World’s top salmon producer blows up Norwegian fish tax plans

Mowi, the world’s largest producer of farmed salmon, has warned that a planned 40 percent resource tax in Norway will lead to lower investment, job cuts and higher prices for the pink fish around the world.

Shares in Norwegian fish producers like Mowi, SalMar and Grieg Seafood slumped in September after their centre-left government announced it would impose tax hikes on the aquaculture and energy industries, urging them to share profits from public resources with the rest of society to share.

Details of the tax, which will be levied retrospectively from earlier this year, are still being worked out, but the government said it intends to add a 40 percent resource levy on fish farmers, on top of a 22 percent corporate tax.

Ivan Vindheim, CEO of Mowi, called the tax “anti-business” and added that the proposals are a “dark cloud for the Norwegian salmon industry”.

He said the tax would hurt the industry’s growth prospects, as Mowi is shelving about €400 million in capital investments for 2023 and 2024, estimating the figure for Norway’s aquaculture industry as a whole at €5 billion.

Line chart of Mowi share price (Nkr) showing tax proposals hit Mowi shares

Vindheim said supply shortages due to lack of investment would result in even higher salmon prices for consumers around the world. Norway is the world’s leading salmon producer, accounting for about half of global production.

“Higher prices from consumers in the UK, Europe and the rest of the world – that’s also a negative consequence of this infamous Norwegian government tax proposal,” he said.

Vindheim warned of “irreparable damage to current and future jobs by the thousands along the Norwegian coast” if the tax proposals were implemented as currently proposed. The salmon industry accounts for about 60,000 jobs in the country.

His comments came as Mowi, which also operates in Scotland, Chile and Canada, reported a 92 percent year-on-year increase in operating income before interest and tax to a record €1 billion. Higher prices more than offset rising costs, with revenue up 18 percent to 4.6 billion euros.

The sector is the second largest contributor to Norway’s economy after fossil fuels, posting record exports of NKr 106 billion (US$10 billion) in 2022, a 30 percent increase from the previous year. according to the Norwegian Seafood Council.

“The announcement had a huge impact on salmon company stocks and with Norway at risk of losing its competitive advantage, you will see higher base prices going forward,” said Ibi Idoniboye, an analyst at food and commodity research group Mintec.

The tax proposals come as salmon prices remain at historically high levels, despite falling from record highs last May. They were then boosted by sharply higher feed prices and production problems caused by algal blooms in Chile and poor fish health in Scotland combined with record temperatures.

Fish Pool Spot Index (NKr/kg) line chart showing salmon prices at historic highs

Vindheim said any comparison between the Norwegian oil industry that is 78 percent taxedand the salmon industry was unfair.

“The oil and gas industry is owned by the state,” he said, while the fish farming industry is “privately owned.” He added that Norway’s coastal communities are “strongly opposed” to the tax. World’s top salmon producer blows up Norwegian fish tax plans

Adam Bradshaw

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