Organic salmon farming–A profitable differentiation strategy

Abstract

This study examines the financial performance of six Norwegian salmon farming companies to investigate the benefits of differentiation through organic salmon production. Utilizing panel data from 2009 to 2020, the study analyses return on sales, prices, and production costs. The results show that the company that has differentiated parts of its production into organic salmon consistently achieves higher returns on sales. Notably, this company also maintains the lowest production costs despite organic farming’s typically higher expenses. This efficiency is seemingly attributed to the firm’s emphasis on “biological risk management,” leading to reduced salmon mortality rates. Contrary to Michael Porter’s differentiation versus low-cost strategy debate, this study indicates that a combined approach may be possible. The findings underscore the potential competitive edge of organic production in salmon farming and prompt questions about why it is not more common in the industry.