On your last trip to the grocery store, did you notice an increase in the price of salmon? Over the past few decades, consumers have come to embrace salmon as a source of high quality protein and a provider of other benefits such as fatty acids. One country in particular, Chile, has risen to the challenge of meeting this demand, becoming a major global supplier and increasing production by several multiples. But this year a red algae bloom, and its associated red tide, has severely reduced production and threatened the industry’s prospects for 2016.

History of Chile’s Salmon Industry

Salmon production in Chile began in earnest in the 1980s, when a group of innovative fisherman got together to start the country’s first salmon farms. They recognized that Southern Chile’s geographic characteristics made it uniquely suited for the production of salmon. The industry really took off in the 1990s, when advancements related to fish reproduction, genetics, and nutrition allowed for rapid expansion. According to the FAO, over the next fifteen years, the industry grew at an average of 21.1% percent annually, reaching nearly 500,000 metric tons of production in 2006, second only to Norway.

In 2007, tragedy struck Chile’s salmon industry when a farm reported the first case of Infectious Salmon Anemia (ISA) in the country. ISA is a devastating and highly infectious viral disease affecting Atlantic salmon. The disease prevents proper blood circulation and results in death for the affected fish. Because of the communicability of ISA and the need to keep the outbreak under control, widespread culling occurred until the last clinical case of ISA was recorded in 2010.

Over this period, salmon production in Chile was halved from the 497,000 tons of 2006, to 247,000 tons in 2010. Since then, certain characteristics of Chile’s salmon industry that allowed the ISA outbreak to reach such severity have been identified. In their 2012 report on the subject, a group of experts gathered by the Global Aquaculture Alliance identified five key issues that contributed to the outbreak:

High concentration of production sites in farming areas
Absence of zone management programs
Poor sanitary control
Insufficient attention paid to biosecurity
Lack of comprehensive government regulation and control

As Food Safety News writer Ross Anderson shrewdly pointed out in his 2012 article on the subject, the 2007 ISA outbreak was a classic ‘tragedy of the commons’ dilemma, whereby producers, who were, as we would expect, individually maximizing profits, failed to take steps that were necessary to protect the well being of the industry as a whole.

The good news is that the industry was quick to react and took several measures to protect the industry against future outbreaks. These included diversifying the species used in production, implementing new government regulation, and introducing new technologies that improved food security and reduced contamination risk. Thanks to these measures, among others, the industry once again assumed rapid growth. By 2015, Chile’s salmon trade association, SalmonChile, estimated that salmon production in the country had increased to 834,000 metric tons. Salmon has become Chile’s second most important export, after copper, supplying their key trading partners of the United States, Japan, and Brazil.

The Curse of the Red Tide

Despite the industry reversing their fortune, it wasn’t long before tragedy would strike once again. In early 2016 evidence began to surface that El Niño, the weather phenomenon that describes the warming of global oceans, was causing an unusual red algae bloom. The bloom, and the ‘red tide’ that followed, consumed the ocean’s oxygen, resulting in the widespread death of marine life. Of the salmon that survived, many were deemed unfit for human consumption and had to be disposed of. Some groups argue that these fish, which were improperly dumped into the sea, were responsible for extending both the length and severity of the red tide.

The loss of income led the Chilean fisherman to hold widespread protests, demanding some governmental remuneration for their loss. They blockaded roads and interrupted the industry causing an estimated economic loss of $9 million USD per day. Overall, industry sources estimate that the industry lost 4,500 jobs as a result of the bloom and the associated fallout. Eventually, the government arrived at an arrangement with the fisherman for payment of damages and the protests were stopped.

In total, over the first half of 2016, the Chilean fishing industry estimates that 100,000 tons of salmon production were lost to the bloom, or about 12% of production. In a recent report, USDA states that the reduction in supply has led prices for salmon in the US to jump more than 50%, from $3.50 per pound in January, to nearly $5.00 per pound in June.

Aquaculture: Opportunities and Challenges

On the whole, the aquaculture industry is fascinating and uniquely situated to expand to meet growing consumer demand in the coming decades. In a TED Talk delivered in 2015, Mike Velings, stated that the ocean is the world’s largest source of animal protein, with over 2.6 billion people looking to it as a daily source of food. He goes on to say that fish is one of the most efficient sources of animal protein, achieving a ratio of about one to one; that is, one pound of feed resulting in one pound of fish. (If you are interested in the subject, I highly recommend Mike’s TED talk – you can find it here).

Long story short, farming fish could be a viable alternative for producing animal protein for a growing global population while avoiding the dangerous consequences of overfishing. But all is not sunshine and roses. According to Mike, many of these fish farming operations are notoriously poorly managed and have led to the development of a plethora of environmental and social challenges. The case of salmon in Chile for example, clearly shows the potential devastation that may befall an industry when it fails to hold itself to a high enough standard.

This industry is ripe for improvement however, and the introduction of new management practices combined with innovative technologies could position aquaculture to demonstrate truly tremendous growth over the next few decades. Several countries in South America are particularly well suited to show leadership in the area. Chile has already demonstrated a predisposition for the industry and has given us an important lesson in mismanagement. But other countries, like Peru and Argentina, may also find that tremendous potential lies in wait along their coastlines.

Summary

I wanted to write about the Chilean salmon industry this week, not only to bring visibility to the current situation but also because I think it holds many parallels for other more ‘traditional’ agricultural sectors in the continent. This case study shows how Chile was able to leverage its inherent qualities to become a leader in a growing industry. However, it also illustrates how failure to properly steward the industry resulted in its near decimation. And finally, it serves as a reminder that we need to be prepared to endure the impacts of uncontrollable phenomena like climate and weather.

It is critical that these lessons stay top of mind for individuals who are actively involved in agriculture and aquaculture, or are considering becoming so, in South America or any other area of the world.

Swimming Against the Red Tide: Chile’s Salmon Struggles