Mowi, the world’s largest producer of farmed salmon, has warned that a planned 40 per cent resource tax in Norway will lead to lower investment, job cuts and higher prices for the pink-fleshed fish all over the world.
Shares in Norwegian fish producers including Mowi, SalMar and Grieg Seafood plunged in September after its centre-left government said it would impose tax rises on the aquaculture and power industries, calling on them to share profits extracted from public resources with the rest of society.
The details of the tax, which will be applied retrospectively from the start of this year, are still being hammered out but the government said it intended to add a 40 per cent resource levy for fish farmers, which comes on top of a 22 per cent corporation tax.
Mowi’s chief executive Ivan Vindheim called the tax “anti-business”, adding that the proposals were a “dark cloud for the Norwegian salmon industry”.
He said the tax would hit the industry’s growth prospects, with Mowi putting about €400mn in capital investments for 2023 and 2024 on hold, and estimating the figure for the Norwegian aquaculture industry as a whole at €5bn.
Vindheim said constraints on supply resulting from the lack of investments would lead to even higher salmon prices for consumers around the world. Norway is the world’s dominant salmon producer, accounting for about half of global output.
“Higher prices on the part of consumers in the UK, in Europe, the rest of the world — that’s also a negative consequence of this infamous tax proposal put forward from the Norwegian government,” he said.
Vindheim warned of “irreparable damage to current and future jobs in the thousands along the Norwegian coastline” if the tax proposals as currently proposed were implemented. The salmon industry accounts for about 60,000 jobs in the country.
His comments came as Mowi, which also has operations in Scotland, Chile and Canada, reported a 92 per cent year-on-year jump in full-year operational earnings before interest and tax to a record €1bn. Higher prices more than offset rising costs, with revenues up 18 per cent to €4.6bn.
The sector is the largest contributor to the Norwegian economy after fossil fuels, reporting record exports in 2022 of NKr106bn ($10bn), up 30 per cent from a year before, according to the Norwegian Seafood Council.
“When a producer with 50 per cent of the global market with annual growth of 4-6 per cent cuts its output growth to 2-3 per cent, clearly you are going to have a tighter market and structurally higher prices going forward,” said Gorjan Nikolik, senior global seafood specialist at Rabobank.
The tax proposals come as salmon prices remain at historically high levels despite being down from record peaks last May. They were pushed higher then by sharply higher feed prices and production issues caused by algae blooms in Chile, as well as poor fish health in Scotland linked to record temperatures.
Vindheim said any comparison between the Norwegian oil industry, which is taxed at 78 per cent, and 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 were “strongly against” the tax.