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A Fishy Farming Crop...Feeds A Growing Hunger In The U.S. (Int'l Edition)


Business Week International Spotlight on Chile

A FISHY FARMING CROP...FEEDS A GROWING HUNGER IN THE U.S. (int'l edition)

At 8 a.m., a truckload of 5,000 freshly killed salmon arrive, packed in salt water and ice, at Salmopack's gleaming new processing plant in Puerto Montt, a southern Chile sea town. By late afternoon, each salmon is gutted, cleaned, inspected, frozen, boxed, and on the road to Europe or Japan.

After 18 years in the public sector, Pablo Aguilera got three partners together to open Salmopack, a $2.6 million processing plant, in 1993. In the first year they produced twice as much as their goal and plan to increase current output 40%, to reach 10,000 metric tons by 2000.

FRY AND SMOLTS. Aguilera's is a success story within a success story. While fish have been farmed in Chile for more than 100 years, the concept of raising nonmigratory salmon in sections of the sea set off by nets wasn't introduced in Chile until 1981. Although this nation of 14 million people has 4,800 kilometers of coastline, until recently its only major maritime industry was fish meal.

Creating a new industry--and jobs--were the goals of salmon farming, which was introduced by Fundacin Chile, a nonprofit, technology transfer corporation created with $50 million of ITT Corp. and Chilean government seed money in 1976. Adding value was another goal.

"To put it crudely, it's better business to export fish meal transformed into a fish than as fish meal," says Anthony Wylie, general director of Fundacin Chile.

The timing couldn't have been better. World consumption has doubled in the last 14 years, with farmed salmon rising from 2% to 40% of total production. Now the second-biggest producer of farmed salmon in the world, Chile raised and sold $250 million worth in 1994, which amounts to 2% of all exports in Chile's commodity-based economy.

Farming is straightforward. Hatcheries incubate a combination of imported and domestic salmon eggs, and the fry then spend about a year in lakes. When they become smolts--old enough to switch to salt water--the fish are trucked off to be fattened in sea farms like that of Marine Harvest Chile in Puerto Montt.

CHOKED OFF. Fish are fed day and night, with the amount of food adjusted according to their appetite, according to Roberto Kido, a manager at Marine Harvest. To scare off predator seals, Kido broadcasts killer whale calls underwater.

Another big challenge is environmental, since the process can damage fragile lake ecosystems. Farm salmon are fed high-phosphate fish meal--their ground-up cousins--and the phosphates they excrete promote algae growth, which in turn chokes off oxygen. The Association of Salmon & Trout Producers' newly opened research institute is working with fish meal producers on a new, lower-phosphate product.

Prime conditions, cheap labor, and an efficient industry had most to do with the Chilean salmon boom, but a few international incidents have helped. Fishing bans and dams have played havoc with salmon catches in the U.S. Northwest. And a U.S. dumping suit resulted in crippling duties on Norwegian salmon starting in 1991. Norway is still by far the top producer of farmed salmon, but Chile has been No.2 since 1992, with industry targets calling for 95,000 metric tons of production by 2000, up from 1,200 metric tons in 1986.

Will the market support all that salmon? U.S. consumption alone has almost doubled in the past three years, and world salmon producers are trying to increase it even more. Chilean and British Columbian industry groups put up 70% of a $700,000 salmon ad campaign in the U.S. last year, with Washington State, Norway, and Scotland paying the balance.

That's the kind of cooperation Rodrigo Infante, director of Chile's Association of Salmon & Trout Producers, envisions in the future. "Two governments can sign whatever papers they want," he says, "but if private businesses don't work together, obviously the agreement is just a piece of paper."EDITED BY JOHN E. PLUENNEKE By Susan Jackson in Puerto Montt, Chile


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