Chile Economy slider — 12 May 2016


Walker Rowe

People dream of going to Patagonia to fly fish for salmon and trout in the cobalt blue streams ringed by snow-capped mountains and steaming volcanoes.

This area of glaciers and fjords is a good place to farm salmon too.  Now that industry is taking a blow again as the red tide has shut it and all other fishing down too in that region of Chile.

Red Tide Disaster

Red tide is an algae bloom that can make people sick and in rare cases is fatal.  And it kills fish, lots of them. It shuts down fishing in the area too as the health authorities say people should not eat fish coming from contaminated areas.  It is a phenomenon that can last for months.

The situation is not unique to Chile. In the USA algae blooms are common. There are entire areas off the coast of Louisiana where the Mississippi River empties into the Gulf of Mexico and the Chesapeake Bay where there are no fish at all. That is blamed on nitrogen due to the excess use of fertilizer.  Of course the Mississippi River drains the vast agricultural section of American known as The Corn Belt. Nitrogen spurs the growth of algae which snuff out all life as they consume all the oxygen in the water.

This is particularly bad news for Chile’s export salmon market.  Salmon is Chile’s second largest export. The fish are raised in giant offshore pens mainly off the island of Chiloé which sits at the northern end of Patagonia, next to the port city of Puerto Montt.

As we explain in this article, small fishermen there have seized roads across the island as they negotiate how much the government will pay them while they are out of work.  Tourists and salmon exports cannot leave.  Stores on the island are running out of food.  

Impact on the Salmon Fishing Industry

Chile exports 800 million tons of salmon each year worth over $3 billion USD. 98% of what is produced is destined for exports.

Felipe Sandoval of Salmon Chile told El Mercurio that because the protesters are blocking the roads it could cost the industry $9 million per day.

Part of the damage, he says, is damage to the brand too, when the fisheries cannot supply their customers for prolonged period of time.

This is the second problem this year.  An algae bloom killed fish back in March.  Then the salmon fishers dumped those fish into the water, which the fishermen protesting today say helped cause the new red tide problem.

These fishermen and some environmental groups blame the red tide on the salmon fish farming industry.  Others say it is global warming or El Niño. No one can say for sure. Even before there was a fish farming industry and even before there was global warming there were red tides.

But environmentalists are clear on their opinions.

Who is to Blame?

The protesters are asking as part of their demands that the government make a study as to the connection between the salmon fisheries and the red tide.

The Colegio de Biólogos Marinos de Chile told the University of Chile radio that the red tide is caused by global warming. A U. Chile marine biologist dismissed that group as being sponsored by the industry and said the problem is the fish farming operation dumps too much nitrogen and carbon in the water as they fatten up the salmon by feeding them ground up fish. He also says that the government has set rules that would regulate the industry so that not too many fish are farmed, but the government has never actually enforced that.

The Oceana organization said that the Chilean Salmon fisheries use 500 times the antibiotics as the Norwegians do.  

National Geographic and others say that the growth of fisheries has been explosive, prices are falling, and no thought is given to having a sustainable system.

Alex Muñoz, director of Latin America for Pristine Seas National Geographic said, “The most important question is not who caused the red tide, but there is an environmental problem much larger than just the coasts of Chiloé that is caused by the intensive industrial fishing in Chile that has contaminated this area for more than 25 years and whose consequences we are still feeling today.”

The Corruption Connection

The situation with industrial fish farming here in Chile is closely related to that of the commercial ocean fishing industry.  This relation shows their political clout.

91% of the fishing quota here was given to nine families in Chile in the 2012 law known as the Ley de Pesca (Fishing Law) or Ley Longueira.  It was passed after over-fishing caused the fishing stocks to collapse.  That law gave the vast majority of fishing quotas to industrial fisheries who operate large fleets of large boats.  Contrast that with the artisan fisher, or artesanal in Spanish, who are fishermen who go to sea in small open boats.  

These commercial fisheries fish mainly for sardines, jack mackerel, and anchovies, much of which is ground up to feed to salmon and cattle.  Since this law was passed, which was supposed to help protect depleted fishing stocks, the number of species declared endangered has gone from 2 to 8. This caused one comic to joke that, “There are more fish in the grocery store than the ocean.”

Now two things have surfaced. First, it has been alleged that one of these nine families paid bribes to Jaime Orpis, who was a senator on the committee that has jurisdiction over fishing.  He has been forced out of the senate and the UDI political party. And then Pablo Longueira, who was the minister who proposed the law that bears his name, has been charged in a bribery scandal related to SQM mining company.  Longueria was the conservative candidate for the last presidential election.

Because of this bribery scandal, the Communist Party introduced a measure to overturn the fishing law.  Even President Bachelet says the issue needs to be revisited.  

Some people ask: if there are not enough fish in the ocean, why are Chilean fishing companies grinding up fish to feed to other fish and cattle?  But recent articles have suggested that situation might correct itself as fish protein has surged in price thus making it too expensive for such luxuries as turning it into cattle food.  Cows, of course, are supposed to eat grass.


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