The Influence of Feed Availability and Feed Price on Norwegian Salmon Aquaculture

The project will extend an existing equilibrium model of the Norwegian salmon aquaculture to include stochastic feed costs. This will allow an analysis of the behavioral adaption of the market to stochastic feed prices, and the economic costs to the industry of more expensive and volatile feed prices. Salmon aquaculture is highly feed intensive; feed costs now account for about 60% of the unit production cost. Variations in feed prices directly influence fluctuations in profitability. Important feed raw materials such as fishmeal and fishoil has become more expensive. For instance, fishmeal pellets from Peru is now four times more expensive, in nominal terms, than fifteen years ago. At the same time prices are highly volatile. Continued sustainable growth of the industry will depend on the state of these markets, and how feed technology and usage adapts to market changes. The project will highlight how higher and more variable feed costs influences the Norwegian salmon aquaculture industry. Feed costs are important as they determine the cost of maintaning fish in pens. As such it directly influences the capital value of the salmon biomass, and the decisions on optimal harvest time and harvest weights.