Chile's farmed salmon production could drop by almost 25 percent because of stricter regulations aimed at tackling environmental crises that have decimated fish populations in recent years, government and industry sources told Reuters.

The algae bloom earlier in the year slashed annual production to around 650,000 metric tonnes, a level last seen in 2011, when the industry was recovering from an outbreak of infectious salmon anemia virus.

That represents the low end of what the government expects to be a new reduced permanent range for production resulting from incoming rules aimed at reducing fish densities in pens by 27 percent, Raul Sunico, the head of the Chilean government's Subpesca fishing and aquaculture body, told Reuters.

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