IN THE MATTER of the Resource Management Act 1991 AND IN THE MATTER of a Board of Inquiry appointed under section 149J of the Resource Management Act 1991 to consider The New Zealand King Salmon Co. Limited's private plan change requests to the Marlborough Sounds Resource Management Plan and resource consent applications for marine farming at nine sites located in the Marlborough Sounds STATEMENT OF EVIDENCE OF RAGNAR OLAV NYSTØYL IN RELATION TO GLOBAL DEMAND FOR KING SALMON FOR THE NEW ZEALAND KING SALMON CO. LIMITED JUNE 2012 D A Nolan / J D K Gardner-Hopkins Phone 64 4 499 9555 Fax 64 4 499 9556 PO Box 10-214 DX SX11189 Wellington
1 Qualifications and Experience 1. My name is Ragnar Olav Nystøyl. I have a Bachelor in Business Administration from the Trondheim Business School, and have complete an international course in Export Marketing from the Suffolk University, Madrid. 2. I am Managing Director of Kontali Analyse ("Kontali"), and have held various senior positions within the company since 2000. Kontali was founded in Norway in 1993 and is recognised as one of the world's leading private research institutes, with a dedicated focus on trends within production, trade, consumption, price and market development of seafood, in particular salmon and trout. A list of recent relevant experience and consulting activity undertaken by Kontali is included as Appendix 1 to this evidence. 3. During my time at Kontali, and in my previous role as Sales and Export Manager in a commercial seafood company, I have gained a broad experience as analyst and consultant within the world aquaculture and seafood sector. I am an expert on the aquaculture industry, with special competence within global aquaculture trends, trade flows and future perspectives, growth dynamics and production development in general, and specific economic and structural analysis. 4. I have read the Code of Conduct for expert witnesses contained in the Environment Court Consolidated Practice Note updated March 2011 and agree to comply with it. In that regard, I confirm that this evidence is written within my area of expertise, except where I state that I am relying on the evidence of another person. I have not omitted to consider material facts known to me that might alter or detract from the opinions expressed in this evidence. Scope of Evidence 5. Kontali Analyse was approached by NZ King Salmon late in 2011 to address the following question: Will demand exist in the global market for Chinook Salmon for the volume of salmon projected to be produced for NZ King Salmon's 9 proposed new farms in the projected timeframes for such production? 6. Kontali Analyse's response to that question is contained in the report titled "Production and Market Growth: Farmed Salmon, with a specific focus on Farmed Chinook (King) Salmon" ("Report") which is included as Appendix 2 to this evidence. 7. The purpose of my evidence is to provide a brief summary of the Report. Existing global demand 8. Production for farmed salmon has experienced a very high growth rate over the last year. In the summary at page 3 of the Report we state: During 2011 and 2012, the production growth for farmed salmon will in both years be showing double digit growth, primarily a result of the Chilean salmon industry experiencing a fast comeback, from a production crisis that brought production dramatically down during 2009 and 2010, but also a result of extremely good growth conditions in Norway.
2 9. We then go on to state, further down the summary at page 3 of the Report: The last half of 2011 and the first couple of months in 2012, confirms the ability that the various salmon markets has to absorb a strong growth in supply, with the second half of 2011 reaching an impressive 20 % global consumption increase, while the first quarter of 2012, has surpassed 30 %. 10. It is clear that existing global demand for salmon is able to absorb large increases in supply. Future global demand 11. Our analysis indicates that future demand for farmed salmon is likely to be greater than future supply. In the summary at page 3 of the Report we state: Looking not a 6-18 months perspective, where a close to record high supply increase will doubtlessly lead to pressure on prices, the demand for farmed salmon & trout in a longer perspective is likely to be stronger than the rate at which overall production can expand. 12. This leads us to conclude that future global demand for farmed King Salmon justifies NZ King Salmon's application to apply for additional water space to establish up to 9 new salmon farms in the Marlborough Sounds. In the summary at page 3 of the Report we conclude: 13. I support this conclusion. As a conclusion, we strongly believe that there will indeed be demand for an additional 10-12,000 tonnes of Chinook from New Zealand by 2020, while at the same time acknowledging that we can only go to a certain point in substantiating this by data and facts.
APPENDIX 1 - RECENT RELEVANT EXPERIENCE AND CONSULTING ACTIVITY UNDERTAKEN BY KONTALI Kontali Analyse Example of relevant Reference projects Kontali Analyse AS is a private, independent research company specializing in sector analysis within the global aquaculture and fisheries industry. Kontali Analyse was founded in 1993, and has since then developed to become one of the world s leading providers of statistics and analysis for the seafood sector. The core area of expertise has always been within the salmon segment, but for the past 10 years, several new areas have been incorporated in the coverage of Kontali Analyse. Regular surveillance of the pelagic sector, including the fishmeal/- oil sector is in place. And lately the focus has been expanded into the whitefish fisheries (groundfish) sector, including also a strengthening of the data- and analysis capacity on seabass/seabream, and other whitefish species in aquaculture, i.e. the larger commercial clusters in Asia and Latin America. The work of Kontali Analyse is founded on professional expertise and comprehensive information storage and retrieval systems, which form the basis for their databases. In addition, strong ties to key industry leaders and important seafood companies have been established, both through the wide range of subscriptions and the associated consultations between Kontali Analyse employees and the readers on covered topics. Through numerous projects, speeches, and workshops, where Kontali Analyse has been engaged to provide information and analysis beyond the scope of ordinary reports, sector expertise is gained and maintained. Examples of relevant experience, consulting activity 2011 Production and Market Forecast for farmed salmon & trout The project was undertaken for a large Latin American seafood group, assessing the industry trends and outlooks for potential investment purposes. The analysis presented the historic development and status in production and market distribution of all ocean-farmed salmonid species. Outlook for production, sales, market growth and price development presented with a 2-3 year perspective. 2010 Analysis of the Australian salmon farming industry, and trends in their main markets The project was undertaken for large industrial client, for potential investment purposes. Research and presentation of history on production, structure, processing/product forms, main markets constraints and opportunities in these, freight rates tariffs etc. Assessment of operational environment and costs level/structure compared to peer regions. 2008 Trends and Outlook Production of farmed salmon & trout The project was undertaken for the seafood branch of a large Asian business conglomerate. The analysis presented the historic development and status in production of all ocean-farmed salmonid species. Based on status and outlooks for the different salmon farming regions with respect to climatic suitability, regulatory regimes, environmental issues and health status, what are their respective growth perspectives on a short, medium term and long term. 3
4 2007 Aquaculture Down-under The report Aquaculture Down-under is an analysis of the Aquaculture in Australia and New Zealand. The project was ordered by an international logistic company, focusing on production development, distribution and industry structure. 2007 Key Market Structures for all Atlantic salmon producing regions, A project undertaken for a large integrated salmon farming group, seeking to establish a complete overview of where the salmon during the last two decades, has been produced, and where it has been consumed, at the same time analyzing 2005 An investigation of cost structure and international competitiveness of the salmon growing industry in Scotland, A project undertaken in companionship with Scottish/Norwegian consultancy firm, for the Scottish Executive Environment and Rural Affairs Department, highlighting differences and similarities between the Scottish, Norwegian, Chilean and the Canadian salmon industry. The cost structures, climatic differences, characteristics of the industry structure, marketing strategies etc. The report also included an analysis of the regulatory regime, the level of taxes and duties, environmental, sanitary and veterinary requirements, and the differences in competitiveness derived from such differences. 2005 Case study on US wild caught King salmon the positioning of California King Salmon, A project undertaken for a US legal advisor, preparing the case for a seafood federation in an anti-dumping dispute, focusing on price difference/premiums and marketing strategies behind various successful stories of niche market developments on seafood. Relevant experience; in-house based analysis Forecasting models: Kontali Analyse have been working with models to describe status and forecast the production development in the fish farming industry, including estimated need for feed/feed ingredients, mainly for Salmonids, but also for tropical whitefish species and seabass/seabream. The production-models are updated continuously, with many important inputs and production parameters, where feed consumption is one main outcome parameter from these modeling tools. These tools are applicable both on short and medium term forecasts (Based on live stock of on-growing fish, juvenile stocking trends etc.), and on longer term basis (Scenario-based modeling). Forecasting model range also include price modeling as of the latest couple of years, with assumptions and factors on both supply and demand side being considered. Salmon Market Analysis: An annual report published since the late 90- ties, covering the supply of salmon & trout to more than 30 various geographical markets, combined and seen in relation to general Macro-economic trends, and food and seafood consumption trends.
5 Regular publications/multi-client reports, covering Salmonids, in addition to pelagics, whitefish and tropical whitefish species in aquaculture, analyzing production development, production costs, profitability, industry structure, market trends and overall outlook.
6 APPENDIX 2 - KONTALI REPORT: "Production and Market Growth: Farmed Salmon, with a specific focus on Farmed Chinook (King) Salmon"