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Why is farmed salmon winning?

Something's going very right for this fish, and the industry needs to understand why.

With labor issues, low margins, fixed prices, trade barriers, quality problems and consumer resistance, it seems like there are always fires for the industry to put out, or at the very least, more than enough to keep our days full.

And similarly, the list of things seafood keeps stumbling over seem to be never-ending. Everyone is in agreement: we're just not there yet.

And yet, there's one seafood that seems to be overcoming every obstacle put in front of it.

Farmed salmon has been unstoppable as a protein, and smashed through all negative expectations about price elasticity, consumer perception and logistical hurdles.

While salmon is a nice-looking, mild-tasting, versatile seafood, there are a lot of those out there. Shrimp? Tilapia? Cod? All have the ability to deliver so much more to consumers, and by extension bring so much more value to the sector.

So it's time to more carefully study the salmon success story for clues how to move the entire industry forward.

Though the reasons are many, here are just a few reasons how I think farmed salmon got to where it is:

A relentless focus on the customer. Fresh, boneless fillets, uniform weights, just-in-time delivery: we know this is what consumers want. Salmon farmers have given it to them.

Listening. It's the old "push vs. pull" manufacturing shift. Customers are asking, and the industry is answering. Antibiotics are a great example. Costco made a dramatic shift on its purchasing away from salmon raised on antibiotics, and here we are, just a couple years later, and reducing antibiotic usage has become one of the primary missions for the industry.

A commitment to sustainable practices. By comparison, few other seafood sectors -- or agricultural sectors -- has made such sweeping, multi-stakeholder commitments to improving how they produce their fish, or engaged with NGOs in quite the same way. Give credit where credit is due -- farmed salmon has made real strides.

A willingness to try new things. No other sector is making the creative leaps in production practices salmon farmers are. From offshore to land-based grow-out to "eggs" and tankers, the industry is not content to do what it's always done, and that's how breakthroughs happen.

Investing in automation.Leroy's recent "look ma, no hands" salmon plant shows the extent to which salmon farmers are willing to invest in automation. Emphasis on the word "invest" -- far too many companies brush off the latest equipment innovations as nice to have, not need to have. But the quality, yield and savings on production costs

And the topic of automation brings me to workforce. It's ironic that salmon farming is conducted most profitably in one of the most expensive labor markets on the planet. This, I think, is where real analysis needs to be done. Because if a company can't attract, hire and retain good people as their business grows, I fail to see the point, or the chances of success. 

But that's exactly what salmon farmers have done. Seafood is not an industry people are lining up to join (yet!), but if the jobs are professional, engaging and mission-focused, we can get there. Salmon farming is reaching a level of sophistication where the best and brightest are now taking a look.

Pushing the price envelope. Yeah, it might be easy to sneer at those salmon farming companies' margins, and certainly if you're a processor. But pull the camera back a second. The farmed salmon industry has managed to get consumers to pay a hell of a lot for their fish, and ultimately, the success or failure of this industry will hinge on people's ability to convince consumers to pay more for their product. Cheap product comes from cheap practices, and that helps no one.

A willingness to consolidate. It's easy to resist change, but in large part the salmon farming industry has been ready and eager to get together. I'd say it was purely for the cash -- though that helped, I'm sure -- but many of the aquaculture pioneers that did sell ended up starting something new in the sector or hanging around in some form or fashion. I think consolidation came in part by a collective recognition that the industry is incredibly inter-dependent.

Attracting capital. Pretty simple: if you want to grow, especially when you're dealing with live animals, you need capital. And the salmon farming sector has been able to demonstrate a case for stability and growth that has brought some of the most recognizable financial names into the fold. That's only accelerated its upward path. But it came from first checking off many of the above boxes.

Before you say, "Yeah, but...," let me first note that salmon farming is by no means perfect, and the quality, service and mindset can vary greatly between operators. And there are a lot of problems -- lice, disease, feed efficiency, ocean floor impacts -- that need addressing, and need continuous improvement. 

The boom-and-bust mentality still hasn't gone away. Not all workers in all regions are being treated the same as their colleagues in countries with more stringent regulations. 

And many of the above things weren't true 15 years ago. 

But the tide, if you will, has turned. It may be a flawed industry, but in the quest for the future of seafood, it's time for everyone to act a lot more like farmed salmon.

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Follow me on Twitter: @drewcherry


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