There was a time when fish, not crude oil, provided the fuel for norways economy. today, both are in the doldrums. demand for fish has collapsed as the pandemic has shuttered restaurants. salmon prices, along with the share prices of norwegian producers, have sunk. however, environmental concerns and rising costs will allow established producers to stay buoyant.

Producers may already be curtailing supply in response to lower prices. leroy seafood said on wednesday that salmon harvests in the third quarter fell after large gains in the first half of the year. even so, leroy thinks production could hit a record high of up to 188,000 tonnes this year. norwegian rival salmar also expects a blockbuster harvest. a second wave of the coronavirus in europe should mean further salmon price falls, providing an opportunity for hardy investors.

Leroys market value has already lost a tenth since the start of the year. the stock is trading at 11 times two-year forward earnings, almost a quarter below the average of local peers. shares in rival salmar meanwhile have risen 20 per cent this year. at double the earnings multiple of leroy seafood, salmar also has triple the operating margin at 27 per cent, one of the best in the world.

Chance matters less to salmon farmers than it does to anglers. science and good husbandry produces larger animals less prone to disease. lower losses from ailments such as sea lice support salmars higher rating. operating profits in the nkr20s per kilo are about double those of leroy.

At least new entrants are not a serious issue. rising industry costs make further expansion prohibitive. rising licence costs represent a significant barrier to growth for marine operators. farming salmon in tanks on dry land is in its infancy. that points to a stable business in the medium term, making a cast worthwhile when the price is right. the opportunity should arrive as harvest numbers climb short term. best to bait and see.

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