Salmon glamour to fall?

Press, 15 May 1987, Page 25

Salmon glamour to fall?

By OLIVER RIDDELL in Wellington

Salmon stocks have had glamour status on the New Zealand share market until recently, but the financial analysts, O’Connor Grieve and Company, can see little reason for this.

In a survey of the salmon industry, they reported that sea-cage profit margins were at best moderate and were likely to deteriorate with salmon prices falling in the world-wide production explosion. The importance of good

management had been highlighted by the problems of the Marlborough Sounds sea-cage enterprise run by Marine Farms.

Ocean ranching was a very volatile business, the report said, with no guarantee of returns after big initial capital costs. Operating costs were less than for sea cages, but it should not be considered a low-cost exercise.

Early indications were that the returns to the New Zealand Salmon Company’s site at Tentburn were well below

commercially viable levels. This might be because of year-to-year volatility and the enterprise should not be written off by investors. The report said the salmon sector had too many stocks and that rationalisation and ownership changes would occur. Diversification from salmon farming had begun and could be expected to continue. Regal Salmon with seacage farms in both Marlborough Sounds and at Stewart Island should be the lowest-cost producer.