Salmon volumes won't ramp up in FY22 as the industry is unable...

Salmon volumes won't ramp up in FY22 as the industry is unable to draw upon it's inventory like it did in FY21. Any increase in revenues will be driven by prices, not volumes. In fact, my expectation is a decline in volumes in 2H22 vs 1H21 in addition to a decline in volumes on FY22 vs FY21. But we will stabilise going forward from here.

ABARES released in March a report saying the same effect. While I agree with their general sentiment, I think they have underestiated the long term price of salmon and would push that GVP line up a bit. Moreover, I think that we could see operating efficiencies to drive up volumes (e.g. growing larger smolt) and margins (e.g. improved feed choices like canola omega 3). And, I expect Tassal to pivot some of their fish away from domestic retail (low margin) and to wholeale and export (spot pricing) like @McQuade has also noted.
https://www.awe.gov.au/abares/research-topics/fisheries/fisheries-economics/fisheries-forecasts#salmonids


@bug1 I think your comment on prawn margins are prescient, we really don't know. They have moved around a bit. Management have said that the previous low margin point was a temporary phenomena as they are scaling up. My modelling has been around the $5/kg EBITDA and I feel I have been conservative.

But, it's uncertain. I find it difficult to break down the unit cost of production for prawns as there is little information out there - or it's really dated. The capital costs and depreciation are the largest expenses - however this is like a Lego modular set up. Once you have the land, you just built out the ponds. Cost of capital will be higher now due to labour costs etc, but that'll probably come down. The next greatest cost is feed input. Interestingly, the use of Novacq from Ridley is based on marine microbes (micro algae) which is not dependent on grain-based feeds (very expensive now) or ocean-caught fish meal (unsustainable and expensive). On the flip side, it's very energy intensive to grow due to the need for LCD lighting, huge filters and pumps. The third largest cost would be labour (higher) and electricity (very high, but solar farms may reduce ongoing costs). In the long term I am confident of Tassal being a low cost producer, in the short term I really just don't know.

On the pricing side, theoretically we should be seeing prices go up for prawns. Conversely, it seems the major supermarkets have been discounting them - not sure why. With prawn trawlers facing higher fuel costs, thought there may be less prawns going into the wholesale markets and having an indirect impact. Maybe it's just seasonal due to low demand - so pricing may be lower on lower volumes - and most the inventory is frozen not fresh anyway.

Hard to untangle all the moving parts - but the brokers are pretty optimistic on the 12-24month time frame which is not my area of expertise; and I am pretty optimistic on the 5yr timeframe. 9 days left in the half and only 2 months until reporting.