Fish farmers disagree about hot water in key Tasmanian harbour

There's something fishy happening in Tasmania.

ASX-listed aquaculture companies Tassal and Huon are debating the health of Macquarie Harbour, an important salmon fishery on the apple isle's west coast.

Time will tell as to whether conditions in Macquarie Harbour will affect supply of Tasmanian salmon to the consumer.
Time will tell as to whether conditions in Macquarie Harbour will affect supply of Tasmanian salmon to the consumer. Photo: Eddie Jim

Investors have offloaded shares in both companies, with Huon and Tassal tumbling 17.9 and 4.2 per cent since the start of March. This compares with the broader market easing 0.3 per cent.

Huon - which posted a $1.3 million loss in the six months to December 31, compared with a $25.9 million net profit for the same period in 2015 – says a hot summer has zapped Macquarie harbour's oxygen levels. This has slowed the growth of salmon in the fishery, the company says, and will lead to a diminished harvest and earnings.

"This environmental uncertainty tempers our outlook," said chief executive Peter Bender when he announced the company's half year results late last month.

He added that Huon's operating earnings before interest, tax, depreciation and amortisation for the second half would be "less" that the $13.6 million the company reported for the same period in 2015.


But rival Tassal, which also farms salmon at Macquarie, says Huon's comments "do not reflect" its experience in the region, adding that overall fish deaths and growth had been in line with its forecasts.

"Environmental conditions are also in line with expectations," said chief executive Mark Ryan.

So who's right, and will there still be enough Tassie salmon to be served on dinner plates across the nation?

PAC partners analyst Paul Jensz says there is "definitely an issue" at Macquarie and describes the water temperatures as behaving almost like a cappuccino.

"You have the fresh water sitting on the top, which the fish don't mind going up to, but you don't have as much oxygen at the level. Then you've got the hot water that sits on the top of that and then you've cold water," Mr Jensz said.

"If you have too much of this hot water sitting just below the fresh water, you've only got a small band where the fish can swim around happily in and eat unthreatened.

"Whereas if it's quite a small depth that's when you feel a little bit more flighty and threatened and if you feel threatened you go into survival mode, not growth mode."

But Mr Jensz said the different companies could be having different experiences because of the location of their nets in the harbour.

"Huon's sort of middle and Tassal is up the end [closer to the Gordon river], so they're in a bit better position. There is a bit of difference but there is definitely some pressure on the area. It just needs to be managed."

And agribusiness advisor and investment banker David Williams – who bought Tassal for $42 million out of receivership and immediately floated the company in 2003 – says low oxygen levels could be easily handled.

"When I ran Tassal it was nothing to be able to move your nets around. In the past, you had to tow them because in order to harvest the fish, we always used to tow them into shore, so it's not so much a big deal."

If the nets couldn't be moved, Mr Williams said a company, which had a geographic spread could harvest fish from another region.

"The fish are not going to die. They might grow a bit slower but they should be fine."

In the meantime, a spokesman for supermarket chain Woolworths says it hasn't noticed any changes to its supply of Tasmanian salmon.

Rival Coles, meanwhile, said: "we wouldn't make any comment on a supplier's business."