October 7, 2003



Fishery Industry in Chile Foresees Slower Growth


As a result of a decline in Chile's salmon and trout production, exports of whole eviscerated salmon failed to expand after many years of constant growth. In the coming years the industry will continue to expand, but at a slower rate.


Salmon and trout (Salmonid) production are the main components of Chile's edible fisheries sector. Exports were valued at $973 million in calendar year 2002, representing 5.8 percent of Chile's total export revenues for both Agricultural and Non-Agricultural products. A further expansion is expected in 2003, prices of exported salmon products have recuperated significantly during the first semester.


Total Chilean aqua-cultural output will continue to grow based on development and growth of salmon, trout and new species like turbot. Total exports in 2003 are expected to reach US$1.2 billion according to recent projections published by the Salmon Producers Association. Exports of value- added salmon and trout products are expected to expand at a faster rate than whole eviscerated salmon. The export share of these processed products has increased from 5 percent in 1990 to 64 percent of the total export value in 2002.




Although total trout and salmon export volumes grew in MY2002, this expansion was significantly smaller than the previous years. Returns only expanded 1 percent for salmon and trout, to a total of US$973 million. For MY2003, production and export volumes are forecasted to grow only moderately. Salmon producers in an effort to reverse the significant decline in export prices observed during last year have agreed to reduce output.


Economic returns should increase as prices recover in the main export markets. Total export of salmon and trout are expected to increase by 23 percent in MY2003, with total revenues of US$1.2 billion. The long term export forecast for whole eviscerated salmon is much more moderate than in the past, as demand is expected to shift to value-added salmon products. Industry contacts have indicated that better results could be expected in coming years as demand in Japan and the United States continues to grow and prices are recovering.


Chile's excellent natural conditions promote efficient, low-cost salmon production year around. Ample supplies of relatively inexpensive, high quality fish meal and fish oil (the principal feed inputs) further support the profitability of the sector in that feed comprises 60 percent of the total cost of production. Most of the feed used by Chilean salmon producers is manufactured domestically, using the most advanced production and processing technology available.


Based on these natural comparative advantages, Chile's salmon and trout production and exports will expand further in the coming years depending upon market conditions. Chile produces and exports a variety of salmon products, including fresh/chilled, frozen, canned, dried and salted, smoked and dehydrated salmon. Although the most important component of the sector is fresh/chilled and frozen whole/eviscerated salmon, exports of value-added salmon products are increasing at a fast rate.


The Chilean salmon and trout industry is composed of more than 70 companies, most of which are located in Regions Ten, Eleven and Twelve employing directly and indirectly over 45,000 workers of which 60 percent are women,. Aquaculture is conducted in 234 coastal concessions for which the companies pay user fees to the government. An estimated 2 billion dollars have been invested in the industry in the major regions of production. In year 2010, yearly exports are expected to reach a level of 2,250 million dollars. Another 1,460 million dollars are expected to be invested in the next seven years.




The average export price for whole eviscerated fresh/chilled and frozen salmon fell again in 2002, from $2.48/Kg. in 2001 and $2.25/Kg. in 2002. As a result, the total export value of exports of whole eviscerated fresh and frozen salmon fell from $284 million in 2001 to $256 million in 2002.




Based on a smaller expansion in salmon output and a significant expansion in exports of value added products, exports of eviscerated salmon fell slightly in MY2002, when compared to the previous year. In the coming years, the expansion of whole eviscerated salmon exports is expected to grow at a slower rate than in the past, as exports of value-added salmon and trout products expand as producers seek higher profits. Exports of value-added salmon and trout products increased another 8 percent in MY2002. Close to 90 percent of Chile's whole eviscerated salmon production is exported to Japan, Brazil and the United States.


The U.S. took just over 43 percent of total salmon exports valued at US$414 million, followed by Japan, with 41 percent of total exports valued at US$403 million. Almost all Pacific salmon (Coho) and trout are frozen and exported to Japan, mostly via ocean freight. Atlantic salmon is normally marketed fresh/chilled and transported via air freight to markets in the United States, and in smaller amounts to Europe and Latin America.


Chile is presently the main salmon supplier in the U.S. with slightly over 48 percent of total imports, of farmed and ranched salmon, followed by Canada with a 41 percent share. In recent years the salmon industry has invested heavily to increase the value of its products by constructing processing plants to produce more value-added products, like smoked salmon. Exports of these products represented just 5 percent of total exports in 1990. Currently they represent 64 percent of total exports. The FTA recently signed with the U.S. will not have a major effect on exports for the salmon producers, as most imports of salmon products are already enter duty free. Only smoked salmon has a 5 percent duty, which will drop to zero once the Free Trade Agreement takes effect.




The Chilean government plays no role in salmon and trout production and exports. Antidumping measures taken by the U.S. back in 1997 against Chilean producers for unfair competition was suspended by a petition to the ITC by the producers from the State of Maine. The Chilean salmon industry has recently faced two health related problems in the Netherlands and Japan, because of the alleged presence of a prohibited substance in the salmon shipments. Authorities in the Netherlands seized a shipment of frozen salmon in early June, where authorities found unsafe quantities of malaquite green. A chemical that has been banned from Chile's salmon farming industry, supposedly since 1995.


In August, authorities in Japan suspended imports of an undetermined amount of Chilean salmon, claiming they contained greater amounts of antibiotics than authorized by Japan's health code. In an effort to prevent new health related incidents, the Government is devoting more resources to Sernapesca (National Fishery Service) to strengthen the Residue Control Program. Additionally, Sernapesca intends to visit an estimated 85 percent of the production sites by the end of this year to control the usage of prohibited substances. They intend to check mainly fresh water production sites, where reportedly, more fungicides are normally used than in ocean sites.




Chilean, U.S. and Canadian salmon producers recently formed a multilateral association called Salmon of the Americas (SOTA), based in Miami, with the main objective of promoting agreements among the main actors in the industry and to increase per capita consumption in the U.S. market. Canadian and Chilean producers supply 90 percent of the consumption in the United States.



Source: USDA

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