Economic Geography

ISSN: 0013-0095 (Print) 1944-8287 (Online) Journal homepage: http://www.tandfonline.com/loi/recg20

Global Salmon Networks: Unpacking Ecological

Contradictions at the Production Stage

Felipe Irarrázaval & Beatriz Bustos-Gallardo

To cite this article: Felipe Irarrázaval & Beatriz Bustos-Gallardo (2018): Global Salmon Networks:
Unpacking Ecological Contradictions at the Production Stage, Economic Geography, DOI:
10.1080/00130095.2018.1506700

To link to this article: https://doi.org/10.1080/00130095.2018.1506700

Published online: 09 Oct 2018.

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 Global Salmon Networks: Unpacking

ECONOMIC GEOGRAPHY
Ecological Contradictions at the
Production Stage

Felipe Irarrázaval Firms’ strategies for turning nature into commodities

abstract
Geography Department are heavily oriented toward reducing the ecological
University of Manchester indeterminacy of the production process by control-
Manchester M13 9PL ling its biophysical properties to ensure that nature
UK commodification leads to a profitable business.
felipe.irarrazaval@manche-
However, research on global production networks
ster.ac.uk
(GPNs) has not focused on firms’ strategies in con-
trolling the impacts of biophysical properties on the
Beatriz Bustos- production network’s organization. This article aims
Gallardo to fill this gap by reviewing the literature on GPN and
Department of Geography resource geographies on nature’s transformation into 1
University of Chile
commodities to show how, in resource-based indus-
Santiago 8331051
Chile tries, ecological contradictions establish the territorial
bibustos@uchilefau.cl embeddedness and value dynamics of the production
network. This article empirically examines the pro-
duction of Atlantic salmon in Chile and how firms’

00(00):1–20. © 2018 Clark University.

strategies for handling the ecological contradictions
after an economic crisis (infectious salmon anemia
Key words: virus crisis) changed the spatial production network’s
global production networks
organization and constrained the value-creation pro-
natural resources
ecological contradictions cess. The results of this work aid in the understanding
territorial configuration of firms’ strategies at the production stage as drivers
value dynamics of the continuities and changes in production net-
salmon production works. Finally, the connection between value dynam-
ics and ecological contradictions opens a set of
challenges to this research agenda. www.economicgeography.org
 ECONOMIC GEOGRAPHY
Acknowledgments
Funding for this research was
provided by Ministry of
Education, Government of
Chile National Commission
for Scientific and
Technological Research
(CONICYT) scholarships
program (Becas Chile) and
Fund for the Promotion of
Scientific and Technological
Development (Fondecyt)
[1160848]. A previous
version of this article was
presented at RGS-IBG 2017
2 conference at the paper
session “Advancing global
production networks
research: progress and
prospects.” Thanks to the
convenors of the session, to
the people of the audience
that gave us feedback, the
editors of this journal, and
the three anonymous
reviewers, all of whom
helped us to improve this
article.
The value of global salmon volumes has quadru-
pled between 2004 and 2016, and reached 14.4
billion US dollars in 2016.1 This valorization of
salmon is grounded in the connection between the
producing countries (Norway, Chile, Canada, and
Scotland, in order of Atlantic salmon production)
with wide consuming regions such as South
America, Asia, Europe and North America (Marine
Harvest 2017a). Considering increasing protein de-
mand and resource depletion of native fisheries, the
salmon industry has become, for international orga-
nizations, a central component of global food secu-
rity policy (Food and Agriculture Organization
[FAO] 2016). In that context, Atlantic salmon
shines, given its flexibility to adapt to different
ecosystems and its richness in omega-3 and fatty
acids, which make it a perfect choice for protein
production. Salmon is also considered an elegant
and valued food, and its consumption has increased
worldwide with its use in sushi and specialized
gastronomy.
However, the ecological fragility of salmon produc-
tion has been buried under its tale of economic success.
The production of seawater conditions for salmon
farming places a great deal of stress in the natural
ecosystems in which production occurs and the man-
agement of several salmon diseases. As a result, the
history of salmon production in exotic places such as
Chile, the world’s largest producer after Norway, is rife
with ecological problems, which have had a noticeable
impact on salmon production. The most important
juncture was the infectious salmon anemia (ISA)2
virus crisis in 2008, when mortality rates reached
over 90 percent for Atlantic salmon, and salmon
firms lost billions of US dollars (Alvial et al. 2012).
Firms’ strategies for handling the ecological contra-
dictions related to transforming nature into commodi-
ties were at the root of the ISA crisis; consequently,
producers and the state changed their practices regard-
ing salmon production (Bustos-Gallardo and
Irarrázaval 2016). Today, salmon producers in Chile
continue to address those contradictions (see “The ISA
Virus and the Ecological Contradictions of Atlantic
Salmon Production”). We understand ecological con-
tradictions as two opposing forces that work by
1
According to Marine Harvest (2017a), 12.5 billion euros
approx.
2
ISA is a viral disease in Atlantic salmon that causes critical
mortality rates in salmon farms.
 Vol. 00 No. 00 2018

transforming nature into commodities. On the one hand is the biophysical composition of
nature, which resists commodification by imposing obstacles to production (Boyd,
Prudham, and Schurman 2001; Bridge 2009). On the other hand are the firms that set up
complex productive strategies for making the transformation of nature as profitable as
possible. These two forces compose the internal logic of transforming nature into
commodities.
This article contributes to the literature on global production networks (GPNs) with an
innovative look at how the ecological contradictions affecting the production stage shape
the network in terms of territorial configuration and value dynamics. To do so, we ask how
ecological contradictions affect a resource-based GPN. Despite the fact that the complexi-
ties related to transforming nature into commodities (e.g., an Atlantic salmon into a tradable
good), have concerned economic geographers over the past decade (Hayter, Barnes, and
Bradshaw 2003; Hayter 2008; Bridge 2009; Bakker 2012), there is a lack of analysis
regarding the incidences of nature transformation for the geographies of production.
Particularly within GPNs3 (Coe et al. 2004; Coe and Yeung 2015), a body of
research exists about natural resources (Bridge 2008; Havice and Campling 2013,
2017; Gibson and Warren 2016; Baglioni and Campling 2017; Bridge and Bradshaw 3
2017; among others) that has expanded the key ideas of GPNs to analyze how the

GLOBAL SALMON NETWORKS

materiality of different natural resources shapes the process of coupling global net-
works and regional assets. However, this body of research has been more focused on
circulation issues than on the production processes of resource-based activities
(Baglioni, Campling, and Havice 2017). As a result, materiality has been mainly
confined to complexities related to access to different sources of natural resource
(see “GPNs and Natural Resources”). Instead, we propose an examination of the
production stage—and the ecological contradictions that arise there, when natural
resources are transformed into different commodities—and an analysis of how firms
manage production to control for nonhuman-related issues that constrain production
(Boyd, Prudham, and Schurman 2001; Prudham 2009).
By linking ecological contradictions and GPNs, our position differs from those of
many resource geographers who have engaged with GPN. Rather than answering our
research question by demonstrating how resource distribution and quality shape the
strategic work of firms in GPNs, as other work has done for guitars (Gibson and
Warren 2016) or oil (Bridge 2008; Bridge and Le Billon 2012), we show how firms’
strategies for controlling nature’s transformation into commodities at the production
stage modify the production networks in two different ways. First, we analyze how
firms must modify the territorial configuration of the production network. Here we use
the term territorial configuration4 for analyzing the horizontal dimension of a produc-
tion network in terms of spatial scope (Coe and Yeung 2015) and for highlighting the
spatial composition of the fixed elements of the production network. Second, our
article shows how the ecological contradictions impact value dynamics. Here we
follow GPNs’ definition of value, which refers to the dynamics (creation, enhancement,
and capture) of economic rent along the production network (Coe et al. 2004).
The empirical evidence supporting our theoretical proposal is based on the case of the
global salmon industry, particularly the firms that produce salmon in Chile, because the exotic

3
Here, we also consider some works that are based on global value chains (or GVCs) or global
commodity chains that consider GPNs as well.
4
This term differs from territorial embeddedness (Hess 2004), which highlights how economic actors are
anchored to the social dynamics that exist in each place. Instead, territorial configuration focuses on an
analysis of the spatial scope of production networks in a general sense.
 ECONOMIC GEOGRAPHY

nature of salmon in the southern seawaters of Chile provides a unique dynamic for ecological
contradictions. Methodologically, this article is based on three main data sources. First, we
use interviews with eighteen salmon firm owners and managers, primarily representing firms
that produce Atlantic salmon only, and are directly engaged in global markets; four of them
are among the top ten salmon producers in Chile, and two of them are leading firms globally
(following the data of Marine Harvest 2017a). Furthermore, we interviewed three salmon
technicians to understand specific issues and three private actors who work in the field of
salmon services. Additionally, four public-sector officers were interviewed to analyze the
institutional context before the ISA crisis and the institutional change after the crisis. The
interviews were undertaken between November and July of 2014 in Puerto Montt, Santiago,
and Valparaiso. All the interviews were analyzed through content analysis by means of
emergent categories following the grounded theory approach. Second, a detailed press review
of media focused on salmon production (Aqua; Salmon Expert) was conducted for seven
years. This information was considered only to verify the interviewees’ information and
clarify technical concepts and data. Third, we checked annual reports of salmon firms
(Cermaq, Marine Harvest, and AquaChile) and other specialized databases, all of which
4 are referenced within the article. Altogether, these data sources were utilized for an analysis of
the salmon production network. The article is structured as follows: the next section discusses
the theoretical framework that links the GPN and ecological contradictions; this is followed
by a section that empirically characterizes how ecological contradictions shape the production
networks of Atlantic salmon in the case of Chile; and finally, the last section outlines the
implications of our argument for GPN literature.

Linking GPNs and Ecological Contradictions

GPNs and Natural Resources
The core of the GPN framework relies on the strategic coupling of global networks
(i.e., lead firms, suppliers, and markets) and regions (i.e., territorialized politics and social
relations, technology, and industrial organization) (Coe et al. 2004; Coe and Yeung 2015).
The GPN approach proposes three main interrelated conceptual categories to understand
the organization of production in the global economy: power, embeddedness, and value
(Henderson et al. 2002; Coe et al. 2004; Coe and Yeung 2015). Power is understood in a
relational sense and is mainly thought of as one actor’s ability to change another’s
behavior as well the ability of one actor to resist changes. Embeddedness refers to the
different realms—such as societal, network, and territorial realms (Hess 2004)—to which
global networks are linked, particularly highlighting the territorial realm and the different
implications they have for structuring production networks in spatial terms. Value is
related to different forms of economic rents, following Kaplinsky (1998), which are
mobilized through exchanges in market and nonmarket transactions and which must be
understood in three different forms. The first is value creation, understood as the
development of a profitable economic activity based on delivering specific products or
services. The second is value enhancement, understood as an increase in the economic
return derived from this product or service as a result of value-adding processes. The third
is value capture,5 understood as the capacity of local firms and workers to capture the
created and enhanced economic rent at the local or regional scale.
5
In this article, we follow the definition of value from the GPN in terms of economic rent. Even though
some works from the GPN (Henderson et al. 2002; Coe et al. 2004) state that the approach considers
both the Marxist definition of value and economic rent from Kaplinsky (1998), subsequent GPN
literature progresses to engage with the Kaplinsky’s definition of economic rent.
 Vol. 00 No. 00 2018

Within this approach, an active body of research analyzes how the global economy
introduces natural resources into production networks. The seminal work of Bridge
(2008), followed by Bridge and Le Billon (2012), shows how the materiality of oil
shapes production networks in a similar way that Bridge and Bradshaw (2017) show
for natural gas. The key argument when analyzing resource-based GPN is that extrac-
tive firms face an imperative of accessing natural resources with better quality and
quantity (i.e., materiality), but how firms control and guarantee access to those sources
(i.e., territoriality) is crucial. This argument, which is critical for the extractive sector,
pushed a research agenda, pursued by many scholars (Steen and Underthun 2011;
Santos and Milanez 2015; Stephenson and Agnew 2016).
Although those analyses have largely focused on the extractive sector, minerals and
hydrocarbons, the concern about resource access and control has expanded to biologi-
cal industries, that is, renewable resources. For example, Gibson and Warren (2016)
analyze the relevance of timber for the acoustic guitar GPN, focusing on how the
scarcity of appropriate timber for manufacturing acoustic guitars has changed GPNs
and how the changes in environmental regulations have shaped firms’ decisions.
Similarly, Faier (2011) focuses on analyzing disarticulation processes and natural– 5
cultural ecologies along the commodity chain of the matsutake mushroom. Havice

GLOBAL SALMON NETWORKS

and Campling (2013) also contribute an analysis of how dis/articulation dynamics are
critical for linking tuna extraction and the development of small island states. Those
analyses highlight precisely how access to and controls over strategic resources are
critical for each GPN organization as well as for territorial embeddedness, power
relation, and network organization. In other words, if firms or producers cannot
guarantee access to resources, they cannot enter the production network. We propose
an advancement of these ideas by looking beyond access to strategic resources, at the
challenges at the production stage related to how firms handle the transformation of
nature into commodities.
Current research about resource-based GPNs has handled the problem of nature’s
transformation by means of materiality and territoriality (following Bridge 2008;
Bridge and Bradshaw 2017). Even though the relation of materiality with resource
access and control is critical, the ecological contradictions that underpin the transfor-
mation of different materialities into commodities entail a wide range of complexities
and challenges for firms and production networks. Those complexities mainly arise at
the production stage, but the GPN/GVC literature about natural resources has been
concerned with circulation and exchange issues rather than production (Baglioni,
Campling, and Havice 2017). A focus on the latter is critical for analyzing the
challenges and feasibility of transforming nature into commodities, because ecological
contradictions are clearest at the production stage. The next section examines this.

Nature Production and Ecological Contradictions

A contradiction must be understood as two simultaneous and (at least apparently)
opposed forces entailed in a particular process or entity (Harvey 2014). Here, we
specifically analyze the contradictions related to the process of transforming nature
into a commodity, which we differentiate from James O’Connor’s (1998) argument
about the second contradictions of capitalism. While O’Connor’s seminal work opened
the debate on how the conditions of production—which consider the environment,
urban infrastructure, and human labor force—impact capitalist production, we consider
ecological contradictions to be different because they also entail the practices of
capitalist firms for handling production conditions and maintaining high rates of profit.
 ECONOMIC GEOGRAPHY

Thus, we analyze how the process of transforming nature into commodities is ground-
ed in two opposed forces. One force consists of the firms seeking to make the production
of natural resources as profitable as possible, and the other force is made up of the
different obstacles, opportunities, and surprises that nature presents to capitalist produc-
tion (Boyd, Prudham, and Schurman 2001). This premise implies that firms are forced to
focus on the biophysical properties and processes mobilized during the production
process. Animals and vegetables must mature under certain ecological conditions (e.g.,
virus control, bioclimatic conditions, and limited density) until reaching commercial
value; this is critical for keeping them healthy and alive until harvest or slaughter.
Capitalist firms attempt to adjust and control the biophysical properties of wild nature
for productive purposes, but their ability to do so is limited by nature itself. Following the
work of Altvater (1993), Bridge (2000) explains how firms struggle against those limits to
ensure capital accumulation, defining ecological contradictions as a way of capturing the
structural and logical relationship between commodity production and the natural environ-
ment, highlighting in particular the tensions inherent in ensuring, for the sake of produc-
tion, specific ecological conditions that “resist commodification” (Bridge 2000, 239). Even
6 though we agree with this definition, we deem necessary a deeper look into how the other
side of the tension—firms—overcomes such resistance, because it is critical for the success
of the business and consequently the shape of the GPN.
Whereas nature might resist commodification, capitalism has a long history of
“successfully resolving its ecological difficulties” (Harvey 2014, 246). In other
words, firms in a capitalist context have been capable of overcoming ecological
resistance to production by changing the way in which production is organized. For
this reason, Moore (2015) notes that ecological contradictions are key moments in
which capitalism, as an ecological regime, must redefine its ability to produce and
realize value in nature.6 Thus, to understand the ecological contradictions of transform-
ing nature into commodities, it is necessary to analyze beyond the boundaries of
capitalist production established by nature. The point is to identify how firms organize
sophisticated technical improvements and production processes to overcome the fron-
tier of commodification resistance and perpetuate capital accumulation.
The collision between the ecological conditions that resist commodification and the
firms’ strategies to overcome such conditions is the cornerstone of ecological contra-
dictions. As agrarian political economy has shown, capitalism’s history is full of examples
showing how ecological contradictions have shaped the production process (Bernstein
2010). The long history of green revolutions demonstrates how capitalism has largely tried
to control nature to increase agricultural production despite soil exhaustion. Such intensi-
fication in production must be understood not only in relation to the spatial expansion of
the agricultural frontier but also in relation to a variety of new agro-chemicals to fertilize
soil, control plagues, and boost productivity rates (Patel 2013; Moore 2015). This process
is also critical for understanding the shift from small and midsize animal production to
large-scale industrial production in which a series of productive technologies have been
deployed to increase animal productivity (Weis 2007, 2013).
Firms’ strategies for controlling nature are not limited to controlling biophysical properties
by means of technological changes but also entail modifications in interfirm relations and

6
Although Moore (2015) understands that value is created through the labor process, our interest here is
to show how nature transformation shapes production networks through the concepts of GPN literature.
Thus, while we consider that the ways in which this definition is related to and contradicted by GPN/
GVC definitions must be discussed, as Starosta (2010) and McGrath (2018) do, we do not engage with
this debate in this article.
 Vol. 00 No. 00 2018

firm–state relations. In the case of poultry industrialization in the US, for example, progress
was contingent on biological intensification in production, which also entailed a progression
toward vertical integration in agro-business firms (Boyd 2001). In the same way, different
institutional arrangements have been developed for controlling and ensuring production
(Parenti 2015), as shown in the salmon industry (Bustos-Gallardo and Irarrázaval 2016)
and in tuna (Havice and Campling 2013) or copper production (Bridge 2000). This process is
relevant to biological production because it is critical for controlling the wide range of viruses
and bacteria within the environment—and not only at the individual firm level, because virus
outbreaks do not distinguish among private property.
All of these examples show how firms handle ecological contradictions using
rationalities and strategies. Firms’ strategies are defined as the set of actions, for
example, changes in technical and sanitary standards, spatial reorganization of produc-
tion, modification of firm–supplier relations, changes in consumption markets, and
advanced harvesting or changes in seeded species amounts, that firms deploy to control
ecological contradictions. Analyzing ecological contradictions from a GPN perspective
is not a whim for understanding nature–society relations, but rather an analytical
framework for understanding how nature’s obstacles shape GPNs’ organization. For 7
example, the spatial organization of productive areas and technical procedures are

GLOBAL SALMON NETWORKS

carefully adjusted to handle ecosystem exhaustion, sanitarian risk, and growth rates.
Even though GPN literature has focused on firm strategies, particularly GPN 2.0
(Coe and Yeung 2015), GPN literature focused on resource-based economies has not
engaged with how firms define strategies for managing ecological contradictions or
their effect over the GPN. Conceptual contributions have been oriented in such a way,
for example, materiality and territoriality (Bridge 2008; Bridge and Bradshaw 2017),
but they are not sufficiently critical regarding firm strategies for solving ecological
contradictions at the production stage or the ways in which ecological contradictions
shape different production networks. For this reason, we link the ecological contra-
dictions with the GPN’s territorial configuration and value dynamics concepts, which
show critical changes because of ecological contradictions. In the next section, we turn
to this set of questions by looking at the case of the global Atlantic salmon production
network and the related firms’ strategies for handling ecological contradictions.

GPNs of Atlantic Salmon and Ecological Contradictions

Aquaculture is a vibrant field for analyzing ecological contradictions because it is a
relatively new area of food production. In less than thirty years, aquaculture production
has almost matched fisheries’ production for food consumption (FAO 2016), and
farmed fish are expected to satisfy 62 percent of the global fish demand by 2030
(World Bank 2013). The switch from fisheries to sea farming involved a learning
process oriented toward controlling fish and growing them in cages. This blue
revolution7 entails a whole new set of obstacles, different from those faced by fisheries.
Clearly, the astonishing results that the blue revolution has shown are a sign of the
economic success of firms’ strategies in overcoming those challenges.
Within the blue revolution, salmon trade (different types of salmon and trout) represents
16.6 percent of the seafood trade worldwide in terms of value, of which Atlantic salmon
(Salmon salar) is the largest single commodity (FAO 2016). A large and steadily growing
demand for Atlantic salmon in developed countries and emerging economies (AquaChile
2016; FAO 2016; Marine Harvest 2017a) has turned Atlantic salmon farming into a
7
The blue revolution refers to the new context of fish supply at the global scale.
 ECONOMIC GEOGRAPHY

profitable business. Even though Atlantic salmon production has constantly expanded its
frontiers toward new production sites, only some specific places in the world satisfy the
seawater requirements for industrial-scale production. Atlantic salmon’s materiality requires
specific seawater circumstances for rearing such as temperature, nutrients, and seasonality.
These conditions define specific hot spots for salmon production globally, and the largest
producers of salmon are located in the inner seas of Norway and Chile (Figure 1). The two
countries produce approximately 75 percent of Atlantic salmon and are its main traders,
while the next largest producers are mainly focused on local markets, for example, Canada to
the west coast of the US, or Scotland to the UK (Marine Harvest 2017a). Usually, salmon is
traded fresh (head-on guts or fillets); therefore, distance to consumption markets is critical for
both product quality and transport cost. Consequently, the main market for Norwegian
salmon is Europe, while Chilean salmon mainly satisfies market demand in the US, Japan,
and Brazil.
Global firms leading salmon production have expanded their territoriality toward places
that satisfy the requirements of salmon’s materiality.8 Marine Harvest, the world’s largest
Atlantic salmon producer, leads production in Norway and the UK and is the second and
8 fourth largest producer in North America and Chile, respectively. Likewise, Mitsubishi
salmon, formerly Cermaq, has a large presence in Norway, North America, and Chile.

The Production of Atlantic Salmon in Chile

Salmon production began in Chile led by Chilean firms in the 1980s; foreign firms
arrived when Chilean production reached global markets in the late 1990s (Montero
2004; Barton and Fløysand 2010; Katz, Iizuka, and Muñoz 2011). After many financial
and ecological junctures (see Katz, Iizuka, and Muñoz 2011), two foreign firm (Marine

North America Europe

Harvest: 1,138,000
Harvest: 149,000 Consumption: 1,058,000
Consumption: 420,000
Asia
Harvest: 0
Consumption:247 000

Latin America
Harvest: 454,000
Consumption:136,000 Oceania
Consumption Harvest: 46,000
Harvest Consumption: 54,000
Farming hotspot

Figure 1. Atlantic salmon production and consumption by continent.

Source: Own elaboration based on Marine Harvest (2017a).

8
Indeed, Marine Harvest is currently exploring open-sea salmon farming by absorbing the technology of
oil platforms (http://www.aqua.cl/2017/09/06/videos-jaula-gigante-cultivar-salmones-mar-abierto-llega-
noruega/).
 Vol. 00 No. 00 2018

Harvest and Mitsubishi) and three Chilean firms (Multiexport, Aquachile, and Los
Fiordos) now comprise Chile’s five largest producers (Marine Harvest 2017a). For both
cases, Figure 29 shows how the salmon production network works in Chile. The
production process for Atlantic salmon, including capital investment decisions, is
designed for the long term. The whole production process—from the spawning of
salmon eggs until harvest, slaughtering, and commercialization—takes at least two
years, typically more. Therefore, salmon firms must handle production risk grounded
in the fact that they are required to take care of live salmons, which are constantly
exposed to a wide range of ecological threats. This risk spans the entire value creation
process, because for salmon producers, the salmon is worthless until it reaches
commercial weight (over 3.5 kg).
While ecological contradictions are critical throughout the entire chain, the growth
stage is the most important because the risk of infection overlaps with the highest
economic investment. At the growth stage, firms face feeding costs, which are the
highest in the chain (between 40 percent and 60 percent of overall costs).10 Firms make
the greatest investment when salmon are developed in seawater, where they are
extremely susceptible to the wide range of microorganisms that flow within sea 9
currents. This condition is essential for understanding the ecological contradictions

GLOBAL SALMON NETWORKS

of salmon production. A failure at the beginning of the chain is cheaper than at the
growth stage; thus, firms’ strategies are heavily oriented toward controlling salmon
production at this stage. They cannot take back their investment, so their economic

Productive locations Global markets

Country B Country C

FIRM D Genetic R&D

FIRM C Spawn
Commercial
office
Feed
FIRM B REGION D Supplier
Country A

Distributor
REGION A Smolt Growth Slaughtering head-on- gutted

FIRM A REGION B Smolt Growth Distributor fillet

REGION C Growth Intermediary for

value adding

Fresh water Sea water

Value creation Value enhancement
Process modified after Crisis

Processes

Figure 2. GPN of Atlantic salmon produced in Chile and changes after the ISA crisis.
Source: Own elaboration.

9
This figure shows the pre-ISA crisis scenario.
10
Usually, salmon food is provided by external firms, such as Skretting (Netherlands), EWOS (US) or
BioMar (Denmark). Marine Harvest is also a large producer.
 ECONOMIC GEOGRAPHY

success relies critically on their capacity to defeat commodification resistance at the

growth stage.
Firms’ decisions during the initial spawn and smolt stages, which take between ten and
sixteen months and occur in freshwater pools, are also oriented toward reducing risk for the
following stages. They do so because genetic improvements, developed by specific firms
(D11 in Figure 2) at the global scale, strengthen the fishes against diseases and allow them
to grow and fatten more quickly. For this reason, many salmon producers in Chile prefer to
import salmon eggs (from firms C12) than produce them locally. Research and develop-
ment (R&D) in genetics and egg importation are the first strategies salmon firms develop
to control production’s biophysical properties, in order to ensure value creation.
Once smolts reach a specific size13 they are transported to seawater for the growth stage,14
which takes between twelve and twenty-four months. Considering that salmon are more
likely to contract a disease and die because there are more viruses in seawater, this stage
carries the highest risk. Here, salmon firms deploy their best efforts to control ecological
contradictions and reduce risk in the production process. A large list of salmon-related
diseases has impacted salmon production at this stage such as Salmon Rickettsial Syndrome,
10 Caligusrogercresseyi, Lepeoptheirussalmonis and ISA virus, among others (Little et al.
2015). These viruses have had a noticeable impact on mortality rates at all production
sites, so they are the most radical members of the resistance to the commodification of
Atlantic salmon. Firms must develop strategies and limit the effects of these viruses. As one
firm executive said, “a salmon that failed to reach commercial conditions is like throwing a
suitcase with money into the sea,” because firms invest in each salmon for a long time,
particularly in the growth stage, due to feeding costs (Bustos-Gallardo and Irarrázaval 2016).
The next section addresses the main ecological contradictions of Atlantic salmon production
at the growth stage and how these were at the root of the ISA crisis.

The ISA Virus and the Ecological Contradictions of Atlantic Salmon Production
There are three main ecological contradictions that underpin the production process,
as has been discussed elsewhere (see Bustos-Gallardo and Irarrázaval 2016). The main
obstacles behind those contradictions are salmon diseases, which create the highest risk
for salmon producers. Therefore, the following contradictions represent the interactions
between firm strategies and ecological conditions that are critical for disease outbreaks.
These contradictions were critical for the ISA outbreak in Chile (2008–10), which was
the most crucial juncture that salmon firms have faced in Chile.
The first contradiction refers to the fact that the value-creation stage is complete
when salmon reach commercial weight (3.5 kg). For this to occur, the fish must remain
in seawater for a certain amount of time, approximately twelve to twenty-four months.
Production costs decline with increasing harvest weight (Marine Harvest 2017a), so
salmon usually exceed commercial weight. However, each day that a salmon spends in
seawater carries the risk of catching a virus; thus, there is a risk associated with turning
the fish into a commodity. Firms gamble each day they decide to keep the fish in
seawater: if a disease outbreak occurs, the salmon will fail to become a commodity.
While firms try to accelerate this stage, they must wait until the salmon are sufficiently

11
Examples: AquaBounty (Canada) or Hendrix genetics (Netherlands, but located in Chile).
12
Examples: Aquagen (Norway) or Stofnfiskur (Iceland, main supplier in Chile).
13
Formerly approximately one hundred grams but currently near one kilogram to avoid time in seawater.
14
Under normal conditions (without virus), the highest mortality is within the first two months of the
growth stage.
 Vol. 00 No. 00 2018

large. Therefore, the relation between days of growth and disease risk is an ecological
contradiction for salmon producers.
The second contradiction refers to the fact that salmon firms yield better results, in terms of
profits, when they produce the greatest number of salmon per square meter. Cage density is
regulated in many salmon-producing countries because it is a critical condition for diseases to
flourish, and salmon producers increase density for economic purposes. While laws regulate
cage density below 18 kg/m3 in Canada and below 25 kg/m3 in Norway, some cages reached
densities of approximately 31 kg/m3 to increase the chance of value creation before the ISA
crisis15 (SUBPESCA 2012).). While a high cage density means higher profits, the resistance
to commodification is higher because of the higher risk of infection.
The third contradiction refers to the need to spatially concentrate production sites in
the closest possible range to reduce production costs, despite the fact that this concen-
tration can increase the risk of spreading diseases. Operational costs related to boat
travel for maintenance, particularly for transporting the harvested salmon to slaughter
plants, are reduced through spatial concentration. While salmon production sites in
Norway are spatially distributed along 1,700 km, in Chile, 87 percent of production
occurred within a 300 km stretch of the coastline before the ISA crisis (Montero 2004; 11
Katz, Iizuka, and Muñoz 2011). The places where production was most concentrated

GLOBAL SALMON NETWORKS

faced a decrease in productivity, and those places were the most critically impacted by
ISA disease. Even though spatial concentration reduces operational costs, it also
increases the risk of infection.
These contradictions played a key role in the rapid expansion of the ISA virus. The
spatial density of salmon production in Chile was a structural condition for the
proliferation of the ISA virus along many production centers (Alvial et al. 2012).
Additionally, at the time of the ISA virus outbreak, firms needed to wait a particularly
long time for salmon to reach commercial weight16 (Katz, Iizuka, and Muñoz 2011).
As a result, the ISA outbreak was catastrophic for salmon producers because the
resistance to commodification defeated firms’ strategies. Because production firms
neglected ecological contradictions, they faced tremendous economic and production
losses. Mortality rates at production centers reached 74.7 percent in 2008 and 97.7
percent in 2009,17 and decreased by approximately 10 percent in following years.
Salmon firms usually take out loans to cover feeding costs, and after the ISA outbreak,
firms and their suppliers owed banks approximately 4 billion US dollars; individual
companies were indebted in the amount of 380 million US dollars (Alvial et al. 2012).
The indeterminacy of production conditions resulted in economic failure.

The Territorial Effect of Ecological Contradictions

The ISA virus embedded the resistance to commodification, but firms quickly
developed a set of strategies to overcome this resistance and continue the value
creation process.18 Those strategies not only had a spatial expression but also required
a spatial reconfiguration of the production process for success. For this reason, our
argument is that these strategies are critical for an analysis of the salmon network, and
the following discussion shows how. Particularly, they show the change in the
15
There was no regulation until 2009. Even though firms asked for more regulations, they struggled
against the density norm that was finally approved.
16
In 2007, firms left salmon in seawater for 543 days to attain a weight of 3.14 kg, while in 2004, they
waited 487 days to attain salmon weighing 3.71 kg (Katz, Iizuka, and Muñoz 2011).
17
http://www.aquabench.com/wp-content/uploads/2015/08/Mortalidades2008-2014.xlsx.
18
Furthermore, firms needed to produce again to pay off their debts.
 ECONOMIC GEOGRAPHY

territorial configuration of the production network due to ecological contradictions.

The dashed line boxes in Figure 2 represent those changes.
After the ISA crisis, salmon firms requested that the state have a stronger presence in
salmon production, mainly as a sanitation guarantor. For this purpose, they proposed to the
state a new institutional regime oriented toward improving sanitation standards to protect
against salmon disease and a spatial reorganization of the production sites through barrios
salmoneros, and they blocked the approval for new production centers in the virus outbreak’s
red zone (Nussbaum, Pavez, and Ramirez 2012; Irarrázaval 2014). Additionally, the state
developed specific norms regarding sanitation control such as a risk score for each produc-
tion site and density norms for farms. Furthermore, firms reached specific agreements
through their business association (Irarrázaval 2014). Altogether, those measures constitute
the set of strategies that the firm–state alliance developed to control disease and overcome the
ecological contradiction of Atlantic salmon production.
This set of strategies modified the territorial configuration of the production network
in four main categories (which are explained in detail after this paragraph; see also the
dashed line boxes in Figure 2) related to ecological contradictions. The first and second
12 territorial changes (eggs and smolt control) are related to the spawn and smolt stages,
and they look to diminish virus risks for the entire production chain and thus for the
three ecological contradictions mentioned above. The third territorial change (growth
control) is mainly targeted toward reducing the issue of spatial concentration and
density, so it is highly oriented to the second and third contradictions. The fourth
territorial change (market operations) is related only to commercialization, but it is
critical for consolidating value creation and enabling value enhancement.
Initially there was mistrust about the origins of the ISA virus, and many firms
blamed the imported eggs.19 Critiques were directed toward the beginning of the
production chain because it was the only stage developed outside the country. As a
result, the salmon business association enacted an internal decree stating that all
salmon eggs must be produced in Chile. The logic behind it was to increase control
over the production chain through vertical integration and an expansion of firm
functions. Consequently, firms located in Chile developed a nationally hermetic pro-
duction chain to increase sanitation control. However, once the mistrust dissipated,
imported eggs were accepted again.20 Therefore, Chilean salmon production is, once
again, globally open to the development of production stages abroad.
Second, following the plan for increased control over the entire production chain,
firms and the state analyzed the smolt stage. Prior to the ISA outbreak, some firms
were developing smolts in seawater to reduce operation costs. As mentioned above,
seawater is riskier than fresh water because of the presence of viruses. Thus, enforce-
ments were put into place to ensure that the smolt process would be developed only in
freshwater (mainly in land-based tanks). As a result, many firms started to develop
smoltification plants in other regions, not far from growth sites, such as Araucania
(353 km away) and Los Rios (213 km away).
Third, as stated above, the high density of salmon farming during the growth stage was a
key factor in the crisis. Before the ISA crisis, firms were critically concentrated within a
small area, so the ISA outbreak easily spread to a large number of production centers. After
the ISA crisis, salmon firms started to carry out the growth stage in southern regions such
as Aysen and Magallanes (Figure 3), thereby critically modifying the territoriality of

19
http://www.capital.cl/el-test-del-isa/.
20
Recently, eggs from other countries were allowed again, and Stofnfiskur from Iceland is the only
authorized firm for supplying those eggs.
 Vol. 00 No. 00 2018

4,00,000
Los Lagos region

3,50,000 Aysen region

Tonns of harvested Atlantic salmon

Magallanes region
3,00,000

2,50,000

2,00,000

1,50,000

1,00,000

50,000

0
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

Figure 3. Atlantic salmon harvest by region in Chile between 2004 and 2016.
Source: Own elaboration based on SUBPESCA
13
salmon production within the country. This change was the most important modification in

GLOBAL SALMON NETWORKS

spatial terms because firms expanded their territorial frontier toward new productions sites.
These sites, barely involved in production previously, are now key assets for firms. This
territorial change is critical for ecological contradictions because they decrease the likeli-
hood of risk contagion in outbreak scenarios. In this context, a virus outbreak is easier to
handle because the larger distance between production centers gives both firms and the
state more time to react and control potential outbreaks. In other words, this spatial
measure allows salmon producers to decrease the effect of the resistance to commodifica-
tion because viruses are easier to control locally. This change was vital in handling the
ecological contradictions that were in existence after the ISA crisis, because it spatially
decompressed the highly concentrated production pressure.
Fourth, many distributors, particularly in the US, mistrust the capacity of Chilean firms to
ensure the salmon supply. For that reason, many firms created commercial offices abroad to
improve communication with foreign distributors. Even though Chilean firms remain a
strong supplier in the US market, the way in which they handled the ecological contradictions
noticeably affected value dynamics along the production network. The next section analyzes
this effect.

Effects on Value Dynamics

The ecological contradictions of salmon production in Chile, particularly the ISA
outbreak, impacted value dynamics in two ways. On the one hand, there were noticeable
impacts on salmon production costs due to the new strategies and production dynamics
implemented (Table 1). Chile has become less profitable for producing salmon because the
necessary sanitation regulations to control ecological contradictions make production more
expensive. These costs constrain value creation possibilities for Chilean salmon firms,
although at the same time, they are necessary to ensure safe salmon production in Chile.
While Marine Harvest globally spends less than 20 percent of its production costs on
nonseawater expenditures, in Chile, this category represents 31 percent of production costs
(Marine Harvest 2017a).
On the other hand, firms’ strategies for handling Chilean ecological contradictions had an
effect on the social valuation of Chilean salmon abroad. Chilean Atlantic salmon has a
relatively negative reputation, based on media exposure of firm strategies. For example, a
 ECONOMIC GEOGRAPHY

Table 1
Production Costs (US Dollars) per Kilogram of Atlantic Salmon Head-on-gutted, Free-on-board
Country/Production Cost 2005 2015
Norway 1.79 3.10
Chile 1.56 4.06
United Kingdom 2.33 3.73
Faroe Islands 2.57 2.97
Source: Aqua based on Kontaly Analyse. http://www.aqua.cl/2016/06/29/informe-evidencia-los-altos-costos-de-produ
cir-salmon-en-chile/.
Note: Original prices in euros, converted to US dollars considering annual exchange rates published by OANDA (1.24
for 2005 and 1.1 for 2015). https://www.oanda.com/currency/converter/.

key reason for this reputation is the use of antibiotics for disease prevention, particularly SRS.
While Norwegian firms immunize fish using vaccination for such purposes, firms in Chile
provide antibiotics through the food. As a result, Chilean salmon has been questioned as
14 having possible side effects that could impact human health. A clear example of this issue
was the rejection by some US retailers, such as Costco Wholesale, of Chilean salmon
because of antibiotic levels.21 In contrast, the main rival (Norwegian salmon) enjoys a
much better reputation in terms of environmental and social practices.22 The outcome of
this reputation is that Chilean salmon has been permanently discounted in relation to
Norwegian salmon since 2012 (Cermaq 2016). While the price gap between salmon
produced in Chile and Norway was approximately fifty cents in 2008, in 2015 it was nearly
two US dollars.23
The combination of these two effects of the ecological contradictions (production
costs and prices) can be observed in Figure 4. The figure shows earnings before interest
and tax (EBIT) fluctuations for Marine Harvest, comparing salmon produced in Chile
and Norway, which represent the profitability of salmon firms per kilogram of salmon.
Even though both countries share a similar fluctuation, linked to international fluctua-
tions, Chile shows a large income gap compared to Norway. This gap shows how the
ecological contradictions of salmon production in Chile constrain the capacity for
creating value, because many firms are facing economic losses due to their struggles
against the obstacles posed by nature. Although the ISA virus is gone, the ecological
contradictions of producing salmon continue to remind salmon producers that turning
nature into a commodity is a difficult task; consequently, value creation has become
more difficult for Chilean firms.
Chilean salmon’s negative reputation not only affects value creation but also con-
strains the value-adding possibilities along its chain. Consumers who are more likely to
buy value-added salmon (e.g., smoked or ready-to-cook salmon) are usually aware of
environmental issues, making it more difficult for Chilean producers to reach those
consumers in the US and Europe.24 This scenario links ecological contradictions and
firm strategies with local consumers’ interest in shaping value performance.

21
http://uk.reuters.com/article/us-chile-salmon-antibiotics-feature-idUKKCN0PX1IG20150723.
22
http://www.aquafeed.co/no-nos-gusta-la-diferencia-de-precios-entre-el-salmon-chileno-y-el-noruego/.
23
https://www.salmonexpert.cl/noticias/diferencia-de-precio-histrica-entre-salmn-chileno-y-noruego/.
24
http://www.aquafeed.co/no-nos-gusta-la-diferencia-de-precios-entre-el-salmon-chileno-y-el-noruego/.
 Vol. 00 No. 00 2018

3.00

2.82 Chile -0.38 -0.39 0.75 -0.92

2.50
Irish
2.00 Faroese

1.50

1.00

0.50

0.00
2012 2013 2014 2015 2016
-0.50

-1.00

-1.50
USD/Kg Average Norwegian Chile 15
Figure 4. Operational EBIT for Marine Harvest by country of origin.

GLOBAL SALMON NETWORKS

Source: Own elaboration based on several reports from Marine Harvest. Marine Harvest
(2012) for 2012; Marine Harvest (2016) for 2013, 2014, and 2015; Marine Harvest (2017b)
for 2016. The operational EBIT for 2016 was converted from euros to Norwegian krone based
on Marine Harvest (2017a). All values were converted from Norwegian krone to US dollars
based on Norges Bank annual average.

Challenges of Ecological Contradictions for the GPN

The case of Chilean salmon is relevant for clarifying the conceptual implications of
considering the ecological contradictions in resource-based industries and for mentioning
possible lines of research. These are summarized in three conceptual categories: territorial
configuration, value, and power.

Territorial Configuration and Ecological Contradictions

Biologically based industries depend heavily on territorial configurations in two
ways. On the one hand, firms depend on the biophysical properties of soil or water,
which are critical for productivity. In this regard, the conceptualizations of materiality
(Bridge 2008; Bridge and Bradshaw 2017) have successfully explained how they shape
the production network, so ecological contradictions may not be something new.
However, the conceptualization of materiality does not consider events that occurred
during the productive stage in temporal terms. The ecological conditions, which are
critical for producing salmon in a specific time and space, might change seasonally or
in the long term, so materiality must be understood as a specific spacio-temporal
product rather than a definitive outcome. The Chilean salmon industry’s example
shows how the materiality of salmon and its environment is dynamic in space and
time; thus, it is possible to further expand the debate of materiality beyond ensuring the
production site.
On the other hand, as the results show, firms need a spatial organization of production to
avoid ecological exhaustion and diminish the expansion of virus outbreaks. Here, under-
standing firms’ strategies—as proposed by Coe and Yeung (2015)—is essential to analyze
 ECONOMIC GEOGRAPHY

territorial configuration. Along with all the logistical and functional complexities related to
industrial production, firms’ strategies must also consider territorial configuration to
control viral outbreaks and avoid ecosystem exhaustion. As this work shows, the overlap
between ecological contradictions and firms’ strategies is fruitful for understanding the
driving forces behind this spatial organization of resource-based industries, particularly at
the small and medium scales. Ecological contradictions have impacts on a global scale
when a crisis scenario arises: production in specific places might be critically reduced,
opening chances for new actors in the global network.

Value Dynamics and Ecological Contradictions

There is a large debt in resource-based/GPN regarding value dynamics. Some works
have progressed by linking how access to the resource course impacts value dynamics
(e.g., Faier 2011; Havice and Campling 2013), but they reduce the relation between
nature and value dynamics in terms of accessing specific sources rather than analyzing
the spatio-temporalities of value. Ecological contradictions, as shown here, are dynam-
ic in space and time, and impact on value dynamics in different ways. A radical failure
16 in a firm’s strategy annihilates the chance to create value, while regular failures and
successes affect value dynamics in terms of value enhancement, as this article shows—
for example, the effect of antibiotics and reputation.
Whereas value-oriented strategies might be grounded in different approaches, such
as marketing for biologically based industries, they are structurally linked to the
strategies for controlling nature transformation. Firms carefully manage technological,
sanitarian, and legal issues to ensure value creation and enhance it, but failures in value
creation in those industries are largely a result of natural obstacles.

A Window for Power Analysis?

Even though this article does not consider power as an analytical category, we find it
necessary to mention how ecological contradictions might affect power relations.
Power is one of the structural concepts of GPN because it is an essential dimension
for analyzing interfirm relations in the global economy, so it is likely that power
analysis delivers an influential approach for analyzing the resource-based GPN. As
we have shown in this article, firms’ ability to ensure the transformation of nature into
commodities as safely and quickly as possible is critical. Thus, the unequal distribution
among firms of resources for waging this struggle—overcoming resistance to com-
modification—could be determinant in understanding a firm’s ability to compete in the
global economy. The first firm to attain specific products for handling production’s
biophysical properties achieves a considerable advantage over its competitors and
could become a top firm thanks to this advantage
How different firms handle ecological contradictions within the same production sector
might be an interesting approach for linking power and value dynamics. In the case of
salmon, the most evident element is technology and know-how for handling ecological
contradictions, but other aspects, such as the number of production sites per firm, or access to
production sites with better conditions (materialities), such as sea currents, might also be
important factors.

Conclusions
The research question guiding this article was how ecological contradictions affect a
resource-based GPN. The main conclusion is that the interaction between nature’s obsta-
cles and firms’ strategies to increase and ensure production in resource-based industries
 Vol. 00 No. 00 2018

shapes the spatial production network’s organization and affects how value is created in
these industries. This conclusion is based on an analysis of the production stage of Atlantic
salmon in which the properties of the natural resource are critical for turning the salmon
into commodities. For Atlantic salmon, this condition is evident because the production
stage takes a long time, whereas the exchange must occur quickly, since Atlantic salmon is
sold fresh. Even though the exchange/circulation is critical because it consolidates the
value creation process, it is largely rooted in firms’ strategies spanning two years.
Against this background, this contribution is an invitation for resource geographers,
who study from a GPN perspective, to reconsider the relevance of the production stage.
Throughout this stage, the materiality of each natural resource is critically transformed
for delivering products globally, and the ways in which the processes and techniques
are organized for this purpose are critical for understanding the spatial organization of
the production network. Even though contemporary global economy is extremely
complex in terms of financialization and technology, resource-based industries contin-
ue to struggle against conditions that are out of their control. Thus, resource geogra-
phers have a potentially important role to play in demonstrating how the global
economy is still linked to the dynamics of nature. 17
Despite the conceptual progress regarding materiality within resource geography, the

GLOBAL SALMON NETWORKS

connections between the ways that nature is transformed and production networks
compositions—and the effects of these transformations on wider markets—must be
expanded. This connection is not an obsession for showing how nature remains as a
key issue in the global economy, but rather for understanding how the firms’ strategies
are strongly connected to the challenges that nature commodification entails.
Particularly, economic geographers have the conceptual tools for unpacking how
such process modifies the territorial configuration of GPNs as well as how changes
on territorial configuration allow firms to defeat the resistance to commodification. We
expect that this contribution, strongly based on ecological contradictions and GPN, will
permit powerful conceptual developments to economic and resources geographers
beyond the topic of access to specific resource sources.

Altvater, E. 1993. The future of the market. An essay on the regulation of money and nature
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