The global leader in aquaculture technology

Industrial Aquaculture Outlook from European perspective

Shanghai, 24 August 2010Knut Molaug

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Agenda

Global macro trends

Background AKVA group

Importance of technology

Summary

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AKVA group in briefCage systems

Feed systems

Facts about AKVA group

Feed barges Sensors & operational

Software systems& services

Recirculation systems

• The leading supplier of aquaculture technology.

• Strong market position for all main products

• The only supplier with ”global” presence.

• Leading supplier in a global growth industry.

AKVA’s main product brands:

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“One-stop-shop” in aquaculture technology

Cage Based FarmsLand Based Farms

Value Chain Software

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Global macro trends

Background AKVA group

Importance of technology

Summary

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Finfish – high growthTrends in world aquaculture production: major species groups

Source: FAO

● Farming of finfish growing at the highest rate● Finfish: Compounded average growth rate of about 9,5%

last 20 years.

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Finfish – high growth globally● High growth level will continue globally for

decades to come● This year, the global growth in farming of

finfish will be more than the production of the entire salmon industry

● Growth in an abundance of various fish species (>200) A number of well known species Some “new” aquaculture fish species in the

starting pit to be industrialised• Cod• Cobia• Tuna (various species)• Yellowtail kingfish• Groupers (various species) • etc

Yellowtail Kingfish

Tiger grouper

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Global macro trends

● Market driven pressure to expand● Shortage of available land● Shortage of available sea space● A global market

● Intensification● “Off-shore” farms*● Recirculation (enclosed)● Knowledge based

● Greater capitalisation● Less use of labour● Consolidation- into large corporate’s● Global players

Tech

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Intensification, “off-shore”* and enclosed: knowledge based

* Note: in this context off-shore is not full off-shore farming, but a gradual move from the close bay farming as seen in Asia today towards more exposedlocations such as the farming to a large extent is done in the salmon industry today

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Market driven pressure to expand● The seafood market - a global market●Demand increasing Per capita seafood consumption increasing Population growth

● Catch of wild fish remaining at 1997 levels Sustainability level a challenge for important species

● The increase in seafood consumption will have to be based on aquaculture Aquaculture to pass 50% of the seafood

consumption in few years

=> Marked pressure to expand

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Intensification● Shortage of available sea

space Competition and conflicts with other

coastal zone users Search better water quality: Water

currents, weather exposure, ocean waves etc More challenging production

environment drives investments

● Larger farm units Larger cages From small scale to industry From manual to automatic From intuition to knowledge based Individual farmers to value chain

integration

Volume of a cage has increased 300 times

1980

2007

Visible area: 45% <1%

From sheltered to exposed locations

Source: AKVA group

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Intensification● Shortage of available land Competition for land space with

other industries etc. Larger units More production per unit Higher densities Controlled environment

(recirculation) Avoid ingress of pathogens

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Intensification – A challenge● Diseases have historically been a cause of severe challenges in

most animal production industries.● In early 1990’s a number of diseases, including ISA caused

significant challenges to the Norwegian industry. High mortality level High use of medication / antibiotics

Norway: Harvested volumes and use of antibiotics

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Intensification - A challenge● Possibly the most striking example of spread

of disease and major loss in aquaculture is the white spot disease in farmed shrimp. Caused by White spot syndrome virus (WSSV) The disease can cause 100% mortality within 3-10

days. The disease emerged in 1991/92 in Taiwan and was

by 2000 spread to all shrimp producing countries in the world.

The global estimate of economic loss due to this disease is 3 billion USD per year.

● Main solutions: Secure WSSV free brood stock Focus on breeding programs - to secure resistant

and disease free shrimp larvae Secure barriers for carriers - (within and between

crops)

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Structure● Industry consolidation and vertical coordination We have seen a strong consolidation in the salmon

industry the last decade, and it is continuing... Other parts of the industry following in Europe and Asia Goal - vertical coordination

● The intensification trends in production entail larger units. Financial robust units – Investment level increasing Competence and knowledge base becoming more

important Etc.

● Access to global market requires larger units.. Food safety Traceability Marketing Logistics Etc.

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Global macro trends

Background AKVA group

Importance of technology

Summary

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How can technology influence?● Reduction in cost of production Technology innovations has been and will continue to be

important to drive down the cost of production in modern aquaculture

R&D in aquaculture technology has a relatively short history compared to other food producing industries

A large potential for further innovations

● Disease control, some examples: By maintaining a disease free brood stock By producing high quality and disease free eggs and

juveniles By providing availability of good water quality at the best

aquaculture sites By use of systems that promote, ensure and enforce

good husbandry practices and techniques By early diagnostics

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Disease free brood stock● Fundamentally, to produce disease free fish you

have to start with disease free brood stock Relatively small biomass and low number of individual fish

Technology Solution:● Use of recirculation allows maintaining brood stock

in isolated and disease free environments Successful in for example in Canada - has contributed to a

significant reduction of ISA outbreaks.

● Recirculation allows a cost efficient mechanism of isolation since 100% of the inputs can be treated to avoid ingress of pathogens

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High quality and disease free juveniles● Production of disease free stocking material is

obviously the next step (eggs, larvae's, fingerlings and/or smolts)

Technology Solution:● Recirculation will play an important role, because:● Significantly improves the control of entrance of

pathogens (the amount of inputs are reduced) ● Control of the environmental and biological

conditions to secure the well-being of the fish The fish’s resistance to exposure improves through self

defence mechanisms

● Allows for environmental manipulation beyond the limits of survival of some pathogens. Example salt addition, high temperatures, etc.

● Recirculation facilitate bath treatments

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Good water quality - the best sites● The grow out phase –● The ambient conditions on the site

are essential for the results

Technology Solutions:● Cages and other technology for

exposed waters● Cages and other technology for

high current loads● Secure good water flow by

maintaining clean nets

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Promote, ensure and enforce good husbandry practices and techniques

● Proper feeding: right amounts, low competition, consistency, good nutrition, etc.

● Reduced or zero handling● Predators avoidance● Ensuring the cage volume is maintained● Ensuring good water flow through maintaining

clean nets (Ox. Access)● Frequent mortality collection, and thus pathogen

removal ● Bigger and deeper cages: offering bigger spaces

for the fish to choose where to be

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Other information from the fish?Fish communication through “Body language”:

Growth Uniformity of size Feeding behaviourIntra-specific aggressionVertical migration patternsLevel of disease and mortalityFeed conversion ratioQuality of end product

Good husbandry is the key to reducing the risk of diseasesA correct control and monitoring of the husbandry, correct practices, consistent practices, etc are critical tools to have a more predictable biological process. Technology offers such tools: How the fish is fed? Are the fish treated equally? How are they handled? How efficient and stress free are the daily operations of the farm taking place? Etc.

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Transforming: from an intuition to a knowledge based industry

Information in a farm Systemize Simplify and modulate

Data analysis: Optimising and enhancing the yield of the biological

production

Understand

The fish talks!

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Global macro trends

Background AKVA group

Importance of technology

Summary

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Global macro trends● Long term market growth

● Intensification

●More ”off shore” farming

●More enclosed/recirculation

● Technology decisive

●Consolidation continues

●Global players

●Knowledge based

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The global growth of the Aquaculture industry has been immense

–the growth will continue for decades

to come