Speech: The government`s strategy for sustainable growth

Speech at Danske Bank Seafood Seminar

                                                                                              Sjekkes mot fremføring

Dear all,

Good morning to all of you. Thank you for the invitation to come and speak here today.

I know that growth in the aquaculture industry – or the lack of growth – is a concern to many at the moment. There has not been a significant change in the production level here in Norway over the last couple of years.

Let me start by assuring you that the government sincerely wants the aquaculture industry to grow. I am convinced that this industry has a bright future. And I am convinced that it will become even more important than it is today.

 

As all of you know, parts of the Norwegian economy are facing challenging times. Few of us could have predicted the sudden fall in oilprices that we have seen the last two years.

The oil and gas sector will be important for many decades yet. But, to secure our long-term welfare, we need to base our economy on several pillars – one of which is the seafood industry.

And seafood - the salmon farming sector in particular - is enjoying its best period ever:

From January to April this year, we exported salmon and trout for a total of 19,5 billion Norwegian kroner. This is 29 percent higher than for the same period last year. A year that you all know was an «all time high».

This record is a result of the good work that has been done by the industry over many years. The krone is weak and this also helps seafood exports.

But it is a fact that right now there is simply a shortage of fish. Globally, we are looking at a decrease this year. Mostly because of problems in Chile. But it is also expected that production will decrease somewhat here in Norway.

From a market point of view, there is no doubt that we could produce a lot more salmon than today.

I know that the industry is impatient. And let me assure you: I am just as impatient.

From an environmental point of view, things are not as clear.  It is not my role to serve as a market regulator. But, it is my responsibility to ensure that growth is environmentally sustainable.

We need to take care of our wild salmon stocks. And we need to maintain our good reputation and market confidence.

 

I have been crystal clear; There will be no growth until the sea lice issue is under control.

I am concerned by the situation we are seeing, with increased resistance to medical treatments. Last year, almost 30 production sites had to cut production in half because levels of sea lice were too high.

I am therefore very pleased to see that the industry is investing heavily in both preventive measures and alternatives to medical treatments. I am hopeful that we will soon start to see the effects of these investments.

 

When former Minister of Fisheries, Elisabeth Aspaker, was here last year, the government had just presented the White Paper on how to achieve sustainable growth in the salmon farming sector.

Since then, we have  taken a big step towards introducing the new regime. But we still have some way to go.

With the White Paper we were able to achieve political agreement in the Storting that:

  • growth shall only be based on environmental sustainability
  • that sea lice is the best – and for the moment only relevant indicator to regulate capacity growth.
  • and that salmon farmers should be responsible for the combined impact from all salmon farms within a production area. Sites impact each other, and we can no longer consider each site as being isolated.

The Storting also agreed with us to the new traffic light system:

In production areas that are given the green light, capacity should increase by 6 percent every second year.

Capacity should be reduced by the same amount in production areas that are given the red light. In areas with yellow light there will be no change.  

We consider 6 percent to be a responsible growth rate for now. I am however open to revising the percentage at some later stage, for instance if we are able to reduce the sea lice problem significantly.

 

Over the summer, we will conduct a test run of the sea lice indicator model. Both the Institute of Marine Research and the Veterinary Institute will be involved, together with other relevant institutions.

And we are now about to send out a consultation paper on how to define the production areas.

I am upholding my progress plan for the new traffic light-system, with the first new licenses to be awarded in 2017.

I have been asked whether licenses will be awarded through auction or at fixed prices. This has not yet been decided. But the government will base allocations on objective criteria. We do not want a repeat of previous rounds where licenses were based on subjective criteria.

 

The test run will give us a first impression on how much growth we can expect with the new system.

But I want to make another important point: The industry has many opportunities to grow outside the new system:

First of all, the government has offered a 5 percent increase in capacity to farmers that are able to produce with very low levels of sea lice.

It remains to be seen how many take up on this option.

I want to stress that there are no plans to make all future growth dependent on the very strict sea lice level of 0,2.

The sea lice regulations are about to be evaluated. Even though we are moving towards more area-based regulation, there is still a need for regulations at the individual site level.

Secondly, there are a number of things the industry can do to increase production without me allocating a single new license!

Larger smolt is one option. Reducing losses in production is another. Every 5th fish does not make it through the production process! And then there are improvements in breeding and more efficient feed. The possibilities are huge!

The third opportunity to grow are the innovation licenses that we introduced half a year ago. We are seeing a massive interest in these, and they will contribute to increased production within two to three years.

 

With the new innovation licenses, we are building a bridge between research and the commercial stage. We are paving the way for future growth.

And over the last few months we have seen a wave of innovation through the industry. More than 20 applications so far, and even the names are innovative: Marine Donut, the Egg and Aquatraz! The last one must be extremely secure!

So far Salmar is the only company to have obtained licenses for its well-known offshore farm.

We also see that many of the applicants – like Gigante Offshore and Marine Harvest are using knowledge and technology from other sectors, such as  maritime and  oil and gas. Here we have enormous amounts of knowledge that can be transferred!

This also gives new opportunities in a challenging time for the  offshore service suppliers!

I have been asked if there is a limit on the number of innovation licenses. To this my answer is no. Those that comply with the criteria - new and viable concepts will be awarded licenses.

 

A final area of growth I would like to mention is on-shore farming. Following the White paper, licenses for onshore farming will now be free and awarded on a continuous basis.

These new regulations are just «around the corner» and will be introduced before the summer.

It is unlikely that onshore farming will replace the traditional sea-based farming, but it can be a supplement. It is important that those who believe in this technology have the opportunity to invest.

Norwegian companies are leading in this area as well. There is demand for onshore-technology from other countries. Therefore, also on the technology-side, this can be a new and successful area of export.

 

The political seafood debate recently illustrated that the Norwegians care deeply about the future of the marine resource economy in this country.

We do not know what  this industry will look like in ten years. This is exciting.

But the framework has to be predictable. To attract entrepreneurs and investors. And to employ even more than the 25 000 people that work in the aquaculture business and related services today.

To overcome the challenges, we have a unique strength that everyone outside Norway envies. This is the good cooperation between the authorities, the industry and research bodies.

This is why our marine resource management is world leading. I am convinced that we together will make a future-based aquaculture industry!

I wish you an interesting and inspiring day!

Thank you for your attention.

***