Costco’s Salmon Buying Affecting Marketplace

SalmonSalmon is one of the most popular fish on American dinner plates. Most people do not give a lot of thought to where the salmon came from (beyond which store), whether the orange-red color is natural, or if the fish is sustainable. But Costco’s announcement last week that they would start buying two-thirds of their fresh-farmed salmon from Norway versus Chile has raised questions about and is affecting the fish marketplace.

Salmon demand is increasing with stories about health benefits and such. Sales have gone up 7 percent, with a great deal of what people are buying being farm raised Atlantic salmon. Chile, on the Pacific is one of the top producers of Atlantic salmon. But, Norway is the world’s largest farmed salmon producer. The country also has the world’s largest wild stock of Atlantic salmon, but there are by differing estimates between 250 and 700 times as many farm-raised salmon in Norway as there are wild salmon.

Large retailers like Walmart and Costco have tremendous pull in the fish arena, like everywhere else. In fact, Costco reportedly buys 600,000 pounds of farmed salmon weekly, which was 10 percent of the Chilean market. So switching 400,000 pounds of purchases to Norwegian sources, which previously only supplied 60,000 pounds per week, has a tremendous impact on the fish marketplace. The warehouse chains new deal is reportedly sending tremors through the global fishing industry because of the club’s gargantuan needs and forcing a gradual transition because of the tonnage of seafood involved.

One large Chilean seafood producer told trade publications that Costco’s decision is “very tough for the Chilean industry.” But Costco representatives have emphasized that the company is not ditching Chilean producers completely. They are testing the market’s appetite for antibiotic-free fish and taking advantage of the strengthened U.S. dollar against the Norwegian krone, which has made fish from that country significantly cheaper than before.

In addition, Costco was able to take advantage of foreign policy problems Norway has encountered that resulted in bans on their salmon. The Nobel Peace Prize, which is awarded by Norwegian custodians, went to Chinese dissident Liu Xiaobo in 2010, which infuriated Beijing. China retaliated by imposing various bans on Norwegian salmon. Russia banned food imports from Norway last August because of sanctions imposed by the West over Russia’s actions in Ukraine.

One positive impact of the new deal is that Costco was able to influence the Norwegian salmon farmers to offer salmon raised without antibiotics. This has been one of the issues with Atlantic salmon from Norway and was a key reason the Monterey Bay Aquarium’s Seafood Watch organization said to “Avoid” buying salmon from Norway.

Starting in June, Norway will fulfill approximately 60 percent of Costco’s needs with salmon that is antibiotic-free. Chile will continue to supply the remainder for some time. Costco wants to preserve its relationships with in Chile. “It’s a lot of tonnage,” said Jeff Lyons, the senior Costco executive in charge of fresh foods. “We understand that. That’s why we wouldn’t leave Chile entirely.”

Another issue with farmed salmon is the perception that all salmon is pinkish or orange-red. Certain wild salmon are those colors before of their diet. For example, the more shrimp and krill containing certain chemical compounds a wild salmon eats, the more orange to reddish it will be.

Farmed salmon, on the other hand, would be grayish in color, a definite turn-off for purchasers, without supplementing their diets or dyeing their flesh after harvesting, farmed salmon. Pigment supplements comprise an estimated 20 percent of farmed salmon feed costs and are often the single costliest ingredient in a salmon farm’s operating budget. So, Costco’s salmon buying is also affecting the marketplace by perpetuating the myth that all salmon are the vibrant orange color familiar in lox or sushi.

By Dyanne Weiss

Sources:
Seafood Watch
Seattle Times
Under Current News
Triple Pundit

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