Salmon

Salmon is one of the rare seafood commodities with a genuine, functioning derivatives market, and it is overwhelmingly a farming story. Global farmed Atlantic salmon production runs roughly 2.7 to 3.1 million tonnes a year, on top of a separate, more variable wild Pacific catch. Norway alone produces about half of all farmed Atlantic salmon, with Chile a clear second, then Scotland, Canada, the Faroe Islands, and Tasmania. It is a high-value premium protein sold fresh and air-freighted worldwide, and demand has grown steadily as salmon moved from luxury to a mainstream healthy-protein staple and as sushi spread.

The industry is concentrated among a few large, often listed companies, Mowi (the former Marine Harvest) the largest, then SalMar, Leroy, Cermaq, and Bakkafrost. Production is biologically constrained: salmon take two to three years from egg to harvest, sea-cage capacity is capped by government licensing, and the industry runs up against sea lice, disease, and the carrying capacity of fjords. Norway manages this with a "traffic-light" system that lets each zone's capacity grow, hold, or shrink based on sea-lice impact on wild salmon, and in 2023 it imposed a resource-rent "salmon tax" of about 25 percent on sea-based farming. Those supply constraints against fairly inelastic demand make salmon prices highly volatile.

That volatility is exactly why a hedging market grew up around it. Fish Pool ASA in Bergen runs salmon forward and futures contracts that cash-settle against the Fish Pool Index, also branded the Nasdaq Salmon Index, the spot reference for fresh superior Atlantic salmon FOB Norway in Norwegian kroner per kilo. Listed for monthly, quarterly, and yearly periods and used by farmers, processors, and large buyers to lock in price, it makes salmon almost unique among fish in having a liquid, hedgeable forward curve. Spot prices hit record highs around 2023, helped by a weak krone, before easing.

Farmed salmon eat formulated pellets, and what goes into them has changed completely. The feed was once mostly fishmeal and fish oil rendered from wild forage fish like anchovies, but because that supply is finite, the industry shifted to a feed that is now majority plant-based, soy, wheat, faba beans, and vegetable oils, with fishmeal and fish oil a smaller share and newer ingredients like algal oil and insect meal filling the omega-3 gap. Feed is roughly half the cost of growing a salmon, so the ration is where the economics and the sustainability debate both sit.

The most famous feed ingredient is the one that makes salmon pink. Wild salmon get their color from astaxanthin, a carotenoid pigment they take in by eating krill and other crustaceans; a farmed salmon raised on plain pellets would have pale grey flesh. So producers add astaxanthin (mostly synthetic, made by a couple of chemical firms) to the feed, and it is the single most expensive ingredient in it. Farmers even dial in the exact shade against a standardized color card, the SalmoFan, because retailers and consumers pay more for a deeper red fillet. The pigment is also a nutrient the fish needs, but the level is tuned to the market.

Finally, wild and farmed are two different markets. Farmed salmon is Atlantic salmon (Salmo salar) raised year-round in sea cages, roughly 2.7 to 3.1 million tonnes a year, dominated by Norway and Chile, sold largely fresh at a premium. Wild salmon is caught, not grown, and is overwhelmingly Pacific salmon, the five species (pink, chum, sockeye, coho, and king) landed in Alaska and Russia, because wild Atlantic salmon has largely collapsed and is now protected. The wild catch is smaller and far more variable, very roughly 0.7 to 1.0 million tonnes a year, lands in a short summer season, and skews toward frozen and canned product, though premium wild sockeye and king fetch high prices. So farming supplies roughly three quarters of the world's salmon by volume and an even larger share of the traded, year-round market, while wild salmon is the seasonal, capture-fishery minority.

A farmed salmon takes a long time to reach the plate: roughly ten to twelve months in freshwater tanks growing from egg to a young smolt, then a year to eighteen months in seawater cages to reach a harvest weight of about four to five kilograms, so two to three years in all. Because the fish grow faster in warm water, biomass builds through summer and the heaviest harvests come in autumn, while supply is tightest in spring, which is part of why prices tend to firm into spring and early summer. Demand is seasonal too: smoked salmon is a Christmas and Easter staple in Europe, and those holidays, with weddings and summer entertaining, are the peaks the market plans around.

Not all salmon is frozen. The premium of the farmed Atlantic business is fresh fish, gutted and air-freighted chilled from Norway or Scotland to markets within a day or two of harvest, which is why jet fuel and flight schedules sit in its cost base; frozen salmon is the longer-haul and value-added product, and most wild Pacific salmon is frozen or canned to sell beyond its short summer season. There is a food-safety wrinkle: salmon meant to be eaten raw usually must be frozen first to kill parasites, but farmed Atlantic salmon raised on pellet feed, with no exposure to the wild fish that carry them, is generally exempt and can be served raw unfrozen. Cold-smoking with a light cure preserves the fish for only a few weeks refrigerated, not the months that heavy old-style salting once achieved, so smoked salmon is a chilled product, not a shelf-stable one. And a label is worth reading carefully: smoked Scottish salmon is fish from Scotland that was then smoked, whereas Scottish smoked salmon may only have been smoked in Scotland from fish farmed elsewhere, and genuinely wild Scottish salmon is now so scarce, after the collapse of wild Atlantic stocks and the near-end of commercial netting, that the claim deserves a hard look.

The label question goes much further than a word order, and this is the part of the seafood trade almost nobody outside it knows: a great deal of fish caught in Alaska is filleted in China. Wild Pacific salmon, along with cod and pollock, is headed and gutted on the boat, frozen, shipped across the Pacific, thawed and hand-filleted and pin-boned in a plant in Shandong or Liaoning, refrozen, and shipped back. The reason is labour. Hand-trimming a salmon fillet is skilled, slow work, and the estimated cost gap has run on the order of a dollar a pound in the United States against roughly twenty cents in China, against a freight cost that is small on a frozen container. The scale is not marginal: China takes roughly 31 percent of all American seafood exports, and something like 57 percent of that comes back to the United States to be eaten. Roughly three quarters of everything China imports in seafood is processed and re-exported rather than consumed there.

Two consequences follow. The first is statistical. The often-quoted claim that the United States imports around ninety percent of its seafood is substantially an artefact of this round trip, because a fish caught by an American boat and filleted abroad returns counted as an import; adjust for the re-imports and for unreported catch and the figure is closer to sixty-five percent. The second is legal, and it explains why nobody sees this on a package. Country-of-origin rules assign origin to the place of last substantial transformation, not the place of catch, which is the same rule of origin used for cars and steel. Fillet an American fish in China and it can return labelled a product of China. That worked in reverse too, and expensively: Russian-caught pollock, cod, salmon, and crab processed in Chinese plants entered the United States as Chinese product at zero tariff, right through the sanctions imposed after the invasion of Ukraine, until Executive Order 14068 was amended in December 2023 to bar seafood harvested in Russian waters or by Russian-flagged vessels even after transformation in a third country.