Production costs to increase in Chile if salmon has to be frozen due to lack of air cargo

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Frozen inventory and a lack of air space, a serious situation for salmon companies already operating at loss in Chile.

Two of Chile’s top salmon suppliers told Undercurrent News they aren’t too worried by the reported high inventory levels building up in the country.

“I think there’s no doubt the inventory level has increased this year because the markets have not been able to absorb the tremendous growth we’ve had,” said Blumar sales and marketing director Daniel Montoya.

“Total exports of Atlantic salmon have grown by five per-cent over the first ten months, but our harvest has grown above that level,” he added.

Arild Aakre, head of global sales and marketing for Cermaq Group told the publication 50,000 tonnes may sound like a lot but in perspective, but it’s less than a month’s production out of Chile.

He added that good sales of frozen fish have picked up in Southeast Asian markets.

But they will have to pick up.

Earlier today, SalmonBusiness reported that planes will be unable to export up to 140,000 tonnes of fresh fish next year due to lower air connectivity.

This was down to the trade body Air Transport Association (IATA) estimating bankruptcies and slimmer air timetables next year in 2021.

Reflecting on the reduction of around 15.4 per-cent because of the lack of air cargo space next year, Cermaq Chile Managing Director Steven Rafferty said that it was important to note that certain companies are reducing volume. But as a company, Cermaq Chile is owned by Japanese giant Mitsubishi has financial backing and no loans.

Other salmon farming companies will have to contend with up to an increase of EUR 65 million – EUR 70 million in production costs. That is based on freezing costs per kg at EUR 0.5. Serious if a business is already operating at, or edging up to, a loss.