ADOLFO ALVIAL

GENERAL MANAGER

TECHNOLOGICAL INSTITUTE OF SALMON CHILE

VOLUNTARY INITIATIVES IN THE VOLUNTARY INITIATIVES IN THE SALMON INDUSTRY IN CHILE: SALMON INDUSTRY IN CHILE:

ROLE AND PROSPECTSROLE AND PROSPECTS

AN EXPORT ORIENTED AN EXPORT ORIENTED INDUSTRYINDUSTRY

WORLD PRODUCTION OF FARMED WORLD PRODUCTION OF FARMED SALMON AND TROUTSALMON AND TROUT

179 179164

178

222

262

313

347

387

458 459478

530

583602

29 4061

7798

128

184

224

258

223

302

4467 54 49

64 7383 93

100120

134 147 133162

137

21 30 30 3441 40 45 50 47

6379 84

118 109 107

6 1820 17 15 13 21 21 25

37 3352 52 58 41

601

494506

450

0

100

200

300

400

500

600

700

1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004

Noruega Chile Reino Unido Canadá Islas Faroe

PRODUCTION BY COUNTRY PRODUCTION BY COUNTRY 20042004

1.597.000 tons round weight

Norway37%

Chile38%

United Kingdom9%

Others6%

Canada7% Faroe Islands

3%

TOTAL CHILEAN EXPORTS TO TOTAL CHILEAN EXPORTS TO PRINCIPAL MARKETS.PRINCIPAL MARKETS.

Thousand net tons.Thousand net tons.

46

154

22

124

5

24

1,5

23

1,0

29

0

20

40

60

80

100

120

140

160

JAPAN U.S.A. E.U.(25) L.A. OTHERS

1994 2004

TOTAL CHILEAN EXPORTS IN TOTAL CHILEAN EXPORTS IN VALUE TO PRINCIPAL MARKETS. VALUE TO PRINCIPAL MARKETS.

Million dollarsMillion dollars

206

566

105

575

24

118

9

79

4

101

0

100

200

300

400

500

600

JAPAN U.S.A. E.U.(25) L.A. OTHERS

1994 2004

SALMON INDUSTRY CONTRIBUTION SALMON INDUSTRY CONTRIBUTION TO CHILEAN EXPORTSTO CHILEAN EXPORTS

2004: us$ 31.460 Million FOB Chile2004: us$ 31.460 Million FOB Chile

159

265 291350

489538

668714

818

973 964 973

1.147

1.439

0

5.000

10.000

15.000

20.000

25.000

30.000

35.000

1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 20040

200

400

600

800

1.000

1.200

1.400

1.600

Total Chile Salmón & Trucha

ADDING VALUEADDING VALUEMillionMillion dollarsdollars FOB ChileFOB Chile

94%90% 83% 77%

71% 61% 53%52% 44% 40% 36%

48%

95%

33% 31%

64%60%56%48%

52%47%39%29%

23%17%10%

6%5%

67%

69%

0

200

400

600

800

1.000

1.200

1.400

1.600

1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004

Otros productos Valor agregado

Mano de obra en Salmonicultura chilenaMiles de personas

8.5

14.517.4 18.0

19.0 20.022.4

24.8

28.531.5

2.54.3 5.2 5.3 5.6

5.9 6.69.6

12.013.5

0

5

10

15

20

25

30

35

1993 1994 1995 1996 1997 1998 1999 2000 2001 2002

Directa Indirecta

DIRECT AND INDIRECT LABOUR DIRECT AND INDIRECT LABOUR IN THE CHILEAN IN THE CHILEAN

SALMON FARMING INDUSTRYSALMON FARMING INDUSTRY

...AN IMPRESSIVE PROCESS OF GROWTH...

...Through this has been possible to satisfay the demand fromimportant foreign markets like USA, Japan and Europe.

REQUIREMENTS FOR REQUIREMENTS FOR THE INDUSTRYTHE INDUSTRY

12

REGULATIONS AND REGULATIONS AND EXPECTATIONSEXPECTATIONS

StakeholdersExpectations

MarketRegulations

NationalRegulatrions

Production

ProcessingMARKETS

SuppliersPRODUCT

13

NATIONAL REGULATION NATIONAL REGULATION CONTEXTCONTEXT

ENVIRONMENT PROTECTION

F and A Law, RAMAEnvironmetal LawDGA RegulationsOTHERS

National Regulations

FISH HEALTHF and A, Law, RESAOTHERS

PROCESS AND PRODUCTS SAFETY

AND SECURITYPAC and Control of residues in products

WORKERS AND OPERATIONS

SECURITY

Code of Work and normsNavigation Law

OTHER AREAS

Coastal zone managementHuman health for products sold in Chile

14

REGULATION FILTERSREGULATION FILTERSNational

Regulations

PRODUCTION

RAMARESAPACWORK REGULAT.OTHER

National

Regulations

PROCESSING

National

Regulations

Safe and quality

Products

Markets

Specific requirements

PACGENERAL ENVIRONM. REGULAT.WORK REGULAT.OTHERS

PACTRACEABILITYCONTROL OF RESIDUES

PRODUCT SAFETY AND SECURITYLABELLINGOTHERS: TRACEABILITYANIMAL WELFARE

15

STAKEHOLDERS STAKEHOLDERS EXPECTATIONSEXPECTATIONS

2000’s

Demostrable goodproduct and process

1980’s

Good product and goodprocess behind it

1970’s

Good quality productas the customer view

Before 70’s

Good quality Productas per the producer

view

•Producers

•Local authorities andregulations

•Producers

•Local authorities andregulations

•Quality productsstandards as per thecustomers expect.

•Producers

•Local authorities andregulations

•Quality productsstandards as per thecustomers expect.

•Production Guidestandards, emphasizingsafe and security

•Producers

•Local authorities andregulations

•Quality productsstandards as per thecustomers expect.

•Production Guidestandards, emphasizingsafe and security

•Demonstrable Ethicproduction

FACTORS AND FACTORS AND EVOLUTION OF EVOLUTION OF

VOLUNTARY VOLUNTARY INITIATIVESINITIATIVES

MarketMarket qualityquality assuranceassurance. . MidMid 8080´́ss

Quality variability was one of the earliest factorsto be considered. This triggered the Quality Sealwhich was applied in Processing Plants, establishing standards on processing.

The Seal was initially private (Fundación Chile) and then it was bought by the Chilean SalmonFarmers Association (also created to face marketchallenges among others).

HACCP HACCP isis adoptedadopted..MidMid 9090’’s s

In order to assure safe and security of products theHACCP was introduced by Plants, principally dueto customers interest.

Foreign authorities requested the HACCP application in exporting Plants and Sernapescaintroduced and promoted its application in Chile.

The Association private Quality Seal ends.

ISOISO’’ss emerged in emerged in thethe industryindustry..Late 90Late 90’’s s

Principally ISO 9001 which was essentially applied in Processingplants.

Slowly ISO 14001 was considered by some companies at the beginingof the 2000’s.

Few providers start with ISO 9001. The most active ones were Feedplants.

Since 2002, ISO 9001 and 14001 were disseminated in the industry, among producers and providers like: Feed producers, PharmaceuticalLabs, Analysis Labs, Transporters, etc.

In 2003 few companies also initiated Integrated management systemimplementation, including simultaneous implemenation of ISO 9001, ISO 14001 and OHSA 18000

DiversificationDiversification ofof CertificationCertificationSystemsSystems..

EarlyEarly 20002000’’ssFCh promoted a GMP system focused in goodenvironmental practices in salmon production (farms).

Organic production is also introduced by one company in Chile. This was applied only in part of its productionprocess.

Different customers request different certification systemslike: BRC, IFS. More recently SQF is under developmentthrough and agreement between SOTA and FMI.

IndustryIndustry initiativesinitiatives emerged.emerged.EarlyEarly 20002000’’s.s.

The Cleanest Production Agreement (APL) was initiated at the end of2002 as a joint initiative of the Chilean Government and the Industry. All salmon producers decided to participate, including more than 300 farms and more than 20 plants distributed between the Metropolitanand XII regions.

In 2002, SIGES is created by SalmonChile through INTESAL, itsTechnological Institute of Salmon. This started in 2003, consideringenvironmental and fish health management, product quality and safety, health and security of workers, among the principal aspects, all of themapplied along the Value Chain. This system pretends to be an industryplatform of good practices, a protection for the industry demonstratinggood practices and a benchmarking tool for continous improvement.

In 2005 SIGES showed expansion among producers and an initiativeto develop SIGES for principal suppliers is considered.

CertificationCertification status in status in thethe industryindustry. . OctoberOctober 20052005

Evaluation based in a 29 producer companies survey

12 voluntary systems were identified2 are considered potential systems: SQF and Eurapgap.10 have been effectively applied; – 5 are international general systems: 2 ISO’s, OHSAS,

HACCP and Integrated ISO+OHSAS – 2 are international for specific markets: BRC e IFS– 3 are national systems: SIGES, APL and BP F.Chile

Only 2 cover more than 1 aspect along the value chain; Integrated ISO’s and SIGES. From them only SIGES establishes verifible standards and not just continuousimprovement committment.

The most important adopted system is SIGES, involving 17 of the 29 checked companies.

11 companies (app. 40 %) have implemented orcertified more than 3 system; 17 companies (app. 60%) have implemented between 1 – 3 systems; only1 company has implemented no system.

All SalmonChile associated companies evaluatedhave implemented at least 1 system.

CertificationCertification status in status in thethe industryindustry. . OctoberOctober 20052005

APL AND SIGESAPL AND SIGES

THE ASSOCIATION AND ITS THE ASSOCIATION AND ITS TECHNOLOGICAL INSTITUTETECHNOLOGICAL INSTITUTE

SALMON CHILE IS THE ASSOCIATION OF THE SALMON INDUSTRY (WHICH IS CONSIDERED A NATURAL “CLUSTER”)

INTESAL S.A. IS THE TECHNOLOGICAL ARM OF THE SALMON FARMING ASSOCIATION.

CleanestCleanest ProductionProduction AgreementAgreement..

The Salmon Industry Association developed an agreement withthe Governmental agencies related to the activity. As per thisagreement the industry made the committment to voluntaryaccomplish a number of committments which benefits thesustainable development of the industry in the join perception ofthe government and the industry.

Committments accomplishment were regularly evaluated(verified) by Intesal supported by specialized consultants whoseresults were informed to the agencies and the industry. In theframework of this agreement a number of specific projectsdirected to improve environmental conducts were alsoconsidered.

The idea was to apply an integral preventive approach, stimulating the environmental regulation accomplishmentavoiding contamination in the origin, improving productiveefficiency, optimizing environmental management anddiminishin operational risks.

First stage was directed to introduce good managementmeasures in the companies and then they should developrequiered investment to improve their environmental status.

This has been the biggest APL developed in Chile in terms ofthe geographical distribution of the units and diversity of them. This agreement ended at the end of 2004.

CleanestCleanest ProductionProduction AgreementAgreement..

THE APL EFFORT

The industry accepted and responded to the invitation ofthe Clean production Secretary of the Ministry ofEconomy.Very extended and disperse distribution of the productiveunits.Multiple actors from the public sector.New era of public-private relationship.Concrete good results regarding the specific industrycomittments.First certified productive units in Chile were from thisIndustry (more than 100 with 100% accomplishment).

GEOGRAPHIC GEOGRAPHIC DISTRIBUTION OF DISTRIBUTION OF

UNITS IN APLUNITS IN APLPiscicultures Farms Processing

plantsTotal

Metropolitana 2 0 0

2

0

24

3

1

30

2

VIII Región 1 0 3

IX Región 9 0 9

X Región 37 233 294

XI Región 6 43 52

XII Región 0 10 11

Total 55 286 371

General General ResultsResults ofof FarmsFarms

IndustryIndustry 93 %93 %

General General ResultsResults ofofProcessingProcessing PlantsPlants

IndustryIndustry 75 %75 %Resultados Quinta Verificación Acuerdo de Producción Limpia de la Industria del

Salmón - Plantas de Proceso

0

10

20

30

40

50

60

70

80

90

100

QE WR ET TU YI IP AD SF DG FH GJ HK JL KÑ ZC XV CB VN BM ÑA MZ OW LS NX IE KD UR JF ON HG

Porc

enta

je C

umpl

imie

nto

Empresas Promedio Industria

APL IMPACTSAPL IMPACTSInvestment:

USD 12,3 million were invested in effluent treatment systems.USD 64,5 million were invested to change fur seal protectionnets (new ones of 10”). USD 809.400 were invested in adequate waiste disposal. USD 13,1 million were invested in new feeding systems thatreduce feed lost. USD 38.788 were invested in cleanest production training. In total the industry invested USD 91,3 million in the APL.

APL IMPACTSAPL IMPACTSGeneral Environmental Impacts

Effluents discharge diminished 4.2 %, representing a reductionof 177.500 m3 in 2004. Also contaminant charge per producedTon in the effluent was reduced 50 %.Solid inorganic waiste were reduced 43,7%.Plastic waiste generation was reduced 53 %, equivalent to a reduction of 461.500 t/año.Plastic recycling was increased 100%, i.e. 35.500 t/año (compared to 2002).Fish byproducts increased 36 %, equivalent to a reuse of 16.330 t in2004.145 Campaigns to clean Beaches were developed.More than 3.000 workers were trained in farms and plants in clean production principles and practices.

APL IMPACTSAPL IMPACTSProcessing plants

Discharge of fats and oils, BOD and TSS were reduced in around 40%.Foam was reduced in 80 %.Fish byproducts recycling grew 30 %Plastic recycling around 180 %.

Fams

14 % reduction in organic solids.72 % reduction in inorganic solids.43 % reduction in dangerous residues.Increase in plastic recycling 30 %; and aroun 180 % in fishresidues.

EffluentEffluent costcost ofof treatmenttreatment

NOTA: Los resultados se muestran por tonelada producida.

Operación en S istemas de Tratamiento

1000

6000

11000

16000

21000

Invers ión en tratam iento Gas tos de operac ión

Eva

luac

ión(

$)/to

nela

da

Tiem po 1 Tiem po 2

ConversionConversion factorfactor

0

0.2

0.4

0.6

0.8

1

1.2

1.4

1.6

Factor de ConversiónBiológico

Factor de ConversiónEconómico

Fact

or d

e C

onve

rsió

n

Tiempo 1Tiempo 2

GENERAL RESULTSGENERAL RESULTSIndustry diminished 50% contaminant charge in itseffluents.Also it dimished 14,4% the generation of inorganicresidues.In 2 years recycling and reutilization of “waiste”increased 100 %.In 2 years investment in waiste treatment systemswas doubled improving management anddiminishing in 33 % the operation cost of thesesystems.More than 3000 workers were trained in CleanProduction principles and practices.

WhyWhy SIGES SIGES waswas establishedestablished??

Tendencies in international markets: food safety and security, sustainable production, social responsibility.New requirements in international markets regulations: BioterrorismAct, Tracebility.SalmonChile decides to develop through Intesal, an industry soundtool in order to establish verifible good practices and standardsAn instrument capable to make real the SalmonChile mission.To act in a proactive way given Chile’s leader position in the industry.

WhatWhat werewere thethe requirementsrequirementsestablishedestablished forfor SIGES?SIGES?

IT HAS TO...: Be an industry tool.Involve critical aspects of salmon farmingin the perception of stakeholders.Involve experts and companies participationin its original construction.Be certifible by internationally acreditedcompanies.

...IN ESSENCE...IN ESSENCE

““AnAn integratedintegrated andand complete complete GoodGood PracticesPracticesPlatformPlatform,, a Protector a Protector UmbrellaUmbrella ableable toto

demonstratedemonstrate excellenceexcellence in in productionproduction andandproductsproducts, , andand a a BenchmarkingBenchmarking tooltool stimulatingstimulating

permanentpermanent improvementimprovement in in thethe industryindustry””..

WhatWhat isis SIGES SIGES todaytoday??

A platform of good practices which prepares companies to respond in a best way to certification request from different market segments.

An umbrella for the global industry defense.

A benchmarking tool which helps companies continuous improvement and efficient allocation of resources to keep high standards of production.

A way of keeping companies updated and alert regading market requirements (legal and voluntary).

SIGES SIGES ElementsElements

Agreement SIGES BylawsRegulations and Good Practices ManualAuditing Manual (includes checklists)Support software (optional)SIGES Interactive Internet site. (Management platform with on line access for continuous SIGES improving)

Manual version 2.0 contents:Chapter 1: Management Requirements.Chapter 2: Manuals, Policy and Programs, Authorities, Responsibilities, Procedures and Best Practices of the Salmon Industry for piscicultures, lake farms, sea farms, processing plants and central organization .Chapter 3: Records, Reports, Protocols and Certificates for piscicultures, lake farms, sea farms, processing plants and central organization . All of them in the fields of : food safe and quality; production and fish health; environmental management; and health and security of workers; in two dimensions, regulations and good practices.

Manual Manual contentscontents

Agreement

General training

Diagnostic audit

Specific trainings(SENCE)

regulations audit

Best Practices audits

Pre-certification audits

Certification audits

Certification Maintenance Audits

First stageINICIATION

(3 months)

Second stageIMPLEMENTATION

(1,5 – 2 years)

STAGES ON SIGESSTAGES ON SIGES

Third stage

CERTIFICATION

PROSPECTSPROSPECTSCertification by market segment is and will be a fact.SIGEs will remain as a platform, umbrella andbenchmarking tool of industry.SIGES will be extended to other segments of theSalmon Cluster.SIGES will be clearly connected to Vigilanceprograms and Indicators of the Chilean salmonfarming industry.Additional benefits: Value of benchmarking; Alerton new regulations and management systems; Creation of bridges with the public sector.

EnvironmentalEnvironmental MonitoringMonitoringandand forecastforecast programprogram

httphttp://://pronosticos.salmonchile.clpronosticos.salmonchile.cl

http://pronosticos.salmonchile.cl/

In situ In situ monitoringmonitoring stationsstations•Temperatura del agua (1m-10m)

•Salinidad (1m – 10m)

•Corrientes (2 m – 18 m)

•Clorofila a (1 m)

•Oxígeno disuelto (1 m – 10 m)

•Temperatura (1m-10m)

•Salinidad (1m-10m)

•Oxígeno (1m-10m)

•Clorofila a (1m)

•Corrientes (2m-18m)

•Meteorología (vientos, t, pluviosidad, rad. solar, humedad, presión atm.)

•Temperatura (1m-10m)

•Salinidad (1m-10m)

•Oxígeno (1m-10m)

Sitio Web de PronSitio Web de Pronóósticossticos

- The Surveillance Programme has been the basis to generate and execute a sanitary management plan to optimise the sanitary status of the industry.

-The objective of the Surveillance Programme is to receive, process, and analyse sanitary and productive data from the monthly report of the companies and integrate them, in an innovative fashion, with environmental variables.

- The Programme generates quarterly reports, geo-referenced in eigtht homo-environmental zones and distributed to the associated companies through its corresponding technical department.

- The Programme represents an excellent tool to support sanitary strategies to mitigate the negative impact of disease over salmon production, prioritise actions, strengthen the public-private institutional work, and optimise resources.

Sanitary and Productive Surveillance Programmehttp//bases.salmonchile.cl/salud/

Sanitary and Productive Surveillance Programmehttp//bases.salmonchile.cl/salud/

THANKS!THANKS!

WORLD PRODUCTION OF FARMED SALMON AND TROUTPRODUCTION BY COUNTRY 2004SALMON INDUSTRY CONTRIBUTION TO CHILEAN EXPORTS�2004: us$ 31.460 Million FOB ChileADDING VALUE�Million dollars FOB ChileREGULATIONS AND EXPECTATIONSNATIONAL REGULATION CONTEXTREGULATION FILTERSSTAKEHOLDERS EXPECTATIONSMarket quality assurance. �Mid 80´sHACCP is adopted.�Mid 90’s ISO’s emerged in the industry.�Late 90’s Diversification of Certification Systems.�Early 2000’sIndustry initiatives emerged.�Early 2000’s.Certification status in the industry. October 2005�Cleanest Production Agreement. THE APL EFFORTGEOGRAPHIC DISTRIBUTION OF UNITS IN APLAPL IMPACTSAPL IMPACTSAPL IMPACTSEffluent cost of treatmentConversion factorGENERAL RESULTSWhy SIGES was established? What were the requirements established for SIGES?...IN ESSENCEWhat is SIGES today?SIGES ElementsManual contentsPROSPECTSEnvironmental Monitoring and forecast program�http://pronosticos.salmonchile.cl� In situ monitoring stationsSitio Web de Pronósticos