SeafoodIntelligence.com Editorial by Bertrand Charron – First posted 22.02.2008
IS CHILE FOR REAL? Chilean salmon industry ducking its head in the sand won’t help its global image!
The Chilean salmon farming industry has now – for years – been considered as the El Dorado of salmon farming’s 21st century prospects. It has in the south of the country great fjord-like coastlines, ideal sea temperatures for salmonid on-growing, an economy geared towards liberalism and international trade, and a willing workforce as well as local capital and a good logistics infrastructure. It is also well situated for frozen exports to the Japanese and US markets; both of which are proving salmon-hungry.
However, Chile is lagging far behind other salmon producing nations in how it communicates – and wishes to accept the very principle – with local stakeholders and international environmental NGOs (Oceana, Greenpeace, WWF, etc…); some of whom relate to the broad concerns of consumer groups in other parts of the world. By “industry”, we don’t just mean the salmon industry’s representative body, but all of the main players.
Labour conditions are a sore point; as exemplified by the various disputes of current (AquaChile-owned Aguas Claras) and past times. Addressing multi-stakeholders’ and environmental concerns seems to be the last point on the agenda. Growth (and now lack of.) seems to come first.
Fine – we’d say – if the industry is sustainable from a human, economical and environmental perspective. But, is it? And is the industry willing to discuss & address those issues?
It would seem not.
Now, the transparency issue is also affecting the results of stock-exchange listed companies. This week, Marine Harvest announced the planned lay offs of a quarter if its staff (1,000+) in Chile. All of this because of the poor Q4 2007 results announced last week, revised forecast & outlook for 2008-2010 due to the ISA salmon disease.
In 2000, the Chile’s salmon farming industry was going on the record (re. interview to the present writer) as casting doubts over the very existence of the ISA virus in farmed salmon in the country. This even tough ISAv’s presence in Chilean farmed coho salmon came from scientists at the Atlantic Veterinary College (AVC) at the Canadian University of Prince Edwards Island (PEI) and described in scientific literature. The OIE even confirmed last summer that ISA “had been previously detected in Chile in 1999”. Then we were told for years that there are & were no particular ‘fish health’ or ‘biological’ problems. No sea lice issues, no ISA problems. And even if there are a few ‘incidents’; by no means this impacts the industry – officially. But there were many warning lights.
Are investors truly dumb? Do they necessarily believe everything they are fed from ‘official sources’ – and should they?
Indeed, things can be kept in the dark when one is far away from the world’s markets and media. But now that Chile’s ‘salmon industrialists’ want to be part of the world globalisation & trade, have FTAs left right and centre; and sell their salmon worldwide; they can’t have it both ways! i.e. tell ‘outsiders’ not to stir things nor ask embarrassing questions; and on the other hand take the cash of foreign investors and want to be part of that global market; never mind attract the capitals of large multi-nationals, which now have to abide to published corporate ethics, and can themselves feel the full brunt of consumer & market power.
All of that even before considering the fact that stock exchange salmon farmers (Cermaq/Mainstream/Ewos, Marine Harvest) have to report their quarterly results, and thus exposing some of the ‘biological and business’ facts out there. (See SeafoodIntelligence’s Børs Seafood Watch). Otherwise, we could be scrutinising the horizon for a long time from pink (salmon)-tainted glasses…
Salmon stocks have tumbled in the past months & weeks on the Oslo Børs – the most advanced in that sector. The fall in share value for the world #1 & 2 can be directly explained by the reduced ‘performance’ and ‘biological situation’ of their Chilean operations. AquaChile, the country’s #1 producer and World #3, pulled out in October from a Santiago stock exchange listing, due to an ‘unfavourable’ market climate & also blaming the current “uncertainty” in ‘fish health situation’ [see AquaChile CEO Victor Hugo Pucci’s comment earlier this week in La Tercera: Biz & Finance : MOTIVATION to invest in Chile’s salmon farming industry? There are ‘non-economic ingredients’… (20.08.2008).].
Meanwhile – even long after Marine Harvest revised its 2007 Chilean production forecast in October and November 2007 – the Chilean industry representatives kept to the ‘Crisis? What Crisis? No Crisis!’ mantra.
Didn’t SalmonChile’s President, César Barros, deny on November 14th the ‘supposed crisis’ the industry was in, though acknowledging that 2007 did not unfold ‘as they had anticipated at the end of last year’… Even yesterday (February 21st) he was quoted in the Chilean press as saying that Marine Harvest’s decision to lay-off 25% of its workforce in Chile “will not affect the image of the industry”.
REALLY? What makes you so sure? Are we talking about “the image” the industry wants to project of itself, or of the industry’s image as perceived from abroad?
Do people want to invest in Marine Harvest – thus in Marine harvest Chile – on the light of its dismal results lately? Suffice to say that at 13.27 last Friday (Feb. 15th) – hours after releasing its ‘disappointing’ Q4 2007 results – the price of Marine Harvest’s shares on the Oslo Børs had plunged 10.36%. Since January 1st 2008 (and @ 11.12 GMT+1 on 22.01.2008), MHG shares lost 23.77% in value; and 63.81% in the past 12 months; most of it after the Chilean forecast warning of October 2007…
So, is pretending that ‘all is well regardless’ good for the industry?
ISA was a (very) long time coming though… Throughout the early summer 2007 (as SeafoodIntelligence readers will recall); there was plenty of warning signs that sea lice and ISA (discovered in 1999, lets remember; and some reports even claim that sea lice could be an ISA vector) were becoming an issue in Chile. But one could only read comforting ‘no problem’ & ‘no issue’ statements.
Is Chile’s salmon industry to blame for all this? “Strongly, but not solely” would be the answer. Indeed, the Chilean establishment seems to frown upon any input from “strangers”. But lets also be fair, there aren’t many countries’ industry that would welcome open-armed any & all type of criticisms. It is an arduous process which takes time and openness. But the sooner it starts the better…
So who else is to blame? Well, one could look at some of the Norwegian businessmen who only look at the ‘favourable’ salmon & investors’ growth climate before taking business decisions. Low-cost labour = lower production cost, of course. Thus, what is ‘ethically right’ from an investor’s perspective? And how does one balance the pursuit of economic gain with the interest of other concerned stakeholders?
Intrinsically thus, the issue is NOT REALLY about ISA, sea lice or labour conditions in particular; it is about developing a sustainable industry in a sustainable fashion….!
Because this industry grows salmon in great environmental surroundings, then environmental issues should be addressed. Because this industry employs people, then labour conditions issues should be addressed. Because the industry grows salmon in an environment of which it is not the sole tributary, multi-stakeholder dialogue should take place. And because this industry trades with other countries on other markets, then it should provide objective information to those markets. [Read in passing the note: INFORMATION LACKING about impact of April earthquake… How is Chile’s salmon industry affected? (13.06.2007)]
The end word of all this is that the Chilean salmon farming industry’s attitude HAS TO CHANGE and a) acknowledge that there are problems, and b) address them.
Otherwise, beware the backlash!
Other countries had to follow the same learning-curve in their dealings with other stakeholders; but Chile is now certainly not leading the pack in that respect. However close to the Antarctic as they may be, Chileans cannot live in isolation and seriously believe that a one-sided relationship with their own workers, investor’s perspective, NGOs and world media will ‘do it’.
The more Chile’s salmon industry resists the move towards better communication, the longer it will take to truly go forward. This is also the realisation made by some prominent members of the Chilean government (when it comes to labour dispute and its handling). All it takes is one ‘scandal’ – one ‘food scare’, and sometimes one article/news report in a prominent (but foreign in Chile’s case) news media – and by means of a lack of transparency an entire industry/market could collapse; particularly in the food business.
With market access comes the need for transparency and openness. If one should only learn one thing from 2007’s “biological situation” & the stock plunges; it should surely be to admit that burying one’s head in the sand (and projecting that image to the world) is not the best business solution, right?! If players in Chile’s salmon farming industry seriously aim to make the country the world’s #1 Atlantic salmon producer; then they must work at their communication, and be pro-active in establishing multi-stakeholder dialogues as well.
And if it’s any consolation… Chile is not the only country which should improve on those fronts!
PS: A good start would also be to have some communications issued in English (we selfishly comment on behalf of environmental & business parties interested… J) as the country’s main three market are Japan, the US and the EU. It could also help, in getting their word out, if they decide to…
Read also a few of the relevant articles on the SeafoodIntelligence.com News Database:
HOT News : UNDERESTIMATED ‘BILOGICAL SITUATION’! Marine Harvest will now lay off 1,000+ of Chilean workforce (22.02.2008).
- Biz & Finance : MOTIVATION to invest in Chile’s salmon farming industry? There are ‘non-economic ingredients’… (20.02.2008).
- Trends & Forecasts : CHALLENGE: Expanding in Chile’s Region XI & XII will increase salmon production costs re. logistics (19.02.2008).
- Biz & Finance : CONSOLIDATION, M&As: In 1997, 117 firms produced 80% of farmed Atlantic salmon; In 2006, it was 46… (19.02.2008).
- Market Comment & Prices : OF ISA… World’s #1 salmon producer plans ‘significant downward adjustment’ in Chile’s Region X (15.02.2008).
- Veterinary & Animal Health : Mainstream Chile had two sites with ISA outbreaks + 1 site included on the ‘suspected’ list (14.01.2008).
- Veterinary & Animal Health : “Main problem in Chile is sea lice; ISA had a relatively minor direct impact” – Cermaq (25.01.2008).
- Veterinary & Animal Health : GROWING list of Chilean salmon sites impacted by ISA, now reaches 13; 11/13 belong to Marine Harvest (16.01.2008).
- HOT News : ISA ‘NO FUN’: Marine Harvest Chile to continue journey SOUTH; salmon giant now considers Region XII… (21.12.2008).
- HOT News : UPDATED! ISA virus found in Chile’s most-promising (and until now ISA-free) salmon producing region (20.12.2008).
- Biz & Finance : Eight ISA-impacted sites in Chile & 40+ quarantined; ‘Closures could lead to hundreds of lay-offs’ (10.12.2008).
- Veterinary & Animal Health : Chile’s ‘biological situation’ problems began long before ISA showed up; ‘virus is only a symptom’ (22.11.2008).
- HOT News : Marine Harvest plans closure of several ISA-diseased salmon farms in Chile; Shift to Region XI (22.11.2007).
- Biz & Finance : Santiago-listed salmon firms also feel the pinch of Chilean ‘crisis’: Double digit falls there too (20.11.2007).
- ‘Wild vs. Farmed’ : “CRISIS LOOMS: Mismanagement, lack of information – as ISA – pose serious problems to Chile” (20.11.2007).
- HOT News : ‘WHAT CRISIS?! Chilean salmon industry denies problems but acknowledges Norway is ‘more experienced’ (16.11.2007);
- HOT News : Marine Harvest shares lost 21.73% of their value in one week! Will the debacle continue today? (16.11.2007).
- Biz & Finance : BLACK THURSDAY for Marine Harvest: Share price plummets (again), ISA impacts investors’ confidence? (15.11.2007).
- Biz & Finance : BLACK THURSDAY for Marine Harvest: Share price plummets (again), ISA impacts investors’ confidence? (17.10.2007).
- Veterinary & Animal Health : Chilean salmon industry reeling from ISA impact & high mortalities; ‘Sea lice is probably a vector’? (17.08.2007).
- Veterinary & Animal Health : Only a footnote, but International body says ISA was in Chile in 1999, despite dismissal at the time (13.08.2007).
- Veterinary & Animal Health : No ISA outbreaks at any of Mainstream Chile’s sites; firm established three new sites in region XI (10.08.2007).
- Veterinary & Animal Health : ‘Major global threat’: Outbreak of infectious salmon anemia (ISA) in Chilean salmon farms (08.08.2007).
- Veterinary & Animal Health : Chilean authorities acknowledge seriousness of sea lice issues; Pure Salmon warns American public (11.07.2007).
- Veterinary & Animal Health : ‘ISA UNDER CONTROL?’… 32 Norwegian outbreaks of Infectious Salmon Anaemia in 2003-05; 4 in 2006… (25.06.2007).