By Guy Standing, Professorial Research Associate, SOAS University of London, and author of The Blue Commons: Rescuing the Economy of the Sea.
Salmon is one of the world’s most beautiful species that serves many functions in our ecosystems and global food chain. It is consumed in huge quantities all over the world, being an excellent healthy source of protein. But today most of that salmon is not ‘wild’ but ‘farmed’, herded and raised in crowded conditions that are unnatural and disquieting.
Salmon was the first carnivore fish to be farmed for human consumption. The way they have been bred in captivity should disgust anyone with a care for living creatures.1 The latest development is genetic engineering, giving rise to fears of a ‘Frankenfish’, following the US government’s approval of genetically modified salmon for sale.
Those worrying aspects aside, this article will consider aquaculture as an invasion and depletion of the commons, concluding with three proposals that would be equitable and would help revive a vital sphere of the commons.
The Blue Commons
In 1970, only about 4% of all the sea fish consumed around the world was farmed artificially. Today, it is over 50%, and is predicted to account for two-thirds by 2030. Although many other species are farmed, the two marine species that dominate the new global aquaculture industry are prawns and salmon. In Europe today, almost all the salmon consumed is from aquaculture. The expansion of commercial aquaculture has been staggering, generating huge profits and accompanied by increasing control by a tiny number of global corporations, the owners of which are billionaires.
One reason they have done so well is that they have not had to bear all of the costs of production, and have not been obliged to pay for very extensive ‘externalities’. And the big corporate plutocrats have formed a powerful lobby to curtail political efforts to make the industry pay more of the costs. This was exemplified by the Norwegian government’s eventual failure in 2019 to introduce a resource rent tax, despite that having been strongly recommended by a high-level expert group after a year-long investigation.
Step back to consider the blue commons in general. The sea, the seabed, the seashore and what is in or under the sea have always been regarded as part of the commons. As such, they belong to society and to all commoners equally. What distinguishes the commons is that they are ‘inalienable’. The current generation is merely the collective trustee for future generations. As a matter of common justice, therefore, if any interest is given or takes what is part of the commons, they should compensate all those deemed to be the commoners. So, with regard to any commons, the government, and the state more generally, must be the Steward or Guardian, responsible for maintaining the commons, and for maintaining the capital value of common pool resources for both current and future generations.
We must remember too that the commons not only encompasses the ‘natural commons’, that is, the land, sea, air, water, minerals and other natural common pool resources. They also include the public amenities and social infrastructure built up over the centuries by our ancestors.
But one special feature of the growth of aquaculture is that it is not just a matter of depriving the commons directly, in using common property as resources for private profit, but it is also a matter of depleting other parts of the commons, as ‘collateral damage’.
In the following, we consider the specific case of artificial salmon farming with a focus on the leading country for salmon aquaculture, Norway. But most of the points apply with equal force in Scotland. One cannot adequately understand salmon aquaculture there without understanding the industry in Norway. When companies, commentators and politicians refer to ‘Scottish salmon’ this is almost fraudulent. Some 99% of salmon farms in Scotland are foreign owned, mostly by Norwegian corporations. The link with Norway is such that many of the salmon eggs that grow into ‘Scottish salmon’ are actually imported from special hatcheries in Norway. It could almost be called ‘Norwegian salmon from Scottish waters’.
Norway: Land of the Oligopolistic Salmon Industry
Commercial salmon farming took off in Norway in the 1970s and today Norwegian companies dominate the global market in salmon, accounting for over half in value terms, followed by Chile (27%) and then the UK, or more accurately Scotland, with about 6%.
In Norway, the industry expanded by an extraordinary 15.4% a year between 1995 and 2012, at the end of which Norway’s Office of the Auditor General issued a sobering report that concluded that, as managed, it was not environmentally sustainable. This did not stop the centre-right government producing a plan in 2014 to multiple production by fivefold by 20502.
Initially, in the 1970s salmon farming was the domain of small-scale farms, but as the industry grew it became concentrated under the control of a few corporations and a few ‘salmon billionaires’. Today, the industry is led by the giant MOWI (formerly Marine Harvest, returning to its original name of 1964), which produces over 25% of the world’s farmed salmon. It has hundreds of facilities across the world, most notably in Chile and Scotland.
MOWI’s largest shareholder is John Frederiksen, who as a Norwegian oil tanker owner made his initial fortune from trading crude oil for the Ayatollah during the Iran-Iraq war in the 1980s. Today, he owns the world’s largest oil tanker fleet. In 2005-06, he managed to amalgamate several farm salmon companies into what became MOWI. With his vast wealth, in 2006 he was not content to pay taxes in his native country and became a Cypriot citizen, taking advantage of Cyprus as a tax haven, where dividend income is not taxed.3 As of early 2023, his estimated wealth, according to Forbes, was $12 billion, making him a major plutocrat. He operates mainly from his London office, but has some dubious commercial relationships internationally. In 2015, Vladimir Putin awarded him Russia’s Order of Friendship.4
Because Frederiksen is now a Cypriot, the richest Norwegian today is Gustav Magnar Witzoe, who is part owner of Salmar, the world’s fourth largest salmon producer. He became the world’s youngest billionaire at age 18 when his father made him the main shareholder in Salmar to avoid inheritance tax. Salmar is the main shareholder in Scotland’s second largest salmon producer, Scottish Sea Farms.
Given that Norwegian firms have such a dominant position, it is not surprising that there has been speculation that they operate as a price-fixing cartel, with at least one legal case having reached the US courts. In 2019, anti-trust regulators raided salmon farms in Scotland owned by MOWI and several other Norwegian companies (Cermaq (now Japanese-owned), Grieg, Leroy and Salmar). But a formal cartel is scarcely necessary. The companies can adjust prices if one, probably MOWI, acts as price leader.
These corporations owe their global dominance to the virtual gift of the commons, and their position is now being solidified by increasing financialisation, as global finance capital seeks to take advantage of a very high profit sector.5
Aquaculture is an amoral industry, if not ‘crimogenic’. For instance, MOWI’s US subsidiary has been accused of deceptive marketing and false advertising, claiming that their salmon was ‘100% natural’ when its own audit documents showed that farms supplying it with salmon used pesticides, antibiotics and other chemicals to treat the fish.6
Again and again evidence has emerged of concealed lice infestations and underreporting of mass escapes. MOWI itself has been responsible for dumping huge quantities of insecticide in Scottish waters to control lice but endangering wild fish populations.7 And the salmon are raised in high-density conditions in often unsanitary pens containing up to 100,000 thrashing fish, entailing stress on the salmon. The pens are also connected directly to the sea, posing a permanent threat to crustaceans and other marine species.
Private Eye, issue 1457, November 2017.
However, let us consider aquaculture as an exploitation of the commons. In this regard, the Norwegian aquaculture corporations have gained multiple forms of rent, which are also losses for the commons and which justify high common resource levies (or rent taxes).
First, as in Scotland, they have been given exclusive access to what is common property – stretches of protected pristine sea, seashore and adjacent land. Those belonged to the Norwegian people, yet they have been gifted to private commerce. This is ironic, in that Norway pioneered a commons-based justice system with its creation of its ‘oil fund’, by which all royalties of its share of North Sea oil were deposited and invested, with the objective of retaining the capital value of what had been a commons resource. The state has so far failed to do that with its treatment of salmon farming in its fjords.
Second, they have been given or sold at a heavily subsidised price private property rights in common pool resources. In Norway in the 1970s, companies were sold ‘production licences’ at a nominal price, each licence allowing the firm to produce up to 780 tonnes a year, except in the north where it was for more. The fact that there were only a restricted number of licences meant that the state created a scarcity value, in a new form of private asset, almost donated to the corporations. Selling a restricted number of licences at below market value meant a treble rental subsidy, depleting the commons, subsidising producers and holding up prices and profits.
This subsidy was shown to be very large when years later new licences were put up for auction. The auction price turned out to be six times what the government had been charging. Today, it is fifteen times as much. So, those who gained the unauctioned licences received what was in effect a substantial regulatory rent subsidy.8
Third, in 1991 the government allowed licences to be commodified, that is, fully transferable. The large-scale producers benefit from economies of scale – unit costs going down as production expands – and economies of scope, that is lower costs and higher profits due to their control or presence at numerous stages of the production and distribution process. Accordingly, they were prepared to pay a higher price for the licences than they were worth for small-scale operators. So, making the licences commodities led to the big firms buying licences from the smaller firms, leading to conglomeration and a more concentrated industry dominated by MOWI.
Fourth, the government introduced a variety of ‘special purpose licences’, giving them for free as long as the firms or other entities did research or used the facilities to develop new technologies. While not alone in gaining from them, big companies, including MOWI, have benefited from these, further subsidising production. Some 21% of all salmon licences, covering 17% of all salmon production, have been special purpose, and thus the implicit subsidy is considerable.9 This is more regulatory rent.
Fifth, there have also been substantial subsidies through public investment in R&D.10 Deemed to be contrary to free trade practices by the US Administration, subsidies have been provided via government-funded research and development aimed at assisting the long-term development of salmon farming. They have also included low-interest long-term loans for investment in production provided by the National Fishery Bank of Norway and in 1988 low-interest loans were provided to 30 producers.11
Sixth, salmon producers have been depleting other commons. To produce farmed salmon, fish meal and fish oil have had to be acquired for their diet. In 2011, a study estimated that to produce one kilo of farmed salmon, it took five kilos of wild fish.12 Since then, salmon farmers in general have tried to reduce this ratio by partially substituting other sources of food, but still they are having an adverse effect on fish populations that have been used to supply their needs. For instance, the trade body, Salmon Scotland, claims that in Scotland the current FIFO (Fish In,, Fish Out) ratio is 0.81, which means it takes 1.23 kilos of feed to produce one kilo of salmon, and that one quarter of the feed is fishmeal. So, a lot of wild fish have to be killed in order to feed the rapidly growing number of farmed salmon.
In Scotland, Norway and elsewhere, much of the fish used to produce fishmeal and oil comes from factories operating in developing countries, where local staple fish are being used up such that there are shortages for consumption by local communities. It is a form of externality and has global implications.
Seventh, the salmon corporations systematically incur what are called ‘externalities’, which are huge, and for which they do not pay. The most important is linked to lice-induced premature mortality of salmon. For instance, it is estimated that 24% of all salmon on Scottish farms die before they can be harvested.13 The number of such deaths doubled between 2021 and 2022.14 The trade body representing the companies blamed swarms of jellyfish, and claimed that survival rates in the wild are low. But it is clear that farming is not very healthy.
There are strong claims that the situation is actually much worse, in that the NGO Wildfish claim that Scottish salmon farms have been taking advantage of a loophole in the regulations. Apparently, to avoid having to give the mandatory weekly report on lice count to the authorities, the firms declare that their fish are about to be harvested, in which case they do not have to make such a report.
However extensive that concealment might be, lice infestations have dogged the industry everywhere since its inception. This has induced firms to treat their salmon stocks with anti-biotics and other chemicals, to a huge and growing extent.15 The trouble then is that when there are mass escapes into the wild, the treated fish mix with wild salmon and do damage to their general health. They also threaten other species. There have been numerous instances of mass escapes, in which many thousands, sometimes over 100,000, of treated salmon have escaped from pens. No financial or other compensation has been given to local fishers or local communities.
Eighth, salmon aquaculture exemplifies global rentier capitalism, a form of capitalism in which the returns to property grow remorselessly relative to the returns to labour. Because there are enormous economies of scale and economies of scope, salmon aquaculture has witnessed a strong conglomeration, implying that a handful of ‘winners’ gain vast oligopoly rent. In Norway, that was encouraged by its largest bank, DNB. So, firms themselves, as well as salmon production licences, became commodities. MOWI, in particular, benefits from economies of scale and from economies of scope – by owning every part of the value chain, from feed production to brood stock to roe and salmon growing to processing and distribution.
So, when MOWI identifies a potential competitor, it simply buys the firm, being quite willing to pay more than the apparent value.16 And the oligopoly has tightened its grip as the global salmon aquaculture industry has exploded. In June 2022, MOWI bought Scotland’s last independent salmon farm firm, Wester Ross Fisheries Ltd. The firm had been highly profitable, but it would become more so as part of Mowi.
In sum, the combination of these eight factors lead to what is a crucial ‘stylised fact’. It has been estimated that on average salmon aquaculture corporations pay only 60% of total production costs, according to research in Norway, Scotland, Chile and Canada.17 The rest is borne by society, by the commons.
Even if it is almost certainly an overestimate, the 60% figure is intriguing. In late 2022, the Norwegian government announced its intention to introduce a 40% resource rent tax in January 2023. Industry representatives promptly complained that with a corporation tax of 22% that would mean a 62% tax on profits. But given that the corporation tax rate is a nominal one and that they are not paying the 40% of production costs that they should be paying, their profit rate is already inflated by implicit subsidies. Moreover, the oil companies operating off Norway have been paying an effective tax rate of 78%, and they have not disinvested.
At the time of writing, a political struggle is underway. It looks like a re-run of what happened in 2019, when the government last proposed a resource rent tax. It was defeated. The industry played a double game, claiming they would move production if it was introduced and that they were not gaining any rent anyhow.
Both were very unlikely. But the defeat of rent taxation was a denial of the commons ethic established with hydropower and oil. A political impediment may have been the existence of the Aquaculture Fund, which since 2016 had distributed 20% of money from licences to the state and 80% to the aquaculture municipalities. This watered down popular support, but was hardly adequate. However, the lessons from that experience are taken into account in the following proposals.
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What should be done?
So, the oligopoly that controls salmon aquaculture in both Norway and Scotland makes its vast profits because the blue commons were enclosed and largely given to them, because the state has acted in a neo-mercantilist way, by providing subsidies and by facilitating regulatory rents, and because, as an oligopoly, the corporations have been able to earn substantial rental income over and above normal profits.18
From this analysis, three measures are recommended. First, the controversies over the environmental impact of salmon aquaculture are so intense — with industry representatives claiming they are practising sustainable methods with minimal adverse effects and with critics claiming the industry is plagued by lice infections, very high rates of pre-harvesting mortality and harm to wildfish – that either the Scottish government or it and the UK government together should set up an independent Commission to evaluate the evidence and, if necessary, recommend regulatory reforms.19
After all, farmed salmon is now Britain’s biggest food export by value, having reached £1 billion in 2019, with production predicted to double by 2030, to 400,000 tonnes a year. But critics claim that in that period it will do damage worth £2 billion, while most of the profits will flow abroad.20
Second, there should be an Aquaculture Levy, that is, a tax on the rental gains made by aquaculture corporations that would also encompass a tax on the damage done to other commons, via pollution, mass escapes and so on. The term ‘levy’ is preferable to ‘tax’, in order to differentiate it from general taxation for government spending as a source of revenue to compensate the ‘commoners’ equally. Given that only about half the costs of production are borne by aquaculture corporations, and that the levy should compensate commoners for the depletion of other commons, the Norwegian level of a 40% resource rent would be appropriate.
Third, the revenue from the levy should go into a Commons Capital Fund, from which the revenue could be recycled to all commoners. As salmon farming involves using renewable, or replenishable, common pool resources, all the revenue could be recycled, rather than only the net return from investing that revenue, for reasons explained elsewhere.21 But not all the revenue should be recycled directly to everybody equally, since a proportion should be reserved for renewing the commons, or at least for giving local communities resources needed to deal with the adverse externalities discussed earlier.
In other words, to secure political support for a common levy from local communities, it may be necessary to guarantee that part of the revenue would be recycled to those communities for investments. This was not done in Norway in 2019, and may have accounted for aquaculture communities opposing the resource rent tax. The government could guarantee to compensate local communities if there were actually disinvestment by the aquacultural industry in the wake of the levy’s introduction. Without such a guarantee, the electorate might be persuaded by the lobbying and public relations of corporations that they would lose because the farms would close.
These are just three economic proposals for responding to what has been a frenzied expansion of salmon farming. It would be nice to think that, first, no further expansion were undertaken until much stronger ecological safeguards and humane treatments were in place and, second, the scale could be rolled back. Realistically, neither are likely. Accompanying the Levy with fines for poor practices, with revenue added to the Commons Capital Fund, would at least force the corporations to bear something closer to the full costs of their exploitation of the blue commons.
1 G.Standing, The Blue Commons: Rescuing the Economy of the Sea (London, Pelican, 2022), p.315.
2 J.L.Bailey and S.S.Eggereide, ‘Mapping actors and arguments in the Norwegian aquaculture debate’, Marine Policy, 115, 2020, pp.1-21.
3 In 1990, he was fined 2 million kroner (about $200,000) for endangering his crews’ lives and had to pay $800,000 to a Norwegian insurance company for dodgy insurance claims. He has houses in various countries, but is based in London. His house in Chelsea is reportedly the most valuable private property in London, worth over £200 million.
5 Private equity, which is the financial sector most oriented to short-term profit maximisation, is moving into aquaculture in a big way. https://www.intrafish.com/tag/private_equity
6 D.Frantz and C.Collins, Salmon Wars: The Dark Underbelly of Our Favorite Fish (New York, Henry Holt, 2022).
7 ‘Down on the fish farm’, Private Eye, 13 January 2017.
8 Regulatory rent is income gained by capital that comes from state actions that increase the net profit rate, such as a system of licences that restricts overall production, so increasing the market price of those with licences.
9 B.Hersoug et al, ‘Serving the industry or undermining the regulatory system? The use of special purpose licenses in Norwegian salmon aquaculture’, Aquaculture, Vol.543, 15 October 2021. https://www.sciencedirect.com/science/article/pii/S0044848621005810
10 H.Am, ‘A critical policy study on why introducing resource rent taxation in Norwegian salmon aquaculture failed’, Marine Policy, 131, 2021.
11 Article link
12 O.Torrissen et al, ‘Atlantic salmon (salmo salar): The ‘super chicken’ of the sea’, Reviews in Fisheries Science, 19 (3).2011, pp.257-78.
13 S.Laville, ‘Scottish farmed salmon industry using loopholes to cover up harm, report alleges’, The Guardian, 17 October 2022.
14 J.Tapper, ‘Salmon deaths on Scotland’s fish farms double – but are jellyfish to blame’, The Guardian, 15 January 2022.
15 In early 2023, the Veterinary Medicines Directive released the UK Veterinary Antibiotic Resistance and Sales Surveillance report 2021 showing that salmon farming is the only industry to have increased antibiotic use since records began, and by a huge margin (p.9).
16 D.Gibson, ‘Mowi paid high price for full fjord control in latest acquisition, say analysts’, Undercurrent News, 23 July 2019.
17 Just Economics, Dead Loss: The High Cost of Poor Salmon Farming Practices (London, Just Economics, 2021).
18 Mercantilism arises when the state acts directly to advance the interests of leading firms or a particular sector. With mercantilism, the state is almost the servant of a particular commercial interest, subsidising it as a means of making it more competitive with potential imports and/or foreign capital.
19 For example, a study led by Feedback Global claimed that salmon farming uses a vast amount of fishmeal that depletes the fish populations of developing country fishing communities. Industry representatives claim that most fishmeal is used for feeding pets. D.Gayle, ‘Wild fish stocks squandered to feed farmed salmon, study finds’, The Guardian, 2 March 2022.
20 J.Martin, ‘Scottish salmon’s unsustainable appetite – Who benefits?’, Feedback, 24 August 2022.
21 Standing, 2022, op.cit, chapter 11.