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Is Magallanes the fresh start Chile's salmon industry needs?

High profitability is encouraging companies to invest in high-tech solutions in the region, raising the bar from the outset.

Salmon farming is moving to the Magallanes region in Chile, an area that is compared in the market with Norway for its salmon farming conditions, and which could give both established companies and newcomers to the region the chance to set the bar high in sustainability and technology standards.

There are just over 1,300 salmon concessions in Chile, of which 539 are in Los Lagos, 635 are in Aysen and 132 are in Magallanes, a region where the coastline is the same size of the other two regions put together.

Besides the current 132 concessions in the region, there are 284 applications being processed; of these, 153 are already marked with a "rejection cause," meaning they will not be approved, and only 15 are in "favorable conditions," meaning they will most likely be approved.

Considering that those 153 will not get approval, there are technically only 131 eligible applications, of which the industry expects no more than 40 concessions to go through. In total, there will be a maximum of 170 concessions in Magallanes -- around 30 percent of the concessions existing in each of the other salmon regions.

Overall, only 30 percent of concessions are operative in one cycle.

In 2017, 96,000 metric tons of salmon were produced in Magallanes. Production is expected to reach 88,000 metric tons in 2018; 101,000 metric tons in 2019 and 121,000 metric tons in 2021.

With subsequent growth, in the long term, the region could produce 60,000 metric tons more than it produces today.

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Unique conditions for salmon farming

The Magallanes area is divided into three subareas for salmon farming: Natales, which currently hosts four companies – Salmones Magallanes, Australis, Bluriver (Blumar) and Multiexport; Skyring, where Cermaq and Australis operate (though AquaChile has held three concessions there since 2017); and Aracena y Canal Cockburn, where Nova Austral operates on its own.

The conditions of these three separate areas are different, with fjords creating natural barriers for the spread of disease and preventing water flow between salmon farms.

In addition, farmers in the area do not have problems with caligus (sea lice) like farmers in Los Lagos and Aysen, and sea temperatures in Magallanes range between 2.5 degrees Celsius and 11 degrees Celsius, compared with temperatures ranging between 11 degrees Celsius and 16 degrees Celsius in the other regions.

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In Magallanes, the most problematic disease is bacterial kidney disease (BKD), while in the other areas the most recurrent and damaging disease is salmon rickettsial septicaemia (SRS).

According to the National Service of Fisheries and Aquaculture (Sernapesca), mortality of Atlantic salmon in Magallanes (which makes up for 85 percent of production in the region) is 11 percent, mostly in the phase of smolt transfer to the sea. On average, salmon mortality in Chile is 15 percent.

The area has of course some significant disadvantages for salmon farmers: logistical challenges, higher costs, lack of infrastructure and a lack of knowledge of the activity and the specific conditions of this region, for example. However, the industry is gaining momentum in this region at an optimal time for investment.

Unprecedented investment

With the takeover of Salmones Magallanes by AquaChile, and the purchase of AquaChile by Agrosuper, the massive new company will have increased access to capital, something that would help it kick off the construction of the second phase of its hatchery -- for which it has all permits in place -- to increase production of smolts and reduce time of smolts in the sea.

“At the moment, we can produce 5 million smolt of 130 grams," Oscar Garay, farming manager at Salmones Magallanes told IntraFish. "With the extension we would be able to produce 6 million smolts of 350 grams."

The company runs a recirculating aquaculture system (RAS) hatchery with direct access to natural fresh and sea water for the different stages of production.

In this hatchery, around 99 percent of the water is recirculated, Garay said.

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Besides the arrival of AquaChile to the Region, two other companies -- Multiexport and Blumar -- recently started stocking in Magallanes, both expecting to harvest the first batches in 2020.

Multiexport, which has operations in Aysen and Los Lagos, began stocking in Magallanes in October this year. It has seven concessions in the region and a number of applications underway. At the moment, it operates only three concessions located in the Taraba Fjord, in which the company will stock 1.2 million smolt through March 2019.

With its arrival to Magallanes, Multiexport is focusing on the implementation of technologies to improve productivity for workers across the remote operations.

It has invested in four feed barges with 22 employee rooms for operations in the region, two of which will be delivered in December and another two in March, with automatic feeding systems and monitoring that can be remotely controlled from the barges and from any centralized system.

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Australis, which is well established with more than 60 percent of its production in this region, has recently invested in 10 barges to accommodate personnel and improve production systems.

Nova Austral is currently building a cutting-edge technology hatchery in Porvenir to produce all its smolts, which is expected to be finalized in 2019.

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Blumar, which will operate in Magallanes as Bluriver, also began stocking recently; it's currently working on the construction of a processing plant, and has plans to build a hatchery at a later stage. It will implement automatic intelligent feeding systems as well as monitoring systems with cameras able to rotate 360 degrees and fully remote feeding control as well in the new installations.

“There is a surge in investment in farming technology, especially in feeding and monitoring systems, and automated photo-period systems to reduce production cycle in both hatcheries and farming sites,” David Labra, commercial manager of Norwegian aquaculture software company Steinsvik, told IntraFish.

“There is an increase in the use of technology across Chile, but it’s more significant in Magallanes, the conditions in the area also need higher investment in this sense, the distances are long and remote control of all the parameters is necessary here."

There are several reasons for all the investment: live information on feeding, temperature, oxygen levels and water conditions from all sites allows for a better control of the process without the need to be physically at the site, and gives a production manager the ability to deal with all the different farms at once. With, in some cases, an eight-hour boat ride to reach farming sites, remote monitoring is crucial.

Communication with the team also increases productivity, and the reduction in logistic costs and feed waste are also strong drivers for investment in technology.

“With the systems that we provide operators are able to see how much feed is being consumed and when fish stop eating, the intelligent feeding system stops automatically distributing feed reducing waste to a minimum,” Labra said.

“Since feed is 70 percent of the costs of salmon farming, this is extremely important.”

Technology to reduce footprint

All the technological investment also reduces companies' environmental footprint, mainly by lowering the amount of feed that falls to the seabed, a concern for the industry and one of the biggest criticisms of environmentalists and anti-salmon farming activists.

Salmones Magallanes uses Steinsveisk RH Multifeeder to automatically feed all cages from the barge at the same time, something that optimizes the few hours of sun light in Magallanes.

“The days are short in Magallanes, especially in winter, so it’s very important to be able to feed all cages at once and not waste time in feeding them by groups,” Salmones Magallanes' Garay told IntraFish during a visit.

The time is now

With this level of investment in the area, the new era of salmon farming in Magallanes is kicking off with the highest farming standards available.

“It is important for the industry, especially here in Chile where the conditions are so different, to optimize time and reduce costs, and people know that and are able to invest now,” Labra said.

In addition, the arrival of new companies is likely to cause a shortage of workforce in Magallanes, particularly in processing plants. This, according to the industry, could also be a good thing, since it would encourage companies to improve working standards across operations.

Although environmental pressure against salmon farming in Magallanes is strong, investment in technologies that can keep competition at the highest level could set up the industry for the controlled and beneficial growth that it needs right from the beginning.

“It is good the fact that some companies are so committed to this kind of improvement, because that raises standards in the region,” Steinsvik's Labra said.


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