in farmed New Zealand Chinook salmon Oncorhynchus tshawytscha
Investment opportunities in the New Zealand Salmon Industry
Transcript of Investment opportunities in the New Zealand Salmon Industry
INVESTMENT OPPORTUNITIES IN THE NEW ZEALAND SALMON INDUSTRYFebruary 2014
ThisinformationwaspreparedbyCoriolissolelyfortheuseofourclient;itisnottobereliedonbyanythirdpartywithout priorwrittenconsent.
InvestmentopportunitiesintheNewZealandSalmon industry
PartoftheFood&BeverageInformationProjectMay2012v1.01
www.foodandbeverage.govt.nz
Cover im
age courtesy New
Zealand K
ing Salmon
STAGEIIIThisdocumentrepresentsthethirdstageofawiderindustryscreendesignedtoidentify,develop&highlightemerginggrowthopportunitiesinNewZealandfoodandbeverageexportsforpotentialinvestorsandotherinterestedparties
StageIISecondaryScreen
StageIIIDevelopOpportunities
StageIPreliminaryScreen
Initialinputtoprocess
559
Metcriteria
129Metcriteria
25Identified
20
Exploredindepth
3
HoneySalmonSpirits
SeerelatedStageI&IIdocumentfordetailsAvailableatwww.foodandbeverage.govt.nz
Youarehere
PAGE3
TABLEOFCONTENTS
Section Page
Contents 4
Glossaryofterms 5
Methodology&datasources 6
Summary&conclusions 7
1.Salmonisanattractiveproduct 8
2. Industryhasachievedstronggrowth 16
3.Export marketsaretheprimedriverofgrowth 31
4.Stronghypotheticalpotential;unlikelyinpractice 38
GLOSSARYOFTERMS
PAGE5
Thisreportusesthefollowingacronymsandabbreviations
ANZSIC AU/NZStandard IndustryClassification
b Billion
CAGR CompoundAnnualGrowthRate
e Estimate
f Forecast
FOB FreeonBoard
FT Fulltime
HSCodes Harmonised SystemCodesforcommodityclassifications
m Million
n/a Notavailable/notapplicable
NZ NewZealand
NZ$/NZD NewZealanddollar
PT Part time
S.H./N.H. Southern/NorthernHemisphere
T/O Turnover
t Tonne
US/USA United StatesofAmerica
US$/USD United Statesdollar
UK United Kingdom
METHODOLOGY&DATASOURCES
PAGE6 *FoodandAgricultureOrganisationoftheUnitedNations
Datawasfromavarietyofsources,andhasanumberofidentifiedlimitations
- Thisreportusesarangeofinformationsources,bothqualitativeandquantitative.
- Thenumbersinthisreportcomefrommultiplesources.Whilewebelievethedataaredirectionallycorrect,werecognisethelimitationsinwhatinformationisavailable.- Inmanycasesdifferentdatasourcesdisagree(e.g.
StatisticsNewZealandvs.FAO*vs.UNComtrade).- Manydatasourcesincorporateestimatesofindustry
experts.- Asoneexample,inmanycases,thevalueand/orvolume
recordedasexportedbyonecountrydoesnotmatchtheamountrecordedasbeingreceivedasimportsbythecounterparty[forunderstoodreasons].
- Inaddition,insomeplaces,wehavemadeourownclearlynotedestimates.
- CoriolishasnotbeenaskedtoindependentlyverifyoraudittheinformationormaterialprovidedtoitbyoronbehalfoftheClientoranyofthedatasourcesusedintheproject.- Theinformationcontainedinthereportandany
commentaryhasbeencompiledfrominformationandmaterialsuppliedbythirdpartysourcesandpubliclyavailableinformationwhichmay(inpart)beinaccurateorincomplete.
- Coriolismakesnorepresentation,warrantyorguarantee,whetherexpressorimplied,astothequality,accuracy,reliability,currencyorcompletenessoftheinformationprovidedinthereport.
- AlltradedataanalysedinallsectionsoftheF&BInformationprojectarecalculatedanddisplayedinUS$(otherthanafewplaceswheredetaileddataisnotavailable).Thisisdoneforarangeofreasons:1. Itisthecurrencymostusedininternationaltrade2. Itallowsforcrosscountrycomparisons(e.g.vs.Denmark)3. ItremovestheimpactofNZDexchangeratevariability4. Itismorecomprehensibletonon-NZaudiences(e.g.foreign
investors)5. ItisthecurrencyinwhichtheUnitedNationscollectsand
tabulatesglobaltradedata
- Theopinionsexpressedinthisreportrepresentthoseoftheindustryparticipantsinterviewedandtheauthors.ThesedonotnecessarilyrepresentthoseofCoriolisLimitedortheNewZealandGovernment.
- Ifyouhaveanyquestionsaboutthemethodology,sourcesoraccuracyofanypartofthisreport,pleasecontactTimMorris,thereport’sleadauthoratCoriolis,on+6496231848
SUMMARY– THESALMONOPPORTUNITY
Overview- Salmoncanonlybefarmedinalimitedrangeofareasgloballyasthefishrequire
coldwater.Inaddition,theindustryishighlycapitalintensiveleadingtosalmonfarmingonlyoccurringinapoliticallystablecountriesthatofferlongtermseaspaceleases.SalmonaquacultureemergedinNorwayandScotlandintheearly60sand70s.Fromthereithasspreadtoahandfulofothercountriesatanyscale.
- ThecoastlineoftheSouthIslandofNZishighlysuitedtosalmonfarminginmanyareas.ShelteredbayscontainingcoldwaterscanbefoundintheMarlboroughSounds,BanksPeninsula,StewartIslandandFiordland.
Driversofsuccess- NZisabletofarmChinooksalmon/KingsalmonasNZwaterslackthemajor
diseasesthatimpactthisspecieselsewhere.ChinookissignificantlydifferentiatedfromAtlanticsalmonandonlyavailableinlowquantities,thusitachievesa5-15%premium.
- OnlyTasmaniahassentanyquantityoffreshsalmontoNewZealandinthelastdecade(forunclearreasons1).ThislackofcompetitionhasmeantthatgrowingNZdomesticconsumptionhasbeenmetbyNZfirms.
- ThedevastationcausedbyISA*inChileoverthepastthreeyearsdroveupworldpricesandhencethevalueofNZsalmonexports.
- Relativetootherproteins,salmonisapremiumproductfarmedsustainablywithpositivehealthattributes.
Investmentopportunities- TheNZsalmonindustryemergedinthelate70searly80swithgreatfanfare.
Largenumbersoffirmsentered,manylistedonthestockexchangeandwereinvestmentdarlingsforaperiodoftime.However,thecombinedeffectoffallingglobalsalmonprices(drivenbyincreasedefficienciesandincreasedproduction)andtheon-goingrequirementsforadditionalcapitaltofundgrowthpushedtheNZsalmonindustryintocrisisintheearly90s.Fromthiscrisisemergedtwokeyindustryplayers:NewZealandKingSalmon(NZKS)andSanford.
- NewZealandKingSalmon [NZKS](68%ofNZproduction)iscurrentlyownedbytheTiong GroupofMalaysia(anAsianconglomeratewithinterestsrangingfrompalmoiltonewspapers)andDirectCapital(aNZbasedPrivateEquityFirm).Itisnotobviousthateitheroftheseownersareclearlongtermholders.KingSalmon
hasannouncedthedesiretoadd+206hectares,allowingittogrowturnoverto$500m/year.
- Sanford (24%ofNZproduction)isaNZX-listedseafoodcompanywithactivitiesrangingfromdeepseafishingthroughtomusselfarming.PrivatelyownedAmalgamatedDairiesisacornerstoneshareholderat37%.
- Beyondthesetwolargefirms,therearefoursmallscalesalmonproducers– threeinfreshwaterhydroelectriccanalsand1usingsea-cagesinAkaroa.OftheseMtCooksalmonhasrecentlyannounceda$20mexpansionplantofuela1,400%productionincreaseoverthenextfouryears.
Growthpotential?- NewZealandhasexcellenttheoreticalpotentialtoproducesalmon:Norway,a
countryofasimilarsizetoNewZealand,produces75timesasmuchsalmon;and,atasmallerscale,theFaeroeIslandsproduces218timesasmuchsalmonastheBanksPeninsularegion.
- However,thisstronghypotheticalpotentialforcontinuedgrowthisunlikelytoberealised.UnlikeNorwayortheFaeroes,therulebookhasbeenregularlychanged.Itistooearlytotellatthisstagewhethertherulesintroducedlastyearwillmakethingseasierinpractice.
- ThefundamentalissueisthatNZasasocietyhasyettocometoaconsensusonsalmonaquaculture,withtheproponentsarguingforittobecomeabilliondollarindustry,whileawiderangingoppositionofrecreationalfisherman,inshorefishingcompanies,holidayhomeownersandenvironmentaladvocatesopposeitsgrowth.Thereisalsohistoricuncertaintyaroundforeshoreandseabedownership.
- InthisenvironmentitisdifficulttorecommendinvestmentintheNZsalmonindustryduetothehighlevelsofrisk,uncertaintyandcostaroundoceanspacetenureandrenewabilityoftenure.Anyusechangeisslow,uncertainandcostly.NZKShasrecentlyspentNZ$6monaresourceconsentandfileda2,600pageapplicationfrom40expertswithanunclearchanceofsuccess.ItishopedthattherecentlyintroducedEPA,decidingonconsentsofnationalsignificance,willimprovetheprocess.
- NZ’slargestseafoodcompanySealordrecentlyinvestedinsalmonaquacultureinTasmania.
1.Wearetoldbyindustrythatthecauseisnotbiosecurity,butlacktheresourcestoconfirmthisstatement;*ISA=InfectiousSalmonAnemia virus
NewZealandsalmonisunlikelytorealiseitspotentialand– astheindustryisalreadyhighlyconsolidated– therearelimitedinvestmentopportunities
PAGE7
TABLEOFCONTENTS
Section Page
Contents 4
Glossaryofterms 5
Methodology&datasources 6
Summary&conclusions 7
1.Salmonisanattractiveproduct 8
2. Industryhasachievedstronggrowth 16
3.Export marketsaretheprimedriverofgrowth 31
4.Stronghypotheticalpotential;unlikelyinpractice 38
Salmonproducingregions(2011)
SALMON– PRODUCTIONREGIONSSalmoncanonlybeproducedinalimitedrangeofareasglobally
PAGE9
NativePacificIntroducedAtlantic
NativeAtlanticIntroducedPacific
NativeAtlanticIntroducedPacific
IntroducedAtlantic&Pacific IntroducedAtlantic
&Pacific
RangeparticularlylimitedinSouthern
Hemisphere
SALMON– KEYSPECIES
Source:UNFAOFishStat;UNFAOFIGIS;Wikipedia;Coriolisanalysis
Therearesixkeysalmonspeciesglobally– threefarmed(Atlantic,browntroutandCoho)andthreewild(Pink,ChumandSockeye);NewZealandfarmsaminorspeciesChinook/Kingsalmon
Overviewofthekey/secondaryspeciesintheglobalsalmonindustry(various;2008-2010asavailable)
Scientificname Commonname(s) Wildcapture
(t;000;08)
Aquacultureproduction(t;000;08)
Keyaquacultureproducingcountries
Comments/notes
Salmo salar Atlanticsalmon 3 1,457 NorwayChileScotlandCanada
FaeroeIsl.USAOthers
- Most importantspeciesglobally- Mostsuitableforfarming- Strongbreedingprogramsinplaceimprovingperformance
Salmo trutta BrowntroutSeatrout
TBD TBD
Oncorhynchuskisutch
Cohosalmon 21 105 ChileJapan
- Valuable enoughforfarming- PrimarilyforJapanesemarket
Oncorhynchusgorbuscha
PinksalmonHumpback salmon
307 - - - - Of lowvaluesonotattractivetoaquaculture
Oncorhynchusketa
ChumDogsalmonKeta salmon
343 - - - - Of lowvaluesonotattractivetoaquaculture
Oncorhynchusnerka
Sockeyesalmon 136 - - - - Lessadaptableforfarmingbecauseithaslowergrowthandsurvivalrates,ithasalowerfilletyieldanditismoresusceptibletostressleadingtopoorproductquality
Oncorhynchustshawytscha
ChinooksalmonKingsalmonColumbiariversalmonCopperriversalmon
6 9 N.ZealandCanada
- OthercountriesgettingoutofnotintothisspeciesduetoitspoorperformancerelativetoAtlantic (e.g.rateofgrowth,realworldFCR,etc.)
- Persistentfishhealthchallengesinothermarkets(bacterialkidneydisease,rickettsia)
- Effectively onlytwofirmfarmingthisspeciesglobally(NZKSandCreativeSalmon[B.C..Canada])atscale
- New Zealandproduces70%+ofglobalfarmingoutput
PAGE10
Typicalusageofthreekeysalmonspeciesbyusageform(2012)
SALMON– CANNEDVS.FRESHInmostmarketsfarmedAtlanticsalmonandtroutaresoldasapremiumfreshorsmokedproductwhilewildPacificsalmonissoldincannedform
PAGE11 Source:various;photocredit(fish:publicdomainviaWikipedia;products:fairuse;lowresolution;completeproduct/brandforillustrativepurposes);Coriolisanalysis
SockeyeorRedsalmonOncorhynchus nerka
Pinksalmon or humpbacksalmonOncorhynchus gorbuscha
AtlanticsalmonSalmo salar
BrowntroutSalmo trutta
RainbowtroutOncorhynchus mykiss
Globalsalmonproduction:wildcaptureandaquaculture(t;000;1950-2008)
SALMON– GLOBALPRODUCTIONGloballywildcaptureofsalmonisflat;salmonaquaculturetookoffintheearly80’sandhasachievedstronggrowthsuchthataquaculturenowexceedswildcapture
PAGE12
-
500
1,000
1,500
2,000
2,500
1950
1952
1954
1956
1958
1960
1962
1964
1966
1968
1970
1972
1974
1976
1978
1980
1982
1984
1986
1988
1990
1992
1994
1996
1998
2000
2002
2004
2006
2008
AquacultureWildcapture
Wildcapture
Aquaculture
0%
7%
10yearCAGR(98-08)
4%
Globalsalmonaquacultureproduction:actualandforecast(t;000;1980-2030f)
SALMON– FORECASTGROWTHTherateofgrowthinfarmedsalmonproductionhasslowedastheindustryhasmatured;howeverMarineHarvest(theglobal#1salmonfirm)forecasts6%globalproductiongrowththrough2030
PAGE13 Source:FAOFishStat (1980-2008);Kontali 2009-2010;MarineHarvest2010-2030(OsloSalmonSummit2010Howtosatisfythedemandforsalmonin2011andin2030)
-
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
4,500
5,000
198019811982198319841985198619871988198919901991199219931994199519961997199819992000200120022003200420052006200720082009201020112012201320142015201620172018201920202021202220232024202520262027202820292030
ProjectedCAGR(10-30)6%
CAGR(80-90)43%
CAGR(90-00)14%
CAGR(00-08)6%
Disease(ISA)outbreakin
Chile1
EXAMPLE:PriceperkilogramofsalmonandselectothermeatsintheUnitedStates(US$/kilogram;March2011)
SALMON– PRICEVS.OTHERMEATSSalmonisapremiumproductthatachieveshigherpricesthanmostotherproteins
PAGE14
$3.95
$5.50
$7.70
$9.03
$10.60
$16.53
$17.00
$17.64
$35.21
Source:SafewayUSonlinegroceryshoppingwebsite20110305(SanFranciscopostcode);Coriolisanalysis
Smokedsalmon
Frozensalmon
Cannedsalmon
Freshsalmon
Cannedsalmon
Realised“NewZealandfarmgate”valueperhectareofspace(NZ$;2011orasavailable)
“FARMGATE”RETURNPERHECTARESalmonreturnsdramaticallymoreperhectarethanotherformsofagri/aqua-culture;forexample,salmonreturns2,000timesasmuchperhectareasbeefandsheepmeat
PAGE15 Source:CoriolisF&BIPSeafoodp89;MAFSONZAF2011;UNFAOAgStat database;Zespri annualreport2011;SNZAgriculturalcensus2007(lastavailable);Coriolisanalysis
$721 $6,086$41,914 $28,889 $39,238
$1,450,000
Cattle/Sheepmeat
Dairy Kiwifruit Oysters Mussels Salmon
2,000x
IncrementalNewZealand“farmgate”valueof+700haofspace(NZ$;millions;2011orasavailable)
$0.5
$4.3
$29
$20
$27
$1,015
Cattle/Sheepmeat
Dairy
Kiwifruit
Oysters
Mussels
Salmon
Another700haofsheep/cattlewouldadd
halfamillion
Another700haofsalmonwouldadda
billiondollars
TABLEOFCONTENTS
Section Page
Contents 4
Glossaryofterms 5
Methodology&datasources 6
Summary&conclusions 7
1.Salmonisanattractiveproduct 8
2. Industryhasachievedstronggrowth 16
3.Export marketsaretheprimedriverofgrowth 31
4.Stronghypotheticalpotential;unlikelyinpractice 38
TimelineofsalmonandsalmonaquaculturedevelopmentinNewZealand(1860-2010)
TIMELINESalmonwereintroducedintoNewZealandmorethan100yearsago;salmonfamingstartedin1976andtheindustryhasexpandedsincethen
PAGE17 1.Successfulinthesenseofcreatingameaningfulamountofproductionandexports;Source:Coriolis
Earlier 1960’s 1970’s 1980’s 1990’s 2000’s
OceanranchingKing/Chinooksalmon1976
BrowntroutfirstintroducedbyAcclimatisationsocietyfromBritishstockviaTasmania1860’s
Rainbowtroutintroduced byAcclimatisationsociety fromWestCoastofNorthAmerica1883
NumerousattemptsbyvariousAcclimatisation societiestointroducesalmonandtrout1875- 1900
Chinook,SockeyeandAtlanticsalmonsuccessfullyintroducedbygovernment1901 - 1907
Atlantic salmonhatcheryestablishedonWanganuiriver1924
SeacageKing/Chinooksalmon1981
Numerousfirmslist toattractadditionalcapital
MalaysianTiong Groupdrivesindustryconsolidation
NZGovernmentputsmoratoriumonnewaquaculturedevelopment2001
Illustration Species Yearintroduced Source CurrentstatusinwildFarmed
elsewhere?FarmedinNew
Zealand?
BrowntroutSalmo trutta
1860’s BritishstockviaTasmania;subsequentintroductions
WidespreadsouthofCoromandelPeninsula
Yes(PrimarilyinUK)
No(illegal)
RainbowtroutorsteelheadOncorhynchus mykiss
1883 FromSonomaCreek,California
N &SIsland;riversthatflowintolakes(not
seagoing)
Yes(widespread)
No(illegal)
AtlanticsalmonSalmo salar
1901 - 1907 BritishstockviaAustralia;numerousattempts toseedaroundcountry
Closetoextinction2;remnantwildstocksconfinedtolakesin
Southland’supperWaiaucatchment
Yes(widespread)
No(Pasttrials; nocurrentfarms)
SockeyeorRedsalmonOncorhynchus nerka
1902 GiftfromCanadianGovernment
Virtuallyextinct;remnantpopulationaroundLake
Ōhau (SIsland)
No(Noteconomic)
Limited(1small firm)
ChinookorKingsalmonOncorhynchus tshawytscha
1875(failed)1901 - 1907
FromBairdFishStation,McCloudRiverinCalifornia.
MainlyonSouthIslandEastCoast
Limited(2farms;disease;pooreconomics
Yes(Primaryspeciesfarmedcurrently)
KeymemberoftheSalmon(Salmonidae)familyintroducedinNewZealand1(1850-1910)
INTRODUCEDSPECIESFivekeymembersoftheSalmonfamilywereintroducedtoNewZealandover100yearsago;onlyonespecies(Chinook)iscurrentlyfarmedatanyscale
PAGE18 1.AlsoSalvelinus fontinalis (brookchar)&Salvelinus namaycush (mackinaw); 2.BreedingstocksofAtlanticsalmonaremaintainedattheOtago FishandGameCouncilhatcheryinWanaka;Source:various;photocredit(fish:publicdomainviawikipedia);Coriolisanalysis
Whydoothercountries notfarmChinook? WhydoesNewZealandfarm Chinook?
Disease - Chinookfarming haspersistentfishhealthchallenges(BacterialKidneyDisease,Rickettsia)inotherregions(Canada,Chile)whichareprofoundchallengestoproductionforNorthAmericanorEuropeanmarket
- Thesediseases aredifficultandexpensivetotreat2
- ChinookinNZarefreeofmostdiseasesandparasites
- If keydiseasesweretoarrive(cf.oysters,kiwifruit),theindustrywouldlikelycollapse(andneedtotransitiontoAtlantic)
Economics - Chinookgrow moreslowlythanAtlanticsalmon(timeismoney)
- Chinookhaveapoorerfeedconversionratio(FCR)thanAtlanticsalmon
- NorwayhasamajorbreedingprogramunderwayforAtlanticsalmoncontinuouslyimprovingtheproductionefficiencyofAtlantic
- Significant fresh/frozenimportsofsalmondonothappen,forunclearreasons,thereforeNew Zealandproducerscanbelessefficient
- Lackofdiseasesimproveseconomics(costoftreatment,rateofgrowth,yield,survivalrate)
History(pathdependence)
- “Atlanticsalmonhavebecomethedominantfarmedspeciesforanumberofreasons.MostnotableisthatNorway's-andtoalesserextentScotland's-earlydevelopmentofAtlanticsalmonaquaculturemeantthatthetechniquesandtechnologiesforcultivatingthisparticularspecies,aswellasmarketsforitssale,werewellestablishedbythetimetheindustryspreadtoothercountries.Inaddition,Norway'sdominanceofthemarket,combinedwithitspioneeringroleindevelopingsalmonaquaculture,hasmeantthataquacultureresearchandexperienceinNorwayhasstronglyinfluencedtheindustry'sdevelopment.Well-establishedNorwegianbreedingprogramshavedevelopedhighlydomesticatedbroodstock (AmosandAppleby,1999)with"...fastergrowthrates,greatertoleranceforhigherstockingdensities,superiordiseaseresistance,andmoreefficientfeedconversionrates" (TheStandingSenateCommitteeonFisheries,2001)
- ChinooksalmonwidespreadaroundSouthIsland ofNewZealand
- Atlanticsalmononlyinoneriver(Waiau)attimesalmonaquacultureemergedinNewZealand(1976/1981)
- IndustryemergedlocallyratherthanthroughinvestmentbyTop10global(i.e.Norwegian)salmonaquaculturefirms
IdentifiedreasonsforandagainstChinooksalmonfarming(2012)
WHYCHINOOK?Unliketherestoftheworld1,NewZealandfarmsChinooksalmon;thisistheresultofhistoricalaccidentratherthananyplanorstrategy
PAGE19 1.OtherthantwofarmsinBC,Canada;2.thisisnottosayAtlanticsalmondonothavediseaseproblems(e.g.ISA)butAtlanticdiseasesappeartobemoremanageablebyexperiencedfarmoperators;Source:Coriolisfromvariousarticlesandreports
NewZealandsalmonproduction(t;000;1984-2010e)
SALMON– NZPRODUCTIONTheNewZealandsalmonindustryexperiencedaperiodofstronggrowththroughthemid-90’s;growthsincewasslowinguntilarecentsurge09/10e
PAGE20 Source:UNFAOFishStat (1984-1997);NZFSA(1998-2009+2010e);Coriolisanalysis
0.1 0.20.6
0.91.2
1.5
2.52.9 3.0
3.54.0
5.0
6.4
4.4
5.9
5.1
6.1
8.59.1
6.7
7.4 7.27.7
8.4 8.5
10.7
12.4
1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
CAGR(84-90)73%
CAGR(90-95)15%
CAGR(90-95)11%
CAGR(00-05)3%
CAGR(05-10)12%
ProductionincreaseisprobablyduetoNZKingSalmon'sClayPoint(Tory
Channel)farmcomingonline
Listedfirm Whenlisted
Details Effectiveoutcome Today
NewZealandSalmon 1983 - Setup; islisted;loseslotsofmoney;diversifiedintovegetableprocessing(Cedenco)andpackaging(Drum);getsexportcommendationfromTradeNZ;didn’tachievescale;wassold
Lostinvestorsmoney;acquiredbyRegal;eventuallyacquiredbyTiong Group
NowpartofNZKS
BigGlorySeafoods Oct1986 - FirstNZseacageoperation setupbyBritishPetroleumin 1981- Wentthroughanumberofhands;waslisted;diversified;gets
exportcommendationfromTradeNZ;wasacquired;sold
Acquiredby80’seraconglomeratewhichbecameMontanaWines;soldsalmonoperation
NowadivisionofSanford
NewZealandMarineFarms
1986 - Reverse takeoverbyComo- ComosellssalmonoperationstoSouthPacificSalmon;SPSsells
toFleetwing Ent.;Fleetwing convertssitetomusselfarming
Lostinvestorsmoney;eventuallyacquired
Gone
RegalSalmon Sep1986 - CreatedinmergerofSouthIslandSalmonPartnershipandtheSouthIsland SalmonCompany
- Initialsuccess;furthercapitalraising;diversifiesintowineandwasabi;losesmoney;winsTradeNZ exportaward;sellsmoreshares;allegedinsider trading;SecuritiesCommissioninvestigation;fined;losesmoremoney;acquiredbyTiong
Lostinvestorsmoney;eventuallyacquiredbyTiong Group
NowpartofNZKS
CroweCorporation Jan1987 - Goat farmingandoceanranchingofsalmon Lostinvestorsmoney;receivership;acquiredbyDFC
Gone
Salmond SmithBiolab [1965] - Listedfirmbuysintosalmonindustrypioneer,diversifies;losesmoney
AcquiredbyTiong Group NowpartofNZKS
NewZealandsalmonfarmingcompanieswhichwerepubliclylistedinNewZealand(1980-1990
LISTEDFIRMSTheexcitementaroundsalmonfarmingledtofivesalmoncompaniesbeinglistedonthestockexchangeandonelistedfirm(Salmond SmithBiolab)acquiringasalmoncompany;allweretobepoorlongterminvestments
PAGE21
EARLYHYPE
- “[Investorswill]participateintwoofthemostexcitingprimaryindustriestoemergeinNewZealandinthelastfiveyears,Goatfarmingandoceanranchingofsalmon.”TonyCrowe,ManagingDirector,CroweCorporation,Jan1987(attimeoflisting)
PAGE22
Theindustryinitiallyhadstronghypeaboutthepotentialforgrowth
MOREDIFFICULTTHANEXPECTED
- "Thenumberoflistedsalmoncompaniesisunjustifiedyetmoreareexpectedbeforetheendofthisyear…Oceanranchingisaveryvolatilebusinesswithnoguaranteeofreturnsafterlargeinitialcapitalcosts.Operatingcostsarelowerthanforseacagesbutitshouldnotbeconsideredalow-costexercise.Seacageprofitmarginsareatbestmoderateandarelikelytodeterioratewithsalmonpricesfallingthroughtheworld-wideproductionexplosion...[Wenote]asimilarpatternoccurredinotherglamourindustriessuchasthoroughbredbreedingandgoats.Initialpricesforthesestocksprovedunsustainableandrationalisationofsalmonstocksisexpectedoverseveralyears.”Analystreport,O'ConnorGrieveandCo.(sharebrokers),May1987
- “Salmonfarmingisanewspeculativeventurecapitalindustrycarriedoutinremoteareas…Acombinationofunforeseencircumstanceshadledtothepresentposition.”SirRonaldScott,Chairman,NewZealandMarineFarms,July1987
- “ListedsalmonfarmerNewZealandMarineFarmsLtdisinaliquiditycrisisandthefutureofthecompanydependsonthebankerdevisingarescueplan.ThecompanyyesterdayreportedtothestockexchangeitsplanstodevelopnewlicencesinthenewlyidentifiedPort Underwoodareahadtakenaseveresetbackthroughthecompany'ssharepricefallingbelowpar($1)onthestockexchange… ApilotsalmonfarmingschemeoperatedintheportUnderwoodareahadshowngoodresults,MrBaigent said.However,morecashwasneededtosetupafulloperationbuttimehadrunout.”NewZealandHerald,Feb1987
- “TheNewZealandSalmonCoLtdhasnotyetbeenabletoidentifythealgaebloomresponsibleforkillingaproportionofitssalmonstockfromseacage farmingoperationinBigGloryBay,StewartIsland.”NewZealandHerald,Jan1989
PAGE23
Salmonfarmingprovedmoredifficultthanexpected
WORLDPRICESDOWN
- “AcombinationoflossesfromtheJanuary1989algaebloom,weakerworldsalmonprices andaninternationaloversupplyoffishhaspromptedRegalSalmontorevisedownwardsitsprofitforecast.”NewZealandHerald,Feb1990
- “NewZealandcompaniesinvolvedinsalmonfarmingarebeinghithardbyafallof25to30percentinworldpricesforfrozenandchilledsalmon.”NewZealandHerald,April1990
- “NewsofadisappointingresultfromNewZealandSalmonCoLtdhasfocusedattentionagainontheskyrocketingworldproductionofsalmon,andthequestionofhowwellNewZealanderscanfootitinsuchaclimate.HardontheheelsofRegalSalmonLtd's 18-monthlossof$940,000toMarch31,NZSalmonturnedinasix-monthlossof$1.797milliontoMarch31,comparedwithalosstothesametimelastyearof$425,000.Bothcompanieshavepointedtoworldoversupplyasthemainsourceoftheirwoesonthesalmonsideoftheirbusinesses,butholdouthopeforabrighterfuturefortheindustry.”NationalBusinessReview,July1990
- “Worldwidepriceshavenotrisenasexpected.”TerryShagin,ManagingDirector,RegalSalmon,June1992
- “Troublecamein1993when[RegelSalmon]announceda$4.63millionlossforthesixmonthsendedSeptember..Thecompanyblamedthelossona25%dropinpricesforfishsoldtoJapanandageneralworldoversupply,stemmingprincipallyfromanunanticipatedincreasefromNorway.Regal's sharepriceimmediatelyfellfrom80cto48c,bothfiguresbeingasubstantialslumpfromthe$2.50reachedin1992forsharesissuedat50cin1986.ThecompanythencameunderthecontrolofMalaysia'sTiong Group,whichacquiredSalmond SmithBiolab inlate1995/early1996andmergedthetwo.”PeterV.O’Brien,NationalBusinessReview,Dec1997
- “RegalSalmonyesterdayreportedanexpectedtradinglossforthesixmonthstoSeptember30,butpulledasurprisebyaddingthatitsprospectsofmeetingapredictedannualprofitanddividendhaddiminishedconsiderably.Thecompanyblamedthe$4.63million interimlossonforeignexchangelossesandasharpdeclineintheprice ofsalmonontheJapanesemarket.”NewZealandHerald,Dec1993
PAGE24
IncreasingglobalproductionoffarmedAtlanticsalmondrovedownworldpricesimpactingNewZealandfirms
ChartofkeytakeoversandacquisitionsinthefarmedsalmonindustryinNewZealand(1978-1996)
INDUSTRYCONSOLIDATIONTheNewZealandsalmonfarmingindustrywentthroughanumberofphasesofindustryconsolidationinthelate80’sandearly90’sleadingtothecurrentsituationoftwokeyfirms
PAGE25
BubblingSpringsSalmon1978
SouthernOceanSalmon1987
SalmondSmithBiolab
NewZealandSalmon1983
RegalSalmon1986
BigGlorySeafoods1987
BritishPetroleum
1981
SaudiCorpClypex1986
1995
SouthIslandSalmon
Partnership
SouthIslandSalmonCompany
1992
MarlboroughSalmonCo.
1989
Tiong Group/OregonGroup
1996
CorporateInvestments
1990
1993
Newlylisted
Date Target Price Buyer Seller Details
Feb1992 NZ Salmon $3.7m Regal Salmon NZSalmon - ListedNZSalmonsellsdomesticNZsalmonfarmsleavinginvestmentinChileansalmonfarm
- seacagesatStewartIsland,theTrentburnHatchery,its50%share inthefeedmillownedwithRegalSalmon
Mar1993 BigGlorySeafoods $14m SanfordLtd. CorporateInvestments - 700-800t/year production- Includesotherseafoodassets- OriginalBPseacagebusiness
Oct1995 Salmond SmithBiolab N/A Tiong Group Listed - Tiong Groupacquireslistedsalmonfirm
Jul1996 RegalSalmon N/A Tiong Group Listed - Tiong acquiresRegalsalmonoperationsinstagesduringcrisisleavingshellcompany
Oct2008 Silverstream Hatchery N/A SalmonSmolt NZ NIWA(Governmentagency)
- Governmenthatcheryboughtbyjoint-venture ofMtCook,Akaroa,Skeggs,HighCountry,Benmore &Sanford
Jan2011 Pacifica SalmonLimited(IslandAquafarms)
NZ$950k(???)
NewZealandKingSalmon(Tiong &others)
Skeggs Group - TwosalmonfarmsinMarlboroughSoundsandahatcheryinCanterbury
- Partof Skeggs exitfromaquaculture(soldotheroperationstoSanford)
KeyhistoricalacquisitionsinsalmonfarmingsectorinNewZealand(1990- Feb2012)
KEYACQUISITIONSAcquisitionsintheNewZealandsalmonindustryhavebeendrivenprimarilybyasearchforadditionalscale
PAGE26 Source:variouspublishedarticlesandpressreleases;Coriolisanalysis
CompanyYearfounded
Salmonprod(t)
Turnover EmployeesOwnership Note/comments
1996merger
7,9612 NZ$115m 420 Evergreen/Tiong 53%DirectCapital43.5%Management3.5%
- Formed in1996mergerofSouthernOcean&RegalSalmon
- 7seafarms(MarlboroughSounds(M.S));2hatcheries;4processingfacilities
- Recentlyacquired2salmonfarmsfromSkeggs- www.kingsalmon.co.nz
1993acquired
2,613 GroupNZ$421m 1,055FT/PT AmalgamatedDairies37%Others63%
- 1farm;BigGloryBay,StewartIsland- Purchased in1993- RecentlyacquiredPacificaSeafood,didnotincl
salmonoperationsinM.S.- NZ$7mupgradein2007;1,900tto3,000t- www.sanford.co.nz
1994 256 N/A N/A MattEvans - OperateinCentralOtagohydroelectric canals- LeaseIsaacquarry- www.smokedsalmon.co.nz
1984 189 $3m 22 Batesfamily - 1farm;LucasBay,BanksPeninsula- www.akaroasalmon.co.nz
1992 74 N/A N/A Various - OperateinCentralOtago hydroelectric canals- www.mtcooksalmon.com
1992 66 N/A N/A Loganfamily - OperateinCentralOtago hydroelectric canals- Nowebsite
N/A 15(?) N/A N/A Isaacfamily - Ex-quarry;production highlyvariable- www.isaac.co.nz/salmon_farm.html
ProfilesofthekeyfirmsinNewZealandsalmonaquaculturesector(various;2010orasavailable)
SALMON– KEYNZFIRMSNewZealandhastwosalmonaquaculturefirmsproducingmorethat1,000tonnes– NewZealandKingSalmonandSanford– andarangeofsmaller,primarilyriver-basedfirms
PAGE27 1.Includesnon-salmonactivities;2.IncludesPacificafromSkeggs;Source:variousindustrypublications;variouspublishedarticles;companywebsitesandannualreports;NZSFA;Coriolisanalysis
NewZealandsalmonaquacultureproductionsharebykeyproducersbyspecies(%ofproductionvolume;2010)
NZPRODUCTIONSHARENewZealandsalmonaquacultureproductionisnowhighlyconsolidated
PAGE28 Note:NZKSincludesPacifica(fromSkeggs);Source:NZSalmonFarmer’sAssociation(email);Coriolisanalysis
68%
24%
2%3% 2%
Other1%
TOTAL=12,391
SeaCage94%
River/Hydroelectric6%
42%
38%
18%
2%
Farmedsalmonproductionsharebyfirmacrossselectcountries(%oftonnes;2010orasavailable)
CONSOLIDATIONELSEWHEREOthermarketsarealsoconsolidated,indicatingstrongeconomiesofscaleinsalmonfarming
PAGE29 Source:SalmonfromtheFaeroes(http://salmon-from-the-faroe-islands.com/producers.html);ABAREAustralianFisheriesStatistics2010;MarineHarvest;variouscompanywebsites;Coriolisanalysis&estimates
53%
18%
15%
14%
FaeroeIslands BritishColumbiaTasmania
57%25%
14%
4%
TOTAL=41,357 TOTAL=73,600TOTAL=31,915
Locationofsalmonfarmingoperationsover50tinNewZealand(2011orasavailable)
FARMLOCATIONSNewZealandhasnine(~eleven)seafarmslocatedacrossthreeregionsandthreeproducersinhydroelectriccanals
PAGE30 Source:variouspublishedarticlesandcompanywebsites;photocredit(NASA;publicdomain);Coriolisanalysis
7/9seafarmsinMarlboroughSounds- Otanerau (nearPicton)- Ruakaka (nearPicton)- Te Pangu (nearPicton)- Crail Bay(nearPicton)- ForsythBay(MarlboroughSounds)- Waihinau (MarlboroughSounds)- ClayPoint(MarlboroughSounds)- Plusrecentacquisitionof2farms
fromSkeggs/Pacifica
OneseafarmatBigGloryBay
OneseafarminLucasBay,Akaroa
CentralOtago Hydroelectriccanals3firmsoperating
Lessthan50tnotshownIsaac,Anatoki &Leslie
TABLEOFCONTENTS
Section Page
Contents 4
Glossaryofterms 5
Methodology&datasources 6
Summary&conclusions 7
1.Salmonisanattractiveproduct 8
2. Industryhasachievedstronggrowth 16
3.Export marketsaretheprimedriverofgrowth 31
4.Stronghypotheticalpotential;unlikelyinpractice 38
ProductionandflowofsalmoninandoutoftheNewZealandmarket(utilisationbymarket)(t;000;1988-2010e)
SALMON– NZUTILISATIONGrowingNZsalmonproductionhasgonetobothdomesticandexportmarkets
PAGE32 Source:UNFAOFishStat (1984-1997);NZFSA(1998-2009+2010e);SNZInfoshare(Import&Exportdatabase);Coriolisanalysis
0.1 0.4 0.8 0.8 0.6 1.0 1.0 1.1 1.4 0.8
2.6 2.83.9
5.0
3.11.9
3.14.0
3.2
5.2 5.15.7 5.6
1.11.1
1.7 2.1 2.42.5 3.0
3.9
5.0
3.5
3.22.3
2.2
3.65.9
4.8
4.43.2 4.5
3.2 3.4
5.0
6.8
-1.0 -0.8 -1.2 -0.8 -1.4 -1.8 -1.7 -1.9 -2.4 -2.1 -1.6 -1.7 -2.0 -1.7 -1.8 -1.8 -2.1 -1.9 -1.8 -1.5 -1.8 -1.0 -1.5
1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
DomesticconsumptionofNZproduction
ExportsfromNZ
12.4
10.7
8.48.47.7
7.27.46.7
9.18.5
6.1
5.1
5.9
4.4
6.4
5.0
4.03.5
3.02.92.5
1.51.2
Note:Calculationisapparentconsumption(production-exports=domesticconsumption);willincludewastage
Imports(almosttotallycanned)
Note:Recentsurgepurelyexportdriven
ApparentNewZealandsalmonconsumptionbysource(kg/capita;1988-2010e)
NZ– CONSUMPTIONPERCAPITAAfteraperiodofstronggrowth,NewZealandsalmonconsumptionpercapitaappearstohaveflattenedandstabilised
PAGE33 Source:UNFAOFishStat (1984-1997);NZFSA(1998-2009+2010e);SNZInfoshare (Import&Exportdatabase);SNZInfoshare (EstimatedResidentPopulation);Coriolisanalysis
0.29 0.250.34
0.240.39
0.50 0.46 0.520.63
0.540.43 0.44 0.50 0.44 0.46 0.44 0.51 0.47 0.42
0.340.43
0.220.34
0.02 0.12
0.23
0.23
0.16
0.290.28
0.31
0.36
0.22
0.69 0.72
1.011.27
0.78
0.48
0.740.95
0.76
1.231.19
1.32
1.28
1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
Domestic
Imports
1.621.54
1.621.57
1.18
1.42
1.25
0.92
1.24
1.71
1.51
1.151.11
0.76
0.99
0.83
0.740.79
0.550.47
0.57
0.360.32
Note:Calculationisapparentconsumption(production-exports=domesticconsumption);will includewastage;calculationdoesnotincludeimpactoftouristsduetolackofdata
CAGR(88-00)14%
CAGR(00-10)1%
Domestic
Imports
Salmonconsumptionpercapita:NewZealandvs.selectpeers(kg/capita;2008-2010)
SALMON– CONSUMPTIONPERCAPITANewZealandsalmonconsumptionpercapitaisatorabovemostpeerssuggestinglimiteddomesticmarketgrowthgoingforward
PAGE34 Note:roundedtoonedecimalplace;Source:UNFAOFishStat (1984-1997);NZFSA(1998-2009+2010e);SNZInfoshare (Import&Exportdatabase);SNZInfoshare (EstimatedResidentPopulation);UNComtrade (variouscodes);NationalMarineFisheriesService(USA);Coriolisanalysis
1.9
1.6
1.6
1.3
1.0
0.7
UnitedKingdom
NewZealand
Australia
Canada
UnitedStates
Spain
ValueofNewZealandsalmonexportsbyproducttype(NZ$m;2000-2010)
SALMON– NZEXPORTVALUEThevalueofNewZealand’ssalmonexportswererelativelyflatuntilthelasttwoyears;wesuggesttherecentsurgeisrelatedtotheChileanISAoutbreakdrivingupworldprices+18%(09)and+16%(10)
PAGE35 Source:StatisticsNewZealandInfoshare database(customjob);Coriolisanalysis
$9.3$16.5
$12.5$16.7 $18.1 $15.7
$22.7 $22.9 $24.1$27.8
$38.9$12.9
$12.5$25.0 $15.2 $12.3
$7.0
$13.3
$4.0$8.7
$22.9
$27.3
$0.7
$0.3
$0.8
$0.7$0.6
$0.6
$1.0
$0.4
$1.4
$1.6
$9.2
$7.2
$7.9
$4.9
$6.1$4.4
$3.7
$4.9
$7.8
$8.6
$6.7
$5.4
$1.0
$0.2
$0.3
$0.3
$0.1
$0.0
$0.1
$0.1
$0.1
$0.1
$0.1
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
Preserved
Smoked
Frozenfillets
Frozenwhole
Freshorchilledwhole
-18%
15%
10yearCAGR(00-10)
Freshorchilled,whole(0302-12)
8%Frozen,whole(0303-10/11/19)
29%Frozen,fillets(0304-200091/290078)
Smoked(030541)
Processed/Preserved (160411)-3%
10%
$31.1
$37.3
$43.5
$39.1$35.4
$27.0
$42.1
$35.1
$42.8
$59.1
$80.9
LikelyChileISAimpact
ValueofNewZealandsalmonexportsbydestination(NZ$m;2000-2010)
SALMON– NZEXPORTVALUEGrowthhascomefromasurgeinsalestoAustralia,theUSandTaiwan(amongothers)
PAGE36 Source:StatisticsNewZealandInfoshare database(customjob);Coriolisanalysis
$23.6$27.7
$33.2$27.2
$22.9
$14.9$22.3
$13.8$17.0
$26.1 $27.7
$3.1
$5.9
$4.0
$6.5
$5.4
$5.9
$9.3
$11.8$12.2
$10.7
$19.4
$0.6
$0.8$1.0
$1.1
$3.6
$3.2
$6.7
$6.4
$8.8
$11.9
$15.8
$0.2
$0.3
$2.9
$1.4$0.7
$0.5
$0.3
$0.2
$0.3
$5.4
$5.5
$1.7
$1.4
$1.3
$1.5$1.8
$1.5
$2.4
$1.8
$3.3
$3.2
$8.0
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
Other
Singapore
FrenchPolynesia
HongKong
Taiwan
USA
Australia
Japan
18%
2%
10yearCAGR(00-10)
Japan
20%Australia
38%USA
Taiwan
HongKong
37%
10%
$31.1
$37.3
$43.5
$39.1$35.4
$27.0
$42.1
$35.1
$42.8
$59.1
$80.9
2%FrenchPolynesia3%Singapore
17%OtherLikelyChileISAimpact
Inflationadjustedexportpriceperkilogramoffreshwholesalmon(US$/kilogram;inflationadjusted2010$;1988-2010)
SALMON– INFLATIONADJUSTED$/KGNewZealandexportpricetracks(above)theworldprice;asChilerecoversfromISA,wewouldexpectpricestoreturntotheirdownwardtrend
PAGE37 Note:USESSITC2-REV2code030412;Source:UNComtrade database;USBLS(US$inflation);Coriolisanalysis
$0.00
$2.00
$4.00
$6.00
$8.00
$10.00
$12.00
$14.00
$16.00
1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
ChileNewZealandNorwayU.K.
NewZealand (lightblue)
Scotland(yellow)
Norway(green)Chile(blue)
ChileISAimpact
TABLEOFCONTENTS
Section Page
Contents 4
Glossaryofterms 5
Methodology&datasources 6
Summary&conclusions 7
1.Salmonisanattractiveproduct 8
2. Industryhasachievedstronggrowth 16
3.Export marketsaretheprimedriverofgrowth 31
4.Stronghypotheticalpotential;unlikelyinpractice 38
NEWZEALANDSALMON– SWOT ANALYSISWhilesalmonhasstrongpotentialforcontinuedgrowth,inpracticethispotentialisunlikelytoberealised
PAGE39 Source:Interviews;Coriolis
Strengths Weaknesses
- FarmsKing SalmonnotAtlanticSalmon(lowsupply,nodiseases,premium)
- 30yearsexperienceinseacagesalmonfarming
- IsolatedSouthPacificlocation,exposuretodiseaselow
- Strongbiosecuritysystem
- Industryconsolidatedaroundtwofirms(NZKS&Sanford)
- FarmsKing SalmonnotAtlanticSalmon(slowergrowing)
- Industrynotatscalerelativetocompetitors(~40,000t)
- Largeamountofbestcoastforsalmonfarminginsideparks(areashighlyvaluedbyotherusersofenvironment)
- Increasingspacerequireshugeinvestmentoftime,effortandmoneywithunclearchanceofsuccess;impossibletodevelopnewseaareawithoutgoingtocourt
- Competingland/seausesandusers
- Changeablegovernmentbehaviourtowardsindustryoverpast30years;limitedclearcross-partyconsensusgoingforward
- Closetoimpossibletointroducenewgenetics
- Negativeattitudestowardsgeneticmodification
- Nopresenceofglobaltop30salmonfirms;nottiedintotheirnetworks
- Residualuncertaintyaroundownershipofforeshoreandseabed
Opportunities Issues/Threats/Risk
- Strongtheoreticalpotentialformuchgreaterproduction(NZKSplanstodoubleproductionby2015)
- Mostrecentnewlegislation(AquaculturelawreformOctober2011)
- Potentialarrivalofsalmondiseases,particularlythosewhichimpactKingSalmonseverely(cf.PSAinkiwifruit;oyster“herpes”)
- AtlanticsalmonimportsfromTasmania– andpotentiallyimportedsalmonfromothercountriesimpactingprofitabilityofdomesticmarket
- MuchlargerAtlanticSalmonbreedingprogramimprovingproductioneconomicsfaster(compareRoss/Cobbchickenswithanyheritagebreed)
SALMON– NZVS.NORWAYNewZealandhasexcellenttheoreticalpotentialtoproducesalmon;Norway,acountryofasimilarsizetoNewZealand,produces75timesasmuchsalmon
PAGE40 Source:CIAWorldFactBook;photocredit(CIAWorldFactBook;publicdomain);Coriolisanalysis
1,156km1,190km
12,391t
Salmon production
936,980t75x
SALMON– FAEROEISLANDSVS.BANKSPENINSULAAsanexample,theFaeroeIslandsproduces218timesasmuchsalmonasBanksPeninsularegion
PAGE41 Source:photocredit(NASA;publicdomain);varioussources;Coriolis
BanksPeninsula/Akaroa~40km
189tofsalmon;1firm
Onefarm,similarinsizetoaKentuckyFriedChickenoutlet(excludingthecarpark).
FaeroeIslands~40km
41,357tofsalmon;4firms
“ThereisafishfarminalmosteverysuitablebayandfjordintheIslands. ”
218xasmuchfarmedsalmon
Salmonproductionmatrix:coastlinevs.coastproductivityvs.totalproductionforNewZealandandpeergroupcountries(2010orasavailable)
PRODUCTIONMATRIXAcomparisonwithpeerssuggestsNewZealandisnotintensivelyfarmed
PAGE42 Source:UNFAOFishStat;Wikipedia;CIAWorldFactBook;MarineHarvest;otherpublishedarticlesandreports;Coriolisanalysis
0
10
20
30
40
50
60
70
80
90
100
110
0 2,000 4,000 6,000 8,000 10,000 12,000 14,000 16,000 18,000 20,000 22,000 24,000 26,000 28,000
Tasmania
SouthIsland
FaeroeIslands
t/km
Norway
Scotland
Chile
BritishColumbiaStewartIsland NewZealand
Lengthofcoastline (km2)
Salmonproductionperkilometre ofcoastline
(t/km2;2010)
Sizeofbubble=totalsalmonproduction
SALMON– THEGREATOPPORTUNITY
- “Thebiggestopportunityissalmon.Wejustneedtomaintainthepremium,it’sapremiumproduct,highfatcontent,greateatingquality,it’saverysuccessfulproduct.”Industryrepresentative,2011
- “WehaveworkedouthowtogetapremiumforKingsalmon;it’sararespecies.Wehavetobecauseittakesmoretofeed,it’snotasefficientasAtlanticsalmon.Wegeta30-40%premium.”CEO,Seafoodcompany,large,2011
- “Whynotgoforthelowhangingfruit,likesalmon,itisthebiggestopportunity”Industryrepresentative,2011
- “Salmon isstillinitsinfancy.Thereissuchopportunitythere.”GM,SeafoodCompany,medium,2011
- “Growthwillcomefromsalmon.”CEO,largeSeafoodCompany,2011
- “NewZealandKingSalmonisapplyingtoincreaseitscurrentproductionof7,500tonnes ofsalmonayearto15,000tonnes by2015.Ifsuccessful,NewZealandKingSalmonbelievesitcandoubleitsproductioninthreetofiveyearsinsupportoftheaquacultureindustry’stargetof$1billioninsalesby2025.”NewZealandKingSalmon,April2011
- “MtCookAlpineSalmonCEO,Matthewsisdrivingabold$20millionexpansionplanhesayswillfuela1400percentproductionincreaseforthecompanywithinfouryears…WhenMatthewstookover,MtCookwasproducing160tonnesperyear.Thisyearitwillproduce400tonnes.Andwitha$20millionexpansion,includingaprocessingfactoryandavalue-addedplant,Mathewssaystheywillbeturningout1000tonnesin2012and2000tonesin2013.”Matthews,CEO,AlpineSalmon,AquacultureNZ,July2011
PAGE43
Thesalmonindustryisheraldedbymanyasagreatopportunitywithinvestorsplanningfurtherexpansions
PotentialareasforsalmonfarminginNewZealand(hypotheticalmodel)
CHALLENGESINPOTENTIALGROWTHREGIONSWhilefourregionsofNewZealand’sSouthIslandhavegoodhypotheticalpotentialforsalmonaquaculture,therearesignificantlimitations
PAGE44 1.~OslotoBergen;Source:;photocredit(NASA;publicdomain);Coriolisanalysisandestimates
StewartIslandHypotheticalpotential:5,000-15,000t
2/3asmuchcoastlineastheFaeroeIslandsAlmostalloftheislandownedbyGovernment
80%ofislandisnationalpark
FiordlandHypotheticalpotential:100,000-200,000t
SimilarinsizetoSouthwestNorway1AlmostalllandinsidenationalparkEffectivelyuninhabited;pooraccess
Nelson/MarlboroughSoundsHypotheticalpotential:40,000-100,000tSimilarinsizetoNorthernScotlandSignificanttourismHolidayhomesRecreationalfishingNationalparksInshorefishing
BanksPeninsula/AkaroaHypotheticalpotential:5,000-15,000tSimilarinsizetoFaeroeIslandsSignificanttourismHolidayhomesRecreationalfishingNationalparks
SALMON– CHALLENGE– ACCESSTOSPACE
- “Thesalmonsectorhasgotsuchhugepotential.It’sauniqueproductwhichisgettingitsfeedconversionratedown,whichwill increaseproductivity.Allitneedsisadditionalspaceallocatedanditwillhum.”Industrybodyrepresentative,2011
- “ThebiggestlimitationwithsalmonistheaccesstowaterspaceintheMarlboroughSounds.Someofthedecisionswemakeandtheplaceswedeployoureffortsissoinefficient.Wewasteresourceswithbaddecision-making.70%ofallmarineassetsareinthewrongplace.Theyarenotproducingwhattheyshould.Wecouldmoveafarm20metresanddoubleourproduction.Thesystemisincapableofmakingdecisions.Wemakethechoicetohaveasmall14,000tonnesalmonindustryasopposedtoa1mtonneone.IdeallywewouldbeinMarlboroughithastheinfrastructureandgreatenvironment,closetotheairport,town.”CEO,Seafoodcompany,large, 2011
- “Wewanttochangesomespacefrommusselstosalmon,thecostisjusttooprohibitive.Theprocessistoomuch,itdoesn’tmakeitfeasible.”CEO,SeafoodCompany,medium,2011
- “Thewholewaterspaceallocationisadebacle.Salmoncomparedtomusselshas5timesthevaluetothewaterspace.Thereiscompletehaltuntilthelegislativereform.Salmonneedmorespacetodevelop.”GM,SeafoodCompany,medium,2011
- “Thebiggestholduptodevelopmentistheregulatoryenvironment.Consentingprocesstogetwaterspaceandtheabilitytochangetheuseofthewaterspace.Evenwhenyoudogetachangeitstilltakes18monthsto2yearstostartdevelopingandsellingsomething.”Manager,Seafoodcompany,Medium,2011
- “Theindustryneedsscale.Thegovernmentseemskeen,yetaccessisstillahugeissue.”CEO,SeafoodCompany,medium,2011
- “Consentchangesareanightmare.Wecanchangetosalmon,butitisahugecost.”Manager,Seafoodcompany,Medium, 2011
PAGE45
Thesalmonindustry,inparticular,isrestrictedbyspacelimitations
www.foodandbeverage.govt.nz