Chile Salmon Virus Saps Farms With ‘Hardest’ Crisis

Salmon farmers in Chile, struggling to eradicate a fish-sickening virus, may be at the start of their worst year yet as the disease spreads and the credit crunch slashes funding, the nation's fishing regulator said.

"It's the hardest crisis they've confronted," Felix Inostroza, Chile's national fishing director, said today in an interview in Santiago. "Everything happened at once."

Chile, the world's second-biggest salmon producer, may cut output more than 30 percent this year because of Infectious Salmon Anemia, said German Serrano, an analyst at BanChile Inversiones in Santiago. The virus caused third-quarter losses at Oslo-based Marine Harvest ASA, the world's largest salmon farmer, and Puerto Montt, Chile-based Multiexport Foods SA.

Outbreaks of the disease, which began afflicting fish in southern Chile in 2007, are intensifying in northern Aysen, the country's second-largest production zone, Inostroza said. Warmer weather during the Southern Hemisphere's summer helps the virus spread, he said.

Salmon anemia has crippled production in an industry that more than tripled exports over a decade to $2.2 billion in 2007 as companies crowded the fjords of southern Chile with salmon cages. The virus, which doesn't affect humans, kills some salmon and weakens others, making the fish more vulnerable to other diseases.

Revenue also is falling as a recession cuts demand in the U.S., Chile's second-largest market for the fish after Japan, Serrano said.

Some companies began this year with cages ruptured by waves and winds from a storm at the end of December, Inostroza said. Companies may have recaptured as many as 100,000 fish of about 690,000 salmon that escaped in southern Chile, Inostroza said.

About 2,000 fish may have gotten out of a production site suspected of having the virus, Inostroza said. The escape doesn't pose a "significant risk" to producers, Alicia Gallardo, chief of the regulator's Aquaculture unit, said today in an interview.

Mainstream Group, part of Norwegian salmon farmer and fish- feed producer Cermaq ASA, is trying to recapture about 60,000 salmon that escaped from a site holding about 190,000 fish, Francisco Ariztia, chief operating office for Mainstream Americas, said today in a telephone interview from Santiago. The rough weather was "extremely unusual," he said.

The virus will cause a "substantial drop" in production this year in Chile, where output at Mainstream's unit also will fall, Ariztia said. Mainstream doesn't have production in northern Aysen, where outbreaks have increased, he said.

Production by Chile's salmon farmers won't recover until 2011, he said.

Last year, companies harvested virus-afflicted underweight fish that had been scheduled to be part of this year's production, analyst Serrano said.

"Companies will have to keep eliminating fish and harvesting early -- which is practically selling at a loss," he said. The effect of the disease "is always going to be a risk."

Chile exported 397,041 tons of salmon and trout in 2007, up 2.6 percent from a year earlier, according to the Association of Chile's Salmon Industry AG. Norway is the world's biggest salmon exporter.