2023 Salmon Farming Industry Handbook 2023

Salmon Farming
Industry Handbook
2023
Salmon Farming Industry Handbook 2023

Forward-looking Statements
This handbook includes forward-looking statements that reflect Mowi's current

expectations and views of future events. These forward-looking statements
use terms and phrases such as "anticipate", "should", "likely", "foresee",
"believe", "estimate", "expect", "intend", "could", "may", "project", "predict", "will"
and similar expressions.
These forward-looking statements include statements related to population

growth, protein consumption, consumption of fish (including both farmed and
wild), global supply and demand for fish (and salmon in particular),
aquaculture’s relationship to food consumption, salmon harvests,
demographic and pricing trends, market trends, price volatility, industry trends
and strategic initiatives, the issuance and awarding of new farming licenses,
governmental progress on regulatory change in the aquaculture industry,
estimated biomass utilisation, salmonid health conditions as well as vaccines,
medical treatments and other mitigating efforts, smolt release, development
of standing biomass, trends in the seafood industry, expected research and
development expenditures, business prospects and positioning with respect
to market, and the effects of any extraordinary events and various other
matters (including developments with respect to laws, regulations and
governmental policies regulating the industry and changes in accounting
policies, standards and interpretations).
The preceding list is not intended to be an exhaustive list of all our forward-
looking statements. These statements are predictions based on Mowi’s current
estimates or expectations about future events or future results. Actual results,
level of activity, performance or achievements could differ materially from
those expressed or implied by the forward-looking statements as the
realisation of those results, the level of activity, performance or achievements
are subject to many risks and uncertainties, including, but not limited to
changes to the price of salmon; risks related to fish feed; economic and
market risks; environmental risks; risks related to escapes; biological risks,
including fish diseases and sea lice; product risks; regulatory risks including risk
related to food safety, the aquaculture industry, processing, competition and
anti-corruption; trade restriction risks; strategic and competitive risks; and
reputation risks.
All forward-looking statements included in this handbook are based on

information available at the time of its release, and Mowi assumes no
obligation to update any forward-looking statement.

Mowi Salmon Farming
Industry Handbook
The purpose of this document is to give investors and financial analysts a

better insight into the salmon farming industry, and what Mowi considers to be
the most important value drivers.

Table of contents
1 INTRODUCTION 6
2 POSITIONING OF SALMON 8
Seafood as part of global food consumption 9

Seafood as part of overall protein consumption 10
Atlantic Salmon as part of global protein consumption 11
Stagnating wild catch – growing aquaculture 12
Fish consumption 13
Salmonids contribute 4.5% of global seafood supply 14
Considerable opportunities within aquaculture 15
Supply of farmed and wild salmonids 16
Salmonids harvest 2021 17
3 SALMON DEMAND 18
Global macro trends 19

Favourable attributes of salmon 20
Relative price development of protein products 24
4 SALMON SUPPLY 25
Total harvest of Atlantic salmon 2002-2022 26

Diminishing growth expectations 27
Few coastlines suitable for salmon farming 28
5 SUSTAINABLE PRODUCTION 29
UN’s Sustainable Development Goals 30

Environmental impact of aquaculture 31
Material sustainability efforts 34
Sustainability of fish feed 35
Global sustainability initiatives 37
Transparency 38
6 SALMON MARKETS 39
Global trade flow of farmed Atlantic salmon 40

Farmed Atlantic salmon by market 41
Top 10 markets by size (2022E) 42
Development of value (CAGR 11%) vs. volume last 10 years 43
Price neutral demand growth – approx. 7% the past 20 years 44
Historic price development 45
Different sizes – different prices (Norway) 46
7 INDUSTRY STRUCTURE 47
Top 10 companies in farmed Atlantic salmon 2022 48

Number of companies in producing countries 49
8 SALMON PRODUCTION AND COST STRUCTURE 50
Establishing a salmon farm 51

The Atlantic salmon life/production cycle 52
Influence of seawater temperature 54
Production inputs 55
Cost component – disease and mortality 57
Accounting principles for biological assets 58
Economics of salmon farming 59
Cost structure industry Norway 2013-2022 60
9 FEED PRODUCTION 61
Overview of feed market 62

Relative feeding 64
Salmon feed producers 65
Salmon feed ingredients 66
Feed raw material market 68
10 FINANCIAL CONSIDERATIONS 69
Working capital 70
Capital return analysis 73
Currency overview 75
Price, cost and EBIT development in Norway 77
Effects of geographical diversification 78
11 BARRIERS TO ENTRY - LICENSES 79
Regulation of fish farming in Norway 81

Regulation of fish farming in Scotland 86
Regulation of fish farming in Ireland 88
Regulation of fish farming in Chile 89
Regulation of fish farming in Canada 90
Regulation of fish farming in the Faroe Islands 92
Regulation of fish farming in Iceland 95
12 RISK FACTORS 97
Salmon health and welfare 98

Most important health risks to salmon 99
Fish health and vaccination (Norway) 100
Research and development focus 101
13 INDICATORS DETERMINING HARVEST VOLUMES 102
Projecting future harvest volumes 103

Yield per smolt 104
Development in biomass during the year 105
14 SECONDARY PROCESSING (VAP) 106
European value-added processing (VAP) industry 108

Market segment 109
The European market for smoked salmon 110
Branding and product innovation 111
APPENDIX 112
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1 Introduction

Introduction
Salmon is the common name for several species of fish of the family
Salmonidae (e.g. Atlantic salmon, Pacific salmon), while other species in the
family are called trout (e.g. brown trout, seawater trout). Although several of
these species are available from both wild and farmed sources, most
commercially available Atlantic salmon is farmed. Salmon live in the Atlantic
and Pacific oceans, as well as the Great Lakes (North America) and other
landlocked lakes.
Typically, salmon are anadromous: they are born in freshwater, migrate to the
ocean, then return to freshwater to reproduce.
About 80% of the world’s salmon harvest is farmed. Farming mainly takes
place in large nets in sheltered waters such as fjords or bays. Most farmed
salmon come from Norway, Chile, Scotland and Canada.
Salmon is a popular food. Salmon consumption is considered to be healthy

due to its high content of protein and omega-3 fatty acids and it is also a
good source of minerals and vitamins.
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2 Positioning of Salmon

Positioning of Salmon
Seafood as part of global food consumption
The average human ate around 710 kg of food in 2020. Most of this food is
produce such as vegetables, fruits, and starchy roots. Animal protein, such as
seafood, poultry, pork, and beef, amounts to 9% of the total diet.
Per capita Meat Consumption (2020)

70
60
50
Kg per year
40
30
20
10
0
1960 1970 1980 1990 2000 2010 2020
Other Meat Seafood (Fish) Poultry Pork Beef
Meat as a food source has gradually become more important. Global per
capita supply has more than doubled since 1960, and the seafood segment is
a big contributor to this increase. 1 0F
Source: FAO (2020) FAOstat Food Balance Sheets
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Seafood as part of overall protein consumption
Although 70% of the Earth’s surface is covered by the oceans, fish accounts for only 7% of all
protein sources produced for human consumption. The UN estimates that the global
population will grow to approximately 9.7 billion by 2050.
Assuming consumption per capita stays constant, this implies a 24% increase in demand for
protein. In product weight that means an increased consumption of 119 million tonnes of
meat of which 39 million tonnes of fish meat. The UN however, estimates that demand will
actually double. We know that resources for increased land-based protein production will be
scarce, so a key question is how the production of protein sources from the sea can be
expanded. 11F
Source: FAO (2020) FAOstat Food Balance Sheets, UN (2022) World Population Prospects 2022
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Atlantic Salmon as part of global protein consumption
Most animal protein in our diets comes from fish, poultry, pork and beef, with
salmon consumption representing a small portion of global protein
consumption.
In 2022, FAO estimated consumption of 161 million tonnes of fish, 136 million
tonnes of poultry, 121 million tonnes of pork, and 72 million tonnes of beef and
veal.
In contrast, the total consumption of farmed Atlantic salmon was around 2.6
million tonnes (GWT). This corresponds to about 1.8 million tonnes in product
weight. If we combine all salmonids (both farmed and wild) it amounts to 3.4
million tonnes (GWT) in 2022. 1 2F
Source: OECD-FAO (2022) Agricultural Outlook 2022-2031, Kontali Analyse
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Stagnating wild catch – growing aquaculture
Over the past few decades, there has been a considerable increase in total
and per capita fish supply. As the fastest growing animal-based food
producing sector, aquaculture is a major contributor to this, and its growth
outpaces population growth.
Aquaculture has expanded fish availability to regions and countries with

otherwise limited or no access to the cultured species. At the global level,
since 2016, aquaculture has been the main source of fish available for human
consumption. In 2022, this share was 56%, a figure that can be expected to
continue to increase in the long term.
In 2022, aquaculture accounted for 88 million tonnes (LW) destined for direct
human food consumption, while wild capture accounted for 71 million tonnes
(LW). However, fish has been estimated to account for only 7% of global
protein consumption (and about 17% of total fish and animal protein supply).
World aquaculture production of farmed aquatic animals has been

dominated by Asia, with an 88% share in the last two decades.
1
3F
Sources: FAO (2022) The State of World Fisheries and Aquaculture 2022, OECD-FAO (2022)
Agricultural Outlook 2022-2031, Kontali Analyse
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Fish consumption
Given the expected production growth of 11% during 2021–2031 and the
projected world population growth of 9% over the same period, we will most
likely see a global increase in the average fish consumption level.
By 2031, per capita fish consumption is estimated to be 18.8kg (vs. 9.9kg in the
1960s and 18.1kg in 2021). This is equivalent to another 20 million tonnes of
seafood supply, which aquaculture is estimated to provide.
According to FAO, per capita consumption is expected to increase by 4% in

the period 2021-2031. Latin America and Asia are expected to have the
highest growth, whilst negative growth is anticipated in Africa. In general, per
capita fish consumption is likely to grow faster in developing countries.
However, more developed economies are expected to have the highest per
capita consumption. 1 4F
Sources: FAO (2022) The State of World Fisheries and Aquaculture, OECD-FAO (2022)
Agricultural Outlook 2022-2031
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Salmonids contribute 4.5% of global seafood supply
Although several salmon species are available from both wild and farmed
sources, almost all commercially available Atlantic salmon is farmed. Even
with an increase in production of Atlantic salmon of more than 1,000% since
1990, the total global supply of salmonids is still marginal compared to most
other seafood categories (4.7% of global seafood supply). Whitefish is about
ten times larger and comprises a much larger number of species.
In 2021, more Atlantic salmon was harvested than Atlantic cod. However, the
harvest of Atlantic salmon was only about 29% of that of two of the largest
whitefish species, tilapia and Alaska pollock.
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Considerable opportunities within aquaculture
The illustration above shows that Atlantic salmon (sea based) has the highest
level of industrialisation and the lowest level of risk compared to other
aquaculture species. Atlantic salmon (land based), on the other hand, has
proven risky with a low level of industrialisation (scale) to date. The size of the
circles indicates volume harvested.
Although Atlantic salmon is relatively small in harvest volume compared to

other species, it is a very visible product in many markets due to the high level
of industrialisation.
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Supply of farmed and wild salmonids
The general supply of seafood in the world is shifting more towards

aquaculture as the supply from wild catch is stagnating in several regions and
for many important species. Wild catch of salmonids varies between 500,000
and 1,000,000 tonnes GWT, whereas farmed salmonids are increasing. The
total supply of salmonids was first dominated by farmed in 1999. Since then,
the share of farmed salmonids has increased and farmed salmonids has been
dominant.
The total supply of all farmed salmonids exceeded 2.81 million tonnes (GWT) in
2022. The same year, the total catch volume of wild salmonids was approx.
one quarter of farmed, with pink, sockeye and chum being the most
common species.
Historically, the supply of pink, chum and sockeye have accounted for 97% of
the total wild catch volume, whereas pink being the dominated one with
approx. 50%.
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Salmonids harvest 2021
Atlantic salmon: By quantity, the largest species of salmonids. Farmed Atlantic

salmon is a versatile product, which can be used for a variety of categories such as
smoked, fresh, sushi, as well as ready-made meals. The product is present in most
geographies and segments. Due to biological constraints, seawater temperature
requirements and other natural constraints, farmed salmon is mainly produced in sea
in Norway, Chile, UK, North America, Faroe Islands, Iceland, Ireland, New Zealand
and Tasmania.
Small trout: Produced in many countries and most often consumed locally as a
traditional dish as hot smoked or portion fish. Small trout is not in direct competition
with Atlantic salmon.
Large trout: Produced in Norway, Chile and the Faroe Islands, the main markets are
Japan and Russia. Trout is mainly sold fresh, but is also used for smoked production.
Coho: Produced in Chile and is mostly used for salted products. It is a competitor of
trout and sockeye in the red fish market. Although Russia has increased its import of
this fish over the last few years, Japan remains the largest market.
Pink: Caught in USA and Russia and used for canning, pet food and roe production.
Since quality is lower than the other species it is a less valued salmonid. The fish is
small in size (1.5-1.7 kg) and is caught over a very short time period.
Sockeye: Caught in Russia and Alaska. It is mostly exported frozen to Japan, but
some is consumed locally in Russia and some canned in Alaska. Sockeye is seen as a
high quality salmonid and is used for salted products, sashimi and some is smoked in
the EU.
Chum: Caught in Japan and Alaska. Most is consumed in Japan and China. In
Japan, it is available as fresh, while in China it is processed for local consumption and
re-exported. Little chum is found in the EU market. The catch varies in quality and
part of the catch is not fit for human consumption.
Chinook/King: Small volumes, but highly valued. Alaska, Canada and New Zealand
are the main supplying countries. Most quantities are consumed locally. Chinook is
more in direct competition with Atlantic salmon than the other species and is
available most of the year.
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3 Salmon Demand

Salmon Demand
Global macro trends1
Population Exploited
growth Health
resources
Climate
Growing middle change/Resouce
class Aging population
efficiency
The industry is a good fit with the global macro trends, as Atlantic salmon is a
healthy, resource-efficient and climate-friendly product produced in the sea.
The global population is growing, resulting in increased global demand for food.
The world’s population is expected to grow to almost 10 billion by 2050.
The health benefits of seafood are increasingly being promoted by global health
authorities. The EAT-Lancet Commission recommends increased consumption of
fish, dry beans and nuts as sustainable, healthy protein sources. Farm-raised
salmon is rich in omega-3 fatty acids, vitamins and minerals.
Global fisheries are to a large extent fully exploited, meaning the supply of wild
fish has limited potential to meet the growing demand for marine protein.
The middle class is growing in large emerging markets, allowing more people to
eat different, and more nutritious, protein rich foods, such as fish, meat and eggs.
Consumption of high-quality proteins is expected to increase.
Another demographic trend driving shifts in demand is the aging population.

Healthy eating becomes especially important as you grow older.
Climate change is the greatest environmental challenge the world has ever
faced. Soil erosion is a growing issue for food production, challenging the world
to investigate new ways of feeding the population. Concerns about climate
change are influencing dietary choices. Increased consumption of fish can
reduce global GHG emissions and improve human health.
Source: Ocean Panel (2019) The Ocean as a Solution to Climate Change: Five Opportunities
for Action, UN (2022) World Population Prospects, FAO (2022) The state of the world fisheries
and aquaculture.
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Salmon Demand
Favourable attributes of salmon
Demand is partly driven by supportive megatrends, but of even greater

importance are the characteristics of the product itself.
Salmon is a healthy product and scientifically proven natural superfood. It is

nutritionally dense and has a favourable nutritional content.
Salmon appeals to the consumer with its top appetising taste, look, texture
and colour. Furthermore, salmon is a versatile product suitable for both
traditional and evolving food occasions. It is a good choice for Sunday dinner
with the family or at the restaurant, but also a great product for food festivals
or just as a snack. Another feature that makes salmon relevant for multiple
occasions is that it can be served in many forms - raw, grilled, cooked and
smoked. It appeals to people of all ages as it addresses the health needs of
the elderly, while being equally attractive to youngsters.
There is a rising demand for more sustainable food and a willingness to pay for
it. The sustainable properties of salmon therefore make the product attractive
to consumers.
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Salmon Demand
3.2.1 A healthy product 10F
Proteins Omega-3 Vitamins Minerals

High quality, High content Rich in D and High content
easily digestible of omega- 3 B12 vitamins
proteins, and fatty acids
of iodine &
high content of selenium
taurin
Atlantic salmon is rich in long-chain omega-3, EPA and DHA, which reduce
the risk of cardiovascular disease. Data also indicates that EPA and DHA
reduce the risk of a large number of other health issues.
Salmon is nutritious, rich in micronutrients, minerals, marine omega-3 fatty

acids, high-quality protein and several vitamins, and represents an important
part of a varied and healthy diet. FAO highlights that: “Fish is a food of
excellent nutritional value, providing high quality protein and a wide variety of
vitamins and minerals, including vitamins A and D, phosphorus, magnesium,
selenium and iodine in marine fish”.
The substantial library of evidence from multiple studies on the nutrients

present in seafood indicates that including salmon in your diet will improve
your overall nutrition and may even yield significant health benefits.
Considering global obesity rates, governments and food and health advisory
bodies around the world are encouraging people of all ages to increase their
seafood intake, with particular focus on the consumption of oily fish, such as
salmon. The U.S. Department of Health and the US Department of Agriculture
recommend an intake of at least 237 grams of seafood per week for
Americans in general. The UK National Health Service, the Norwegian
Directorate of Health and several other national health organisations
recommend eating fish at least twice a week.
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Salmon Demand
3.2.2 Resource-efficient production 1F
Protein retention 28 % 37 % 21 % 13 %
Calorie retention 25 % 27 % 16 % 7%
Edible Yield 73 % 74 % 73 % 57 %
Feed conv ersion Ratio (FCR) 1.3 1.9 3.9 8.0
Edible Meat per 100 kg fed 56 kg 39 kg 19 kg 7 kg
To optimise resource utilisation, it is vital to produce animal proteins in the

most efficient way. Protein resource efficiency is expressed as “Protein
retention”, which is a measure of how much animal food protein is produced
per unit feed protein fed to the animal. Salmon has a protein retention of 28%,
which is more efficient than pork and cattle (see table above).
Calorie retention is measured by dividing calories in edible portion by calories

in feed. Salmon has a high calorie retention of 25%.
The main reason why salmon convert protein and energy to body muscle and
weight so efficiently is that they are cold-blooded and therefore do not have
to use energy to heat their bodies. Furthermore they do not expend energy
on standing up like land animals do.
• Edible yield is calculated by dividing edible meat by total body weight.

Atlantic salmon has a high edible yield of 73%.
• Feed conversion ratios measure how efficiently the different animal

proteins are produced. In short, this tells us the kilograms of feed
needed to increase the animal’s bodyweight by one kg. Feed for
Atlantic salmon is high in protein and energy which accounts for
Atlantic salmon’s feed conversion ratio being even more favourable
than its protein and energy retention when compared with the
production of other land animal proteins.
• Edible meat per 100kg of feed fed is the combination of the FCR ratio
and edible yield and presents salmon as giving a favourably high
quantity of edible meat per kg of feed fed.
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Salmon Demand
3.2.3 Climate friendly production 12F
In addition to its resource-efficient production, farmed fish is also a climate-

friendly protein source. It is expected to become an important solution to
providing the world with vitally important proteins while limiting the negative
effect on the environment.
According to Blue Food Assessment and SINTEF the carbon footprint of farm-
raised salmon is 5.1 kg of carbon equivalent per kg of edible product,
compared with 8.4 kg, 12.2 kg and 39.0 kg carbon equivalent per kg of edible
product of chicken, pork and beef, respectively. For the consumer, replacing
land-based proteins with fish would significantly reduce their personal carbon
footprint (daily greenhouse gas (GHG) emissions).
Freshwater is a renewable but limited natural resource, and human activities

can cause serious damage to the surrounding environment. Production of
farmed Atlantic salmon requires 2,000 litres of freshwater per kg of edible
meat, which is significantly less than other proteins.
Carbon Footprint
Kg CO2 / Kg edible meat 5.1 kg 8.4 kg 12.2 kg 39.0 kg
Water consumption
Litre / Kg edible meat 2,000* 4,300 6,000 15,400
*Total water footprint for farmed salmonid fillets in Scotland, in relation to weight and content of
calories, protein and fat.
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Salmon Demand
Relative price development of protein products
Prices for all proteins have increased over the past decade, with a particular
rise during 2021 and 2022.
Salmon has historically always been a rather expensive product on the

shelves.
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4 Salmon Supply

Salmon Supply
Total harvest of Atlantic salmon 2002-2022
CAGR Global Norway Chile UK North America Others

2002-2022 5% 6% 5% 1% 1% 6%
2012-2022 4% 3% 8% 0% 0% 7%
2022-2027E 3% 3% 2% 4% 3% 6%
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Salmon Supply
Diminishing growth expectations
Supply of Atlantic salmon has increased by 543% since 1995 (annual growth of
7%). Annual growth in the period 2012-2022 was 4%. Mowi expects growth to
remain relatively stable at 3% from 2022 to 2027.
The background for this trend is that the industry has reached a production
level where biological boundaries are being pushed. It is therefore expected
that future growth can no longer be driven only by the industry and regulators
as measures are implemented to reduce its biological footprint. This requires
progress in technology, development of improved pharmaceutical products,
implementation of non-pharmaceutical techniques, improved industry
regulations and intercompany cooperation.
Too rapid growth without these measures in place adversely impacts

biological indicators, costs, and in turn output.
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Salmon Supply
Few coastlines suitable for salmon farming
The main coastal areas adopted for salmon farming are depicted on the
above map. The coastlines are within certain latitude bands in the Northern
and Southern Hemispheres.
A key condition is a temperature range between zero and 20oC. The optimal
temperature range for salmon is between 8 and 14oC.
Salmon farming also requires a certain amount of current to allow a flow of

water through the farm. The current must however be below a certain level to
allow the fish to move freely around in the sites. Such conditions are typically
found in waters protected by archipelagos and fjords and this rules out many
coastlines. However, offshore farming is an emerging approach. Offshore
farms are positioned in deeper and less sheltered waters, where ocean
currents are stronger than they are inshore, and they therefore require more
robust cages.
Certain biological parameters are also required to allow efficient production.

Biological conditions vary significantly within the areas adopted for salmon
farming and are prohibitive in certain other areas.
Political willingness to permit salmon farming and to regulate the industry is

also required. License systems have been adopted in all areas where salmon
farming is carried out.
Land based salmon farming (full-cycle) has attracted increased investments

in the past years. To date, only limited volumes have been harvested on land,
however, this could change going forward as new production technologies
continue to mature.
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5 Sustainable production

Sustainable production
UN’s Sustainable Development Goals
The SDGs, which were agreed by all 193 UN member states in 2015, guide
governments, civil society and the private sector in a collaborative effort for
change towards sustainable development. Out of the 17 SDGs, the industry
can contribute significantly to at least ten: good health and well-being;
gender equality; decent work and economic growth; reduced inequalities,
sustainable cities and communities; industry, innovation and infrastructures;
responsible consumption and production; climate action; life below water
and partnerships for the goals.
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Environmental impact of aquaculture
It is important first to understand the impact of aquaculture on the environment in

order to become even more sustainable.
Carbon footprint
Fish farming is among the most climate-friendly forms of animal husbandry.
According to the Blue FoodAssessment (Environmental performance of blue foods,
Gephart et al., 2021) the carbon footprint is only 5.1 kg of carbon equivalent per kg
of edible product, compared with 8.4 kg of carbon equivalent per edible kg of
poultry, 12.2 kg per edible kg of pork and 39.0 kg per edible kg of beef.
By replacing land animal protein production with farmed salmon, significant CO2
emissions are avoided. Assuming that global salmon production replaced a mix of
poultry, pork and beef production in 2022, 16.4 million tonnes of CO2 emissions were
avoided.
Genetic changes in wild salmon

Most escaped farmed salmon disappear into the open sea. They are likely to die
from starvation or disease, or be eaten by predators. Still, some survive after
escaping, and migrate into the rivers each year, posing a risk of genetic changes in
a river's wild salmon population.
The Institute of Marine Research considered seven out of 13 production areas in

Norway to be at high risk for further genetic changes. Three production areas are
considered to be at moderate risk and three production areas are considered to be
at low risk.
Environmental effects of discharges of dissolved nutrients

Dissolved nutrient salts are released into coastal waters by population (sewage),
industry, agriculture and aquaculture. In aquaculture, when salmon eat, dissolved
nitrogen and phosphorus will be released via the gills and also a smaller proportion in
the form of urea. Even though increased concentrations of dissolved nutrients in
coastal waters may cause adverse ecosystem changes, the risk of regional
environmental impacts as a result of dissolved nutrients from fish farming is
considered low in all production areas according to the Institute of Marine Research.
Environmental impact on the seabed as a result of particulate organic emissions
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Open pens release organic particles directly into the environment in the form of
faeces from the fish and feed that is not eaten. Such discharges can affect the
environment to a greater or lesser extent around the fish farm. However, the
emissions mainly consist of easily degradable compounds, the impact is reversible,
and the seabed can fully regenerate over a few months to a few years. Farmers are
obliged by law to monitor the seabed continuously in accordance with NS 9410 or
other national regulations, so that the environmental impact of aquaculture is within
acceptable limits. If the environmental impact on the seabed is not acceptable, the
site may be fallowed, production reduced or the site reallocated to a different
location.
Based on reporting made through today's monitoring system, the condition of soft-
bottom sites is considered to be good in all production areas in Norway and the risk
of unacceptable environmental impacts due to particulate organic emissions is low.
As of today, there is no good monitoring of hard-bottom sites and this has therefore
not been evaluated.
Mowi measures the potential impact of organic loading on the seabed according to
national seabed quality standards. Results show that, on average, 92% of its sea sites
surveyed in 2022 have a minimal impact on faunal communities and/or sediment
chemistry near to the fish pens.
Environmental effects on non-target species when using medicine 1 16F
Sea lice belong to the animal group of crustaceans, and medicines that treat sea
lice can potentially affect other species.
There are differences in the way treatments may affect non-target species. Bath
treatments may have a short-term effect, while oral treatments may affect non-
target species over a longer period of time. Bath treatments include hydrogen
peroxide, azamethiphos, cypermethrin and deltamethrin, and the treatment takes
place either directly in the pen or in a well boat. If treatment is done in pens, the
bath treatment is released directly into the sea. When the treatment takes place in a
well boat, the bathing agent is released while the vessel is in motion. However,
purification systems that remove the medicine used in well boat-delivered bath
treatments have are being introduced to the market. The oral treatments considered
are diflubenzuron, teflubenzuron and emamectin, and a proportion of these can be
released to the environment via feed and faeces.
The Institute of Marine Research’s risk assessment is a comprehensive assessment and

emphasises, among other things, total consumption, toxicity and occurrence in the
environment in Norway. Of the treatments considered, azamethiphos is considered
to have low risk, while hydrogen peroxide, cypermethrin, deltamethrin, diflubenzuron,
teflubenzuron and emamectin are considered to have moderate risk. However, the
number of prescriptions was highest in the years 2014 and 2015, respectively 3,477
and 3,285, whereas for 2018 this was reduced to 501. Overall, this presents a
significant reduction in the environmental risk.
Mowi only uses licensed medicines when other measures are not sufficient or when
fish welfare may be compromised. In 2022, 60% of sea lice treatments were non-
medicinal, compared with 12% in 2015, showing the significant reduction in the use
Source: Institute of Marine Research (2023) Risk assessment of Norwegian fin fish aquaculture
2023, Mowi
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of medicines to manage sea lice, itself made possible by the increased use of non-
medicinal tools.
Fish welfare
In Norwegian farm pens, there is a maximum of 200,000 fish per pen at any given
time. These are individuals which, according to the Animal Welfare Act, have the
right to be kept in an environment that provides good welfare based on species and
individual needs, and the opportunity for stimulating activity, movement, rest and
other natural behaviour. Farmers must also ensure that feed is of good quality and
meets the fish's needs, and that the farmed fish is protected against injury, disease
and other hazards. The farmed fish must be robust enough to withstand farming
conditions, and they should not be subjected to unnecessary stress.
The challenges in the north of Norway are primarily related to low temperatures and
bacterial wound infections, while Western Norway has challenges with PD and
injuries in connection with lice treatment.
Survival rate is commonly used as a measure of animal health and welfare. Improved
survival can be achieved through good husbandry and management practices,
vaccination etc. In 2022, the average monthly survival rate of farmed salmon in
Norway was 99.2%. The monthly survival rate for poultry was 98.8%, for pork 99.5% and
for beef 99.8% on a global basis.
Monthly surv iv al rate* 99.2 % 98.8 % 99.5 % 99.8 % 1
* Average monthly survival (Individuals) / Inventory beginning of year (Individuals)

Source: Institute of Marine Research (2023): Risk Assessment of Norwegian fin fish aquaculture
2023, Mowi
33 | P a g e
Material sustainability efforts
Carbon footprint
The industry is constantly working to make the value chain more energy efficient and
has set targets for reducing greenhouse gas (GHG) emissions. Sourcing of feed raw
materials is the largest contributor of GHG emissions in salmon farming.
Plastic management
The presence of microplastic in the world’s ocean is an emerging issue that fish
farmers have started to focus on. Fish farmers are undertaking various initiatives to
reduce plastic waste, such as improving waste management, engaging in beach
clean-up events around the world, using improved packaging and monitoring the
presence of microplastics and plastic-related contaminants in fish.
Escape prevention
Because escaped farm-raised salmon may have a negative impact on the
environment due to interactions and interbreeding with wild populations, fish farmers
have a target of zero escapes.
Sea lice
Effective sea lice management is important for fish welfare and to ensure sea lice on
our farms do not negatively impact wild salmonids. Farmers work intensively to
improve their approach to sea lice management and to minimise the number of
adult female sea lice, especially during the period when wild salmon migrate to sea.
A number of non-medicinal tools have been developed over the last years reducing
significantly the use of medicines to manage sea lice.
Medicine use
Licensed medicines may have a negative environmental impact if used too
frequently. Farmers use antimicrobial medicines only when fish health and welfare
are at risk from bacterial infection and only when absolutely necessary.
Antimicrobials are not used for growth promotion, prevention of infectious diseases or
for control of dissemination.
Fish health and welfare

Caring about fish welfare is an ethical responsibility. The industry works every day to
safeguard the health and welfare of fish through effective sea lice management,
and to reduce medicine use by optimising fish survival and preventing disease.
Operational welfare indicators are also monitored during production.
Biodiversity
The industry needs healthy oceans to drive sustainable salmon farming and farmers
must pay attention to the critical and highly sensitive environment they operate in. In
all farming countries there are regulations in place to safeguard farming’s impact on
the seabed by monitoring the physical, chemical and biodiversity characteristics of
the benthic environment.
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Sustainability of fish feed
Fish feed is a key component in ensuring the best possible fish health and
performance. In any life cycle assessment (LCA)* of salmon farming, feed also
makes the largest contribution to its environmental footprint. Important
parameters for the carbon footprint arising from feed consumption are feed
efficiency and feed ingredients.
Feed efficiency
The feed conversion ratio (FCR) describes the amount of feed used to
produce a certain amount of salmon. Efficient feeding, that is to say releasing
the minimum amount of feed beyond what is actually eaten, is important
since the footprint of the feed released dominates the overall carbon
footprint of the product. Improvements in feed formulations and in feed
manufacture, combined with better on-farm feed management, can hugely
reduce the quantity of feed (and thus the feed raw materials) used per
kilogram of farmed aquatic food produced.
Feed ingredients
The current carbon footprint of farmed salmon shows that it is critical to
change what the salmon is fed. Simply shifting between existing feed inputs,
such as from marine to terrestrial inputs only leads to trade-offs between
environmental impact categories.
In 1990 the average Norwegian salmon diet contained 65% fish meal and 24%
fish oil. Marine ingredients have been reduced over time and in 2022 Mowi
used 17% fish meal and 13% fish oils in its salmon feed. Production of fish meal
and fish oils uses species from reduction fisheries and trimmings not suitable for
human consumption.
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Recaptured Fish in- fish out (rFIFO)
Recaptured Fish in- fish out (rFIFO) express the number of kg of wild fish
(excluding trimmings and the fish meal and oil produced from by-products
originated from salmon processing) it takes to produce 1 kg of salmon. In 2022
Mowi used 0.65 kg of low consumer preference wild fish (like anchovy and
sardine) to produce 1 kg of Atlantic salmon.
Substitution of marine raw materials has not been found to have any negative
effect on growth, susceptibility to disease, or quality of the fish if the fish’s own
nutrient requirements are being covered.
Major reductions in carbon footprint could potentially come from exploring

and developing feed ingredients that close the nutrient loop in the salmon
industry (that increase overall resource efficiency) and developing ingredients
from resources that are not utilised today. For example, products derived from
insects, alcohol fermentation, CO2 capture and forestry are currently being
explored.
Traceability is important to make sure that no raw materials originate from

illegal, unregulated and unreported (IUU) catches, or from fish species
classified as endangered on the International Union for the Conservation of
Nature (IUCN) red list. Sustainable sourcing of vegetable feed raw materials
such as soy is ensured by purchasing from Proterra-certified (or equivalent)
deforestation-free suppliers.
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Global sustainability initiatives
Achieving a sustainable future will require concerted action and new forms of
partnership. One example of a key partnership is the Global Sustainable
Seafood Initiative (GSSI). GSSI plays an important role in providing clarity on
seafood certification. Third-party certifications can give consumers and
stakeholders confidence that a product is sustainable. The Aquaculture
Stewardship Council (ASC) and Global G.A.P. are examples of third-party
certifications.
Global Sustainable Seafood Initiative (GSSI) aligns global efforts and resources
to address seafood sustainability challenges. Governed by a Steering Board
representing the full seafood value chain – companies, NGOs,
governments and international organisations, including the FAO – GSSI
promotes sector-wide collaboration to drive forward more sustainable
seafood for everyone and maintains a benchmarking tool to assess
sustainability standards.
The Aquaculture Stewardship Council (ASC) is an independent non-profit

organisation with global influence. The ASC’s primary role is to manage the
global standards for responsible aquaculture. The ASC works with aquaculture
producers, seafood processors, retail and foodservice companies, scientists,
conservation groups and consumers.
Global G.A.P. is a recognised standard for farm production. Its goal is safe
and sustainable agricultural production to benefit farmers, retailers and
consumers throughout the world.
BAP (Best Aquaculture Practices), is a third-party certification programme that
certifies every step of the production chain. BAP is part of GSA (Global
Seafood Alliance), an international, nonprofit trade association dedicated to
advancing responsible seafood practices through education, advocacy and
third-party assurances.
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Transparency
Being transparent about environmental, social and product performance is

key for building trust and correcting misinformation. The sustainability data is
audited by third parties and reported according to global standards such as
CDP (formerly the Carbon Disclosure Project) and FAIRR.
CDP is a not-for-profit charity that runs the global disclosure system for investors,
companies, cities, states and regions to manage
their environmental impacts. CDP supports
thousands of companies, cities, states and
regions to measure and manage risks and
opportunities relating to climate change, water
security and deforestation.
The FAIRR Initiative 1is a collaborative investor network that raises awareness of
20F
the material ESG risks and opportunities caused by intensive livestock

production. The Coller FAIRR Index ranks the largest global meat, dairy and fish
producers by looking at risk factors ranging from use of antibiotics to
deforestation and labour abuses. The index is the world’s only benchmark
dedicated to profiling animal protein producers
and showcasing critical gaps and areas of best
practice in the sector. Mowi is ranked as overall
best performer for 4 times in a row, and there are
three salmon producers in the top three.
The WBA Seafood Stewardship Index (SSI) measures the world’s 30 most
influential seafood companies and presents an overall ranking based on the
results in five measurement areas. These areas reflect where stakeholders
expect corporate action, pinpointing where companies can have the most
impact; Governance and management of stewardship practices,
Stewardship of the supply chain, Ecosystems, Human rights and working
conditions and Local communities. Mowi ranks
2nd in the benchmark and demonstrates a
strong performance in all measurement areas.
Source: www.cdp.net, www.fairr.org, www.seafood.worldbenchmarkingalliance.org
38 | P a g e
6 Salmon Markets

Salmon Markets
Global trade flow of farmed Atlantic salmon
The main markets for each production origin:

• Norway – Europe and Asia
• Chile – USA, South America and Asia
• Canada – USA
• Scotland – Domestic within UK, France
Each producing region has historically focused on developing the nearby

markets. As salmon is primarily marketed as a fresh product, time and cost of
transportation have driven this trend.
A relatively high price differential is therefore required to justify transatlantic

trade as this incurs the cost of airfreight. Such trade varies from period to
period and depends on arbitrage opportunities arising from short-term
shortages and excess volumes from the various producing countries.
The Asian market is generally shared as transportation costs are broadly similar
from all producing regions.
Distribution of frozen salmon is much more straightforward.
40 | P a g e
Salmon Markets
Farmed Atlantic salmon by market
EU+UK and USA are by far the largest markets for Atlantic salmon. Emerging
markets such as Brazil and Asia have been growing at significantly higher
rates than traditional markets. However, these markets have a higher food
service share compared to traditional markets, and growth rates in 2020-2022
were hampered due to Covid-19 restrictions and increased airfreight costs.
On average consumption of Atlantic salmon has increased by 4% in all
markets over the last 10 years.
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Salmon Markets
Top 10 markets by size (2022E)
In the 10 largest markets by country, consumption per capita varies from 0.07
kg WFE (China / Hong Kong) to 4.16 kg WFE (France). In Norway, Sweden and
Finland, consumption per capita is between 6-8 kg WFE. This means that there
is significant growth potential among the largest markets.
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Salmon Markets
Development of value (CAGR 11%) vs. volume last 10 years
The value of salmon sold has increased by 191% from 2012 to 2022 (CAGR
11%), while volume has increased by 40% (CAGR 4%) in the same period. This
illustrates the strong underlying demand for salmon. In 2022, the value of
salmon consumed increased 32% on strong prices and continued demand
recovery from Covid-19.
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Salmon Markets
Price neutral demand growth – approx. 7% the past 20 years
Global supply
Change in av g.
The correlation between change in global
Year price FCA Oslo
growth
(EUR)
supply and average FCA Oslo price (EUR) is very
2001 15% -25% strong. In the period 2001-2011, change in
2002 8% -3% supply explained 84% of the change in price
2003 7% -11% using linear regression. In 2012 and 2013
2004 6% 7%
demand for salmon significantly overperformed.
2005 5% 23%
2006 1% 23%
2007 10% -21% Price correlation across regional markets is
2008 5% 1% generally strong for Atlantic salmon.
2009 3% 12%
2010 -4% Growth in global supply of Atlantic salmon was
35%
2011 12% -17%
186% in the period 2001-2022 (CAGR 5%),
2012 22% -10%
varying between -4% and 22% annually.
2013 2% 42%
2014 8%
Variation in growth rates has been the main
-5%
2015 5% determinant for the variation in prices. However,
-4%
2016 -4% in 2020, demand was impacted by Covid-19
46%
2017 2% restrictions which reduced foodservice activity.
-5%
2018 6% Demand partially recovered in 2021 as the
-2%
2019 6% -6%
pandemic waned and market conditions
2020 4% -14%
2021 9%
improved, and this positive trend continued into
14%
2022 -2% 2022 as demand made a significant recovery
40%
when the effects of the pandemic further
diminished and market conditions further improved.
Since 2013, prices have varied between EUR 7.87 per kg (2022) and EUR 4.72
per kg (2014). 2023 YTD prices have continued to reach new record-high
levels on strong demand and limited supply from key producing regions.
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Salmon Markets
Historic price development
As salmon is perishable and marketed fresh, all production in one period must
be consumed in the same period. In the short term, the production level is
difficult and expensive to adjust as the planning/production cycle is three
years long. Therefore, the supplied quantity is very inelastic in the short term,
while demand shifts according to the season. This is the main reason for the
price volatility in the market.
Factors affecting market price for Atlantic salmon are:

- Supply (absolute and seasonal variations)
- Demand (absolute and seasonal variations)
- Globalisation of the market (arbitrage opportunities between regional
markets)
- Presence of sales contracts reducing quantity available for the spot
market
- Flexibility of market channels
- Quality
- Disease outbreaks
- Food scares
Comparing FCA Oslo, FOB Miami and FOB Seattle, there is a clear indication
of a global market as prices correlate to a high degree.
As in most commodity industries, producers of Atlantic salmon experience

high volatility in the price achieved for the product. The average price (GWT
based) for Norwegian whole salmon since 2013 has been about EUR 5.9/kg,
for Chilean salmon fillet (3-4lb) D-trim fillet USD 5.0/lb (USD 11.0/kg), and for
Canadian salmon (10-12lb) USD 3.3/lb (USD 7.2/kg). The pricing of Scottish and
Faroese salmon is linked to the price of Norwegian salmon. The price of
Scottish salmon normally has a premium to Norwegian salmon. Faroese
salmon used to trade at a small discount to Norwegian salmon. However, due
to geopolitical events in last decade, salmon from the Faroes now trades at a
premium over Norwegian salmon in selected markets.
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Salmon Markets
Different sizes – different prices (Norway)
The main reason for differences in size is the biological production process in
which individual fish grow at different speeds. A farm holding fish of
harvestable size will show a normally distributed size distribution. This leads to
the majority of fish being harvested at 4/5 kg GWT with smaller quantities of
smaller and larger fish.
The processing industry in Europe mainly uses 3-6 kg GWT but niche markets
exist for smaller and larger fish. As these markets are minor compared to the
main market, they are easily disrupted if quantities become too large.
Generally, small fish are discounted, and large fish are sold at premium as
shown in the graph above.
The graph to the left shows

Norwegian harvest
distribution for 2022, with the
harvest size of 4-5 kg (GWT)
being the most frequent. In
addition to catering for
production process and
market requirement,
another driver behind this
size fluctuation is that
farmers want to balance out
market risk and biological risk. Drivers behind smaller harvest size can be
disease, early harvest when there is a need for cash flow, or early harvest to
realise ongoing capacity. Larger fish (6-7kg+) may be a result of economies of
scale/lower production costs, production for niche markets or other market
requirements.
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7 Industry Structure

Industry Structure
Top 10 companies in farmed Atlantic salmon 2022
Top 3 - Other Europe
Top 10 - Norway H.Q. Top 4 - United Kingdom* H.Q. Top 4 - North America* H.Q. Top 10 - Chile H.Q. H.Q.
(Faroes/Iceland/Ireland)
Company GWT Company GWT Company GWT Company GWT Company GWT
1 Mowi 294,000 Mowi 48,000 Cooke Aquaculture 58,000 Aquachile (Agrosuper) 138,000 Bakkafrost (FO) 67,000
2 Salmar** 178,000 Scottish Sea Farms 36,000 Mowi 41,000 Multi X (Multiexport) 77,000 Mowi (FO/I S/I E)*** 23,000
3 Lerøy Seafood 152,000 Cooke 28,000 Grieg Seafood 20,000 Mitsubishi / Cermaq 77,000 Salmar - I celandic Salmon 16,000
4 Mitsubishi / Cermaq 78,000 Bakkafrost 24,000 Cermaq 16,000 Australis Seafood (Joyv io) 75,000
5 Grieg Seafood 68,000 Mowi 66,000
6 Nordlaks Oppdrett 64,000 Salmones Blumar 48,000
7 Nov a Sea 44,000 Salmones Camanchaca 45,000
8 Sinkaberg-Hansen 35,000 Salmones Austral 31,000
9 Alsaker Fjordbruk 33,000 Salmones Yadran 25,000
10 Bremnes Fryseri 29,000 I nv ermar 24,000
Top 10 975,000 Top 4 136,000 Top 4 135,000 Top 10 606,000 Top 3 106,000
Others 390,400 Others 12,500 Others 1,000 Others 72,000 Others 37,100
Total 1,365,400 Total 148,500 Total 136,000 Total 678,000 Total 143,100
All figures in tonnes GWT
*The industry in the UK and North America are best described by top 4 producers
**Including Norway Royal Salmon and NTS acquired in 2022.
***Including Arctic Fish acquired in 2022.
Mowi Group represents the largest total production, harvesting one fifth of the
salmon produced in Norway and approx. one third of total production in both the UK
and North America.
In Norway and Chile there are several other producers of significant size. In Chile,
several of the companies also produce other salmonids, such as Coho and large
trout.
48 | P a g e
Industry Structure
Number of companies in producing countries
The graph shows the number of companies producing 80% of the farmed
salmon and trout in each major producing country.
Historically, the salmon industry consisted of a larger number of smaller firms.

As illustrated above, this was the case in Norway, and to some extent in
Scotland and Chile.
During the last decades the salmon farming industry has been through a
period of consolidation in all regions and this is expected to continue.
There are approx. 120 companies owning commercial licenses for salmon
and trout in Norway, however some of these are controlled by other
companies. The total supply is produced by around 90 companies (directly or
through subsidiaries).
There are approximately 1,360 commercial licenses for on-growing of Atlantic

salmon, trout and coho in Chile, whilst only 385 licenses are in operation. The
10 largest firms account for 82% of total licenses.
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8 Salmon Production and Cost Structure

Salmon Production and Cost Structure
Establishing a salmon farm
The salmon farming production cycle is about 3 years.

During the first year of production eggs are fertilised and fish are grown to
approximately 100-250 grams in a controlled freshwater environment. In
recent years, the industry has invested in freshwater facilities that can grow
the smolt larger, up to 1,000 grams, thus shortening the time at sea.
The fish are then transported to seawater cages where they are grown to
around 4-5 kg over a period of 12-24 months. The growth of the fish is heavily
dependent on seawater temperatures, which vary by time of year and across
regions.
When they reach harvestable size, the fish are transported to processing
plants where they are slaughtered and gutted. Most salmon is sold gutted on
ice in a box (GWT).
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The Atlantic salmon life/production cycle
Freshwater 10-16 months

Eggs Hatchery
Seawater 12-24 months

Growth phase in sea
Primary processing & packaging
The freshwater production cycle until smolt takes approximately 10-16 months
and the seawater production cycle lasts around 12-24 months, giving a total
cycle length of on average about 3 years, including fallowing. Postsmolt will
normally have a longer production cycle in freshwater and a shorter
production cycle in seawater depending on smolt size. In Chile, the cycle is
slightly shorter as seawater temperatures are more optimal with fewer
fluctuations.
In autumn, broodstock are stripped for eggs, and ova inlay takes place
between September and April. The producer can speed up the growth of the
juveniles with light manipulation which accelerates the smoltification process
by up to 6 months.
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Spring and autumn are the two main periods to release smolt in Norway.
However, there are smolt being released in all twelve months of the year.
Harvesting is spread across the year, although most harvesting takes place in
the last half of the year as this is the period of best growth. During summer the
harvesting pattern shifts to a new generation, and consequently weight
dispersion between large and small harvested salmon is greater at this time
than for the rest of the year.
After a site is harvested, the location is fallowed for between 2 and 6 months
before the next generation is put to sea at the same location. Smolts may be
released in the same location with a two year cycle.
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Influence of seawater temperature
Seawater temperatures vary considerably throughout the year in all

production regions. While the production countries in the northern hemisphere
see low temperatures at the beginning of the year and high temperatures in
autumn varying by as much as 10ºC, the temperature in Chile is more stable
varying between 10oC and 14ºC. Chile and Ireland have the highest average
temperature of 12ºC, and the four other regions have an average
temperature of about 10ºC, except from Iceland which have the lowest
average temperature of 6 ºC.
As the salmon is a cold-blooded animal (ectotherm), water temperature

plays an important role in its growth rate. The optimal temperature range for
Atlantic salmon is 8-14ºC, but they thrive well from 4-18ºC. Temperature is one
of the most important natural competitive advantages that Chile has
compared to the other production regions as production time there has
historically been shorter by a few months.
With high seawater temperatures the risk of disease increases, and with
temperatures below 0ºC, mass mortality becomes more likely, both of which
cause the growth rate to fall.
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Production inputs
Eggs Smolt
There are several suppliers of eggs The majority of smolt are
to the industry. AquaGen, produced ”in-house” by vertically
Benchmark Genetics and Rauma integrated salmon farmers. This
Stamfisk are some of the most production is generally for a
significant by quantity. In addition company’s own use, although a
to these suppliers, Mowi produces proportion may also be sold to
its own eggs based on the Mowi third parties. A smolt is produced
strain. over a period of 8-12 months from
startfeeding to a mature smolt
Egg suppliers can tailor their weighing 100-250 grams. Postsmolt
deliveries through use of production (250-1,000 grams) has
broodstock with favourable become more common in recent
genetics for different traits desired years, accounting for 21% of the
by customers, and several Norwegian smolt release in 2022 in
suppliers are able to produce terms of individuals. The idea
eggs throughout the whole year. behind larger smolt is to shorten
The market for salmon eggs is production time at sea, thus
international, although this can be reducing exposure to sea lice and
subject to import/export fish diseases, and improving fish
restrictions imposed by different welfare.
countries.
55 | P a g e
Labour 130F
According to The Directorate of Fisheries, the Norwegian aquaculture industry

directly employed 9,807 people in 2021. According to a MENON publication
in 2022, total direct and indirect employment within aquactulture was 19,000
people. Including the processing and supplier industries total employment
amounted to 62,500 people.
According to the Scottish Salmon Producers Organisation (SSPO), more than

2,500 people are employed in salmon production in Scotland. The Scottish
Government estimates that over 10,000 jobs are generated directly or
indirectly by the aquaculture industry.
Estimates on Canadian employment say that around 14,000 people are

employed in aquaculture, where Canada’s farmed-salmon industry provides
more than 10,000 jobs. Direct employment in Chilean aquaculture (including
processing) was estimated at around 30,000 people in 2014.
Mowi Group employed 13,726 people (including third-party employees), in 25

countries worldwide as at 31 December 2022.
Electricity
Electricity is mainly used in the earliest and last stages in the salmon’s life
cycle. To produce a good quality smolt, production normally takes place in
tanks on land where the water temperature is regulated and water may be
recirculated, which requires energy (accounting for approx. 7% of smolt cost
in Norway). The cost of energy consumption will depend on the price of
electricity and the temperature. A cold winter will demand more electricity to
heat the water used in the smolt facility. The size of the smolt will also influence
electricity consumption as a larger smolt has a longer production cycle in the
smolt facility. More energy is consumed when the salmon is processed.
However, this depends on the level of automation (3-4% of harvest cost in
Norway).
Source: Mowi, Kontali Analyse, Directorate of Fisheries, MENON, SSPO, Government of

Canada, Estudio Situación Laboral en la Industria del Salmón”, Silvia Leiva 2014
56 | P a g e
Cost component – disease and mortality
Production costs per kg decline with increasing harvest weight. If fish is

harvested at a lower weight than optimal (caused by diseases for example),
production costs per kg will be higher.
During the production cycle, some mortality will occur. Under normal
circumstances, the highest mortality rate will be observed during the first 1-2
months after the smolt is put into seawater, while subsequent stages of the
production cycle normally have a lower mortality rate.
Elevated mortality in later months of the cycle is normally related to outbreaks

of disease, treatment for sea lice or predator attacks.
There is no strict standard for how to account for mortality, and there is no
unified industry standard. Three alternative approaches are:
• Charge all mortality to expense when it is observed
• Capitalise all mortality (letting the surviving individuals carry the cost of
dead individuals in the balance sheet when harvested)
• Only charge exceptional mortality to expense (mortality, which is higher

than what is expected under normal circumstances)
It is not possible to perform biological production without any mortality. By

capitalising the mortality cost, the cost of harvested fish will reflect the total
cost for the biomass that can be harvested from one production cycle.
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Accounting principles for biological assets
Biological assets are measured at fair value less cost to sell, unless the fair
value cannot be measured reliably.
Effective markets for the sale of live fish do not exist so the valuation of live fish
implies establishment of an estimated fair value of the fish in a hypothetical
market. Fair value is estimated by the use of a calculation model, where cash
inflows are functions of estimated volume multiplied by estimated price. Fish
ready for harvest (4 kg GWT, which corresponds to 4.8 kg LW) is valued at
expected sales price with a deduction of costs related to harvest, transport
etc. to arrive at back-to-farm prices. For fish not ready for harvest (i.e. below 4
kg GWT), the model uses an interpolation methodology where the known
data points are i) the value of the fish when put to sea and ii) the estimated
value of the fish when it has reached harvest size. The valuation reflects the
expected quality grading and size distribution.
Broodstock and smolt are measured at cost less impairment losses, as fair
value cannot be measured reliably.
The change in estimated fair value is recognised in profit or loss on a

continuous basis and is classified separately (not included in the cost of the
harvested biomass). On harvesting, the fair value adjustment is reversed on
the same line.
Operational EBIT
Operational EBIT and other operational results are reported based on the
realised costs of harvested volume and do not include fair value adjustments
on biomass.
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Economics of salmon farming
The salmon farming industry is capital-intensive and volatile. This is a result of a

long production cycle, a fragmented industry, market conditions and a
biological production process which is affected by many external factors.
Over time, production costs have been reduced and productivity has
increased on the back of new technology and improved techniques. In
recent years, costs have trended upwards due to several factors including
rising feed costs, biological costs and more stringent regulatory compliance
procedures.
Reported revenues: Revenues are a gross figure; they can include invoiced
freight from reference place (e.g. FCA Oslo) to customer, and have
discounts, commissions and credits deducted. Reported revenues can also
include revenues from trading activity, sales of by-products, insurance
compensation, gain/loss on sale of assets etc.
Price: Reported prices are normally stated in the terms of a specific reference
price e.g. the Nasdaq price for Norway (FCA Oslo) and UB price for Chile
(FOB Miami). Reference prices do not reflect freight, and other sales reducing
items mentioned above. Reference prices are for one specific product
(Nasdaq price = sales price per kg head on gutted fish packed fresh in a
standard box). Sales of other products (frozen products, fresh fillets and
portions) will cause deviation in the achieved prices vs. reference price.
Reference prices are for superior quality fish, while achieved prices are for a
mix of qualities, including downgrades. Reference prices are spot prices, while
most companies will have a mix of spot and contract sales in their portfolio.
Quantity: Reported quantity can take many forms. Quantity harvested = Fish
harvested in a specific period in a standardised term; e.g. Gutted Weight
Equivalent (GWT), which is the same weight measure as Head-on-Gutted
(HOG), or Whole Fish Equivalent (WFE), the difference being gutting loss.
Quantity sold can be reported using different weight scales:
• Kg sold in product weight.
• Kg sold converted to standard weight unit (GWT or WFE).
• Quantity sold could also include traded quantity.
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Cost structure industry Norway 2013-2022
Feed: As in all animal production, feed makes up the largest share of the total
cost. The variation in costs between countries is based on somewhat different
inputs to the feed, logistics and the feed conversion ratio. In 2022, feed costs
increased significantly due to higher feed prices and inflationary pressures.
Smolt: Atlantic salmon smolt is largely produced at land-based hatcheries

either in flow-through or RAS systems. Cost per kilo is increasing as farmers
increase the size of the smolt in the hatchery before release to sea. The cost is
expected to be offset by shorter time in sea, less lice treatment etc.
Labour cost: Whilst salmon production is a capital-intensive industry, labour

cost only accounts for a minor part of total costs. Labour cost increased in the
period 2014-2017, partly because of increased employment in relation to lice
issues, however, it has been stable the last few years.
Harvest/ Packing/ Well boat: Costs relating to transportation of live fish,

slaughtering, processing and packing are all heavily dependent on quantity,
logistics and automation.
Depreciation: The industry is investing heavily in new technology and

automation, but also in equipment used to treat lice, which in turn leads to
higher depreciation costs.
Misc. operating costs: Other costs include direct and indirect costs,
administration, insurance, biological costs (excluding mortality), etc.
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9 Feed Production

Feed Production
Overview of feed market
Global production of manufactured feed was around 1,266 million tonnes in

2022. The majority was used for land-dwelling animals, where 87% was used in
the farming of poultry, pig and ruminants. Only 4%, or 52 million tonnes, of
global production of manufactured feed was used in aquatic farming.
Most aquatic feed produced globally is used for carp as this is the
predominant farmed fish species. Feed for salmonids only accounts for 9% of
the total production of aquatic feed.
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Feed Production
Atlantic salmon is the most farmed species of salmonids and is therefore the
largest consumer of salmonid feed. 1
3F
Most of the feed used in farming of salmonids is produced close to where it is

farmed. Norway used 46% of the global feed directed towards the salmonid
segment in 2022 and Chile used 29%.
Source: Kontali Analyse
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Feed Production
Relative feeding
The production of feed around the world varies as there are large deviations
in sea temperature. Norway has the greatest seasonality in production. The
low season is from February to April and the high season is from July to
October, with the mid-season in between. Production in the low season can
be as low as only 30% of the high season’s production. Over a year, Chile has
the highest relative feeding, measured by feed sold or fed during a month
relative to the incoming biomass. Feed is considered a perishable product
with limited opportunities to store.
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Feed Production
Salmon feed producers
During the last decade, the salmonid feed industry has become increasingly
consolidated. Together with Mowi, three producers now control the majority
of salmon feed output; Skretting (subsidiary of Nutreco which has been
acquired by SHV), EWOS (Cargill), and BioMar (subsidiary of Schouw). These
companies all operate globally.
In mid-2014, Mowi began production of feed from its first new feed plant. In
2019, Mowi completed its second feed plant located in Kyleakin, Scotland.
Mowi has a total production capacity of 640,000 tonnes. In 2022 Mowi
produced 515,000 tonnes compared with total global salmonid feed
production of around 4.7 million tonnes.
The major cost elements when producing salmonid feed are the raw
materials required and production costs.
The feed producers have historically operated on cost-plus contracts, leaving

the exposure to raw material prices with the aquaculture companies.
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Feed Production
Salmon feed ingredients
Growth interv als 0.1 - 0.2 kg 0.2 - 1 kg 1 - 2 kg 2 - 3 kg 3 - 4 kg 4 - 5 kg

Feed consumption
0.08 kg 0.75 kg 1.00 kg 1.05 kg 1.10 kg 1.20 kg
(Norway)
Time, months 2 4 4 3 2 2
Atlantic salmon feed should provide proteins, energy and essential nutrients
to ensure high muscle growth, energy metabolism and good health.
Historically, the two most important ingredients in fish feed have been fish
meal and fish oil. The use of these two marine raw materials in feed
production has been reduced in favour of ingredients such as soy, sunflower,
wheat, corn, beans, peas, poultry by-products (in Chile and Canada) and
rapeseed oil. This substitution is mainly due to heavy constraints on the
availability of fish meal and fish oil.
Atlantic salmon have specific nutrient requirements for amino acids, fatty
acids, vitamins, minerals and other lipid- and water-soluble components.
These essential nutrients can in principle be provided by the range of different
raw materials listed above. Fish meal and other raw materials of animal origin
have a more complete amino acid profile and generally have a higher
protein concentration compared to proteins of vegetable origin. As long as a
fish receives the amino acid it needs it will grow and be healthy and the
composition of its muscle protein is the same irrespective of feed protein
source. Consequently, feeding salmon with non-marine protein sources results
in a net production of marine fish protein.
During the industry’s early phases, salmon feed was moist (high water
content) with high levels of marine protein (60%) and low levels of fat/oil
(10%). In the 1990s, feed typically consisted of 45% protein, made up mostly of
marine protein. Today, the marine protein level is lower due to cost
optimisation and the availability of fish meal. However, the most interesting
development has been the increasingly higher inclusion of fat. This has been
made possible through technological development and extruded feeds.
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Feed Production
Feed and feeding strategies aim to grow a healthy fish fast at the lowest
possible cost. Standard feeds are designed to give the lowest possible
production cost rather than maximised growth. Premium diets are formulated
to give amongst other things better growth rate and higher survival.
Feeding control systems are used at all farms to control and optimise feeding.
Feeding is monitored for each net pen to ensure that fish are fed to maximise
growth (measured by the Relative Growth Index - RGI). At the same time
systems ensure that feeding is stopped immediately when the maximum feed
intake has been provided to prevent feed waste. The fastest growing fish
typically also have the best (i.e. lowest) feed conversion ratio (FCR).
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Feed Production
Feed raw material market
Fish oil: In general, fish oil prices are more volatile than vegetable sources
mainly due to volatile supply as result of the quota systems for fisheries. The
average price of fish oil was about USD 3,900 per tonne in 2022 mainly due to
low availability of raw material.
Fish meal: Fish meal has seen stable price development over the past ten
years. Although prices have been stable based on a yearly average, there
are large variations within the years. The market for fishmeal is small
compared with that for vegetable proteins.
Rapeseed oil: Up until 2011, rapeseed oil price development was correlated
with fish oil but from 2011 to 2015 prices fell each year and it traded
significantly below fish oil. The price has been hovering around USD 800-900
per tonne in recent years, but in 2021 and 2022 the price increased.
Soy meal: Soy and corn have traditionally been very important vegetable
protein sources in fish feed. Prices have been under pressure in the last few
years as a result of increased supply, especially from expanded production in
Brazil. However, in 2021 and 2022 soy prices increased in line with other soft
commodity prices.
Wheat: Prices for wheat have remained stable over the years with generally
good production and balanced supply/demand. However, in 2022 wheat
prices increased in line with other soft commodity prices..
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10 Financial Considerations

Financial Considerations
Working capital
The long production cycle of salmon requires significant working capital in the
form of biomass.
Working capital investments are required for organic growth, as a larger

“pipeline” of fish is needed to facilitate larger harvest volumes. On average, a
net working capital investment of approximately EUR 3.4/kg is required, split
between the year of harvest and the year immediately preceding harvest, in
order to obtain an increase in harvest volume of 1 kg. The working capital
requirement has increased over time and fluctuates with variations in
currency exchange rates and production costs. In 2022 working capital tie-up
was impacted by inflation on input costs.
Net working capital varies during the year. Growth of salmon is heavily
impacted by changing seawater temperatures. Salmon grows at a higher
pace during summer/autumn and more slowly during winter/spring when the
water is colder. As the harvest pattern is relatively constant during the year,
this leads to large seasonal variations in net working capital. For a global
operator, net working capital normally peaks around year-end and bottoms
out around mid-summer.1
Source: Mowi
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For illustration purposes, the farming process has been divided into three stages of 12
months. The first 12-month period is from production from egg to finished smolt. 24
months of on-growing in the sea follows this. When the on-growing phase ends,
harvest takes place immediately (illustrated as “Month 37”). In a steady state there
will always be three different generations at different stages in their life cycle.
Capital expenditure is assumed equal to depreciation for illustration purposes. The
working capital effects are shown above on a net basis excluding effects from
accounts receivable and accounts payable.
By the point of harvest there have been up to 36 months of costs to produce the fish,
comprising the cost of producing the smolt two years ago, further costs incurred to
grow the fish in seawater, and some costs related to harvest (”Month 37”). Sales price
covers these costs and provides a profit margin (represented by the green
rectangle).
Cash cost for the period in which the fish are harvested is not large compared to
sales income, creating a high net cash flow. If production going forward (next
generations) follows the same pattern, most of the cash flow will be reinvested into
salmon at various growth stages. If the company wishes to grow its future output, the
following generations need to be larger requiring even more of the cash flow to be
reinvested in working capital.
This is a rolling process and requires substantial amounts of working capital to be tied
up, both when in a steady state and especially when increasing production. 1 38F
Source: Mowi
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The illustration above shows how capital requirements develop when

production/biomass is being built “from scratch”. In phase 1, there is only one
generation (G) of fish produced and the capital requirement is the
production cost of the fish. In phase 2, the next generation is also put into
production, while the on-growing of G1 continues, rapidly increasing the
capital invested. In phase 3, G1 has reached its last stage, G2 is in its on-
growing phase and G3 has begun to increase its cost base. 1 39F
At the end of phase 3, the harvest starts for G1, reducing the capital tied-up,
but the next generations are building up their cost base. If each generation is
equally large and everything else is in a steady state, the capital requirement
will peak at the end of phase 3. With growing production, the capital
requirement will also increase after phase 3 as long as the next generation is
larger than the previous (if not, the capital base is reduced). We see that
salmon farming is a capital-intensive industry.
To equip a grow-out facility you need cages (steel or plastic), moorings, nets,
cameras, feed barge/automats and workboats.
Source: Mowi
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Capital return analysis
Investments and payback time (Norway) - assumptions 1 40F
- Normal site consisting of 4 licenses
- Equipment investment: MEUR 3.5 - 4.5

- Number of licenses: 4
- License cost (second hand market) MEUR: 68 (~MEUR 17 per license)
- Output per generation: ~4,400 tonnes GWT
- Number of smolt released: 1,150,000
- Smolt cost per unit: EUR 2.0

- Feed price per kg: EUR 1.8 (LW)
- Economic feed conversion ratio (FCR): 1.3 (to Live Weight)
- Conversion rate from Live Weight to GWT: 0.84
- Harvest and processing incl. well boat cost per kg (GWT): EUR 0.44
- Average harvest weight (GWT): 4.5kg

- Survival rate in sea: 85%
- Sales price: EUR 6.8/kg
To increase capacity there are many regulations to fulfil. In this model we focus
on a new company entering the industry and we have used only one site, for
simplicity’s sake. Most companies use several sites concurrently, which enables
economies of scale and makes the production more flexible and often less
costly.
In this model smolts are bought externally, also in the interests of simplicity. Smolts
are usually less costly to produce internally, but this depends on production
quantity.
The performance of the fish is affected by numerous factors including feeding

regime, seawater temperature, disease, oxygen level in water, smolt quality, etc.
The model is based on pre-tax cash flow figures. If taxes are included in the
example, and in particular a potential resource rent tax, economics and return
levels would be materially impacted. Moreover, the license cost for auction 2020
is used as a basis due to auction 2022 being affected by the proposed resource
rent tax in Norway.
The sales price reflects the average sales price from Norway over the last four
years.
Source: Mowi, Kontali Analyse
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Results 1
41F
Because of the simplifications in the model and the low, non-optimal

production regime, production costs are higher than the industry average.
Due to high entry barriers in terms of capital needs, and falling production
costs with increasing quantity, new companies in salmon production will
experience higher average production costs. During the production of each
generation the working capital needed at this farm, given the assumptions,
would be peaking at around MEUR 16 (given that the whole of each
generation is harvested at the same time).
With a sales price of EUR 6.8/kg the payback time for the original investments
would be around 11 years. This result is very sensitive to sales price, license
cost and economic feed conversion ratio (FCR).
The sales price of EUR 6.8/kg is based on the average price in Norway in the 5-
year period 2019-2023 YTD.
Source: Mowi
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Currency overview
Norwegian exposure vs foreign currency – average last 5 years(1) 1 42F
Exporters deal in the traded currency, while the customer has an exposure to both
traded and local currencies. For example, a French processor may trade salmon in
NOK, but sell its products in the local currency (EUR).
Most Norwegian producers are exposed to currency fluctuations as most of the

salmon they produce is exported. Most of the salmon is exported to countries within
the EU and is traded in EUR. The second largest traded currency is USD. Some players
in countries in Eastern Europe, the Middle East and some Asian countries prefer to
trade salmon in USD rather than in local currency.
The price of salmon quoted in traded currency will compete with other imported
goods, while the price of salmon quoted in local currency will compete with the
price to consumers of domestically produced products.
There is a currency risk involved in operating in different currencies, and therefore

many of the largest industry players hedge currencies often with back-to-back
contracts. The currency risk arising from salmon sales denominated in the traded
currency is usually absorbed by the exporter, while the currency risk in local currency
is absorbed by the customer.
Note: (1) The table shows exposure against local currency weighted against total export
volumes
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Exposure against local currency – 2022(1) 1 43F
Europe is the largest market for Norwegian produced salmon, so EUR is the
predominant currency for Norwegian salmon producers.
Key markets for Chilean produced salmon are the USA and Brazil, so exposure to USD
and BRL (Brazilian real) in local currency terms is followed closely.
Feed production: Currency exposure

The raw materials required to produce feed are as a rule of thumb quoted in USD
(approx. 70%) and EUR (approx. 30%), based on long term average exchange rates.
Raw materials generally account for 85% of the cost of producing feed. The
remaining costs, including margin for the feed producer, are quoted in local
currency.
Secondary Processing: Currency exposure

The biggest market for value added products is Europe, hence the vast majority of
currency flows are EUR-denominated, both on the revenue and cost side. In the US
and Asian processing markets currency flows are denominated largely in USD and
EUR on the revenue side whilst costs are denominated in USD, EUR and local
currency.
Note (1): The table shows exposure against local currency weighted against total export
volumes
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Price, cost and EBIT development in Norway
Atlantic salmon is seen as a healthy, resource-efficient, and climate friendly product.

On the back of a growing global middle class, an aging population, a global trend
towards healthy living, and a focus on carbon footprint, demand has been
estimated to grow by 11% per annum the last decade. Product innovation, category
management, long-term supply contracts, effective logistics and transportation have
stimulated strong demand growth for salmon.
An essential characteristic of the salmon market is that supply is limited due to

regulations and biological conditions. However, over the years there have been
several supply shocks. In Chile, the ISA virus outbreak which lasted until 2010 and the
algae bloom in 2016 caused negative supply shocks which in isolation caused
positive price movements. In 2020, a temporary demand shock caused by Covid-19
restrictions, which partly closed the foodservice sector, resulted in negative price
development. In 2021, the pandemic waned and markets partially recovered. In
2022 prices increased futher on foodservice demand recovery and a slight global
supply contraction.
Over the last ten years, costs have trended upwards due to several factors including
rising feed costs, biological costs and more stringent regulatory compliance
procedures. The average EBIT per kg for the Norwegian industry has been positive
with the exception of a few shorter periods. In the last 10 years it has been EUR 1.5
per kg in nominal terms.
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Effects of geographical diversification
The illustration above depicts Mowi’s performance across different countries

over the last 5 years. In all regions, the biological risk is high, and this impacts
cost significantly from period to period. The variance in EBIT per kg is high,
however, the geographic specific risk can be diversified with production
across regions.
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11 Barriers to Entry - Licenses

Barriers to Entry - Licenses
Due to biological constraints, seawater temperature requirements and other

natural constraints, farmed salmon is only produced in Norway, Chile,
Scotland, the Faroe Islands, Ireland, Iceland, Canada, USA, Tasmania and
New Zealand.
Atlantic salmon farming began on an experimental level in the 1960s and

evolved into an industry in Norway in the 1980s and in Chile in the 1990s.
In all salmon-producing regions, the relevant authorities have a licensing

regime in place. In order to operate a salmon farm, a license is the key
prerequisite. Such licenses restrict the maximum production for each
company and the industry as a whole. The license regime varies across
jurisdictions.
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Regulation of fish farming in Norway
License and location
Fish farming companies in Norway are subject to a large number of regulations. The
Aquaculture Act (17 June 2005) and the Food Safety Act (19 December 2003) are the two
most important laws, and there are detailed provisions set out in the various regulations which
emanated from them.
In Norway, a salmon-farming license allows salmon farming either in freshwater

(smolt/fingerling production) or in the sea. The number of licenses for Atlantic salmon and
trout in seawater was limited to 1,135 in 2022. Such limitations do not apply for freshwater
licenses (smolt production), which can be applied for at any time. Seawater licenses can use
up to four farming sites (six sites are allowed when all sites are connected with the same
licenses). This increases the capacity and efficiency of the sites.
Production limitations in Norway are regulated as "maximum allowed biomass" (MAB), which
is the defined maximum volume of fish a company can hold at sea at all times. In general,
one license sets a MAB of 780 tonnes (945 tonnes in the counties of Troms and Finnmark). The
sum of the MAB permitted by all the licenses held in each region is the farming company's
total allowed biomass in this region. In addition, each production site has its own MAB and
the total amount of fish at each site must be less than this set limit. Generally, sites have a
MAB of between 2,340 and 4,680 tonnes.
New seawater licenses are awarded by the Norwegian Ministry of Trade, Industry and
Fisheries and are administered by the Directorate of Fisheries. Licenses can be sold and
pledged, and legal security is registered in the Aquaculture Register. Since 1982, new licenses
have been awarded only in certain years and growth in biomass is today regulated on the
basis of the new system for growth implemented in 2017.
Production limitations in Norway are regulated as "maximum allowed biomass" (MAB), which
is the defined maximum volume of fish a company can hold at sea at all times. In general,
one license sets a MAB of 780 tonnes (945 tonnes in the counties of Troms and Finnmark). The
sum of the MAB permitted by all the licenses held in each region is the farming company's
total allowed biomass in this region. In addition, each production site has its own MAB and
the total amount of fish at each site must be less than this set limit. Generally, sites have a
MAB of between 2,340 and 4,680 tonnes.
The Norwegian coast is divided into 13 geographical areas of production. The level of sea
lice in these areas decide if the MAB can increase (6%), stay the same or decrease (6%) in
these areas. Every second year the government announces the conditions for growth on
existing and new licenses. Growth through the “Traffic Light System” has been sold by the
government to the industry based on an auction process since 2018. The purpose of the
auction has been to maximise the proceeds through a competitive closed clock auction by
tonnes in all green areas. The average price paid for a new standard license in the auction
was NOK 153 million and NOK 171 million in 2018 and 2020, respectively. Total proceeds for
the government and local communities were approximately NOK 3.9 billion and NOK 6.9
billion in said years. The Traffic Light System has effectively ensured a form of resource rent tax
on the industry for growth. In 2022 the average price for a new license was significantly
reduced to NOK 120 million due to the proposed additional 40% resource rent tax (details
below) whilst also leaving 25% of the available capacity unsold.
Sites complying with very strict environmental standards are offered additional growth. The
conditions for this growth are A) below 0.1 lice per fish at every counting for the past two
years in the period April 1st to September 30th and B) a maximum of one treatment during
the last cycle of production. For sites meeting this standard a maximum of 6% growth is
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offered, regardless of the general situation in the different production areas. In “red” areas,
companies will need to reduce production by 6%.
In October 2021, the Government appointed a committee to review the licensing system in
the Norwegian aquaculture industry. Among other things, the committee will assess the
objectives for the license regulations, the entirety of the system and how it can be adapted
to existing and new challenges. In its original mandate, the committee was given a deadline
to deliver its report by the end of March 2023. That has now been delayed until the end of
September 2023.
In September 2022, the Norwegian Government proposed a new 40% resource rent tax on
aquaculture in addition to corporate tax. The resource rent tax has been implemented
retroactively from 1 January 2023 even though its initial proposal was on hearing until 4
January 2023 and with final approval in late May 2023. In March 2023, the Government
presented a revised proposal of 35% resource rent tax. In May 2023, a small majority in
Parliament approved the proposed tax model with a tax rate of 25%. In addition, the
production fee introduced in 2021 has been increased to NOK 0.90/kg salmon produced
from 1 July 2023. There is a standard deduction of NOK 70 million. The current auction system
of licenses, which occurs every second year, will also continue.
The revenues will be based on the market value of when fish are removed from the pen,
which the companies themselves will set/determine for 2023. From 2024, the Government’s
aim is to establish an independent price board.
The resource rent tax will apply to sea phase only and thus not cover the industry’s long value
chain.
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Access to Licenses
The figure below depicts an example of the regulatory framework in Norway for one
company:
• Number of licenses for a defined area: 5

- Biomass threshold per license: 780 tonnes live weight (LW)
- Maximum biomass at any time: 3,900 tonnes (LW)
• Number of sites allocated is 3 (each with a specific biomass cap). In order to optimise
production and harvest quantity over the generations of salmon, the license holder can
operate within the threshold of the three sites as long as the total biomass in sea never
exceeds 3,900 tonnes (LW).
• There are also biomass limitations on the individual production sites. The biomass
limitation varies from site to site and is determined by the carrying capacity of each
site.
Maximum
GEOGRAPHICAL biomass at
AREA any time 3,900
tonnes
Site 1 (5 licenses)
- Allowance for use of 2 licenses Site 2
- Max 1,560 tonnes - Allowance for use of 5 license
- Max 3,900 tonnes
Site 3
- Allowance for use of 4 licenses
- Max 3,120 tonnes
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Average harvest per standard license 2022
1,250
1,200
1,150
1,100
1,050
1,000
950
900
Average Mowi Comp. B Comp. C Comp. D Comp. E Comp. F
Norway Norway
The graph above shows the harvest per license in 2022 for the Norwegian industry as a whole
and for the largest listed companies.
Please note that one standard license equates to 780 tonnes in the comparison above. A
standard license of 945 tonnes in the counties of Troms and Finnmark has therefore been
recalculated to 780 tonnes to make the overview comparable. In addition, a broodstock
license is adjusted to 65% of a standard license for all companies.
Because of the regulation of standing biomass (maximum allowed biomass - MAB) per license
(780 tonnes LW), the production capacity per license is limited. Annual harvest quantity per
license in Norway was 1,093 tonnes GWT in 2022. Larger companies typically have better
flexibility to maximise output per license which means that the average harvest figure for the
industry as a whole is normally lower than the figure for the largest companies.
Number of grow-out seawater licenses for salmon and trout in Norway:

2013: 959
2014: 973
2015: 974
2016: 990
2017: 1,015
2018: 1,041
2019: 1,051
2020: 1,087
2021: 1,098
2022: 1,135
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Maximum allowed biomass for commercial use by the end of 2022 was 988,165 tonnes of
Atlantic salmon and trout. MAB-utilisation is normally at its highest in October-November,
because rate of growth is higher than rate of harvest during the summer. It is at its lowest in
April-May due to low growth during the cold winter months. Average utilisation of the MAB
was 87% in 2022, down from 89% in 2021.
In October 2021 the Norwegian government proposed to establish a new environmental

licensing scheme for aquaculture. Such licenses will come in addition to the growth offered
through the existing traffic light system. Low emissions and collection of sludge are among the
requirements proposed for the possible new licenses. It is still not decided if or when the
Government will proceed with the proposal.
The Norwegian Government has also established a committee to review the overall licensing
regulations for the aquaculture industry, and explore how they can be adapted to meet
both current and future challenges. The committee is expected to conclude their review and
report in September 2023.
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Regulation of fish farming in Scotland
Licenses and location
In Scotland, instead of a single aquaculture licence, permissions are required from four
organisations before setting up a fish farming site; Planning Permission from the local planning
authority, a Marine licence relating to navigational considerations from Marine Scotland; an
environmental permit from the Scottish Environment Protection Agency (SEPA) and an
Aquaculture Production Business authorisation, also from Marine Scotland.
The Maximum Allowed Biomass (MAB) for individual sites is determined based on an
assessment of environmental concerns, including the carrying capacity of the local marine
environment to be able to accommodate the fish farm. Setting MAB falls within SEPA’s
regulatory remit. During 2019 SEPA introduced a new regulatory framework for the licensing of
marine fish farms in Scotland. This included new limits on the spatial extent of the impact
mixing zone around farms, the use of more accurate modelling tools and more enhanced
environmental monitoring. MAB is not uniform and varies depending on the site
characteristics and location of the fish farm. The combination of the new regulatory
standards, the more detailed, accurate modelling approaches supported by enhanced
benthic monitoring has enabled the approval of larger farms than would have been
traditionally approved previously (i.e., >2,500 tonnes) provided they are appropriately sited in
sustainable locations.
The environmental permit from SEPA can be reviewed and MAB reduced in the event of non-
compliance with benthic environmental standards and potentially revoked in cases of
significant and long-term non-compliance.
The Crown Estate owns and manages most of the seabed around the UK out to a distance of
12 nautical miles. Anyone who develops or operates in UK territorial waters is doing so on
Crown Estate property. Because of this, you must apply for a lease from The Crown Estate
and pay rent to install, maintain and operate your farm on the seabed. Most existing leases
are automatically renewed at the end of their lease period. A Crown Estate lease is generally
granted for a period of 25-year period and is dependent on securing Planning Permission.
All new fish farms or alterations to existing fish farms require planning permission. New site
applications can take 6 months for planning permission to be granted with the determination
period for applications for the environmental licence being 4 months, however both can take
significantly longer.
Expansion of existing facilities, subject to environmental suitability can be the most efficient
route in terms of cost, time and timeline for securing regulatory changes; new sites will take a
greater amount of time, reflective of the need for detailed investigations into the
characteristics of locations, including collection of environmental data and will be subject to
an Environmental Impact Assessment (EIA) to secure planning permission.
An annual rental is levied by the Crown Estate which from 1 January 2023 tracks market price,
as 1.0% benchmark of notional business turnover calculated for the harvested production
and referenced against the applicable average market price over a 6-month reporting and
invoicing period. An increased 1.5% benchmark will apply from January 2026 onwards. A
baseline minimum rent, scaled according to licensed MAB, is applied for calendar years
where there has been no harvested production. An escalator is applied which doubles the
minimum rent after 4 years of no production and then every two years thereafter where these
circumstances persist to discourage ‘land-banking’ with unproductive sites. Nursey sites that
yield no harvested production but which are in productive use are liable for an annual rent
equivalent to three time the applicable minimum rent to recognise productive value.
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The SEPA environmental permit for an existing fish farm attracts an annual charge calculated
according to three elements: activity and environmental components, and a compliance
factor. The annual charge can in some cases be >30,000 GBP. Applications fees for a new
environmental permit from SEPA are assessed according to the type and scale of
aquaculture facility with a new marine finfish farm with a MAB >1500 tonnes would attracting
the maximum application fee of 34,240 GBP.
The fees for new or modified marine aquaculture site planning applications are set by the
Scottish Government and apply across the whole of Scotland. They are based on a
combination of the surface area occupied by the surface equipment and the seabed area
occupied by the anchors required to maintain the equipment in place. Fee levels are
calculated using the following principles: the placing or assembly of equipment in any part of
any marine waters for the purposes of fish farming. A fee of 200 GBP for each 0.1 hectare of
the surface area of the marine waters to be used in relation to the placement or assembly of
any equipment for the purposes of fish farming and a further fee of 75 GBP for each 0.1
hectare of the seabed to be used in relation to such development, subject to a maximum of
25,000 GBP. A reduced fee of 500 GBP applies to certain permitted aquaculture
development.
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Regulation of fish farming in Ireland
Aquaculture in Ireland is licensed by The Minister for Agriculture, Food and the Marine,
(MAFM) under the Fisheries (Amendment) Act, 1997 and its associated Regulations which
have been amended to give effect to various EU environment protection Directives. The
licensing process is complex.
The Aquaculture and Foreshore Management Division, (AFMD) of the Department manages
the processing of aquaculture licenses on behalf of the Minister. The Marine Engineering
Division (MED) of the Department undertakes site mapping and provides certain technical
advice on applications as well as undertaking certain post-licensing inspection duties. The
Marine Institute (MI) provides scientific advice on a range of marine environment and
aquaculture matters and in the case of applications which require Appropriate Assessment
(AA) under EU Birds and Habitats Directives. Advice is also provided by Bord Iascaigh Mhara
(BIM) and the Sea Fisheries Protection Authority (SFPA). The National Parks and Wildlife
Services (NPWS) are consulted in relation to habitat protection. Inland Fisheries Ireland (IFI), An
Taisce, Irish Water, Failte Ireland, the Department of Housing, Local Government and Heritage
(DHLGH), the Marine Survey Office (MSO) and the Commissioners of Irish Lights (CIL) are also
consulted. Where relevant, the Local Authority and/or Harbour Authority are consulted. Land
based fin fish units also require planning consent from the local authority. All applications are
released for public consultation and comment.
An Environmental Impact Assessment Report (EIAR) is mandatory for marine finfish

applications and applicants are required to submit an EIAR with their initial applications. The
obligation to carry out an Appropriate Assessment (AA) applies if the application is within a
Natura 2000 site or likely to impact on a Natura 2000 site. Decisions of the Minister in respect
of aquaculture license applications, including license conditions, may be appealed to the
Aquaculture Licenses Appeals Board (ALAB). ALAB can confirm, refuse or vary a decision
made by the Minister or issue licenses itself under its own authority.
Licenses are typically issued for 10 years. The 1997 Act provides for license duration of up to 20
years. Foreshore (seabed) leases and licenses are companion consents to Aquaculture
Licenses. Foreshore Acts allow for leases and licenses to be granted for terms not exceeding
ninety-nine years, respectively. Terms of current licenses vary between harvest output (tons)
per annum, smolt number input, maximum number of fish on site or a combination of these.
Prior to expiry of a license, an application for renewal of the license must be made.
Currently the processing of a marine fin fish license takes between 87 and 800 weeks. Most
licenses will be appealed to ALAB which can take at least a further 272 weeks to determine.
The process of renewing expired fin fish licenses takes as long as a new application.
However, in the past 12 months there is evidence of licence applications being dealt with by
the licencing authority in a more proactive manner with gathering momentum in
engagement with licence applicants.
In 2017, the Minister for Agriculture, Food and Marine initiated an independent review of the
Aquaculture licencing system in Ireland. The report of this review was published in May 2017
with the overarching conclusion, that a root-and-branch reform of the aquaculture license
application processes is necessary which encompasses a further 30 recommendations.
Annual fin fish culture license fees for a marine based fin fish site are €6.35 per tonne for the
first 100 tonnes plus €6.35 for each additional tonne. Foreshore rental fees are charged at
€63.49 for up to and including 5 hectares of foreshore with each additional hectare up to 10
ha at €31.74 and each additional hectare >10 and up to 20 at €63.49. Annual culture license
fee for a land-based site is €127.97 per annum.
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Regulation of fish farming in Chile
In Chile licensing is based on two authorisations. The first authorisation is required to operate
an aquaculture facility and specifies certain technical requirements. It is issued by the
Undersecretaries of Fisheries and Aquaculture (under the Ministry of Economy). The second
authorisation relates to the physical area which may be operated (or permission to use
national sea areas for aquaculture production). This is issued by the Undersecretaries for
Armed Forces (Ministry of Defence). The use of the license is restricted to a specific
geographic area, to defined species, and to a specified limit of production. The production
limits are specified in Environmental and Sanitary Resolutions for the issued license. Under
certain conditions, owners can choose to reduce their whole stocking, producing at
maximum density (17kg/m3 for Atlantic salmon), or to maintain or increase their stocking,
using a limited density (from 4 to 17 kg/m3 for Atlantic salmon) determined by productive,
sanitary and environmental conditions of each neighbourhood, any increase over previous
stocking numbers means going to 4 kg/m3. Owners can choose only one alternative to stock
each semester. From January 2021, all producers have the option to increase the smolt
stocking based on a combined score of fish health parameters, related to losses, sea lice
treatments and antibiotic use. The individual company’s performance on the parameters in
the previous period will determine the size of the potential increase in the next smolt stocking.
A positive assessment will result in an increase of 9%, 6% or 3%, while a negative assessment
will result in a decrease of -3%, -6% or -9%. For example, if antibiotic consumption is below 300
g / tonne, mortality is less than 10% and the indicator related to bath treatments against
Caligus is below 50%, the model will allow farmer the option to grow by 6% in the next
stocking.
Access to Licenses
The trading of licenses in Chile is regulated by the General Law of Fisheries and Aquaculture
(LGPA) and controlled by the Undersecretaries of Fisheries and Aquaculture of the Ministry of
Economy. Aquaculture activities are subject to different governmental authorisations
depending on whether they are developed in private fresh water inland facilities (i.e.
hatcheries) or in facilities built on public assets such as lakes or rivers (freshwater licenses) or at
sea (seawater licenses).
To operate a private freshwater aquaculture facility requires ownership of the water-use rights
and holding of environmental permits. Environmental permits are issued when operators
demonstrate that their facilities comply with the applicable environmental regulations.
Licenses for aquaculture activities in public assets are granted based on an application,
which must contain a description of the proposed operations, including a plan for complying
with environmental and other applicable regulations. Licenses granted after April 2010 are
granted for 25 years and are renewable for additional 25-year terms. Licenses granted before
April 2010 were granted for indefinite periods. License holders must begin operation within
one year of receiving a license and once the operation has started, the license holder
cannot stop or suspend production for a period exceeding two consecutive years. Subject to
certain exceptions, license holders must maintain minimum operational levels of not less than
5% of the yearly production specified in the RCA (Environmental Qualification Resolution).
Until August 2016, all licenses not used could be kept by the holder if they prepared an official
Sanitary Management Plan.
License holders must pay annual license fees to the Chilean government and may sell or rent
their licenses. For the moment, no new licenses will be granted in the most concentrated
regions, Regions X, XI, and XII (Chile is made up of 16 administrative regions).
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Regulation of fish farming in Canada
Fish farming companies in Canada are subject to different regulations depending on the
geographical area they operate in. The principal Federal laws are the Fisheries Act, the
Canadian Navigable Waters Act, The Health of Animal Acts, and the Species at Risk Act. The
Aquaculture Activities Regulations (AAR) are national regulations that apply throughout
Canada. Each province has specific Acts and Regulations that also apply. The three primary
fish farming areas in Canada are British Columbia, Newfoundland and Labrador, and New
Brunswick.
To operate a marine fish farm site, provincial and/or federal authorisations are required. In
Newfoundland and Labrador and New Brunswick, the Provincial government is the primary
regulator and leasing authority. The Province regulates the activity and operations of
aquaculture and issues the Aquaculture License, Crown Land lease and Water Use License
where fish farms are located. In Newfoundland and Labrador, the Crown Land Lease for the
site is issued for 50 years, the Aquaculture License is issued for 6 years, and the Water Use
License is issued for 5 years. In New Brunswick, individual sites are typically granted lease for 20
years. All Commercial Aquaculture Licenses are renewable but may be lost or suspended for
non-compliance issues and non-payment of fees. Farms in New Brunswick are also issued an
Approval to Operate with a 5 year term limit by the provincial department of Environment
Department.
In British Columbia, Federal and Provincial authorizations are required to operate a marine fish
farm site. The Federal Government regulates the activity and operations of aquaculture while
the Provincial Government administers the Crown lands where fish farms are located. The
Province grants a license to occupy an area of the ocean associated with the individual fish
farming site. The tenured encompasses the rearing pens, ancillary infrastructure and all
moorings. Individual site tenures have a specific timeline ranging from five to twenty years.
The term of tenure is based upon the provincial policy at the time of offer. In 2023, the annual
fee for a typical 35 hectares tenure is $22,000 CAD per year. This fee is calculated based on
the tenure size and a provincially indexed land value. Each tenure license contains a renewal
provision once expired. After the tenure term has expired, it becomes a month to month
occupancy until it is either renewed or returned to the Crown. It is uncommon for a tenure to
not be renewed, however breaches to a tenure agreement can result in non-renewal.
The production limitations in Canada are regulated as either a “Maximum Allowable

Biomass” or a fixed number of smolt per cycle. “MAB” is specific to each Aquaculture
licensed facility in British Columbia. Smaller farms are typically licensed for 2,200mt. with larger
capacity facilities licensed to produce 5,000 mt. per cycle. In Newfoundland and Labrador
and New Brunswick, a maximum number of smolt per cycle is given to a farm. Farms are
typically licensed for 600,000 to 1,000,000 smolt per cycle in Newfoundland and Labrador,
and 250,000 to 600,000 smolt per cycle in New Brunswick.
In British Columbia, the Federal Government grants an Aquaculture License with conditions
that a farm must meet. The Aquaculture license conditions are linked to The Fisheries Act.
Aquaculture license conditions specify the species being farmed, the Maximum Allowable
Biomass (MAB) on the site, the type of rearing equipment and the allowable environmental
impact. Production or “MAB” is specific to each site. The annual license fee is calculated at
$2.90 CAD per ton of MAB for operational sites. Facilities that are fallow pay only a $100 CAD
administrative fee. All Aquaculture licenses are renewable but may be lost or suspended for
non-payment of fees.
Access to Licenses
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All permits and licenses require consultation with First Nations and local stakeholders. The time
taken to acquire licenses for a new farm can vary from one to several years. The cost for
preparing a new site license application averages approximately $350,000 CAD. The location
of aquaculture farms is regulated by both the Provincial and Federal governments. The
Province regulates the land use and the Federal government sets out site specific
requirements to limit impacts to critical species and habitats. Companies with the support of
local First Nations can still obtain new tenures.
In December 2020, the Federal Government instituted policy prohibiting the restocking of
farms in the Discovery Islands area and removal of all sites by June 2022. A court challenge
by all affected operating companies was initiated. On 22 June 2022, DFO Minister Murray
announced a new consultation process for the Discovery Island farm licenses and on 17
February 2023, the Minister informed industry that she was continuing the prohibition on
farming in the area. This decision is again subject to a judicial review in Federal Court. All
other farm licenses have been renewed for a 2-year term to allow for the development of a
transition plan for salmon farming in British Columbia. Mowi Canada West continues to work
with all levels of Government, including First Nations, to secure a future for sustainable salmon
farming in British Columbia. We are anticipating an announcement by the Minister during
June 2023 with respect to the Transition plan. At this time, we can only speculate what the
Minister will propose.
In Newfoundland and Labrador, proponents must submit a sea cage license application to
the Newfoundland and Labrador Department of Fisheries, Forestry and Agriculture for each
new or acquired marine site. In New Brunswick, companies must submit an Aquaculture
license Application for Marine Sites to the Department of Agriculture, Aquaculture and
Fisheries (New Brunswick). It takes about nine months to transition an existing site to a new
owner, and approximately 18 months for a new application in both places. This includes
obtaining all necessary approvals and licenses, and a review from The Department of
Fisheries and Oceans (Federal). Consultation with residents, towns, development groups and
commercial/recreational fishermen is required. In Newfoundland and Labrador, all new sites
of the same company must be 1 km apart, 5 km if sites are operated by different companies.
Consultations with First nations is now required in both New Brunswick and Newfoundland and
Labrador prior to submission of the application.
In Newfoundland and Labrador, Provincial approvals can be assigned to a different operator

through a government sub-lease assignment process, however, licenses are not transferable.
A company may transfer licenses to another company providing the rationales for the
assignment are supported by the government processes in New Brunswick.
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Regulation of fish farming in the Faroe Islands
Fish farming companies in the Faroe Islands are subject to extensive regulation. The most
important legislative instruments are the Aquaculture Act (Act No. 83 from 25 May 2009 with
latest amendments from 2022), the Environmental Act (Act No. 134 from 29 October 1988 with
latest amendments from 2021), the Food Safety Act (Act No. 58 from 26 May 2010 with latest
amendments from 2017) and the Parliamentary Act No. 64 from 15 May 2014 on license fees
for the fish farming industry with latest amendment in 2021.
In addition to the above-mentioned acts, several Executive Orders with more detailed
provisions covering fish farming have been issued under the provisions of the acts.
The right according to a specific licence is provided for a specific geographic area and with
a limit of production specified in the individual licence. Production and stocking density limit is
specified in an Environmental and Sanitary Resolution issued for each specific licence. The
density limit may depend on production conditions as well as sanitary and environmental
conditions.
The size of the area and density limits etc. for each of the 20 sea licences vary greatly.
Production limitations in the Faroes are not regulated through limits on ”maximum allowed
biomass”, MAB. As a consequence, MAB for salmon farms varies between 1,200 tonnes and
5,800 tonnes a year per licence, depending on site characteristics and the geographic
location of the individual farm.
In 2012 and 2018 the Government of the Faroe Islands announced revised aquaculture
regulations with the aim of securing sustainable growth in the industry and in order to
implement anti-trust regulations.
Mowi Faroes is first and foremost affected by the anti-trust regulations in the Aquaculture Act.
These rules set a cap of 20% for either direct or indirect foreign ownership in Faroese fish
farming companies. If the limit is exceeded with regard to a fish farming company, the
company must adjust its ownership to be within the limit within a short deadline set by the
authorities or face possible loss of the right to conduct fish farming activities.
Mowi Faroes is 100% owned by Mowi ASA (NO). This ownership is protected by transitional
provisions in the Aquaculture Act, securing that the company can remain owned by a
foreign company and nonetheless keep its licences. The consequence for Mowi Faroes of the
Anti-trust regulations is that the company cannot expand its business with additional
commercial licences to farm fish in the sea. Mowi Faroes can however apply for
development licences and licences on land.
It is stipulated in the Aquaculture Act that a fish farming company cannot hold more than
50% of the total sea licences. The new restrictions do not apply to licences held by each
individual company today, but the new regulations specify that Mowi Faroes can keep its 3
seawater licences and 1 smolt licence, even though the company does not comply with the
new cap on foreign-held capital.
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Access to Licenses
In order to conduct fish farming activities in the Faroe Islands, the fish farming company must
obtain authorisation from Heilsufrøðiliga Starvsstovan (The Faroese Food and Veterinary
Authority) to operate an aquaculture facility. The authorisation specifies certain technical
requirements with regard to conducting fish farming activities.
Fish farming companies with the above mentioned authorisation can apply for licences to
conduct fish farming activities from the Ministry of Foreign Affairs and Trade. New sea licences
can be awarded by the Ministry of Foreign Affairs and Trade. There is today a limit of 20
commercial seawater licences and no limit for licences on land. If new licences are to be
awarded, they may be awarded through auction.
An application for a seawater licence must contain a description of the proposed

operations, including a plan for complying with environmental and other applicable
regulations.
The government of the Faroe Islands in April 2018 announced a new category of licences, i.e.
development licences. Development licences are intended to motivate investment in new
fish farming technologies. Due to the anti-trust regulations, Mowi Faroes can only obtain
development licences, as the limits regarding foreign ownership do not apply to such
licences.
Licences are granted for 12 years and are renewable for additional 12-year term. Licence
holders must pay an annual fee of DKK 12,000 for each individual licence.
Fish farming companies must also pay a harvesting fee based on the harvesting of farmed
fish. The fee is based on the weight of gutted fish harvested in a month, multiplied by the
average international market price in the same month.
If the average international market price is DKK 36 per kilogramme or higher, the fee is 5%. If
the average international market price is DKK 32 per kilogramme or higher, but lower than
DKK 36 per kilogramme, the fee is 2.5%. If the average international market price is DKK 32 per
kilogramme or lower, the fee is 0.5%.
From 1 August 2023 the harvesting fee has been amended from the above mentioned
system to the system below:
The payment will be set as follows:
P = average international market price in DKK per kilogramme.

K = average weight of gutted fish harvested in a month.
- If P is lower than K, the payment is 0.5%.

- If P is higher than or the same as K, but lower than K + DKK 5, the payment is 2.5%.
- If P is higher than or the same as K + DKK 5, but less than K + DKK 15, the payment is 5%.
- If P is higher than or the same as K + DKK 15, but less than K + DKK 20, the payment is
7.5%.
10%.
12.5%.
15%.
17.5%.
- If P is higher than or the same as K + DKK 40, the payment is 20%.
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No fee is payed in connection with harvesting of fish, ordered by the Chief Veterinary Officer,
and which cannot be sold at market price.
Information on the monthly harvesting of fish shall be reported to the tax authorities not later
than on the 15th day in the month following the harvest. If information on harvesting is
submitted to late, a fine of DKK 1.000 will be added to the fee for the relevant month.
The harvesting fee falls due for payment in 4 installments on 1 February, 1 May, 1 August and
1 October and must be paid no later than on the 20th day in the relevant month.
Licences can be sold and pledged, and legal security is perfected by registration with the
Land Registry. Licences may be withdrawn in cases of material breach of conditions set out in
the individual licence or in the aquaculture or environmental legislation.
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Regulation of fish farming in Iceland
Licenses and location
Aquaculture in Iceland is licensed by The Minister of Food, Agriculture and Fisheries and is
subject to extensive regulation. The most important laws and regulations include the
Aquaculture Act (Act 71/2008 with later amendments, most importantly Act 101/2019, as well
as regulation on Aquaculture, reg. 540/2020. Other relevant laws and regulations include:
Regulation 550/2018 on Environmental Impact of Industry, the Control of Water Bodies Act
36/2011, the Protection of Ocean and Coastal Bodies Against Contamination Act 33/2004,
Laws on the Taxation of Aquaculture for Ocean Aquaculture and the Aquaculture Fund Act
89/2019, and the Environmental Assessment Act 106/2000.
Licenses are managed by the Food and Veterinary Authority of Iceland (MAST) on behalf of
the Minister. Fish farms in Iceland must have work licenses issued by MAST and the Icelandic
Environmental Agency (UST). Farming companies apply for both permits simultaneously and
the process is overseen by MAST, with licenses valid for 16 years. All applications are released
for public consultation and comment during the licensing process.
Access to licenses
Licensing of aquaculture in Iceland has traditionally been complex and the application
process can take up to 7-10 years. Historically a company could start the licensing process
once the Icelandic Maritime Agency (i. Hafrannsóknunarstofnun) had produced an estimate
of the biological load bearing capacity (i. Burðarþolsmat) of the designated farming area,
usually an individual fjord. The Icelandic Maritime Agency is also responsible for performing a
risk assessment (i. Áhættumat) for genetic mixing of farmed salmon. This was a lengthy
process involving thorough and time-consuming environmental risk assessments with multiple
government agencies involved at various stages of the process where new demands were
brought to bear as the process evolved.
In a major amendment to the Aquaculture Act 71/2008 in 2019, Act 101/2019, critical
changes were made to Icelandic Aquaculture’s legal environment. Previously, the Icelandic
Maritime Agency could in theory perform load bearing capacity assessments at their own
prerogative, with companies able to apply for licenses based on available biomass after the
publication of each assessment, however, after the amendment, the power to decide on
load bearing assessments was transferred to the Minister of Food, Agriculture and Fisheries.
Another critical change affected how licenses would be issued going forward; all future
available biomass would be sold directly by the government via auction and consequently
all license applications that had not finished preliminary environmental assessments at the
time of Act 101/2019 were rejected.
As of May 2023, the load bearing capacity assessment for Iceland stands at 144,500 tonnes
and the risk assessment for genetic mixing stands at 106,500 tonnes. Issued licenses amount to
103,100 tonnes. Additional available locations within allowed farming areas are awaiting load
bearing assessments in accordance with Act 101/2019, however, no load bearing capacity
assessments have taken place in Iceland since the enactment of the amendment in 2019.
Farming areas in Iceland are limited as few regions allow salmon farming. Farms are
concentrated in the Western- and Eastern Fjords with possible expansion into a single fjord
(Eyjafjörður) in the north-east of the country.
Farming areas as defined by the load bearing capacity assessment can contain multiple
license holders. Each license is fixed to a pre-determined location within the area, defined by
GPS co-ordinates. Farming locations are fixed within license boundaries and the total biomass
farmed in the designated area cannot exceed the load bearing capacity of that area.
Farmers are also subject to rules regarding minimum distances between farm sites. License
holders are subject to regular audits by both MAST and UST.
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Taxes and Fees
Prior to the amendment of Act 71/2008 in 2019, no direct fee was taken for licenses other
than to cover administrative costs. A production tax is instead charged per kg of harvested
fish in accordance with laws 89/2019 (see details below).
The current tax system is:

0.5% of Nasdaq price when prices are lower than 4.3 EUR/kg;
2.0% of Nasdaq price when prices are between 4.3 EUR/kg and 4.8 EUR/kg;
3.5% of Nasdaq price when prices are above 4.8 EUR/kg.
• As it stands, the whole year calculations are based on average prices Aug-Oct (low-
price months)
• It has been proposed to use the average for the whole year instead of Aug-Oct,
which would be approx. 9% higher than what is used now.
• The tax system is being phased in over a 7-year period. We are now in year 4.
• This year farmers pay 4/7 of 3.5% of Nasdaq or approx. 2% of Nasdaq ≈32 ISK/kg ≈2
NOK/kg harvested.
• In addition, farmers pay 0.79% harbour fee and a fee to the environmental fund,
equivalent to approx. 3,500 ISK per tonne licenses. All this adds up to some 5%-6% of
turnover when fully implemented.
• The Minister proposed last year to increase the highest tax level from 3.5% to 5% of
Nasdaq. She is aiming for another try this year.
The Fishery Directorate (i. Fiskistofa) is responsible for collecting the fee by two instalments per
year. As mentioned above, all new licenses will be auctioned off, however details of the
auction process remain unclear as of now.
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12 Risk Factors

Risk Factors
Salmon health and welfare
Maximising survival and maintaining healthy fish stocks are primarily achieved
through good husbandry and health management practices and policies,
which reduce exposure to pathogens and the risk of health challenges. The
success of good health management practices has been demonstrated on
many occasions and has contributed to an overall improvement in the
survival of farmed salmonids.
Fish health management plans, veterinary health plans, biosecurity plans, risk
mitigation plans, contingency plans, disinfection procedures, surveillance
schemes, as well as coordinated and synchronised zone/area management
approaches, all support healthy stocks with an emphasis on disease
prevention.
Prevention of many diseases is achieved through vaccination at an early

stage and while the salmon are in freshwater. Vaccines are widely used
commercially to reduce the risk of health challenges. With the introduction of
vaccines a considerable number of bacterial and viral health issues have
been effectively controlled, with the additional benefit that the quantity of
licensed medicines prescribed in the industry has been reduced.
In some instances medicinal treatment is still required to avoid mortality and

for the well-being and welfare of the fish. Even the best managed farms may
have to use licensed medicines from time to time, if other measures are not
sufficient. For several viral diseases, no effective vaccines are currently
available.
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Risk Factors
Most important health risks to salmon
Sea lice: There are several species of sea lice, which are naturally occurring
seawater parasites. They can infect the salmon skin and if not controlled they
can cause lesions and secondary infection. Sea lice are controlled through
good husbandry and management practices, the use of lice prevention
barriers (e.g. skirts), by submerging the salmon using Tubenet, cleaner fish
(different wrasse species and lumpsuckers, which eat the lice off the salmon),
mechanical removal systems and when necessary licensed medicines.
Cardiomyopathy syndrome (CMS): CMS is a chronic disease that can

develop over several months and is caused by the piscine myocarditis virus
(PMCV). Mortality typically occurs in large seawater fish. A typical disease
event can last one to six months. Control is achieved mainly by good
husbandry and management practices and keeping the fish in conditions
that satisfy their biological needs for food, clean water, space and habitat.
Salmonid Rickettsial Septicaemia (SRS): SRS is caused by intracellular

bacteria. It occurs mainly in Chile but has also been observed, albeit to a
much lesser extent, in Norway, Ireland and the UK. It causes lethargy and
appetite loss, and can result in elevated mortality. SRS is to some extent
controlled by vaccination, but medicinal intervention may also be required.
Heart and Skeletal Muscle Inflammation (HSMI): HSMI is currently reported in

Norway and to a lesser extent Scotland. Symptoms of HSMI are reduced
appetite, abnormal behaviour and in most cases low mortality. HSMI
generally affects fish in their first year in sea and control is achieved mainly by
good husbandry and management practices.
Infectious Salmon Anaemia (ISA): ISA is caused by the ISA virus and is widely
reported. It is a contagious disease that causes lethargy and anaemia and
may lead to significant mortality in seawater if not appropriately managed.
Control of ISA is achieved through culling or harvesting of affected fish and
the application of stringent biosecurity and mitigation measures. Vaccines
are available and are in use in areas where ISA is considered to represent a
risk.
Gill Disease (GD): GD is a general term used to describe gill conditions

occurring in sea. The changes may be caused by different infectious agents;
amoeba, virus or bacteria, as well as environmental factors including algae or
jellyfish. Little is known about the cause of many of the gill conditions and to
what extent infectious or environmental factors are primary or secondary,
how they interact, and causes of disease.
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Risk Factors
Fish health and vaccination (Norway)1
The incidence of bacterial disease events increased in the 1980s. In the

absence of effective vaccines, the use of approved antimicrobial medicines
reached a maximum of almost 50 tonnes in 1987. Following the introduction
of effective vaccines against the main bacterial challenges at the time, the
quantity of antimicrobials used in the industry declined significantly to less
than 1.4 tonnes (by 1994) and has since then continued to be very low. These
developments, along with the introduction of more strict biosecurity and
health management strategies, allowed for further expansion of the industry
and an increase in production.
During the last two decades there has been a general stabilisation of
mortality in Norway, Scotland and Canada, which has been
achieved principally through good husbandry, good management practices
and vaccination. The trend in the Chilean industry stems from infection
pressure from SRS, which has declined in recent years.
Source: Kontali Analyse, Norsk medisinaldepot, Norwegian Institute of Public Health
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Risk Factors
Research and development focus
Fish Welfare and Robustness

• Development of better solutions for prevention and control of infectious
diseases
• Minimisation of production-related disorders
• Optimisation of smolt quality
• Monitoring of fish welfare
Product Quality and Safety

• Continuously develop better technological solutions for optimised processing,
packaging and storage of products, while maintaining consistently high
quality.
New Growth
• Development of methods to reduce production time at sea
• Production in more exposed areas
• Production in closed sea-going units
Production Efficiency
• Development of cost effective, sustainable and healthy salmon diets which
ensure production of robust fish
• Identify the best harvesting methods, fillet yield optimisation and the most
efficient transport and packaging solutions
• Net solutions and antifouling strategies
• Development of AI-based tools for value chain optimisation and accelerating
seawater-phase production efficiency
Footprint
• Develop, validate and implement novel methods for sea lice control
• Reduce dependency on licensed medicines and limit the discharge of
medicinal residues
• Escape management and control
• ASC implementation; R&D projects that facilitate and make ASC
implementation more efficient
According to Zacco and Hamsø (Norwegian patent offices), the rate of patenting in
the salmon farming industry has grown rapidly in the last two decades. Considerable
R&D is being undertaken in several areas and the most important developments
have been seen in the feed, sea lice control and vaccine sectors, carried out by
large global players. In this industry most producers are small and do not have the
capital to undertake and supervise major R&D activities. This is expected to change
as consolidation of the industry continues.
Smolt, on-growing production and processing

The technology used in these phases can be bought “off-the-shelf” and very few
patents are granted. Technology and producers are becoming increasingly more
advanced and skilled.
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13 Indicators Determining Harvest
volumes

Indicators Determining Harvest volumes
Projecting future harvest volumes
Standing Biomass
Feed Consumption Smolt Release

Source: Source:
Directorate of fisheries Akvafakta
Seawater Disease Vaccine Sales

Temperature Outbreaks Source:
Source: Source: e.g.
Meteorological Media, ScanVacc,
institutes Barentswatch PharmaQ
The three most important indicators for future harvest volumes are standing
biomass, feed consumption and smolt release. These are good indicators for
medium- and long-term harvest, while the best short-term indicator is standing
biomass categorised by size. As harvested size is normally above 4 kg, the
available biomass of this size class is therefore the best estimate of short-term
supply.
If no actual numbers on smolt releases are available, vaccine sales could be

a good indicator of number of smolt releases and when the smolt is put to
sea. This is a good indicator of long-term harvest volumes as it takes up to 2
years from smolt release to harvest.
Variation in seawater temperature can materially impact the length of the

production cycle. A warmer winter can for example increase harvest volumes
for the relevant year, partly at the expense of the subsequent year.
Disease outbreaks can also impact harvest volume due to mortality and
growth slowdown.
103 | P a g e
Yield per smolt
Yield per smolt is an important indicator of production efficiency. Due to the

falling cost curve and the discounted price of small fish, the economic
optimal harvest weight is in the area of 4-5 kg (GWT). The number of
harvested kilograms yielded from each smolt is impacted by disease,
mortality, temperatures, growth attributes and commercial decisions.
The average yield per smolt in Norway is estimated at 3.53 kg (GWT) for the 21
Generation.
In 2010 and 2011 the Chilean salmon industry performed well on fish
harvested, due to the low density of production (improved yield per smolt). In
line with increased density in subsequent years, biological indicators
deteriorated. In 2016, an algae bloom caused high mortality, and the Chilean
salmon industry started to rebuild its biomass once again and improved yield
per smolt. The yield per smolt increased in Chile for 21G to 4.00 kg (GWT) from
20G’s 3.63 kg (GWT).
Average yield in the UK, North America and Faroe Islands for 21G is estimated
at 2.79 kg, 3.39 kg and 4.22 kg, respectively.
104 | P a g e
Development in biomass during the year1
Due to variations in seawater temperature during the year, the total standing
biomass in Europe has a S-curve, which is at its lowest in May and at its peak
in October. The Norwegian industry is focused on minimising natural
fluctuations as license constraints put a limit on how much biomass can be in
sea at the peak of the year.
In Chile the situation is different due to its more stable seawater temperature
and opposite seasons (being in the Southern hemisphere). A more consistent
water temperature allows for smolt release throughout the year and enables
more uniform utilisation of facilities.
105 | P a g e
14 Secondary Processing (VAP)

Secondary Processing (VAP)
In processing we distinguish between primary and secondary processing.
Primary processing is slaughtering and gutting. This is the point in the value
chain at which standard price indexes for farmed salmon are set.
Secondary processing is filleting, fillet trimming, portioning, producing different

fresh cuts, smoking, marinating or breading. Depending on the setup of the
processing plant, products are fresh packed with Modified Atmosphere
(MAP), vacuum packed or frozen and stored for distribution.
Products that have been secondary processed are called value-added

products (VAP), as they represent an additional value to the retailer and
foodservice operator but most of all to the final consumer.
107 | P a g e
European value-added processing (VAP) industry
• A total value of > EUR 25 billion

• Employees > 135,000
• Extremely fragmented – more than
4,000 companies
• About 50% of all companies have
fewer than 20 employees
• Traditionally EBIT-margins have been
between 2% and 5%
• The average company employs 33
people and has a turnover of EUR 4.2
million
The seafood industry in Europe is fragmented with more than 4,000 players.
Most of the companies are fairly small, but there are also several companies
of significant size involved in the secondary processing industry: Mowi,
Icelandic Group, Deutsche See, Caladero, Royal Greenland, Labeyrie,
Parlevliet & van der Plas and Lerøy Seafood. Some of these companies are
integrated into fish farming or wild catch, others are buying external and
processing.
Most of the largest players base their processing on Atlantic salmon,

producing smoked salmon, salmon portions or ready meals with different
packing techniques. Others are into white fish processing.
Consumers are willing to pay for

quality and added value. This means
that we expect to see an increase in
demand for healthy convenience
products such as ready-to-cook fish,
together with a packing trend
towards MAP as this maintains the
freshness of the product longer for
than fish sold in bulk.
108 | P a g e
Market segment
Market segment in the EU (2022E) 1

49F
In the EU, around 70% of Atlantic salmon supply went to retailers while the
remainder was sold to foodservice establishments. The foodservice share was
back to pre-pandemic levels in 2022. Approximately 70% was sold fresh. Of
the different products, fillets had the largest market share of 45% followed by
smoked. “Other VAP” consists of all value-added processed products, except
smoked salmon.
Market segment other regions (2022E) 2 50F
109 | P a g e
The European market for smoked salmon
Smoked salmon is the most common secondary-processed product after

fillets. The European market for smoked salmon was estimated to be 161,000
tonnes GWT in 2022, with Germany and France the largest markets. Assuming
50% yield from gutted weight to product weight, the European market
consumed 80,500 tonnes product weight of smoked salmon in 2021.
European smoked salmon producers (2022E)

The ten largest producers of smoked salmon in Europe are estimated to have
a joint market share of more than 60%. The production is mainly carried out in
Poland, France, the UK, the Baltic states and the Netherlands.
Mowi produces its smoked salmon in Poland (Ustka), UK (Rosyth), France

(Brittany), Belgium (Oostende) and Turkey (Istanbul), and its main markets are
Germany, France, Italy and Benelux. After the acquisition of Morpol in 2013,
Mowi became the largest producer of smoked salmon. Labeyrie is the second
largest and sells most of its products to France, and has also significant sales
to the UK, Spain, Italy and Belgium.
Estimated Annual Raw Material - Tonnes HOG
70 - 90 000 20 - 40 000 5 - 20 000
Mowi Consumer Products Labeyrie (FR-UK) Norv elita (LT) Martiko (ES)
(PL-FR-BE-UK-TR) Milarex (PL) Mer Alliance (FR-PL) Young's Seafood (UK)
Lerøy (NL-SE-NO) Moulin de la Marche (FR)
Foppen (NL) Viciunai (LT)
Suempol (PL) Zalmhuys Van Winjen (NL)
Delpeyrat (FR) Krone Fisch (DE)
110 | P a g e
Branding and product innovation
As the world around us is changing, and consumer needs and behaviours are
changing with it, we see an increased interest in seafood and salmon. As
consumers, we want to buy products and support companies which provide
something good for me, my family and the planet – it’s about taking greater
responsibility through our product choices.
Salmon farming overcomes many of the key barriers our planet faces in terms
of climate and biodiversity when it comes to increased food production. This
provides an opportunity for farmed salmon as it can be supplied
steadily year-round to markets which in the past had less access to seafood.
Mowi’s brand strategy is a great example of putting the final consumer at the
centre of our innovation strategies. Based on trends in the market and
evolving consumer habits, Mowi is developing products ranging from fresh
cuts, coated, smoked and specialty products all the way to ready-meals and
on-the-go products to suit customer needs. Mowi sees a huge opportunity
in driving the creation of new occasions and new uses for salmon, for
example by integrating the product into the local cuisine and thus driving
higher and more frequent salmon consumption, especially in those markets
where salmon is not a “native” ingredient.
Product innovation is key to achieving Mowi’s objective of de-commoditising

the salmon market.
111 | P a g e
Appendix

Appendix
Atlantic salmon
Live fish 100%
Loss of blood/starving 7%
Harvest weight / Round bled fish (wfe) 93%
Offal 9%
Gutted fish, approx. (HOG) 84%
Head, approx. 7%
Head off, gutted 77%
Fillet (skin on) 56 - 64%
C-trim (skin on) 60%
Fillet (skin off) 47 - 56%
Net weight 152F
Weight of a product at any stage (GWT, fillet, portions). Only the weight of the
fish part of the product (excl. ice or packaging), but including other
ingredients in VAP
Primary processing
Gutted Weight Equivalent (GWT) / Head on Gutted (HOG)
Secondary processing
Any value added processing beyond GWT
Biomass
The total weight of live fish, where number of fish is multiplied by an average
weight
Ensilage
Salmon waste from processing with added acid
BFCR
IB feed stock + feed purchase – UB feed stock
Kg produced – weight on smolt release
EFCR
IB feed stock + feed purchase – UB feed stock
Kg produced – mortality in Kg – weight on smolt release
Price Notifications
Nasdaq (FCA Oslo) - Head on gutted from Norway (weighted average
superior quality)
FOB Miami - fillets from Chile (3-4 lb)
FOB Seattle - whole fish from Canada (10-12 lb)
113 | P a g e
Appendix
Price indices vs. FOB packing plant 1 53F
Norwegian NASDAQ-Index - Selling price for superior gutted, fresh salmon iced and packed in boxes - FCA Oslo
NASDAQ Index
- Freight to Oslo
~1,20 NOK
- Terminal Cost
= Selling price farmers FOB packing plant (sup/ord)
Urner Barry FOB Miami - Chilean atlantic salmon fillets, PBO, d-trim delivered FOB Miami
UB
- See text below **
= Selling price farmers FOB packing plant
Urner Barry FOB Seattle - West Coast atlantic salmon - whole - fresh delivered FOB Seattle
FOB Seattle
- Freight (~7-10 cent/lb)
= Selling price farmers FOB packing plant
Several price indices for salmon are publicly available. The two most
important providers of such statistics for Norwegian salmon are Nasdaq/Fish
Pool and Statistics Norway (SSB). Nasdaq is a 100% spot-based price, Fish Pool
is primarily a forward price, and SSB is a mix of spot and contract prices. Urner
Barry in the US provides a spot reference price for Chilean salmon in Miami
and Canadian salmon in Seattle and Boston/New York.
In Norway, using Nasdaq, the farmer’s FOB packing plant price is found by
deducting freight costs from the farm to Oslo and the terminal cost (~1.20
NOK).
Calculating Urner Barry – Chilean fillets, back to GWT plant is more extensive. It
can be done by using prices for 3-4 lbs and adjusting for size mix share,
trucking, handling and customs (USD 20-30 cent), and market commission
(1.0%-3.5%). In addition, there are some adjustments which vary over time;
premium fish share (~90%), reduced price of downgraded fish (~30%),
airfreight (USD 1.40-1.60/kg) and GWT to fillet yield (60-70%). Airfreight rate to
USA has started to reduce following the Covid-19 pandemic.
Source: Fishpool, Nasdaq, SSB, Norwegian Seafood Council, Urner Barry, Kontali Analyse
114 | P a g e
Appendix
Historic acquisitions and divestments
In Norway there have been ’countless’ mergers between companies over the
last decade. The list below shows only some of the larger ones in transaction
value. In Scotland consolidation has also been very frequent. In Chile, there
have been several acquisitions over the last two years. Canada’s industry has
been extensively consolidated with a few large players and some small
companies.
See table on the next page.
115 | P a g e
Appendix
116 | P a g e
Appendix
Year UK Year Chile Year North America
Cale Bay Hatchery - Sold to Kelly Cov e
1996 Shetland Salmon products - Sold to HSF GSP 1999 Chisal - Sold to Salmones Multiexport 1989
Salmon
Anchor Seafarms Ltd., Saga Seafarms Ltd.,
387106 British Columbia Ltd., and United
1996 Straithaird Salmon to MH 2000 Salmo America - Sold to Fjord Seafood 1994
hatcheries merged into Omega Salmon Group
(PanFish)
Gigha, Mainland, Tayinlaoan, Mull Salmon - All
1996 2000 Salmones Tecmar - Sold to Fjord Seafood 1997 ScanAm / NorAm - Sold to Pan Fish
sold to Aquascot
1997 Summer I sles Salmon - Sold to HSF GSP 2000 Salmones Mainstream - Sold to Cermaq 2001 Scandic - Sold to Grieg Seafoods
1997 Atlantic West - Sold to West Minch 2001 Pesquera Eicosal - Sold to Stolt Nielsen 2004 Stolt Sea Farm - merged w ith Marine Harv est
Marine Harv est Scotland - Sold from BP Nutrition Marine Farms - Sold to Salmones Atlantic salmon of Maine (Fjord Seafood)- Sold
1998 2003 2004
to Nutreco Mainstream to Cooke Aquaculture
Salmones Andes - Sold to Salmones Golden Sea Products (Pan Fish) - Sold to
1998 Gaelic Seafood UK - Sold to Stolt Seafarms 2004 2004
Mainstream Smokey Foods
Stolt Seafarm - Merged w ith Marine
1998 Mainland Salmon - Sold to Aquascot 2004 2005 Heritage (East) - Sold to Cooke Aqua
Harv est
Hydro Seafood GSP - I nitially sold to Nutreco as Pesquera Chillehue - Sold to GM
1999 2004 2005 Heritage (West) - Sold to EWOS/Mainstream
part of Hydro Seafood deal Tornegaleones
1999 Joseph Johnston & Sons - Sold to Loch Duart 2005 Aguas Claras - Sold to Acua Chile 2006 Marine Harv est - Sold to Pan Fish
Aquascot Farming - Sold from Aquascot to
2000 2005 Salmones Chiloè - Sold to Aqua Chile 2007 Target Marine - Sold to Grieg Seafoods
Cermaq
Shur-Gain (feed plant in Truro)- Sold to Cooke
2000 Shetland Norse - Sold to EWOS 2005 Robinson Crusoe - Sold to Aqua Chile 2007
Aquaculture
Hydro Seafood GSP - Sold to Norskott Hav bruk GM Tornegaleones - change name to
2000 2006 2008 Smokey Foods - Sold to I cicle Seafoods
(Salmar & Lerøy Seafood Group) from Nutreco Marine Farm GMT
Merger Pan Fish - Marine Harv est - Fjord Vernon Watkins' Salmon Farming (NFL -
2001 Laschinger UK - Sold to Hjaltland 2006 2011
Seafood Canada East) - Sold to Cooke Aquaculture
Ocean Legacy/Atlantic Sea Smolt (NS -
2001 Wisco - Sold to Fjord Seafood 2007 Pacific Star - Sold to Andrè Nav arro 2012
Canada East) - Sold to Loch Duart
Wester Sound / Hoganess - Sold to Lakeland Salmones Cupquelan - Sold to Cooke
2002 2007 2014 Cermaq – sold to Mitsubishi
Marine Aqua
Patagonia Salmon Farm - Sold to Marine
2004 Ardv ar Salmon - Sold to Loch Duart 2009 2016 I cicle Seafoods sold to Cooke Aquaculture
Farm GMT
Hennov er Salmon - Sold to Johnson Seafarms Camanchaca (salmon div ision) - Sold to
2004 2010 2016 Gray Aqua sold to Marine Harv est
Ltd. Luksic Group
Bressay Salmon - Sold to Foraness Fish (from adm.
2004 2011 Salmones Humboldt - Sold to Mitsubishi 2018 Northern Harv est sold to Marine Harv est
Receiv ership)
Pesquera I tata+Pesquero El Golfo -
2004 Johnson Seafarms sold to city inv estors 2011 2020 Grieg New foundland sold to Grieg Seafood
merged into Blumar
Unst Salmon Company - Sold from Biomar to
2005 2011 Landcatch Chile - Sold to Australis Mar
Marine Farms
Year Iceland
Salmones Frioaysen & Pesquera Landes'
2005 Kinloch Damph - Sold to Scottish Seafarms 2012 freshw ater fish cultiv ation sold to 2015 Salmar acquired 22.91% of Arnarlax
Salmones Friosur
Murray Seafood Ltd. - Sold from Austev oll
2005 2012 Cultiv os Marinos Chilé – Sold to Cermaq 2016 Måsøv al acquired 53.5% of Laxar Fiskeldi
Hav fiske to PanFish
Pacific Seafood Aquaculture – Prod
2005 Corrie Mohr - Sold to PanFish 2013 rights&permits for 20 licenses sold to 2018 Salmar increased ow nership in Arnarlax to
Salmone Friosur 41.95%
Salmones Multiexport div est parts of coho
2006 Wester Ross Salmon - MBO 2013 and trout prod. I nto joint v enture w ith 2019 Salmar incraesed ow nership to 59% in Arnarlax
Mitsui
Trusal sold to/merged w ith Salmones
Salmar listed I celandic Salmon (prev . Arnarlax)
2006 Hjaltland Seafarm - Sold to Grieg Seafood ASA 2013 Pacific Star, w ith new name Salmones 2020
and reduced ow nership to 51%
Austral
2006 Orkney Seafarms - Sold to Scottish Seafarms 2013 Congelados Pacifico sold to Ventisqueros 2020 Måsøv al acquired 55.6% of I ce Fish Farm
Lighthouse Caledonia - Spin-off from Marine I ce Fish Farm acquired Laxar Fiskeldi - both
2007 2014 Nov a Austral sold to EWOS 2022
Harv est controlled by Måsøv al
Northern Aquaculture Ltd - Sold to Grieg
2010 2014 Acuinov a sold to Marine Harv est Chile 2022 Mow i acquired 51.28% of Arctic Fish
Seafood
Lighthouse Caledonia - changed name to
2010 2014 Cermaq – sold to Mitsubishi
Scottish Salmon Company
Comercial Mirasol – sold to Salmones
2010 Meridian Salmon Group - Sold to Morpol 2014
Humboldt (Mitsubishi)
Skelda Salmon Farms Limited - Sold to Grieg Landcatch Chile - Sold from Australis Mar
2011 2015
Seafood to AquaGen
Salmones Magallanes & Pesquera Eden
2011 Duncan Salmon Limited - Sold to Grieg Seafood 2018
aquired by AquaChile
Salmones Friosur, Salmones Frioaysen &
Uyesound Salmon Comp – Sold to Lakeland Unst
2012 2018 Piscicola Hornopiren aquired by Los
(Morpol)
Fiordos (Agrosuper)
2013 Lew is Salmon – Sold to Marine Harv est Scotland 2018 AquaChile aquired by Agrosuper
Australis Seafood aquired by Joyv io Group

2013 Morpol sold to Marine Harv est 2018
Co. Ltd
Part of Morpol/Meridian sold to Cooke
2014 2019 Salmones I ce-Val aquired by Blumar
Aquaculture
Thompson Bros Salmon - Sold to Cooke Cabo Pilar aquired by Nov a Austral (4
2015 2019
Aquaculture licenses)
Balta I sland Seafare - Sold to Cooke
2016
Aquaculture
The Scottish Salmon Company acquired by
2019
Bakkafrost
Grieg Seafood Hjaltland UK Ltd sold to Scottish
2021
Sea Farms (ow ned by Salmar and Lerøy Seafood
2022 Mow i aquired Wester Ross Fisheries in Scotland
117 | P a g e
Appendix
118 | P a g e
Appendix
The history of MOWI
2022 MOWI enters Iceland with the acquisition of 51.28% of Arctic Fish
2021 MOWI 4.0 digital strategy is launched
2020 Self-sufficient for feed in Europe
2019 MOWI brand is launched
2018 The company once again becomes Mowi
Acquires Gray Aqua Group and Northern Harvest, and establishes
2017-18
Mowi Canada East
Enters into joint venture with Deep Sea Supply to build, own and
2016
operate aquaculture vessels
2013 Acquires Morpol
2012 Feed division is established
2006 PanFish acquires Marine Harvest
2005 Marine Harvest and Stolt Sea Farm merge
PanFish acquires Fjord Seafood
John Fredriksen acquires PanFish
Nutreco acquires Hydro Seafood. New company name: Marine
2000
Harvest
1999 Nutreco acquires the Scottish farming operations started by Unilever
1998 Mowi is discontinued as a company name
Hydro Seafood has sites in Norway, Scotland and Ireland
1996 Hydro Seafood acquires Frøya holding
1990 Hydro Seafood registered 25 June
Restructuring and consolidation of the industry starts
1985 Hydro increases its holding to 100%
1983 Mowi buys GSP in Scotland and Fanad in Ireland
1975 Mowi becomes a recognised brand
1969 Hydro increases its holding to 50%
1965 Mowi starts working with salmon in Norway
1964 The adventure of Mowi begins
119 | P a g e
Appendix
Mowi
Mowi is the world’s largest producer of farm-raised salmon measured by both
volume and turnover. We offer seafood products to more than 70 countries,
are represented in 26 countries and employ 11 500 people. Mowi is organised
into three business areas: Feed, Farming and Sales & Marketing.
Total revenue for Mowi in 2022 was MEUR 4,900 and the harvest quantity of
Atlantic salmon was 464,000 tonnes (GWT), equivalent to a global market
share of approximately 20%.
Business areas
Feed Farming Sales and Marketing
515,000 tonnes vs. Clear #1. Approx. Leading position in

Position global salmonid feed two times larger than Consumer products
production of ~4.7 m #2. Global sales network
tonnes
Operations Started in Norway in Norway, Chile, Operations in 26

2014 and Scotland in Scotland, Canada, countries
2019 Ireland, Faroe Islands,
Iceland
Volumes 640,000 tonnes 464,000 tonnes 229,000 tonnes

capacity harvested product weight
Op EBIT 2022 EUR 30.8m EUR 817.2m EUR 173.2m
120 | P a g e
Appendix
Feed
(Tonnes) Production
Country Capacity 2022 2021 2020 2019 2018
Norway 400,000 371,876 358,769 389,750 353,310 348,402
Scotland 240,000 143,140 123,133 150,576 51,883 --
Total 640,000 515,016 481,902 540,326 405,193 348,402
Farming
(Tonnes) Harvest volume GWT
Guidance
Country
2023 2022 2021 2020 2019 2018
Norway 290,000 293,720 273,204 262,016 236,880 230,427
Chile 72,000 65,737 65,958 64,570 65,688 53,165
Canada 28,000 41,095 45,311 43,953 54,408 39,267
Scotland 64,000 48,374 64,405 52,739 65,365 38,444
Ireland 4,500 6,845 6,790 7,961 6,650 6,238
Faroes 10,500 7,864 9,932 8,590 6,913 7,696
Iceland 15,000
Total 484,000 463,635 465,600 439,829 435,904 375,237
Consumer Products
(Volume sold, tonmnes prod wt)
Country 2022 2021 2020 2019 2018
Europe 169,071 183,920 179,928 155,673 144,360
Americas 31,317 30,684 29,687 30,633 22,368
Asia 29,046 32,973 29,812 9,965 11,602
Total 229,434 247,577 239,427 196,271 178,330
121 | P a g e
Appendix
Sources of industry and market information
Mowi: www.mowi.com
Other
Kontali Analyse: www.kontali.no
Intrafish: www.intrafish.no
Norwegian Directorate of Fisheries: www.fiskeridirektoratet.no
Norwegian Ministry of Trade,
Industry and Fisheries: www.fkd.dep.no
Norwegian Seafood Council: www.seafood.no
Norwegian Seafood Federation: www.norsksjomat.no
Chilean Fish Directorate: www.sernapersca.cl
FAO: www.fao.org
International fishmeal and fish oil org.: www.iffo.net
Laks er viktig for Norge: www.laks.no
Price statistics
Fish Pool Index: www.fishpool.eu
Kontali Analyse (subscription based): www.kontali.no
Urner Barry (subscription based): www.urnerbarry.com
Statistics Norway (SSB): www.ssb.no/laks_en/
NASDAQ: www.salmonprice.nasdaqomxtrader.com
122 | P a g e
Appendix
123 | P a g e

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Salmon Farming

Salmon Farming Industry Handbook 2023

This handbook includes forward-looking statements that reflect Mowi's current

These forward-looking statements include statements related to population

All forward-looking statements included in this handbook are based on

Salmon Farming Industry Handbook 2023

The purpose of this document is to give investors and financial analysts a

Salmon Farming Industry Handbook 2023

Seafood as part of global food consumption 9

Global macro trends 19

Total harvest of Atlantic salmon 2002-2022 26

UN’s Sustainable Development Goals 30

Global trade flow of farmed Atlantic salmon 40

Top 10 companies in farmed Atlantic salmon 2022 48

8 SALMON PRODUCTION AND COST STRUCTURE 50

Establishing a salmon farm 51

Salmon Farming Industry Handbook 2023

Overview of feed market 62

11 BARRIERS TO ENTRY - LICENSES 79

Regulation of fish farming in Norway 81

Salmon health and welfare 98

13 INDICATORS DETERMINING HARVEST VOLUMES 102

Projecting future harvest volumes 103

14 SECONDARY PROCESSING (VAP) 106

European value-added processing (VAP) industry 108

Salmon Farming Industry Handbook 2023

Salmon is a popular food. Salmon consumption is considered to be healthy

Salmon Farming Industry Handbook 2023

Seafood as part of global food consumption

Per capita Meat Consumption (2020)

Source: FAO (2020) FAOstat Food Balance Sheets

Seafood as part of overall protein consumption

Source: OECD-FAO (2022) Agricultural Outlook 2022-2031, Kontali Analyse

Aquaculture has expanded fish availability to regions and countries with

World aquaculture production of farmed aquatic animals has been

According to FAO, per capita consumption is expected to increase by 4% in

Although Atlantic salmon is relatively small in harvest volume compared to

The general supply of seafood in the world is shifting more towards

Atlantic salmon: By quantity, the largest species of salmonids. Farmed Atlantic

Salmon Farming Industry Handbook 2023

Another demographic trend driving shifts in demand is the aging population.

Demand is partly driven by supportive megatrends, but of even greater

Salmon is a healthy product and scientifically proven natural superfood. It is

Proteins Omega-3 Vitamins Minerals

Salmon is nutritious, rich in micronutrients, minerals, marine omega-3 fatty

The substantial library of evidence from multiple studies on the nutrients

To optimise resource utilisation, it is vital to produce animal proteins in the

Calorie retention is measured by dividing calories in edible portion by calories

• Edible yield is calculated by dividing edible meat by total body weight.

• Feed conversion ratios measure how efficiently the different animal

In addition to its resource-efficient production, farmed fish is also a climate-

Freshwater is a renewable but limited natural resource, and human activities

Salmon has historically always been a rather expensive product on the

Salmon Farming Industry Handbook 2023

CAGR Global Norway Chile UK North America Others

Too rapid growth without these measures in place adversely impacts

Salmon farming also requires a certain amount of current to allow a flow of

Certain biological parameters are also required to allow efficient production.

Political willingness to permit salmon farming and to regulate the industry is