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Norwegian salmon farming moves to cleaner indoor waters

Hundreds of thousands of salmon swim against the current in southeast Norway -- in massive indoor tanks away from the nearest river as the controversial industry increasingly embraces greener land-based facilities.

Norwegian salmon farming moves to cleaner indoor waters
Salmon farms are being moved indoors. Photo by Brandon on Unsplash

The fish live in two gigantic pools inside an inconspicuous industrial building in Fredrikstad owned by a company that plans to raise salmon in similar settings even further afield, in the United States.

By raising the salmon on land, the industry is attempting to move away from the river or sea cages that have invited criticism over a slew of issues.

The problems run from costly mass escapes to fish infected with sea lice treated with chemicals to mounds of faeces and feed piling up on the seabed below the farms.

“At sea, you depend on the almighty for many things. In a land-based farm, we are suddenly the all-powerful one,” Fredrikstad Seafoods general manager Roger Fredriksen told AFP.

“Here we control everything: temperature, oxygen, pH, CO2,” he said as he gave a tour of Norway’s first land-based salmon farm, opened in 2019.

Pumped from the nearby mouth of Norway’s largest river, the salt water that feeds the facility is treated with UV light to eliminate viruses and bacteria and afterwards it is cycled and filtered through a loop for repeated use.

Under a faint blue light, designed to trigger their appetite, the salmon swim day and night as they are fed food pellets from an overhead dispenser.

When they reach between four and five kilograms (nine and 11 pounds), they are harvested.

“The fish have a very firm consistency,” said veterinarian Sandra Ledang, head of production at the adjacent abattoir.

“That’s because it swims against the current all its life, from the moment it arrives in our facilities until it is slaughtered. It exercises absolutely
every day,” she added.

As populations are expected to increase, with almost 10 billion mouths to feed by 2050, food production needs to be optimised.

While salmon, which is rich in protein, is still a luxury in many places, it is finding new customers among the growing middle class, particularly in Asia.

Matthias Halwart, a senior officer in the fisheries department of the UN’s Food and Agriculture Organization (FAO), sees clear benefits to recirculating aquaculture systems (RAS), like those tested in Norway.

“You have fully controlled environment for the fish, a very low water use, a very good disease control, a very efficient land use, you can optimize your feeding strategies and you can have a very good proximity with the market,” Halwart tells AFP.

READ ALSO: Norway fails to agree fishing quote deal with the UK

Proponents say that although land farms require a lot of energy, their proximity to consumers reduces the use of transportation, making them better for the environment.

Land-based farming projects are already spreading around the world and soon salmon now primarily raised in Norwegian, Chilean, Scottish and Canadian waters will also be produced in Japan, Florida or China.

Nordic Aquafarms, the parent company of Fredrikstad Seafoods, is working on two farms in the United States, one in Maine on the east coast, the other in California on the west coast.

The plan is to use Icelandic salmon roe to raise the fish there.

“The idea is to produce locally. No need to fly salmon over the ocean from one continent to another,” Fredriksen said.

Happy fish?

However, production costs are still higher, and land-based salmon farming is currently considered more as a complement than a substitute for sea- or river-based farming.

NGO Compassion in World Farming, which campaigns against intensive factory farming, fears that the quest for profits will come at the expense of animal welfare.

“We estimate that the minimum density necessary for profitability is 50 kilograms per cubic metre of water,” said Lucille Bellegarde, in charge of agri-food affairs for the French branch of the organisation.

But she lamented that the “average density found in existing systems is more like 80 kilograms per cubic metre” — eight times denser than what the NGO recommends.

Fredriksen said these fears are misguided as his farm cares about the welfare of the salmon.

“If the fish are not happy, they don’t grow.”

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PROPERTY

EXPLAINED: Will Swedish housing prices plummet as interest rates rise?

The Swedish financial supervisory authority warned on Wednesday that rising interest rates could lead to house prices falling "quite sharply". How likely is it that this will happen?

EXPLAINED: Will Swedish housing prices plummet as interest rates rise?

What financial circumstances might make it difficult for borrowers to repay loans?

With an increase in the cost of living, including rising interest rates and rising electricity prices, there are plenty of circumstances that may make it difficult for borrowers – especially those holding large debts in relation to their income – to repay their mortgages.

Households with large debts are therefore more sensitive to an increase in interest rates, according to the Swedish financial supervisory authority, known in Swedish as Finansinspektionen (FI).

The agency published its annual Swedish Mortgage Market report on Wednesday.

“Large debts also mean a higher sensitivity if you were to suffer unemployment during an extensive recession,” said Henrik Braconier, the authority’s chief economist.

Other factors that could stretch borrowers’ finances include rising energy prices, higher food prices, and growing inflation.

“Apples, oranges, tomatoes have gone up by 30 percent,” said Américo Fernández, a household economist at SEB. “Wheat is coming from Ukraine and it’s getting harder and harder to get hold of.”

READ ALSO: 

Will homeowners become unable to repay their mortgage loans?

Not according to Fernández.

“One of the last things Swedish households will fail to make their payments on is their mortgage and their houses,” he said. “They would rather decrease their spending on vacations abroad, or restaurants.”

The FI report noted that most new mortgages include margins that allow for fluctuations in the borrower’s finances. This means that mortgage holders have a cushion that allows them to handle financial changes.

“Our stress test shows that they can handle increases in the interest rate and also loss of income,” said Magnus Karlsson, FI’s director of macroanalysis. “New mortgages have margins in them calculating discretionary income, and will be able to absorb increases in interest rates and loss of income.”

SEB foresees an interest rise of up to three percent over the next two years, Fernández said,an increase that can be absorbed by most households.

Both Fernández and Karlsson agreed that if homeowners have to cut back on spending, those cuts will not come from debt repayment, but from their disposable income – the money they might ordinarily spend on entertainment, eating out, or travelling.

So while household spending may have to change, financial stability is not at stake for most households.

What’s going on with the housing market?

Right now, a record number of mortgage-holders have loans that are worth more than 4.5 times their income. This year, more than 14 percent of new mortgagors took on such large loans, compared to 6.3 percent last year.

A “low interest rate, increase in housing prices, increase in disposable real income and a housing market that is not functioning well” are all factors in the large debts that homeowners have incurred today, Karlsson argued.

Fernández noted that there is an imbalance between the low supply of housing and the high demand for housing, which is in part responsible for the high housing prices we see today.

He said a decrease in price of a few percentage points would not be surprising: “We’re coming from two years of exaggerated prices.”

Will housing prices begin to decrease after two years of increasing prices?

Calculations for three different scenarios tested by FI show that housing prices will decrease, Karlsson said.

While the agency does not predict housing prices, its report shows that under three different scenarios – the first an increase in mortgage interest rate, the second an increase in energy prices, and the third a combination of the first two with a reversal to pre-pandemic housing preferences – prices will decrease.

The Local Sweden reported last year about increasing housing costs in Sweden, spurred on in part by a desire for bigger homes further away from urban areas during the COVID-19 pandemic.

Fernández called the two years of increasing housing costs “surprising.”

“10-12 percent two years in a row, that’s historical in these uncertain times,” he said, noting that prices were still increasing in figures for March this year.

What sorts of housing will see the largest price decrease?

The FI report also included various scenarios of how the price of different types of housing may fluctuate based on changes in the interest rate.

One scenario assumed a 1 percent increase in interest rates this year and a 0.5 percent increase next year, and predicted that while the price of apartments owned in a cooperative – called bostadsrätter – would fall only slightly, the price of detached houses would fall by 10 percent.

Another calculation that accounted for rising electricity prices and a decline in new housing purchases found that the price of bostadsrätter and detached houses risked falling by an average of 30 percent.

Is there a plan to let borrowers end their mortgage terms early?

“We believe it needs to be simpler and more inexpensive for households to repay their mortgages early,” FI Director General Erik Thedéen is quoted as saying in a press release published by the agency on Wednesday.

To that end, Thedéen said at a press conference that the agency had sent a request to the government to change the calculation model for how banks are compensated when mortgages are terminated early.

“When you terminate a loan agreement and the bank incurs costs, it must be reimbursed,” Thedéen said. “But at present the banks are overcompensated, that is what our calculations show. If the government follows our line and changes the model and follows our line, then the banks must simply adapt.”

When asked about the likelihood of this request being granted, FI recommended reaching out to the Ministry of Justice for comment.

What does this mean for foreigners in Sweden?

If you’re already a mortgage holder, then as Karlsson and Fernández assured, mortgage calculations include a cushion that allow for changes in your financial circumstances.

If homeownership is in your future, housing prices may begin to decrease in the near future, so it’s worth keeping an eye on your local real estate listings.

By Shandana Mufti

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