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Rabobank: Land-based technology may disrupt aquaculture sector

New projects could account for 25 percent of production by 2030, Rabobank analysts say in new report.

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Land-based salmon farming could become a disruptive technology over the next 10 years, accounting for a quarter of the global salmon supply by 2030, Rabobank analysts said in a new report.

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More than 50 recirculating aquaculture system (RAS) technology projects have been announced publicly across the globe, according to Rabobank research, with more expected, ultimately resulting in a potential supply of 250,000 metric tons of salmon from land-based projects by the end of the next decade.

It is difficult to calculate how much fish is currently produced using recirculation systems, but Rabobank said it is likely to be no more than 3,000 metric tons worldwide.

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Disruptive technologies stem from innovations that significantly alter the way consumers, industries, or businesses operate.

With investments in land-based projects pouring in, Rabobank found that a third of the projects target 5,000 tons by 2026 or later. The majority aim to produce between 5,000 and 35,000 metric tons.

Although Rabobank analysts don't expect all of these projects to succeed, they identify three critical factors for site location.

Projects are more likely to succeed in an environment where expertise and innovation are present, for example in Norway. Regions with no local salmon supply but strong demand are favored targets for land-based producers.

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But this is less likely to work well without access to water, logistical infrastructure, the prospect of subsidies, energy and labor resources, the report said.

Financial bottlenecks, the wrong choice of business and marketing strategies, location, species, as well as permitting holdups are likely to mean that plans for 700,000 metric tons of production from land-based projects will not be achieved by 2030 in Rabobank analysts' view.

But they add that land-based salmon could become a mainstream product in 10 years if producers can get close to reaching "ambitious" targets of 500,000 metric tons of production.

"Profitability of projects will depend on production volumes, costs, prices and consumer acceptance of land-based salmon," the report said.

While a 10 percent addition to salmon production in Norway or Chile would not be particularly large, in China such an increase may have a game changing effect on trade dynamics, analysts calculate.

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