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Salmon Farming

This information is from a past project and whilst it is outdated it may still be a viable diversification option under the correct circumstances.

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General

Salmon farming was introduced to Scotland in the early 1960s. It is now a major industry, with over 530 registered businesses engaged in salmon farming in Scotland (2000), producing over 130,000 tonnes of salmon yearly, worth over £300 million.

Salmon production is carried out in two phases; the first is a fresh water phase where the ova are hatched and the young (smolts) reared in tanks or in cages in fresh water lochs. This takes around 10 - 15 months (although new technology enables fish to be put into the sea from 6-7 months now).

The second phase involves growing the smolts in cages in sea water until they reach market size, which may take around 12 - 18 months and takes place in units varying in size from under 100 tonnes to over 500 tonnes production per annum.

The average fish weight at harvest is 3 - 4kg with larger fish used for smoking. The industry is mostly in the hands of medium or large-scale limited companies, but there are a number of small or medium family-run businesses.

Please remember that special consideration must be given to the VAT aspects of diversification as the new activity may not be treated the same as the existing farm business from a VAT standpoint.

Market

50% of current output goes to processors, mainly smokers, the remainder being sold fresh to wholesale fish merchants or direct to supermarkets and caterers.

Opportunities may exist for small-scale producers to develop a specialised local market.

Physical Requirements

Land: On-shore base to service cages, feed store, general store, work shop, net washing and repair area.

Water: Production of cage salmon: shelter and unpolluted water with a good water exchange. Production of smolts: fresh water.

Equipment: Vehicles and boats. Moorings, cages, nets, feeders and accessories.

General: Net washer, harvest boxes, ice machine, jetty crane.

Costs

The following costing information is general and current prices should be sought for budgeting purposes.

Capital Costs

Costs vary according to the size of unit. For a 14-cage unit producing 200 tonnes per annum, they might be as high as £300,000.

These costs could be reduced by working on a DIY system and using second-hand equipment.

Capital costs for a large-scale unit c £1,500/tonne.

Running Costs

Production costs/tonne from a large-scale unit are around £1,500 -£1,900. This includes smolts, feed @ £820/t, (Food conversion ration 1.2:1), vet & medicine @ £70/tonne output.

Returns

An example of gross margin expected per tonne of salmon (extracted from SAC's Farm Management Handbook is given:

Output

Per Tonne Salmon (£)

125 large salmon 4kg @ £2.40/kg

1200

100 medium salmon 3kg @ £2.30/kg

690

80 grilse 2.5kg @: £2.20

440

Subtotal

2330

Less smolts 335 @ £0.70

235

Total

2095

Variable Costs

Per Tonne Salmon (£)

Feed 1.18t @ £820/t

968

Vet & medicine

70

Other costs (marketing, packing, haullage, SSGA levy)

300

Subtotal

1338

Gross Margin

757

Sensitivity - Change +/-

Change in Gross margin/tonne (£)

10p/kg salmon price

100

£10/t feed

12

0.1 in feed conversion ratio

80

10p smolt price

34

Constraints

Finance: Initial cost of operation for 12 - 20 months before first income generated.

Disease: Both a bacterial disease, furunculosis and pancreas disease can cause major economic loss.

Legal: Lease required from Crown Estate Commission (CEC) for use of the sea bed (typically 15 years).

Regulatory Laws: Scottish salmon farming industry is scrutinised by ten different statutory bodies and subject to more than 50 pieces of legislation

Planning: Must have planning permission for all on-shore developments.

Register: Must register with SOAFD as required by the Diseases of Fish Act 1983. Other organisations also need to be consulted, eg River Purification Boards, Nature Conservancy Council.

Training

SAC Aberdeen - MSc / Dip. in Aquaculture Business Management Barony College, Parkgate, Dumfries DG1 3NE Tel: 01387 861251 Fax: 01387 860395 (HND, HNC, Cert. in Fisheries Studies, SVQ level 2 Fish Husbandry, Short Courses).

Stirling University - Institute of Aquaculture (MSc Aquaculture, MSc Aquatic Pathobiology, MSc Aquatic Vet Studies, BSc (hons) Aquaculture, short courses, specialist technical training).

Inverness College / Seafield Centre, Kishorn, Strathcarron, Ross-shire IV54 8XD, Tel: 01520 733 300, Fax: 01520 733262 (HNC Fish Farm Production Management, NC Fish Farming, SVQ II Fish Husbandry - distance learning, SVQ III Fish Husbandry, IT computing courses, short courses).

Institute of Fisheries Management, 31 Ferndene, Bradley Stoke, Bristol BS12 9DG, Tel: 01454 624367, Fax: 01454 624033, (Certificates in: Fish Farming, Fisheries Management, Diploma, all by correspondence).

North Atlantic Fisheries College, Port Arthur, Scalloway, Shetland ZE1 0UN Tel: 01595 880328 Fax: 01595 880549 e-mail admin@nafc.ac.uk (MSc/ PGDip Practical Mariculture, MSc Mariculture Science & Technology, Modern Apprenticeship in Fish farming, SVQ Level II Aquaculture and SVQ Level III in Aquaculture, Modern Apprenticeship in Fish Farming, SVQ Level II Fin Fish Husbandry, SVQ Level II-IV Fishing, NC Marine Science & Technology, Boatmaster's Licence).

Grants

Through the Scottish Rural Development Programme (SRDP) 2007-2013 funding is now available for rural businesses throughout Scotland for diversification and renewable energy projects. Specifically, support is delivered through Rural Development Contracts – Rural Priorities which was launched in April 2008. For further information about what support is available see the Section on Rural Development Contracts – Rural Priorities.

Further Information

Publications

Salmon Production in Scotland 2000 (.pdf format) Scottish salmon and sea trout catches 2002 Predators at Scottish Salmon Farms (.pdf format) Economic Impact of Salmon Farming Salmon Farming and Predatory Wild Life. A Code of Practice (.pdf format) Aquaculture in Scotland. This Newsletter is intended to provide a quick reference to the latest developments on aquaculture in Scotland. It contains economic, statistical, fish-health and environment and planning information, as well as relevant publications and links to other useful web-sites. A Code of Practice on the Containment of Farmed Fish, Official Notification Following the Escape of Fish and Possible Measures to be Employed to Attempt Recapture (.pdf format) The Code of Practice To Avoid and Minimise the Impact of Infectious Salmon Anaemia (ISA) (.pdf format) A National Treatment Strategy for the Control of Sea Lice on Scottish Salmon Farms - A Code of Practice (.pdf format) Salmon Farming Handbook. S D Sedgwick (1988). For details see Fishing New Books Catalogue. Salmon & Trout Farming. Laird & Needham (1988). Salmon Smolt Production Manual. BIM (1990). The Economics of Salmon Aquaculture. T Bjorndahl (1990). Handbook of Trout and Salmon Diseases. R J Roberts, C J Shepherd. See Landsman's Bookshop Ltd's Fish Farming Section