Required Report - public distribution

**Date:** 9/30/2004

**GAIN Report Number:** CI4028

CI4028

**Chile**

**Fishery Products**

**Annual Report**

**2004**

**Approved by:**

![](media/image1.wmf)Christine M. Sloop, Agricultural Attaché

U.S. Embassy Santiago

**Prepared by:**

Luis Hennicke, Agricultural Specialist

**Report Highlights:**

**As a result of a decline in Chile's salmon and trout production,
exports of whole eviscerated salmon fell in 2003 after many years of
constant growth. In the coming years the industry will continue to
expand, but exports of whole eviscerated salmon will grow at a much
slower rate, as demand shifts to value added products.**

Includes PSD Changes: Yes

Includes Trade Matrix: Yes

Unscheduled Report

Santiago \[CI1\]

\[CI\]

Table of Contents

[**Executive Summary 3**](#executive-summary)

[Production 3](#production)

[Consumption 4](#consumption)

[Prices 4](#prices)

[Trade 4](#trade)

[Table 1: CHILE - Exports of Value-Added Salmon and Trout Products
5](#table-1-chile---exports-of-value-added-salmon-and-trout-products)

[Other Uses 5](#other-uses)

[Stocks 5](#stocks)

[Policy 5](#policy)

[Marketing 6](#marketing)

[PSD Table 6](#psd-table)

[Export Trade Matrix 7](#export-trade-matrix)

# Executive Summary

Salmon and trout (Salmonid) production are the main components of
Chile\'s edible fisheries sector. Exports were valued at \$1.15 billion
in calendar year 2003, representing 5.6 percent of Chile's total export
revenues for both Agricultural and Non-Agricultural products. A further
expansion is expected in 2004, as prices of exported salmon and trout
products have increased significantly. Total Chilean aquaculture output
will continue to grow based on development and growth of salmon, trout
and new species like turbot. Total exports in 2004 are expected to reach
US\$ 1.3 billion. Exports of value- added salmon and trout products are
expected to expand at a faster rate than whole eviscerated salmon. The
export share of these processed products has increased from 5 percent in
1990 to 67 percent of the total export value in 2003.

Note: A Fisheries Products Strategic Indicators Table will not be
provided, as Chile does not import salmon products and is only a
marginal importer of total edible fish products.

# Production

Output of whole eviscerated salmon fell slightly in 2003, after many
years of significant expansion. Salmon producers in an effort to reverse
the decline in export prices observed in 2001 and 2002, agreed to reduce
output. Due to this cut back in production, prices recuperated
significantly during 2003. As a result, economic returns expanded 18%
for the whole salmon and trout industry to a record US\$1.15 billion in
2003. For MY2004 and the coming years, the industry predicts that
production of whole eviscerated salmon will expand for at least 15% each
year. However, the long term export forecast for whole eviscerated
salmon is much more moderate, as demand is expected to shift to
value-added salmon products.

Atlantic and Silver (Coho) salmon are the main species produced in
Chile, with marginal numbers of King and Cherry salmons. In MY2003, over
77 percent of total salmon production was of the Atlantic species, with
Coho salmon representing the remaining 22 percent of total production.
Atlantic salmon have an average harvest weight of 4 - 5 kg, while Silver
(Coho) Salmon average 3 - 4 kg, and King and Cherry Salmon average 3 - 5
kg. Atlantic Salmon reach this weight in 10 - 24 months in the ocean,
while Silver Salmon spend an average of 8 months in fresh water followed
by 10 - 12 months in the ocean.

Chile's excellent natural conditions promote efficient, low-cost salmon
production year around. Ideal water temperatures, which fluctuate from 7
to 16 degrees Celsius in the southern fresh water lakes of Region Ten,
and in the ocean south of Puerto Montt, have contributed to the
industry\'s success. Since the lakes and fjords in these regions do not
freeze during the winter months, the salmon grow faster and reach
commercial sizes 6 - 12 months earlier than in Norway, the world's
leading producer. This provides a significant economic advantage over
competitors. Additionally, the cost of land, facilities and labor are
low in these regions. Ample supplies of relatively inexpensive, high
quality fish meal and fish oil (the principal feed inputs) further
support the profitability of the sector in that feed comprises 60
percent of the total cost of production. Most of the feed used by
Chilean salmon producers is manufactured domestically, using the most
advanced production and processing technology available.

Based on these natural comparative advantages, Chile's salmon and trout
production and exports are expected to expand further in the coming
years, provided there are no unforeseen sanitary problems or extreme
exchange rate fluctuations. Chile produces and exports a variety of
salmon products, including fresh/chilled, frozen, canned, dried and
salted, smoked and dehydrated salmon. Although the most important
component of the sector is fresh/chilled and frozen whole/eviscerated
salmon, exports of value-added salmon products are increasing at a fast
rate.

The Chilean salmon and trout industry is composed of more than 70
companies, most of which are located in Regions Ten, Eleven and Twelve
employing directly and indirectly over 45,000 workers of which 60
percent are women,. Aquaculture is conducted in 234 coastal concessions
for which the companies pay user fees to the government. In year 2010,
yearly exports are expected to reach a level of 2.25 billion dollars.

# Consumption

There are no official statistics for fresh/chilled domestic consumption
in Chile; figures given in the PS&D are based on information provided by
Salmon Chile, the salmon and trout producers association. The
significant increase shown in MY2003 in the PS&D table is the result of
new information made available by that association. Although domestic
consumption of both farmed and \"wild\" salmon has been increasing
during the last few years, it is not a significant portion of total
demand. This is primarily due to the fact that in Chile fish in general
is less popular than red meat and poultry.

Supermarket chains buy directly from the producers or, in some cases,
internally source the product from their own salmon farms. Up to now
there has not been comprehensive promotional campaigns to increase
domestic consumption, because Chile\'s salmon producers have been
focused mainly on the export market.

## 

# Prices

The average export price for whole eviscerated fresh/chilled and frozen
salmon increased in 2003, from \$2.25/Kg. in 2002 to \$2.91/Kg. in 2003.
Nevertheless, total export value of whole eviscerated fresh and frozen
salmon fell from \$256 million in 2002 to \$245 million in 2003, due to
the salmon producers decision to cut back supplies by 25%.

# Trade

Based on a fall in salmon output and an expansion in exports of value
added products, exports of eviscerated salmon fell significantly in
MY2003. In the coming years, whole eviscerated salmon exports are
expected to grow again, but at a slower rate than in the past, as
exports of value-added salmon and trout products expand as producers
seek higher profits. Industry sources have indicated that since
transport costs have increased significantly and Chile is comparatively
farther away than other producers from the main consumption markets,
producers will increase the effort to produce a larger percentage of
value added products which will reduce the volume of exports but
increase the value. Exports of value-added salmon and trout products,
such as fresh and frozen filet, smoked, dried & salted or canned,
increased another 24 percent in value during MY2003.

Approximately 90 percent of Chile\'s whole eviscerated salmon production
in volume is exported to Japan, Brazil and the United States. More than
47 percent of total salmon and trout exports were destined to the U. S.
(valued at US\$ 544 million), whereas 37 percent were destined for Japan
(valued at US\$ 427 million). Almost all Pacific salmon (Coho) and trout
are frozen and exported to Japan, mostly via ocean freight. Atlantic
salmon is normally marketed fresh/chilled and transported via airfreight
to markets in the United States, and in smaller amounts to Europe and
Latin America. Chile is presently the main salmon supplier in the U.S.
with slightly over 48 percent of total imports for farmed and ranched
salmon, followed by Canada with a 41 percent share.

In recent years the salmon industry has invested in processing plants to
produce more value-added products, like smoked salmon. Exports of these
products represented just 5 percent of total exports in 1990, but now
represent 67 percent of total exports.

+---------------+---------+----------+---------+---------+---------+
| #             |         |          |         |         |         |
| Table 1: CHIL |         |          |         |         |         |
| E - Exports o |         |          |         |         |         |
| f Value-Added |         |          |         |         |         |
|  Salmon and T |         |          |         |         |         |
| rout Products |         |          |         |         |         |
+---------------+---------+----------+---------+---------+---------+
| (US\$         |         |          |         |         |         |
| Thousand)     |         |          |         |         |         |
+---------------+---------+----------+---------+---------+---------+
| Product       | *       | **2000** | *       | *       | *       |
|               | *1999** |          | *2001** | *2002** | *2003** |
+---------------+---------+----------+---------+---------+---------+
| Fresh Filet   | 203,774 | 278,470  | 280,119 | 300,336 | 353,347 |
+---------------+---------+----------+---------+---------+---------+
| Frozen Filet  | 119,063 | 170,826  | 201,443 | 197,407 | 216,596 |
+---------------+---------+----------+---------+---------+---------+
| Smoked        | 12,995  | 19,399   | 20,149  | 28,925  | 30,852  |
+---------------+---------+----------+---------+---------+---------+
| Dried &       | 17,516  | 18,665   | 14,876  | 15,185  | 18,087  |
| Salted        |         |          |         |         |         |
+---------------+---------+----------+---------+---------+---------+
| Canned        | 7,798   | 8,441    | 7,240   | 7,057   | 22,699  |
+---------------+---------+----------+---------+---------+---------+
| Other         | 29,070  | 49,881   | 52,875  | 72,01   | 128,734 |
+---------------+---------+----------+---------+---------+---------+
| **Total**     | **39    | **5      | **57    | **62    | **77    |
|               | 0,216** | 45,682** | 6,702** | 0,927** | 0,315** |
+---------------+---------+----------+---------+---------+---------+
| \% of Total   | 47.7    | 56.1     | 59.8    | 63.8    | 67.2    |
| Salmon        |         |          |         |         |         |
| Exports       |         |          |         |         |         |
+---------------+---------+----------+---------+---------+---------+

# 

Source: Salmon Producers Association.

# Other Uses

Other Use/Loss figures in the PS&D table corresponds to the value-added
production of \"fillet and meat\" and other types of value added
products like smoked, dried and salted or canned. This figure is the
residual of total salmon production (which includes \"whole
eviscerated\") and the export figure, plus an estimate for domestic
consumption. The table above is based on value of exports, as opposed to
the PS&D, which is based on volume.

# Stocks

Producers and/or exporters keep no stocks of fresh chilled and frozen
salmon.

# Policy

The Chilean government provides no domestic support on subsidies for
salmon and trout production.

The Chilean salmon industry had another health related problems in 2003
in the Netherlands this time, based on the reported presence of
malaquite green, a prohibited substance, used to control algae in nets.
The use of malaquite green was banned in Chile's salmon farming industry
in early 2002.

In an effort to prevent new health related incidents, the Government is
devoting more resources to Sernapesca (National Fishery Service) to
strengthen the Residue Control Program. Additionally, as there are new
approved vaccines being used, the industry expects to lower the
quantities of antibiotics administered to salmon and trout.

# Marketing

Chilean, U.S. and Canadian salmon producers formed a multilateral
association called Salmon of the Americas (SOTA), based in Miami, with
the main objective of promoting agreements among the main actors in the
industry and increasing per capita consumption in the U.S. market.
Canadian and Chilean producers supply 90 percent of the consumption in
the United States.

+---------------------+------+------+------+------+------+------+------+
| ## PS&D Table       |      |      |      |      |      |      |      |
+---------------------+------+------+------+------+------+------+------+
| Country             | ##   |      |      |      |      |      |      |
|                     | #### |      |      |      |      |      |      |
|                     | #  C |      |      |      |      |      |      |
|                     | hile |      |      |      |      |      |      |
+---------------------+------+------+------+------+------+------+------+
| Commodity           | Sal  |      |      |      |      |      |      |
|                     | mon, |      |      |      |      |      |      |
|                     | W    |      |      |      |      |      |      |
|                     | hole |      |      |      |      |      |      |
|                     | /Evi |      |      |      |      |      |      |
|                     | scer |      |      |      |      |      |      |
|                     | ated |      |      |      |      |      |      |
+---------------------+------+------+------+------+------+------+------+
|                     | **20 | **R  | **20 | **Es | **20 | **Fo | **U  |
|                     | 03** | evis | 04** | tima | 05** | reca | OM** |
|                     |      | ed** |      | te** |      | st** |      |
+---------------------+------+------+------+------+------+------+------+
|                     | **   | **   | **   | **   | **   | **   |      |
|                     | USDA | Post | USDA | Post | USDA | Post |      |
|                     | Offi | Esti | Offi | Esti | Offi | Esti |      |
|                     | cial | mate | cial | mate | cial | mate |      |
|                     | \    | \    | \    | \    | \    | \    |      |
|                     | [Old | [New | [Old | [New | [Old | [New |      |
|                     | \]** | \]** | \]** | \]** | \]** | \]** |      |
+---------------------+------+------+------+------+------+------+------+
| #######             |      | 01/  |      | 01/  |      | 01/  | MM/  |
| # Market Year Begin |      | 2003 |      | 2004 |      | 2005 | YYYY |
+---------------------+------+------+------+------+------+------+------+
| **Beginning         | 0    | 0    | 0    | 0    | 0    | 0    | (MT) |
| Stocks**            |      |      |      |      |      |      |      |
+---------------------+------+------+------+------+------+------+------+
| **Total             | 35   | 34   | 37   | 40   | 0    | 46   | (MT) |
| Production**        | 4000 | 8930 | 0000 | 5000 |      | 0000 |      |
+---------------------+------+------+------+------+------+------+------+
| **Intra-EC          | 0    | 0    | 0    | 0    | 0    | 0    | (MT) |
| Imports**           |      |      |      |      |      |      |      |
+---------------------+------+------+------+------+------+------+------+
| **Other Imports**   | 0    | 0    | 0    | 0    | 0    | 0    | (MT) |
+---------------------+------+------+------+------+------+------+------+
| **TOTAL Imports**   | 0    | 0    | 0    | 0    | 0    | 0    | (MT) |
+---------------------+------+------+------+------+------+------+------+
| **TOTAL SUPPLY**    | 35   | 34   | 37   | 40   | 0    | 46   | (MT) |
|                     | 4000 | 8930 | 0000 | 5000 |      | 0000 |      |
+---------------------+------+------+------+------+------+------+------+
| **Intra-EC          | 0    | 0    | 0    | 0    | 0    | 0    | (MT) |
| Exports**           |      |      |      |      |      |      |      |
+---------------------+------+------+------+------+------+------+------+
| **Other Exports**   | 11   | 8    | 12   | 9    | 0    | 10   | (MT) |
|                     | 5500 | 4660 | 1000 | 4000 |      | 4000 |      |
+---------------------+------+------+------+------+------+------+------+
| **TOTAL Exports**   | 11   | 8    | 12   | 9    | 0    | 10   | (MT) |
|                     | 5500 | 4660 | 1000 | 4000 |      | 4000 |      |
+---------------------+------+------+------+------+------+------+------+
| **Domestic          | 1800 | 2860 | 1800 | 2860 | 0    | 2860 | (MT) |
| Consumption**       |      |      |      |      |      |      |      |
+---------------------+------+------+------+------+------+------+------+
| **Other Use/Loss**  | 23   | 26   | 24   | 30   | 0    | 35   | (MT) |
|                     | 6700 | 1410 | 7200 | 8140 |      | 3140 |      |
+---------------------+------+------+------+------+------+------+------+
| **TOTAL             | 23   | 26   | 24   | 31   | 0    | 35   | (MT) |
| Utilization**       | 8500 | 4270 | 9000 | 1000 |      | 6000 |      |
+---------------------+------+------+------+------+------+------+------+
| **Ending Stocks**   | 0    | 0    | 0    | 0    | 0    | 0    | (MT) |
+---------------------+------+------+------+------+------+------+------+
| **TOTAL             | 35   | 34   | 37   | 40   | 0    | 46   | (MT) |
| DISTRIBUTION**      | 4000 | 8930 | 0000 | 5000 |      | 0000 |      |
+---------------------+------+------+------+------+------+------+------+

+----------------------+----------------+---------------+------------+
| ##                   |                |               |            |
|  Export Trade Matrix |                |               |            |
|                      |                |               |            |
| ##                   |                |               |            |
+----------------------+----------------+---------------+------------+
| ####### **Co         | **Chile**      |               |            |
| untry** {#country-1} |                |               |            |
+----------------------+----------------+---------------+------------+
| **Commodity**        | **Salmon,      |               |            |
|                      | Whole          |               |            |
|                      | /Eviscerated** |               |            |
+----------------------+----------------+---------------+------------+
| **Time Period**      | **Jan-Dec**    | **Units:**    | **M.T.**   |
+----------------------+----------------+---------------+------------+
| **Exports for:**     | **2002**       |               | **2003**   |
+----------------------+----------------+---------------+------------+
| U.S.                 | 6215           | U.S.          | 5318       |
+----------------------+----------------+---------------+------------+
| **Others**           |                | **Others**    |            |
+----------------------+----------------+---------------+------------+
| Japan                | 85389          | Japan         | 62489      |
+----------------------+----------------+---------------+------------+
| Brazil               | 9307           | Brazil        | 8106       |
+----------------------+----------------+---------------+------------+
| Taiwan               | 3087           | China         | 1836       |
+----------------------+----------------+---------------+------------+
| China                | 2342           | Taiwan        | 1315       |
+----------------------+----------------+---------------+------------+
| Thailand             | 1039           | Argentina     | 1279       |
+----------------------+----------------+---------------+------------+
| Venezuela            | 907            | So. Korea     | 736        |
+----------------------+----------------+---------------+------------+
| Argentina            | 694            | Lithuania     | 509        |
+----------------------+----------------+---------------+------------+
| Spain                | 621            | Thailand      | 489        |
+----------------------+----------------+---------------+------------+
| Estonia              | 516            | Russia        | 375        |
+----------------------+----------------+---------------+------------+
| Russia               | 425            | Mexico        | 370        |
+----------------------+----------------+---------------+------------+
| ######               | 104327         |               | 77504      |
| ### Total for Others |                |               |            |
+----------------------+----------------+---------------+------------+
| **Others not         | 3591           |               | 1837       |
| Listed**             |                |               |            |
+----------------------+----------------+---------------+------------+
| #                    | 114133         |               | 84659      |
| ######## Grand Total |                |               |            |
+----------------------+----------------+---------------+------------+