Your Best Sushi Years Are Behind You

First there was peak oil. Now there's concern that peak salmon is setting in.
Is peak salmon threatening your sushi fix? Photographer: Carla Gottgens/Bloomberg

First there was peak oil. Now there's concern that peak salmon is setting in.

If that's the case, prices for products as varied as gourmet cat food and salmon rolls might be headed higher. And it isn't as if sushi was inexpensive to begin with, especially in New York and Los Angeles.

Worries about peak oil -- the idea that all the world's crude had been found and output was bound to decline -- never materialized because of conservation and advances in extraction technology.

Increasing salmon production might not be so easy, though, which helps explain why salmon prices are at record highs. Recently a kilogram (2.2 pounds) of fresh Norwegian salmon slated for export cost about 50 kroner ($8.29). That's about 50 percent higher than a year earlier, according to data compiled by Bloomberg.

What's pushing up salmon prices? Although demand is increasing steadily, including from countries such as China, tightening supplies of fish food might be the bigger culprit.

Most salmon is raised on aquatic farms, usually floating net pens in the coastal waters of countries such as Norway, Canada, the U.K. and Chile. The captive fish are fed a diet that, in part, is made up of processed fish meal and fish oil. Most of that comes from sardines, anchovies, herring, menhaden and other forage fish that are ground up and fed to salmon, usually in the form of compressed pellets.

Overfishing has depleted supplies of forage species, and producing salmon feed isn't the sole reason. Forage species tend to be high in omega-3 fatty acids, which are believed to help prevent human diseases such as heart disease and arthritis. After fish farms, pharmaceutical companies and dietary-supplement makers are among the biggest buyers of fish oil. On their own, salmon don't produce omega-3 fatty acids; it is stored in their flesh when they consume meal that contains fish oil, and most people find eating salmon preferable to consuming forage fish.

Agriculture companies such as Cargill Inc. and Monsanto Co. are working on producing fish meal substitutes made of everything from soybeans to algae. But there is no substitute for fish oil that packs as much omega-3 fatty acids.

Of course, there are other constraints on increasing salmon production.

Salmon farming is limited by geography -- not many places have the cold, clean water and ocean currents the fish need to thrive -- and government regulations. Although Norway is issuing new aquaculture permits, many potential locales such as Alaska have declared fish farms unwelcome.

The drawbacks of aquaculture have been well documented: Farms in which fish are concentrated in numbers far greater than in the wild cause all sorts of problems. Uneaten food falls to the seabed, where it decays along with fish waste, depleting oxygen in the water. Much like farms on land, overcrowding stresses the fish. This increases susceptibility to disease and parasites, requiring farm operators to lace feed with antibiotics and parasiticides. Diseases can also wipe out farms and spread to wild fish populations.

There is an upside to higher salmon prices, though it doesn't necessarily benefit consumers: The owners of the biggest farms see opportunities for expansion and consolidation.

There is one thing consumers can count on: No matter where salmon prices are today, they won't stay put for long. From the end of July to late September, prices fell more than 35 percent amid renewed speculation of economic weakness in developed nations. Of course, if it's cheap salmon you want, a global economic slump isn't a price worth paying.

(James Greiff is a member of Bloomberg View's editorial board. Follow him on Twitter.)

This column does not necessarily reflect the opinion of Bloomberg View's editorial board or Bloomberg LP, its owners and investors.