Bakkafrost Scotland losses mount but progress on the horizon

Bakkafrost’s farming operations in Scotland continued to produce sizeable losses between July and September, the Q3 figures show.

The Farming Scotland EBIT or operational loss was DKK 282 million (£33m), up from a loss of DKK 180m (£21m) a year ago.

Freshwater Scotland saw its operational EBIT or profit increase from DKK 11m (£1.2m) to DKK 17m (almost £2m).

Farming Faroes did produce an operational profit of EBIT during the quarter, but it was much lower than a year ago – down from DKK 274m (£31.8m) to DKK 108m (£12.5m).

Bakkafrost revealed its Scottish marine operation had a challenging biological development during the quarter.

“The main challenge was micro-jellyfish combined with primary (predisposing) factors and secondary (subsequent) complications leading to increased mortality,” the company explained.

“As previously disclosed, the biological challenges arrived earlier than in recent years, but have in return eased off earlier as well.

“Hence, from mid-September, the biology improved significantly. The upscaled freshwater dual treatment capacity in Scotland, had a positive impact on fish gill health and ensured low sea lice levels. This has reduced the potential impact of the biological threats during the quarter.

“To leverage the improved biological development since mid-September, Bakkafrost plans to reduce Q4 2023 harvest volume to under 1,000 tonnes, allowing fish to grow larger, similar to Bakkafrost’s approach in Scotland in Q4 2022.

“This shift will push some harvest volume into Q1 2024, enhancing market value through higher average weights and better prices.”

In order to address the biological risks, Bakkafrost has made strategic adjustments to its short-term plans and production strategy for the Scottish farming operation.

A comprehensive risk assessment has been conducted for all farming sites, evaluating the feasibility of stocking and farming these sites using various strains, hatcheries, and smolt sizes.

“Based on this evaluation, Bakkafrost will prioritise and advance the utilisation of large, high-quality smolt from the Applecross hatchery over external sources. Consequently, Applecross will supply nearly all of the required smolt to the marine sites in 2024.”

The statement continued: “Additionally, there are plans for an early trial involving 500g smolt, set to be released in Q1 2024.

“Some farming sites may not be restocked or remain productive during Q3 until the risks have been mitigated through the use of large, high-quality smolt. This approach will reduce the biomass at risk in Q3 and result in an increased harvest during the first half of the year.”

The Scottish freshwater operation is scaling up the production of large high-quality smolt at Applecross, after the release of the first trial-batch of 250g smolt in May .

During the current quarter the first full batch of large smolt (200-300g) is expected to be transferred to marine, and in Q1 2024 the first trial batch of 500g smolt is planned to be transferred as a first trial with 500g smolt in Scotland.

It adds: “During 2024, as the Applecross 5 & 6 expansions will be finalised, the increased production capacity from Applecross will enable around 9.1 million smolts to be released from Applecross in 2024, compared to a total of 9.3 million smolt to be released in 2024.”

“From 2025 Applecross will deliver all smolts for Scotland at around 200-300g. As demonstrated in the Faroe Islands, large high-quality smolt will have a lower risk exposure in the marine environment due to shorter production cycles in the sea and the robustness of the smolt.

“In Q3 2023, the average weight of released smolt in Scotland was 112g, which is 5% higher than in Q3 2022, ” the report concludes.