The development of large scale aquaculture production: A comparison of the supply chains for chicken and salmon

Highlights

• Similar to poultry, salmon production has gone from small independent farms to large vertically integrated companies

• Transfer of knowledge on various levels from terrestrial food producers has facilitated the growth of salmon aquaculture

• Salmon is behind poultry in control of production process, coordination of the supply chain and marketing sophistication

• Potential for further growth in the salmon industry can be reached by continued knowledge transfer from the poultry industry

• With salmon aquaculture possibly the most advanced seafood supply chain, the potential is even greater for other species

Abstract

The supply chain for salmon is, in many respects, the world's most efficient seafood supply chain. Adopting new technologies and expanding the scale of production have improved competitiveness leading to increased production and industry growth. The transfer of knowledge and processes from other food producing industries has facilitated growth in salmon aquaculture in particular, and in aquaculture in general. As such, the maturity of the salmon industry relative to other food producing industries can provide indications of further growth potential. We argue that the salmon industry still has much to learn from similar processes in other food-growing industries. Notably, the production and processing of poultry has experienced significant increases since the 1940s, becoming the fastest growing and most rapidly changing highly-intensive livestock farming segment, with often fully-automated processing environments. Although farmed salmon has a production history closely following that of poultry, it remains semi-automated with less control over production processes and a more limited product specter than poultry. While this gives important avenues of growth for salmon, it holds even more potential for other aquaculture species with even less control over the production processes and supply chain.

Statement of relevance

Innovations leading to productivity growth and improved competitiveness throughout the supply chain have been key to the development of successful aquaculture industries. To a large extent, innovations have built on knowledge from the agrosciences. In this paper we compare the development of salmon aquaculture, one of the most sophisticated aquaculture industries with chicken, one of the most sophisticated terrestrial animal production industries. This sheds new light on the development of salmon aquaculture and it show that there is s large knowledge potential still to be tapped form chicken production, giving substantial promise of further development.

Introduction

Aquaculture has been the world's fastest-growing food production technology during the last three decades, with an annual average growth rate of 6.2% since 2000 (FAO, 2014). As more aquatic species are becoming domesticated, the production practices in aquaculture, particularly for fed species, are becoming increasingly comparable to those of agricultural meat production based on grain and oilseeds (Forster and Hardy, 2001, Torrissen et al., 2011). Still, aquaculture is in many ways a new industry, as systematic R&D did not commence on any significant scale until the 1970s (Asche, 2008, Kumar and Engle, 2016), and large-scale market impact did not occur until the 1990s (Asche et al., 2015).

Salmon is one of the leading species in modern aquaculture in terms of control within the production process, sophistication of supply chains and product specter (Anderson, 2002, Asche, 2008, Kumar and Engle, 2016). The global production of farmed salmon exceeded 3.4 million metric tons (mt) in 2014 (FAO).¹ Although that quantity only represents 4.7% of the total aquaculture production volume, it accounts for over 12.9% of the production value, making salmon the second most valuable farmed species after shrimp.²

It is well established that the success of aquaculture in terms of increased production is achieved through innovation, productivity improvements, and cost reduction at all levels in the supply chain, from the production stage to the market. An important part of this process has been the transfer or adoption of technologies and knowledge from the agricultural sciences (Anderson, 2002, Asche, 2008, Kumar and Engle, 2016). This suggests that the development of successful species in terrestrial animal production may contain a number of useful insights with respect to the future development of aquaculture. In this paper, the objective is to gain some of these insights by comparing the progress of salmon, the most advanced aquaculture species in production as well as marketing (Kumar and Engle, 2016), to chicken, one of the fastest growing and most efficient terrestrial meat species (FAO, 2010).

The quantity of chicken produced in 2011 was 3.5 times that of 1970, and the global production in 2011 surpassed 95 million mt, according to the FAO database. Over a span of fewer than 6 decades, the chicken industry has evolved from fragmented, locally owned businesses into one of the most efficient, vertically integrated parts of agriculture production. The obvious question to ask when interested in the potential for future growth in aquaculture species such as salmon, is what aspects of the production process contributed to this success, what are the similarities in the development of salmon aquaculture relative to chicken and how much knowledge is there still to transfer.

We will first provide a description of the development of the modern chicken industry focusing on changes in the production process, as well as supply chain and product forms. This will be followed by a description of the same process for salmon and finally, a comparison of the two industries. While the focus of the article is on salmon, as a leading species in modern aquaculture, the insights from improved production technologies, through the supply chain and to the market, are relevant for most aquaculture species. The data used for the comparison come mainly from the USA, historically the largest and most technologically advanced broiler producer, and from Norway, the main producer of farmed Atlantic salmon. However, we know that some and believe that most of the remaining insights are representative for producers in all countries using modern production processes.