Commodity vs. Niche Markets and the Debate over Salmon in Recirc

In my opinion, there are two major markets for any food product: a commodity market and a niche market.  The overwhelming majority of food is sold on a commodity basis where consumers purchase products based on only one criterion: price.  These consumers do not care how the food was produced or where it came from: their only concern is the buying power of their dollar.  In contrast, niche markets comprise a much smaller portion of the total marketplace; consumers searching for niche products will concern themselves with factors other than price when selecting a product.  These consumers will ask how the food was produced and where it came from, and the decision to purchase will only occur once the consumers’ sense of ethics and quality are satisfied.  The important point here is that niche consumers are less concerned with price and would be willing to pay premium prices for what they value as premium products.

Like any other food, we can apply this model to farmed Atlantic salmon, which is very much a commodity product: it is comparable in price to terrestrial meats such as beef and poultry, and many consumers around the world are not concerned as to where the salmon came from or how it was produced.  When purchasing farmed Atlantic salmon, most consumers select based on price and move on…

Growing salmon in on-land recirculation systems has been hotly debated recently, and several projects are currently underway to test the business viability of such a practice.  However, by its very nature, recirculation systems are expensive to build and maintain, indicating that the species produced will need to be sold for a higher price. Higher prices can only be achieved in niche markets, and when coupled with the lowered environmental impact of recirculation systems, it would make sense for products grown in recirc systems to be destined for niche markets.

Now we have arrived at the challenge: if salmon is a commodity product, how can it be grown in recirculation systems and still be a commodity that is accessible to consumers who only want low prices?  Once the salmon is grown in recirc systems, it must transform from a commodity product into a niche product to allow the farmer to recover his capital and operating costs.  Therefore, salmon grown in recirc systems is going to be inherently more expensive than salmon grown in net pens: this is fine if the farmer is actively looking to target these niche markets.  For example, Irish salmon has done a fantastic job at differentiating on the basis of ‘organic’, and consumers are paying a premium price for this niche product.

Many people mistakenly believe that if we take net-pens out of the ocean and begin farming salmon on-land, the price and availability of farmed salmon will not change.  However, this is far from the expected outcome: by moving salmon farms on-land, the dynamics that currently dictate salmon markets will shift and a significant portion of the commodity market will be lost. 

Until such time as the capital and operating costs of recirculation systems become more manageable, farmed Atlantic salmon will continue to be a commodity product produced in net pens.  Rather than campaigning to remove net pens, we should be working together to tackle the challenges head-on and reform the industry for the benefit of future generations.  

‘Salmon’ Farming vs. ‘Fish’ Farming

Sometimes it is frustrating to work in the aquaculture industry.  There is so much misinformation and public scare-mongering emanating from environmental lobby groups that when I tell people that I work in aquaculture, most people turn up their noses and politely inform me that I shouldn’t spend my time destroying the planet.  I want to clear the air on one simple, vet vital, distinction that must be considered when discussing the activity’s environmental effects.

I live in British Columbia, and in BC when people say ‘fish farming’, in most instances they really mean to say ‘open-net salmon farming’.  Many “informed consumers” often confuse the two, saying one thing and intending another.  I saw a bumper sticker the other day that said ‘Friends Don’t Let Friends Eat Farmed Fish’.  I’ve got news for you: over half the seafood consumed globally is farmed, much of it in a more sustainable manner than current commercial salmon production.  In fact, salmon represents only 2% of global aquaculture production- in contrast, the majority of global aquaculture focuses on vegetarian finfish such as carps (which have feed-conversion ratios of less than 1) as well as shellfish which require no feed inputs.  By using the shortcomings of the salmon industry to vilify aquaculture as a global practice, environmental lobbyists are doing nothing more than openly displaying their ignorance.     

I have done the research and I will be the first one to stand up and point out the challenges associated with the sustainability (or rather lack thereof) of commercial salmon production.  Yet I stand flabbergasted every time someone on the street attempts to tell me that ‘fish farming is bad’ and that I should sign a petition to ‘make Canada a fish farm-free country’.  Aquaculture as a global practice has grown and developed to the point at which a huge variety of species are cultured in a range of production systems in almost every country around the world: to generalize the industry into one lump activity is not only plain wrong, it is dangerous.

Going forward I will continue to focus on awareness, open dialogue, and transparency as this industry continues to mature.  I hope that in time, consumers may yet better understand the issues associated with where their seafood comes from and make informed decisions about which aquaculture practices to support. 

Aquaculture America 2012: Las Vegas

A few weeks ago I had the opportunity to attend the Aquaculture America 2012 conference, held this year in Las Vegas, Nevada.  The event attracted a wide audience from the US aquaculture industry, as well as many international manufacturers and producers.  The trade show featured hundreds of vendors from around the world, highlighting the latest advances and developments in design and research.

Having previously been to neither a large-scale aquaculture conference nor Las Vegas, I was understandably excited for the trip.  I arrived the evening before the Conference and had the opportunity to walk along the Strip and take it all in.  Yet once the conference started, my focus shifted entirely to my purpose for being there: listening, learning, and networking. 

The sessions covered a broad range of topics, from feed and genetics to economics and regulations.  The presenters themselves were just as varied, with members of government, education, and private sectors all in attendance. 

I had the opportunity to see some familiar faces as well as make many new contacts.  Given the breadth of people and industries in attendance, I feel as if I was successful in casting a wide net in terms of the individuals I met and the discussions I shared.  I am particularly excited about one or two of the people I met and the projects we discussed, which hopefully will be the basis of future articles for this blog. 

Overall I would say that it was time very well spent and I am already looking forward to Aquaculture America 2013 in Nashville next year!   

Returning to this Blog with a Bit More Gusto…

I write this after more than 5 months without putting pen to paper (so to speak) with this blog…

A lot has changed in 5 months.  After finishing the MSc., I returned to Vancouver where I secured a position with the AquaBioTech Group, an international aquaculture and environmental consulting network based in Malta.  The company specializes in the design and construction of recirculation systems, as well as marine surveying, market intelligence, research and development, and specialist audits, including environmental and risk management.  

I set up shop in Vancouver and am currently working as an aquaculture consultant and Regional Manager Canada for ABT, occupying my time with a variety of aquaculture-related activities and ventures.  While I won’t say too much at this point, what I can say is that there are some really cool things in the works, so check back to this blog often for updates and developments.

As I come back to this blog with a bit more gusto than as of late, I wanted to take an opportunity to thank those of you who have followed the blog over the years.  I get the occasional email from someone who has stumbled across an article that interests them, and I always enjoying hearing from readers.  As those who have contacted me will attest to, I am happy to share information and point people in the direction of further resources, so do not hesitate to be in contact.

I also wanted to share with you my plans for the future development of this blog.  While I will continue to write articles about my experiences in the industry, I also intend to write more opinion pieces, discussing important (and often misunderstood!) aspects of sustainability as it relates to fish farming around the world.  Perhaps more importantly, I will work to provide context and a ‘big picture’ perspective to these issues, hopefully enough so that you are inspired to do more research and form your own opinions.  I encourage people to post comments and foster constructive dialogue that focuses on solutions, not problems.

I am already looking forward to the next piece I am going to write, and I am not even sure what the topic is yet…