SCOTTISH salmon exports are recovering from a slump in 2015, with factors including a toxic algae crisis in Chile and the strengthening Norwegian kroner helping to boost demand.

“Market prices are back strongly and demand is strong,” said Scott Landsburgh, chief executive of the Scottish Salmon Producers Organisation, the trade association for salmon farming.

The bounce back is good news for the industry, which saw exports fall 20 per cent in 2015 after a Russian ban on European food imports – in response to EU sanctions over the Ukraine crisis – led to a glut of salmon on international markets.

One of the reasons for the recovery is that Chile, the world’s second biggest salmon exporter after Norway, has been hit by a deadly increase in the algae population, which asphyxiates fish by decreasing oxygen in the water. This so-called ‘algal bloom’, attributed to unusually high ocean temperatures caused the El Niño weather pattern, has killed around 23 million fish in Chile.

“It has significantly damaged their production,” Mr Landsburgh said. “In excess of 100,000 tons of salmon have been taken out of the market. Volumes from Norway have also reduced on account of some feed production issues. So there’s a shortage of supply into markets, and with consistent demand, prices have risen.”

The Norwegian kroner has also started to strengthen – probably reflecting the rebound in the oil price – which meant Scottish salmon was looking more competitive relative to Norway’s product. Last year the record low oil price and weaker kroner meant Norwegian exporters were able to make inroads into some of Scotland’s markets. Exchange rates against the dollar and euro are also more favourable.

Mr Landsburgh said prices were now ‘trending’ back towards levels seen in 2014, which was a record year for the industry.

“2014 was the record year for exports to the extent that we became the UK’s largest food export,” Mr Landsburgh said. “I think what we would say is that prices have come back and we plan on a consistent market price of about £4.50 a kilo, which is where it was in 2014.”

The Scottish Salmon Producers Organisation is also predicting volumes this year to be slightly ahead of last year at around 160,000 tons.

“Which means we will maintain our production levels as the third largest producing country of Atlantic salmon in the world,” Mr Landsburgh said.

However, he added that while Scotland had been ‘flatlining’ in salmon volumes over the last ten years, competitor countries had been growing their production significantly.

“This has resulted in our share of the world market in production terms dropping from around 12 per cent in 2002 to around 7 per cent now,” Mr Landsburgh said.

Improvements to the planning process in Scotland to get more fish farms approved is a key element of the organisation’s Scottish election manifesto.

Mr Landsburgh acknowledged that the industry had received support from the Scottish Government, industry lobby group Scotland Food & Drink and trade promotion agency Scotland Development International, but added: “We are constrained by the fact that the licensing and consenting process (for new fish farms) is taking too long to get approvals. As a consequence of that, we’re concerned that investors would start to lose confidence in the system if it’s not reformed.”

Oslo-based Marine Harvest, Scotland’s biggest fish farmer, delivered a potentially major boost to the industry last month with the announcement that Kyleakin on the Isle of Skye was its preferred location for an £80m fish feed factory that would create more than 50 full-time jobs.