Thanks to geographical conditions ideal for large scale cage aquaculture, Scottish Salmon Industry has grown incredibly in the last 20 years to reach more than 170,000 T in 2003.
Despite strong improvements in all parts of the rearing technology, the scale of the industry raises fears among environmentalists, risks for producers and more restrictive legislative evolution while consumer perception of Scottish Salmon quality needs to be maintained. For many professionals within the industry, the diversification of rearing systems appears necessary with the choice of investing in more off-shore or in inland technologies. In order to assess the comparative profitability of both systems, a technical design of a circular cage site located in a medium exposed area and a recirculating system (RAS), 70 % recycling, made of 5 individual systems have been developed on the same scale (1,000 T/year). With production costs of respectively £2.04/kg and £2.12/kg (Operating costs and depreciation), the preliminary designs and management analyses are consistent. Capital Costs are £2,060,000 and £4,103,000 to set up respectively a cage and a recirculating system while Operating Costs are close at about £1,800,000. A basic financial analysis shows that the cage system is far more profitable if sales price of whole salmon is identical for both systems. If environmental costs are internalized, the cage system is slightly less profitable. If risk cost is included, the cage system remains more profitable despite greater risks in operation. Variation of biological performance has only a minor impact on comparative profitability of both systems. However, from a premium price of 15 % on sale price of RAS salmon, RAS system has a greater profitability with a payback period of 4.2 years and a Net Present Value of £204,100 at 10 years. This premium on price could be obtained from greater freshness, regularity of outputs, reduced transport costs, environmental respect and new localization. RAS system needs a strong investment capacity and specific management ex-farm but has a real potential for high returns in the medium and long-term.