on an industrial scale in Chile in the 1980's, is the country's No. 4 export. Chile is best known as the world's biggest producer of copper, which accounts for over half its exports. The rise of the salmon industry has changed the remote southern regions where it is centered, fueling economic and employment growth in port towns such as Aysen and Chacabuco.

Besides frozen trunks - salmon with heads and tails removed - Chile also exports more expensive fresh frozen boneless salmon filets and delicate smoked sliced salmon. "There's more activity in Aysen and I think that Chacabuco used to be quieter too. It's because of the salmon farms," said a local resident.

The steady progress of Chilean salmon producers has spurred some of the largest Norwegian and European firms to associate with or acquire them, like Fjord Seafood's plans to purchase local Delifish. One Chilean salmon producer, Invermar (INV.SN: Quote, Profile, Research), is listed on the Santiago stock exchange, and there are others, including AquaChile, that plan to do the same.

The question is whether Chile can innovate fast enough to keep up with the increasing environmental and health demands of well-organized environmental groups.

ENVIRONMENTAL CHALLENGES

Farm raised salmon, however, has been criticized by environmental groups for containing high levels of PCB's, antibiotics and other toxins. The Washington-based National Environmental Trust (NET) filed a shareholder resolution on Tuesday in Norway requesting that Pan Fish, the world's leading farmed fish producer, and its subsidiaries reform their production practices.

Local environmentalists have also complained that salmon farming elevates nitrogen levels in the sea, worsening the red tide that poisons shellfish, and they say the government should not grant additional permits. Chilean environmental authorities have recently begun a process to sanction eight salmon firms for producing levels of nitrogen that exceed legal limits.

Salmon are raised in enormous floating cages that are tied to the seabed. The fish are fed until they reach the desired size and weight and are then transported to processing plants. Chilean salmon go mainly to Japanese, U.S. and European markets.

According to SalmonChile, the industry directly and indirectly generates some 53,000 jobs in Chile, and is concerned about innovating to improve production, reduce environmental impact and support local communities. "We know that without innovation we won't grow, and one of our biggest efforts is in the area of fitosanitary issues: we want to have our own formula for a vaccine against SRS," said Odebret.

SRS is one of the main infectious diseases that attack salmon, compromising their immune system and substantially raising the mortality rate in the local industry. "Instead of being importers of vaccines, we want to be exporters. We're working on it," Odebret said at his office in Aysen.

"Trials we've carried out so far have had good results and we hope that in the short term we can have a vaccine to immunize our fish against this disease," Odebret said. Chilean salmon farms prefer not to reveal exactly how much they spend on imported vaccines to maintain the health of their fish, but they are willing to invest large amounts in research so that they can develop their own formulas. "The losses caused by this illness (SRS) have been heavy, and having our own effective vaccine would help," said Victor Soto, manager of the Chacabuco processing plant of Pescachile, a subsidiary of Spanish group Pescanova SA.

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