Bard Misund
Published: 2022
Total Pages: 0
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Since the commercial breakthrough in the early 1970s, salmon farming in the sea has gone from small-scale to one of Norway's largest export industries. Although salmon and trout farming represents only a few percent of the world's aquaculture production, the Norwegian aquaculture industry is a leader in many areas. Initially, production technology was simple, but with increased experience, knowledge, and continuous innovations in farming technology, nutrition and fish health, productivity in the aquaculture industry increased dramatically. The twenty-year period between the mid-1980s and the mid-2000s was characterised by high productivity growth, which resulted in a substantial reduction in costs, which in turn led to lower salmon and rainbow trout prices. Production grew by almost 20 percent annually between 1980 and 2005.The cost decline reversed around 2005, and between 2005 and 2020 production costs increased by 176 per cent in nominal terms (102 per cent in real NOK). The cost increase has averaged 7 percent per year, several times faster than inflation. The cost increase has continued even after 2020 and is approaching NOK 60/kg gutted weight (HOG) including capital costs.The reasons behind the cost explosion are complex, and are due to higher prices for factor inputs, increased capital intensity, a depreciation of the krone, stricter regulations, increased profitability, as well as disease, lice and lice treatments. The purpose of this report is to investigate the effect of biological problems on cost trends. The results show that "biological" costs are one of the most important drivers behind the cost development.