A landmark year in the top Faroese salmon producer’s history, 2017 saw the completion of Bakkafrost’s new corporate headquarters and advanced production facility at Glyvrar—followed by an advance in the US market.
[Bui Tyril & Edmund Jacobsen]
It was a day of celebration when Bakkafrost, in September 2017, invited the public to visit its new headquarters at Glyvrar. Merging seven factories into one facility, the complex also houses the company’s new harvesting and VAP (value added products) plant—a visual sign of the company’s remarkable growth in recent years, backed by key statistics. With farming operations on 21 sites across 17 Faroese fjords, Bakkafrost controls the longest value chain in the entire fish farming industry. From fishmeal and fish oil to feed production to hatcheries and farming to harvesting and processing to packing and sales—Bakkafrost has the most integrated value chain in the world of salmon.
“The feed our fish gets is of top quality, rich in Omega 3 fatty acids and of pure marine origin,” CEO Regin Jacobsen said. “It’s produced at our own fishmeal, fish oil and feed plant Havsbrún, Fuglafjørður. By retaining full control over the content of the salmon feed, we make sure our salmon is nourished with marine, protein-rich ingredients that closely resemble wild salmon’s own natural food, which again is fundamental to the product quality achieved in our final produce.”
In May 2018, the Faroe Islands’ flagship salmon producer entered into a share purchase agreement with the owners of New Jersey-based salmon importer North Landing Ltd, a deal intended to establish a base of operation in the US and improve Bakkafrost’s ability to serve its American customers, according to Mr. Jacobsen. “This acquisition will improve our access to one of the world’s largest salmon markets,” he noted.
The effectiveness of salmon farming as a source of protein for the world’s growing population, compared to other meats such as beef, is frequently stressed by the Global Salmon Initiative, of which Bakkafrost is a member. “Salmon needs much less feed to yield the same amount of protein,” Mr. Jacobsen pointed out.
Alongside other Faroese aquaculture enterprises, Bakkafrost has been highly successful in keeping disease and parasites at bay in recent years, largely through innovative solutions and investments in technology. The company’s new, 22,000 square meter hatchery, a.k.a. smolt station, at Strond near Klaksvík will be the world’s largest and most advanced of its kind, with first cohorts of production commencing by mid 2018.
Market diversification
With around 3.8 billion dkk in operating revenues, Bakkafrost has evolved into a key player in the global salmon business, ranked among the world’s top twelve producers, harvesting 54,600 tonnes per year (2017 figures). The company’s operating earnings before interests and taxes for 2017 amounted to 1.378B dkk, compared to 1.165B for 2016.
In the Faroe Islands, each generation of farmed salmon is kept in a separate fjord during its production cycle, and following harvesting all farming in that fjord is suspended for a period of a minimum two months. This ‘All-in/All-out’ management regime has helped prevent the spread of contagious disease while reducing mortality rates in on-growing pens. Besides, using advanced automation and underwater optics to regulate feeding and prevent pollution from overfeeding, Faroese fish farmers have established a world-renowned system that has contributed significantly to their success.
Back in the 1980s and 1990s, juvenile salmon would typically be released to sea at an individual weight of around 80 to 100 grams. Subsequently, the weight of the fish at the point of release has been gradually raised to around 150g—a process that requires a highly controlled and sophisticated operation at onshore hatcheries a.k.a. smolt stations. The objective, according to Mr. Jacobsen: reach the weight of 500g at point of release, by 2020.
“This is all about minimizing exposure to disease and parasites such as sea lice,” Mr. Jacobsen said. “The larger and stronger the fish when released into sea, the shorter its life cycle spent at sea, and the higher the likelihood of remaining healthy at the point of harvesting. This is, in essence, the reason for our sizable investment in the new hatchery at Strond.”
Bakkafrost has four state-of-the-art FSVs (farm serving vessels) used for harvesting as well as for treating salmon against sea lice; when including numerous workboats used to access and serve its farms, the company is counted among the largest Faroese shipowners.
“Our main markets are Europe, USA, the Far East and Russia,” Mr. Jacobsen added. “As variation in sales distribution between the different markets are driven by change in demand over time, we aim for a balanced diversification to reduce market risk.”
