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Salmon Industry
Sustainability Report 2015

Our society is facing challenging times, where borders are becoming increasingly blurred and new ideals are overtaking old paradigms. A time where advances in technology have multiplied the speed and number of contacts between people, and where access to information and transparency are increasingly valued. New times require new responses.

This is SalmonChile’s vision, in order to adapt to current expectations and the changes required by society today. We know that salmon farming and other industries that use natural resources must turn around and build operational standards that indicate transparency to their target audiences.

We know that we have made mistakes, and that many times we have not been in tune with our stakeholder’s requirements. We also know that we have a long way to go to build solid links with local communities - despite the efforts of our members - and that we must improve our communications.

We know that it is not an easy task, nevertheless, we are ready to face the challenge and improve our relationships with local communities by improving our communication and bringing them closer. We want to build strong links.

We are currently working on a strategic design that will strengthen our links with our target audience, so they might better understand us, and with these communities jointly build measurement parameters for various key operational targets.

This industry produces many positive benefits, but a plan is being developed to build stronger links. We know that generating quality jobs is not enough. Member companies have trade unions, benefits and departments dedicated to local communities. However, we still need more creativity and closeness.

Salmon producers, suppliers and employees form a cluster that is the most important economic activity in southern Chile by far, and is a leading national cluster, which obliges us to lead these changes.

Salmon farming is the third largest economic activity in Chile and the principal activity in the south. It has generated over 71,000 jobs and over 4,000 small and medium-sized enterprises are involved in this productive activity. It currently represents 6% of Chile's exports, 84% of sea-food exports and 36% of general food exports. But that is not enough.

We are proud of what we have built together as an association over the past 30 years, despite our errors. We know that the future of this industry requires operational sustainability and flexibility, and the development of confidence from various stakeholders.

Our first attempt to build that confidence and contribute to an informed and purposeful debate is consistent with that vision. Therefore, we are now making available to the community the First Salmon Industry Sustainability Report. It contains the principal environmental, health, social and employment indicators that apply to the Chilean salmon industry, and aims to increase transparency and inform society in general, but particularly communities that are local to our operations.

SalmonChile believes that explaining its operations and how it contributes to generating financial and social value within Chile’s southern regions is very valuable, and valuable to Chile’s international image, as Chilean salmon is currently sold into 75 markets, where it has become a great ambassador.

This is an initial step, demonstrated by our commitment today to produce the FIRST SALMONCHILE SUSTAINABILITY REPORT in 2017 covering 2016. This First Sustainability Report published today marks the beginning of a journey with no turning back.

Methodology

The Sustainability Report provides information regarding relevant health, environmental and employment indicators, detailed by industry and by company. The Sustainability Report was compiled from information collected from SalmonChile member companies. However, the Protocol governing the Collection and Release of Company Information for the Salmon Technological Institute (the "Protocol") also applies to SalmonChile, which aims to strictly comply with information confidentiality and free market standards and principles. The decision to make an exception to the aggregation criteria contained in the Protocol was taken with advice from free market lawyers, considering that: (i) the indicators will report to the community the performance of each company regarding health and environmental issues, in order to encourage each company to improve such variables and even encourage competition between them in such areas; and (ii) the information will be over one year old. The Association believes that the benefit to the industry provided by the Sustainability Report will be to improve key aspects of the industry’s sustainability performance over the long term, and therefore justifies this special treatment of disaggregating historical information.

Preparing this first sector sustainability report required the following stages to be completed, which were validated by the SalmonChile Board:

1. Analysis, evaluation, and definition of scope and content:

This first stage defined the strategic guidelines and indicators, adding global indicators for the salmon industry and for management at each company. Furthermore, the preparation agenda and the key contents were defined according to the requirements and other formal definitions.

2. Data and information collection, preparing texts, charts and diagrams:

This stage covered specific field work, collection, consolidation, and contents preparation and adaptation according to the parameters defined previously. The preparation process covered developing a preliminary draft, and the final review and report approval process.

3. Presentation and improvement plan:

The first sector sustainability report presents the information required to continue moving forward in the communication of its financial, social and environmental performance and in adopting other standards regarding social issues.

The report will be publicly presented to various stakeholder groups and published on the Association’s web page.

Also, the Association is committed to an improvement plan, which will enable the organization to transparently report its productive processes over the medium term, in order to produce a more extensive Sustainability Report.

Employment

The Chilean salmon industry is the most important economic activity in Chile’s southern area (Los Lagos Region, Aysen Region of General Carlos Ibanez del Campo, Magallanes Region and Chilean Antarctica) and a leading national activity.

This economic development has been very significant for southern Chile, in addition to its great contribution to regional employment. The industry currently employs over 71,000 people, with 31,000 direct employees and 40,000 indirect employees. Moreover, it provides employment for a significant number of women and young people.

The responsibility attached to employing thousands of people has prompted the industry to provide intense training and qualifications for its employees, so providing them with better skills and improving their quality of life.

Employment in the salmon industry as of December 2015 is presented as follows.

Salmon Industry
Workforce
2015
Indirect Employees Trabajadores Indirectos Industry Total
Women 9.430 7.650 17.080
Men 22.005 32.093 54.098
Employees aged between
18 and 29
11.088 13.205 24.293
Employees aged between
30 and 44
13.554 15.864 29.418
Employees aged between
45 and 64
6.705 10.487 17.192
Employees aged
over 65
88 187 275
Total
Employees
31.435 39.743 71.178
Source: Member companies of SalmonChile A.G.

Unemployment Rate

The salmon industry is located in regions where figures are below national indicators, so it actively contributes to the economic development of southern Chile.

Source: Chilean Central Bank

Regional Economic Activity Indicator (INACER)

The development of the salmon industry since the 1980’s was based on the advantageous natural conditions that the country offers, which have been very important for the economic and social development of southern Chile.

Source: The Chilean National Statistics Institute

Constant improvements have been achieved over time in product quality and safety control, leading to increased value added, packaging, presentation, transport, storage and port facilities, among other factors. These have also achieved greater financial mobility for other services and generated an intense productive chain with other sectors, which employ over 4,000 suppliers and service providers throughout the value chain.

The industry has also favorably affected its local communities, with lower poverty rates, increased family incomes, population retention and increase, and regional employment.

Production

The United Nations has estimated that world population will become 9 billion by 2050. The FAO has indicated that the continuous increase in world population will require an additional 37 million tonnes of sea-food products by 2030, over the current 48 million tonnes - in order to maintain current consumption per capita, considering that traditional fishing has reached its maximum production level and responsibly managed aquaculture represents the only solution to fill this gap.

The sector’s dynamism and the associativity of the industry has enabled salmon farming to become a leading engine of export growth over the past 20 years.

The production model has been refined over the past few years in order to protect sanitary conditions and progress toward sustainable harvesting.

Official production information for the sector over the last 10 years:

Atlantic salmon Pacific salmon Rainbow trout King salmon Total (TONS)
2005 385.779 102.494 122.962 2.904 614.139
2006 376.476 118.221 150.608 1.958 647.263
2007 331.042 105.477 162.406 1.910 600.835
2008 388.847 92.317 149.411 72 630.647
2009 203.067 133.308 149.741 596 486.712
2010 122.744 114.338 215.367 452.449
2011 264.354 159.585 224.569 648.508
2012 398.316 159.745 262.674 820.735
2013 490.300 148.100 153.800 792.200
2014 644.459 158.947 151.773 955.179
2015 606.453 133.108 94.607 834.168
Source: Sernapesca

Participation in Exports

Salmon has become a fundamental pillar in the national strategy of transforming Chile into a significant food source. As evidenced by salmon exports already representing 6% of total Chilean exports.

Source: Member companies of SalmonChile A.G.

Non-Copper Exports

The global demand for healthy proteins has been steadily increasing. Therefore, Chilean salmon appears to be a valid choice as a protagonist for providing food to the world.

Source: Chilean Central Bank

Over 75 countries consume Chilean salmon, close to 10 million servings each day, which puts the industry under the spotlight as it is the third largest Chilean exporter and brought in over US$ 3,500 million in 2015.

Exports

Sustained growth in the population, in family incomes and the requirement for a healthy diet based on foods rich in proteins with high nutritive value, require the markets to demand products that meet the highest standards of quality and safety, in order to guarantee their source and the sustainability of their processes and the environment.

Since its inception, the salmon industry has been committed to exporting first class products that comply with the most demanding global standards, in order to successfully provide three species to over 70 countries, and leading markets such as Japan, USA and Brazil.

Details of salmon and trout exports are as follows:

Source: Member companies of SalmonChile A.G.

Municipal Licenses

The industry contributes directly to municipal resources by paying for municipal aquaculture licenses in each corresponding community. This is an important contribution that helps municipalities to deal with various social policies, generate projects and contributes to local employment.

Licenses were acquired from 38 communities in southern Chile, totaling UTM 103,944 (approx. Ch$ 4.8 billion as of December 2016). The same figure was paid to the National Fund for Regional Development, which totals UTM 207,888 in 2015.

The detail by community is as follows:

Source: Member companies of SalmonChile A.G.

* According to the law, aquaculture concessions required a license of 14 UTM per hectare in 2015. This rose to UTM 17 in 2016 and to UTM 20 per hectare in 2017.

Productive Efficiency versus Other Animal Proteins

Salmon is one of the most efficient and effective protein sources in the world.

When various protein sources and the sustainability of their production are compared, salmon ranks as one of the best in the world, not only in the conversion and the edible proportion, but also by its carbon footprint and energy retention.

All these positive features are a source of pride for the Chilean salmon industry, and position our product as one of the world's healthiest proteins, with one of the smallest footprints. This reinforces our commitment to the sustainability challenge.

FSource: From Fishing to Sustainable Farming - Atlantic Salmon. The Super Chicken of the Sea

Energy Conversion (FCR)

This indicator measures the productivity of protein production methods. It indicates the number of kilograms required to increase the weight of a live animal by 1 kilogram.


Edible Proportion

This is calculated by dividing the edible proportion of an animal by its total weight and is expressed as a percentage.


Energy Retention

Energy retention describes the efficiency of a product to retain the energy provided by its food. It is expressed as a percentage.


Carbon Footprint

The carbon footprint measures the total greenhouse gas emissions caused directly or indirectly by producing a product. The carbon footprint is measured in kilograms (kg) of carbon dioxide equivalent (kgCO2e) per edible kg of the product.