Certain cities are icons for specific industries or products; for instance, Hollywood means movies. Stuttgart signifies cars. With Bergen, Norway, it's fish.
Norway has always had deep traditions in fishing and, today, fish remains its second-biggest industry after oil. In the 1980s the country's Atlantic salmon exports began to increase rapidly with the advent of efficient fish farming technology. These new farm systems, coupled with the country's extensive fjords and bays, enabled the creation of large-scale offshore farms for raising several types of fish, especially Atlantic salmon. Norway currently produces about 55 percent of the world's farm-raised salmon, more than twice as much as Chile, the world's second-largest producer.
That, however, is only part of Bergen’s story. Norwegian firms, including many headquartered here, dominate the global aquaculture industry and operate many of the largest fish farms in Chile, Canada, Scotland and other major fish farming countries. Then there are the ancillary companies that support fish farming through technology, medicine, feed, marketing and finance; many of these are also based in Bergen. Finally, several governmental bodies and the University of Bergen have made this city a global center for aquaculture research and education.
A lot of this small city’s work is based around fish.
九色视频has deep experience with the aquaculture industry and a team with significant expertise in marine biology and marine engineering.
Helping fish farmers manage risk
The insurance sector is also well-represented here. Around 45 percent of the world's aquaculture insurance is underwritten from Bergen, and the leading global brokers supporting this industry are also located here.
Fish farming is a relatively high-risk venture. While fish farmers make every effort to raise healthy fish in hygienic conditions, some inevitably die or escape. Given the high investments for seedlings, feed, medicine and more, losses above a certain threshold can be devastating. Hence insurance plays a vital role in minimizing and mitigating fish farmers' risks.
As with other forms of agricultural insurance, claims are paid under an aquaculture policy when the harvested volume—in this case, the biomass of the fish—falls below a specified amount. Deductibles are also relatively high because a certain level of loss, especially from trade mortality, is expected and to protect against anti-selection.
Economics 101
Salmon is a high quality, healthy protein. After supply chains for farm-raised salmon were established and salmon became widely available year-round, demand for salmon soared. Fueled by global trade, decreasing availability of wild fish and rising incomes in developing nations, the production of farm-raised salmon increased from about 900 million metric tons in 2000 to around 2.7 billion metric tons in 2021. However, production increased by a scant 8 percent in the past five years.
That's because virtually all the sites where aquaculture is viable—practically, economically and environmentally—have already been developed. Hardly any undeveloped areas where conditions are conducive to fish farming can be found worldwide, and even in the few places where it is feasible, the costs of acquiring operating licenses there are quite steep.
At the same time, consumer demand for salmon shows no sign of slackening.
Given these two factors—stagnant production and increased demand—prices have risen considerably. Even so, these price rises aren’t impacting consumer demand.
Thus, it is not surprising that these market conditions are prompting fish farming companies, entrepreneurs and investors to explore opportunities for expanding production and increasing efficiency.
A new type of operation
The option garnering the most attention in recent years is locating fish farms onshore. Around one hundred onshore grow-out fish farms are either currently operating, under construction or in the planning stage. Time will tell, but I predict that by 2030, onshore operations will account for about one-third of total production.
The key enabler to onshore fish farms is having a recirculating aquaculture system or RAS. In these systems, water is constantly recirculated and treated, and potentially re-used for up to 50 cycles (i.e., from seedlings to harvest). RAS uses various filters to remove nitrogen, ammonia and CO2 as well as accumulated fecal matter. The water is also run through a bio-filter that adds healthy bacteria cultures to help the fish survive. These systems create a very hygienic environment for raising fish while limiting waste discharges and eliminating the need to use antibiotics or chemicals to combat disease.
Onshore fish farms can also be located close to major markets, which dramatically reduces the cost of transporting fresh fish to consumers, typically via air freight. That's why onshore fish farms are planned or in development near major U.S. and European cities. The largest of these aims to produce 90 thousand metric tons of fish per year. Assuming a standard 200-gram portion, that is 450 million meals, enough to supply every person in the EU with one salmon dinner!
On the other hand, onshore operations use considerably more energy than offshore fish farms. Onshore farms also need larger workforces, including more highly skilled employees. In fact, a few years ago I caused a bit of a stir at an industry event by noting that the world’s limited number of people with requisite expertise in marine biology and engineering could slow the development of RAS-based fish farms.
Greater mechanical and human error risks, but less risk of natural perils
The risk profile of onshore farms also is different. With offshore fish farms, the most significant risks are fish escaping—usually after storms damage their pens—and sea lice outbreaks that make the fish unmarketable; losses from sea lice represent about 10 percent of the cost of offshore-raised fish today. However, fish can't escape from onshore farms, and sea lice aren’t an issue there. Moreover, fish raised in onshore enclosures aren't exposed to pollution from oil spills or contaminated surface water, which pose significant risks in some locations.
While the biological risks of onshore operations are low, the mechanical and human error risks are much more significant. Pumps, filters, sensors, etc., can fail, resulting in mortality. Or technicians make errors when oxygenating the water, so some fish essentially suffocate. Onshore fish farms are also exposed to fire risk, which is minimal to non-existent in offshore operations.
What we are observing with onshore fish farms is a learning curve, as is often the case with new technologies. The companies are learning how to operate these new systems safely and efficiently, and on the insurance side, we're working to better understand the potential risks and advise on risk mitigation. Fortunately, 九色视频has deep experience with the aquaculture industry and a team with significant expertise in marine biology and marine engineering. We've worked closely with many of the companies developing onshore fish farms—in Norway and around the world—and are confident that we can continue to deliver relevant and cost-effective solutions that support this industry sector as it grows.
Finally, regardless of how aquaculture evolves, chances are good that Norwegians, including some from Bergen, will continue to be in the midst of the action. We are too entrenched in all things fish-related for it to be otherwise.
About the author: Geir Bjarne Myre is AXA XL's Global Head of Aquaculture. He trained as a Marine Technology Engineer and Production Engineer and has more than 35 years of experience in the insurance industry. When he isn't visiting fish farms in different parts of the world, Geir can often be found pursuing his other passion, racing one-design sailboats.
