One of last few locally-owned salmon farms sold to Norwegian operator

One of the last Shetland-owned salmon companies has been sold to the Norwegian fish farming giant Grieg Seafood Hjaltland for nearly £2.2 million.

The sale of Skelda Salmon and its subsidiary G Duncan (Salmon) Ltd by Robert and Alexis Nicolson from Twatt leaves just four working salmon farms in local ownership: two in Unst and one each in Yell and Skerries.

Over 90 per cent of the industry is now in the hands of three powerful foreign operators who are keen to maximise production in a booming world market.

Mr Nicolson has sold up after about 13 years farming salmon, including contract-growing for Lakeland. He is also an agricultural farmer in the West Side. He said: “I think we always knew it was inevitable that we would sell up but the opportunity has come sooner than expected. I think both parties came away from the table thinking they had got a good deal.”

The two sites he sold to Hjaltland at Spoose Holm, off the Scalloway isles, and Setter Voe off Burra, are licensed to produce 2,100 tonnes of salmon but neither currently has any fish in the cages. G Duncan had not grown its own fish for a number of years and was eventually bought by the Nicolsons from George Duncan. Hjaltland plans to restock both sites in spring next year.

Apart from the Nicolson family only one worker was employed on the sites and he transferred to Hjaltland last year.

Mr Nicolson is not planning a further foray into fish farming but reckoned he was “still game” for another business venture, yet to be revealed.

The sale means all the salmon farms in the once-intensively farmed zone between Burra, Weisdale and Walls are now in the hands of just Hjaltland and its main Norwegian rival Scottish Sea Farms. Problems have been experienced in that zone, including outbreaks of infectious salmon anaemia (ISA) and sea lice infestations. ISA broke out in 2009 in a Scottish Sea

Farms site and eventually reached Mr Nicolson’s farm at Setter Voe, forcing him to harvest the fish in November and leave the site fallow.

He said the fewer players there were in the area the more manageable it becomes. There is now a management agreement which ensures that all fish growing is synchronised between sites with each stocking the same year-class of smolts. The arrangement should minimise the danger of problems.

But Mr Nicolson said it did not really lend itself to a small operator like him who did not have sites in other areas where smolts could be introduced every other year. “If you want continuity of supply of fish to a fish buyer then if you miss a generation every time that is not really any use.

“Also, the bigger operators are in a much better position for negotiating deals for their fixed costs, such as feed, smolt supply and buying equipment. If they’re buying a lot of one thing they have far better bargaining power than a smaller operator.”

In a statement through the Norwegian stock market Oslo Børs, Hjaltland’s parent company Grieg Seafood said the fact that its new sites are in one of its existing production areas means they “fit very well” with its existing operational structure. The sale includes cages, a work boat and feeding barge.

Prior to its latest acquisition Hjaltland was already the biggest player in the islands’ industry with more than one-third of salmon production. It processes more than half Shetland’s total harvest at its Lerwick Fish Traders factory.

Hjaltland’s Shetland-based managing director Michael Stark said its new acquisition would allow the company to increase its production significantly with farm site production expected to reach over 23,000 tonnes in 2012/13 and over 24,000 tonnes by 2014/15.

He said: “The additional harvest volume of salmon will strengthen our market position. It will also allow us to offer more customer-tailored products.”

This week Mr Stark almost doubled his shareholding in Greig Seafood, acquiring 10,000 shares for about £2.20 each to bring his total to 20,500.

Commenting on the sale, Shetland Aquaculture general manager David Sandison said: “It’s encouraging to see that companies are still willing to invest heavily in assets in Shetland.”
Grieg and Scottish Sea Farms dominate Shetland salmon farming but were joined last year by a newcomer, the Polish/Norwegian-owned Meridian Salmon Group, which owns Lakeland Unst, Hoganess and Northern Isles Salmon.