Exploring Processing Opportunities

Aquaculture is an industry that has been rapidly expanding in Iceland in recent years, mainly with open seawater pens being utilized for farming Atlantic salmon (salmo salar). As production levels continue to increase, there is a growing potential for secondary processing aimed at the consumer markets. Although current production volumes are still relatively modest, with around 45 thousand tonnes produced last year primarily through sea pens farming, Iceland’s extensive experience in processing and a culture of value creation from the whitefish industry offer significant opportunities. However, there are also significant plans for land-based salmon farming in the country. Thanks to its access to green energy, water, and land, land- based farming is becoming an increasingly viable option in Iceland. For instance, Samherji Fiskeldi is constructing a land-based farm on the Reykjanes peninsula in south Iceland and this development capacity alone will match the total Icelandic salmon production of last year, demonstrating the enormous potential of the industry. A recent analysis predicts a yearly salmon production of 245 thousand tonnes in Icelandic within 10 years.

With rising volumes from the faming however most of the salmon exports still comprise of whole fresh fish, head on gutted. Only a small proportion of processed salmon is being exported and this has prompted discussions about the potential for further processing of salmon in Iceland. To maintain a competitive edge, it is imperative to increase productivity in the salmon processing industry. Automation is a key driver in achieving this goal, but it requires significant capital investment and economies of scale. Automation also offers new job opportunities for highly skilled workers in the seafood industry, and leading equipment manufacturers such as Marel, Valka, Baader, and Skaginn 3X have worked closely with Icelandic companies to develop and implement automation solutions. The success of the Icelandic whitefish industry, particularly in fresh fish production, can serve as a blueprint for the salmon industry. While high wages in Iceland present a challenge for labour-intensive fish processing, automation can significantly increase productivity and help maintain a competitive advantage. By leveraging computer and robotic automation, the Icelandic fresh fish industry can quickly process complex customer orders and deliver fresh fillets of different sizes and types via sea containers or aircraft. The utilization of side streams from secondary processing can also provide an additional source of revenue, beyond the primary product of fillets. There has been a significant research focus on these side products, which have shown promise in generating valuable outputs in the future. By conducting secondary processing near the site of slaughtering, the carbon footprint of the final product can be significantly reduced, as only the prime parts are transported to foreign markets rather than the entire salmon. The secondary product parts of the fish can then be frozen and the side raw material, such as heads, frames, and cut-offs, processed into a final product or raw material for further processing. Adopting this approach can help to minimize transportation costs and reduce the environmental impact associated with the product.

The Icelandic salmon industry, transporting high value product with limited shelf life, faces a significant challenge due to the distance from markets. Currently, much of the Icelandic salmon is processed in Poland, which is closer to retail markets in Europe. Iceland is limited to transport either by sea or air. It has a major international airport in Keflavik that serves approximately 80 cities in Europe and the US, most passenger planes have cargo space that can be used to transport fresh fish and Icelandair Cargo operates a fleet of cargo planes that can transport significant volumes of fish and fly daily to Europe and the US. While there are no direct flights to Asia from Keflavik, salmon can be shipped to continental Europe and then flown to Asia. Icelandic ports have three major shipping companies, including Smyril Line, Samskip, and Eimskip, which sail regularly to ports in Europe and the US. While the distance from markets presents a challenge for the Icelandic salmon industry, the country’s well-connected airport, cargo planes, and shipping companies offer a decent range of solutions to transport fresh fish to retail markets in Europe and the US. Icelandic salmon exporters can leverage these transportation options to expand their reach and explore new markets.

Matís recently held a workshop in Iceland focusing on Value Added Processing in the Nordic Aquaculture, which aimed to explore the feasibility of value-added salmon production in Iceland, Norway and the Faroe Island. Representatives from salmon farms, marketing and sales professionals, processing equipment developers, research groups, and transport and freight companies in the region attended the workshop. The workshop revealed that the Nordic salmon industry shares similarities in terms of value-added production, but there are significant differences between countries. One major challenge they all face are high wages and costs, which reduce their competitiveness against lower-wage competitors. Additionally, getting the final product to retail shelves can be a logistical challenge. However, the lack of delivery power could be overcome through cooperation among Nordic farmers, producers, and sales companies. Vertically integrated companies have an advantage in terms of monitoring the process from farming to sale and having better information throughout the process. Nordic salmon producers have strengths such as their technological capabilities and the use of superchilling to improve quality and shelf-life. Furthermore, secondary processing can add value through side stream production. A strong demand for salmon value-added products provides an opportunity to build a strong brand for the Nordic product. Strict regulatory frameworks and adherence to reasonable legislation can further push farmers to commit to environmental matters and animal welfare standards, contributing to building a strong brand. However, the industry also faces several challenges. Logistic and shelf-life limitations, unfavourable tariffs on trade, and high production costs compared to competitors are the main negative factors. A significant challenge identified for Iceland is the need for a steady, year-round supply of salmon and the difficulties of serving retail chains from a distance. Logistics and transportation costs were identified as potential barriers, particularly for companies operating in Iceland and the Faroe Islands. To enhance their brand, farmers and producers can minimize negative environmental impacts such as carbon footprint and genetic contamination and use ships for transport instead of airplanes to reduce carbon footprint.

The use of new freezing technology and high-quality freezing could become an essential aspect of value-added processing for the Icelandic salmon industry. The freezing method is important for salmon, which is a sensitive product due to its high fat content and the potential for colour change during freezing. By utilizing emerging freezing technology, salmon producers can freeze their value-added products while minimizing colour changes. Freezing also slows the biological, chemical, and physical deterioration of food, as well as the degradation of food quality, such as colour, texture, enzymatic activity, and lipid oxidation. Quality freezing can provide a great opportunity to control production, stock up products and ship them to markets by container, alleviating the challenges of logistics for fresh products with short shelf lives. Matís is currently working in collaboration with freezer equipment experts to develop innovative methods to improve the quality of frozen fish, aiming to break the ice in marketing Icelandic frozen salmon products in the future.

The Icelandic government recently initiated an analysis on The State and Future of Aquaculture in Iceland, which predicts that within the next 10 years, aquaculture (including algae) will contribute sales values of 1.7 billion EUR, equivalent to approximately 6% of Iceland’s GDP in 2032. This projection highlights the potential for aquaculture to become a key economic driver in Iceland, with significant opportunities for technical development and innovation to support its growth.