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People and economic activity

Ian McKee
Learning Materials Production Centre

A local case study: Tasmanian salmon

This study examines Tassal Ltd., an economic enterprise within the economic activity of aquaculture.

Links to various web sites will allow access to maps, photographs, diagrams and articles that expand on the material presented here. Questions based on syllabus outcomes are provided following the material along with suggested answers.

Outcomes addressed in this unit

The student:

H1	explains the changing nature, spatial patterns and interaction of ecosystems, urban places and economic activity
H5	evaluates environmental management strategies in terms of ecological sustainability
H10	applies maps, graphs and statistics photographs and field work to analyse and integrate data in geographical contexts
H12	explains geographical patterns, processes and future trends through appropriate case studies and illustrative examples.
	Stage 6 Syllabus Geography © Board of Studies NSW 1999

Salmon case study

Tassal Ltd: a case study in aquaculture

Overview

The study aims to explain the nature of a small aquaculture enterprise; how it fits within the spatial pattern of global aquaculture and connections found within the enterprise. This case study also demonstrates the way in which management strategies are applied to an economic enterprise to ensure ecological sustainability.

Tassal Ltd. is a small Tasmanian company producing Atlantic salmon for consumption in Australia and around the world. It is an excellent example of how a well-run individual enterprise operates at the local scale within a global context.

Aquaculture as an economic activity

Aquaculture involves the cultivation and processing of aquatic plants and animals for food. A form of primary production, aquaculture has grown in importance as a response to increasing pressures on the capture of wild species and greater demand for food.

Aquaculture is one of the fastest growing sectors of global food production. By 1996 the total production of cultured fish shellfish and aquatic plants reached 34.12 million tonnes. The value of this production was estimated by the United-Nations Food and Agriculture organisation to be about US$46.5 billion. The bulk of production is geared to domestic consumption although many species are traded globally.

Product	Production (tonnes x 10⁶)
Kelp	4.17
Pacific cupped oyster	2.92
Silver carp	2.88
Grass carp	2.44
Common carp	1.99
Unclassified freshwater species	1.59
Algae	1.42
Bighead carp	1.41
Yesso scallop	1.27
Mollusca species	1.20
Figure 1 Reported world production of the top ten species or species groups in 1996
Source: FAO report: Trends in global aquaculture production 1984-96

Although salmon is not one of the top ten species produced, it is a high-value commercial species. Salmon therefore is one of the main aquaculture products traded internationally. Farmed salmon production has grown dramatically in the last fifteen years with more than 500 000 tonnes traded internationally in 1996. The Atlantic salmon species represents 87% of all salmon produced under aquaculture.

Salmon production is concentrated in a few countries with Norway, Chile and the United Kingdom the largest exporters. The main markets for farmed salmon products are the developed economies such as the European Union, Japan and the USA.

Background to the enterprise

Tassal Ltd., Australia's largest producer of salmon, farms and processes Atlantic salmon for both the domestic and export markets.

Location factors

Tassal is based in Tasmania's Huon Valley just south of Hobart (See image on homepage of "Tasmania's Huon Valley").

Climate

Atlantic salmon is so named as it is normally found in the rivers that run into the North Atlantic Ocean, both in Europe and along the east coast of North America. A comparison can be made by examining the climatic statistics for Hobart with those of a site in Nova Scotia, Canada - a region renowned for Atlantic salmon.

Hobart

Lat 43* S Long 147* E Height about 55m above sea level.

	J	F	M	A	M	J	J	A	S	O	N	D
Temp 0c	17	17	15	13	11	9	8	9	11	12	14	15
Rain mm	51	38	46	51	51	51	51	49	47	60	52	57

Shearwater Nova Scotia, Canada

Lat 44 N Long 63* W. Height about 51m above sea level.

	J	F	M	A	M	J	J	A	S	O	N	D
Temp 0c	-4	-4	-1	4	9	14	18	18	15	9	4	-2
Rain mm	139	121	123	109	110	96	93	103	93	127	142	141

Although Tasmania's climate is cool, it is much warmer than the salmon's native habitat. This means the salmon in Tasmania are farmed within the upper limits of the ideal water temperature for growing Atlantic salmon.

Habitat

The hatcheries in the highlands are found in a largely pristine mountain environment whilst the sea farms of the Huon estuary take advantage of a clean, cool marine environment with regular downstream flushing of fresh water.

Atlantic salmon are highly prone to disease and perish in polluted waters. High water temperatures are another threat to salmon. Salmon raised in Tasmania are free from the diseases that infect the species in other parts of the world.

Workforce

Access to a highly educated population is another locational factor. The Huon valley is just kilometres away from Tasmania's capital city. Hobart with a population of over 195 000 provides Tassal, with a highly skilled workforce.

Salmon are farmed in sea-cages. Sea-cages can be moved within the Huon Estuary (See image of sea cages on homepage of "Tassal today"). Processing occurs either at Huonville or Dover within the valley.

The nature of the enterprise

Tasmania currently produces over 6500 tonnes of salmon each year of which Tassal accounts for just over 65%. Two-thirds of all production is consumed in the domestic market with around 1500 tonnes exported to markets throughout the Western Pacific region.

Linkages within the enterprise

Tassal Ltd. is a vertically integrated aquacultural company. This means it is involved in all stages of salmon production from hatchery operations, through farming, processing, distribution and marketing. The four main parts of Tassal's activities are:

the freshwater hatchery company the marine farming operations salmon processing factories
administration, marketing and distribution offices both domestic and overseas.

Freshwater operations

Saltas Pty Ltd., of which Tassal Ltd. is a major shareholder, operates two high technology salmon hatcheries in the central highlands of Tasmania. Here salmon are taken from the egg to the smolt stage of maturity. This process takes around 15 months to complete. Tassal Ltd. takes half of the two million smolts or juvenile salmon produced by Saltas each year.

Marine operations

Tassal 's nursery farms in the Huon Estuary receive the smolts when they weigh about 75g. After a six to nine month stay they have doubled their weight and are then transferred to the sea farms.

The sea farms operate at a number of offshore deepwater sites around the Huon estuary and the Tasman Peninsula. Each farm consists of several cages or pens (either 80 metres or 120 metres in circumference) where the salmon are tended until they are ready for harvest. Fish are fed on a mixture of fish-meal, cereal products, fish-oil, vitamins and mineral supplements and reach their harvest weight of three to four kilograms in about twelve months.

Sea-cages are lined with nets to not only restrain the young fish, but also to protect them from pests and predators like seals and jellyfish. A recent innovation in salmon farming has been the use of massive polyester bags to line the cages. The bag technology allows producers to control the water temperature using pumps taking water from various depths with in the estuary. The water circulates within the bags and waste collects at the bottom for easy removal.

Processing factories

Tassal operates two processing facilities. At the primary processing plant in Dover, fish are harvested and processed to the “Head On Gilled and Gutted” (HOGG) stage. Premium HOGG salmon are chilled and packed for sale whole, while the remaining HOGG salmon are transferred to a new plant at Huonville for value-adding. The Huonville factory produces smoked salmon fillets.

Marketing and distribution

Tassal has more than 50% of the domestic market where it wholesales to retail supermarkets and food service outlets. The major export focus is on the Japanese fresh fish market through the subsidiary company Tassal Japan Ltd.

Tassal products are also marketed in Indonesia, Singapore, Hong Kong, Thailand, Taiwan and Philippines.

Distribution relies upon rapid transit for both domestic and export markets. The use of specialised refrigerated road and air transport is of critical importance.

Administration

Tassal management and information systems operate out of the company’s headquarters in Hobart. The company’s operations are computerised using a combination of local area networks (LAN) and wide area networks (WAN). This system allows produce to be tracked from the factory to the customer.

Ecological Impacts

Salmon farming in the Huon Valley depends upon a healthy estuarine environment. An estuary is that part of a river subjected to the effects of ocean tides. The ecology of an estuary is highly structured and relies on regular flushing. Changes to the catchment impact upon the entire river including the estuary.

The salmon farms of the Huon are both affected by and cause changes in the estuary's ecology.

Impacts on the enterprise

A study by the CSIRO has investigated the sources, distribution and cycling of nutrients in the estuary. The study also targets the effect of nutrients on algal blooms and other aspects of the ecology.

A summary this study can be found on the CSIRO site .

The main threats to the health of the estuary are pollution and nutrient build up. These threats are:

the clearing of native vegetation which causes increased sediment load in surface water run-off

agricultural and urban development which cause increases in the nutrient loads of surface water run-off

pollution from industrial waste which discharges into the tidal river.

Impacts of the enterprise

The nutrient levels of the estuary can also be increased by soluble waste from aquaculture. Open netcage salmon farming allows for the direct discharge of wastes into the surrounding marine environment. The main waste sources include uneaten feed, fish wastes (faeces), dead fish, pesticides, anti-foulants and other solid wastes such as feed bags, ropes and floats.

Environmental management legislation

Tasmania has been cited as an example of what can be done to integrate aquaculture into resource use plans. Under new legislation (notably the 1995 Marine Farming Planning Act and the 1995 Living Marine Resources Act), marine farming development plans must be designed to cover areas rather than sites, and broad community participation in the preparation of such plans is also provided for by laws. An environmental impact assessment must be carried out and a marine farming zone established before leases are granted to marine farms.

The effects of global changes

A recent decision by the World Trade Organisation (WTO) has placed pressure on the Australian government to allow the importation of uncooked salmon meat products from the major overseas producers. The Tasmanian producers argue that these products have the potential to carry unwanted fish pathogens that have caused millions of dollars of losses to industries overseas.

The overseas producers have successfully argued to the WTO that the Tasmanian growers are using the disease argument as a means to control the domestic market.

An analysis of the arguments surrounding this issue was published in The Sydney Morning Herald on 23 March 2000.

Editorial:

Fear, reality on salmon

At first sight, it seems reasonable. Tasmania's new salmon industry, growing healthily on its clean, disease-free reputation and now worth $120 million a year, doesn't want to be destroyed by some chance infection. Canada's salmon industry, much older and larger but troubled by disease-control difficulties, objects to being kept out of the Australian market for fresh, uncooked or unsmoked salmon. Canada takes it market-access case to the World Trade Organisation and wins. Australia, reckoning that in its overall WTO negotiations it has done well and satisfied that it has at least won strict enough quarantine conditions to ensure Canadian fresh salmon poses no health threat, decides not to appeal against the market access ruling in Canada's favour. Not surprisingly, Tasmania is upset.

It is its next move which is highly problematical - and typical of the over-reaction and exaggeration on all sides of the drama. The Tasmanian Government, instead of accepting the WTO ruling and moving on to make the best of it, has dug in its heels. Instead of working to ensure that any imports of gilled and gutted Canadian salmon are so carefully checked that no practical health risk could arise from them, Tasmania has remained implacable "Those products," the Agriculture Minister, Mr David Llewellyn, says, "are not going to come into Tasmania because we will not lift our provisions that we have in place preventing them."

Tasmania's exaggerated fears and intransigence have now raised the spectre of a trade war with Canada. A range of Australian exports - beef, lamb and sugar,and even Blundstone boots - have been mentioned as possible targets of Canadian retaliation. Again, there is much exaggeration. The value of Australian exports at risk from retaliation is said to amount to many millions of dollars. Yet it is hard to see how this could be so. If Tasmania continued to go it alone and defy Canberra by maintaining a ban on all Canadian salmon, WTO rules do allow retaliation. But if the retaliation is to be proportionate to the lost market in Tasmania, the amount involved and impact on Australian exports would be minuscule.

A strong doses of realism is needed on all sides. Fortunately, the official Canadian position, while firmly insistent that Canberra is responsible for seeing that Tasmania abides by the WTO ruling on access and some tough talk on retaliation, appears now to be aimed at seeing market access smoothly achieved rather than at precipitate action risking a trade war. The Federal Government's problem is to persuade Tasmania that the time for grandstanding is over. Mr Llewellyn and the Tasmanian Premier, Mr Bacon, have yet to give a convincing argument as to why the agreed quarantine arrangements are insufficient to protect the State's salmon industry. Apart from some extreme scenarios, dependent on chains of events too far-fetched to be credible, there seems to be not much more than unreasoning fear sustaining the Tasmanian position.

Moreover, given the small size of the market for Canadian salmon in Tasmania, the likelihood of any of "those products" reaching Tasmania is extremely small. The cost of shipping and paying for the WTO-endorsed strict quarantine checks will mean that Canadian live salmon, gilled and gutted, will find it hard to compete with the local product in Tasmania itself. While the volume of WTO-sanctioned retaliatory measures against Australia if Tasmania remains defiant may be small, the damage done to Australia's wider trade efforts may be enormous. It already risks unravelling the wider agreements affecting South Australian tuna and West Australian lobster. The sooner Tasmania realises this the better.

Editorial The Sydney Morning Herald
http://www.smh.com.au/news/0003/23/text/editorial.html

The future of the Atlantic salmon industry

As a high-value commercial product, farmed Atlantic salmon has enormous potential. The global farmed salmon industry is advanced, both technologically and commercially. Production costs are dropping and are likely to be further reduced. Demand is growing both for HOGG salmon and for the value-added product.

Currently, the products are directed at markets in developed economies. The industry is however, making efforts to open new markets in developing economies. Consequently, there is likely to be a continued expansion of production.

Issues will continue to arise out of the international trade in salmon products. Expansion of salmon farming in relatively low cost developing countries such as Chile, threaten the market dominance of traditional producers in developed countries.

Revision

Name the fish most used in aquaculture around the world. (H1)
Explain why salmon was the most traded aquaculture species in 1996. (H1)
Examine the climatic statistics for Hobart and Shearwater. Calculate the average monthly temperature for each of the climatic stations (add the 12 monthly averages and divide by 12). Compare the two averages. What is the impact of this on salmon farming? (H10)
Compare the amount of salmon traded internationally with the total of all cultured species. What proportion of global aquacultural production is traded as salmon? (H10)
Describe the spatial distribution of Tassal Ltd. in Tasmania. (H1)
Explain the advantages of Huon estuary location for the farming of Atlantic salmon. (H1)
Outline the main impacts of salmon farming on the Huon Estuary. (H5)
How might changes in the Huon catchment threaten the Tasmanian salmon industry? (H5)
Describe the management decisions made to reduce these threats. (H5)
Outline the arguments for and against the importation of uncooked salmon products into Australia. (H12)

Links:

HSC Online, Food Technology
This HSC site also uses Tassal Ltd as their case study for "food product development".

HSC Online, Food Technology
This HSC site gives background to aquaculture in Australia as their case study for "Australian food industry".

Sources from CSIRO on the Huon Estuary:

Full report on the Huon Estuary Study (PDF file)

A summary of the report

"Outcomes for the community"

Media release: "Environmental report card for Tasmania's Huon"

Further information on global aquaculture:

Food and Agriculture Organization: international trade

Food and Agriculture Organization: fisheries resources

Other forms of aquaculture:

Aquatic Network

Food and Agriculture Organization

Aquaculture production

Food and Agriculture Organization

A diagram of the life cycle of a farmed Atlantic salmon:

Tasmanian Salmonid Growers Association Ltd.

Virtual tour of the value-added processing plant at Huonville

Tassal Ltd.

The Tasmanian Salmonid Growers Association

A personal web page on fair trade

A comment from Tassal Ltd.

An analysis of the salmon virus issue by the University of Maine USA

Listen to a radio broadcast on the issue from the ABC on the AM program (see ABC Transcript 1)

Listen to a radio broadcast on the issue from the ABC on the PM program (see ABC Transcript 2)