Virus from Norway destroys Chile's salmon industry

I recently returned from a week in Chile, the long South American country that formerly trailed Norway as the world's leading producer of Salmon. Like Norway, a large region of Chile is full of fjords whose moderate water temperatures make them an ideal breeding ground for salmon. But Infectious Salmon Anemia (ISA), a disease reportedly imported from Norway, has wiped out Chile's salmon industry quite suddenly. Now Norway is taking up the slack.

Due to ISA -- a highly contagious virus that can be lethal to fish but does not affect humans -- global farmed salmon production is expected to fall between 7 and 12 percent in 2009 to between 1.17 million and 1.24 million metric tons. ISA is wiping out most of Chile's production -- leading to a 67 percent decline to 120,000 metric tons, in 2009. Meanwhile Norway is taking up the slack -- increasing its output by 13 percent, to 754,000 metric tons -- growing faster than the United Kingdom at 6 percent (130,000 metric tons) and North America at 5 percent (128,000 metric tons).

This decline is shutting down Chilean salmon producers. This week I saw one such producer which the Chilean government closed down in the course of 48 hours. This facility bordered a fjord and included hatcheries for growing baby salmon and cages submerged in the fjords where the salmon formerly matured. In the course of 48 hours, Chile ordered this producer's entire $34 million salmon inventory to be destroyed. The facility closed and eliminated the jobs of 85 workers.

Norway, which a Chilean expert told me had imported ISA to Chile, has paid a $1 million in reparations. It seems too small a price to pay for wiping out an entire country's salmon industry.

Peter Cohan is president of Peter S. Cohan & Associates. He also teaches management at Babson College. His eighth book isYou Can't Order Change: Lessons from Jim McNerney's Turnaround at Boeing.

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