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Inarctica is Russia's largest producer of farmed salmon and trout. The company raises its fish in pens in the Barents Sea and in the lakes of Karelia rather than catching it. Its shares trade on the Moscow Exchange under the ticker AQUA.
Aquaculture is farming in water, and its economics obey the same laws. The fish grows for two to three years, consuming feed all that time, and feed makes up the bulk of the production cost. It cannot be sold earlier — it will not have reached market weight.
Hence the defining feature of the industry: biological risk. An outbreak of disease, an infestation of parasites or a sharp cold snap can wipe out the biomass in the pens, and that is not a month-long production stoppage but the loss of two years of growing.
The price of the finished fish, meanwhile, is set by the global salmon market, while feed and juvenile fish were historically bought abroad — which is why the company has been steadily building its own hatcheries and feed production.
Sea pens in the Barents Sea — the bulk of production.
Lake farms in Karelia.
Hatcheries that reduce dependence on imported smolt.
Strengths and weaknesses describe the business itself. Opportunities and threats describe what may happen around it.
It raises salmon and trout in pens — sea pens off the coast of the Barents Sea and lake pens in Karelia — and supplies chilled fish to retail chains and processors.
Fishing harvests wild fish, aquaculture raises it: juveniles are placed in pens and fed for two to three years until they reach market weight. This is closer to livestock farming than to commercial fishing — with the same disease risks and the same dependence on feed.
Because losing a pen means losing not a month's output but all the fish being raised in it — that is, two to three years of work and the feed invested over that time. This has already happened in the history of the industry.