Despite the current uncertainty around Norway’s incoming ground rent tax on salmon farming, 2023 should still be a good year for the country’s salmon farmers, according to one analyst that tracks the sector.

Speaking during the Sjomatdagene conference in Norway on Tuesday, Knut-Ivar Bakken, seafood analyst at Sparebank 1 Markets, said it is clear that salmon's rise is not over.

"In fact, we believe that 2023 will be the third or fourth-best year ever, behind, among others, 2022 and 2017," he said.

While last year was great for the farming industry, the sector's success has been overshadowed by discussions around the introduction of a new 40 percent tax on Norway's salmon farming companies and the uncertainty it has created.

"We have a product with very high demand and relatively low supply growth in the coming years, which will provide strong prices and strong earnings for the sector," Bakken said.

Still high feed prices

Bakken said the sector is currently seeing a slightly lower level of long-term supply contracts, but “although we expect slightly lower spot prices in 2023, the price achieved will be higher than in 2022."

But there are some clouds on the horizon. Notably costs are high and feed prices have been rising for the past four years for all proteins.

"We had an expectation that feed prices would come down a little now," he said.

"You will continue to have high feed prices and costs in the future, which will reduce the total a little."

Annual export growth in value

The value of salmon from Norway measured in euros has risen every single year except 2020.

From 2011 to 2019, there has been an average annual growth of around 9 percent, said Bakken.

"If we look further ahead, and if we get the opportunity to engage in product development, the train will continue to run," he said. "That is the advantage of a product that is in high demand."

The demand for salmon was helped by the pandemic with more people preparing salmon at home.

"[The pandemic] was a fantastic marketing campaign for Norwegian salmon," said Bakken. "When the restaurant market was closed down, people had to eat at home, and we gained many new consumers."

The restaurant industry has also bounced back, and strong inflation has not affected orders significantly, Bakken said, but he predicted a "slight decline" this year.

Low volume growth

Lower salmon biomass is indicating a slow growth year for the industry, Bakken noted. Biomass was down 3.5 percent at the end of November, and down 7 percent in Chile.

Sparkebank 1 Market estimates a total of 2.9 percent global supply growth in 2023.

"It is probably a little higher than what Kontali and the farmers present," said Bakken. "Many believe that there will be negative growth in Chile."

But he noted that Chile can often produce more than analysts project.

Adding to the volume drag, Bakken noted that there is very little new capacity coming from authorities in any countries.