Norwegian salmon aquaculture has in recent years realized high operating margins, which has prompted the introduction of a resource rent tax. Aggregate accounting data on operating costs and margins for the industry exist but these data do not allow a more detailed assessment of when profits are realized in the market. Higher frequency operating margin data is relevant to assess both the source of the profitability, and thus the justification for the resource tax, as well as implications for efficient harvest planning.
We show how annual data on operating costs can be used in combination with a model of higher frequency operating costs to derive higher frequency, i.e. monthly, estimates of operating costs and thus operating margins. The measure is constructed to be consistent with the official annual data but allows for a higher frequency assessment of costs and margins.
Efficient harvest planning implies that operating margins should be on average equal for each month of the marketing period of a cohort. Our estimates of operating margins show large deviations from this benchmark in recent years. Most of the high operating margins in Norwegian salmon aquaculture are realized at the end of the marketing period and during the transition of harvest across cohorts. This implies large efficiency losses where some months of the year have very low margins, while others have very high margins. The inefficiency can be explained by regulatory binding biomass restrictions preventing farmers from optimizing harvest plans across the marketing period.