WHEN the Queen sat down to tuck into her Diamond Jubilee luncheon in June 2012, pride of place on the plate in front of her was Scottish salmon.

Not any Scottish salmon, however.

This was farmed Scottish salmon, reared in pens and part of what has soared to become a £600 million industry and Scotland’s biggest food export.

Award-winning Loch Duart salmon was also served to guests at Prince William’s wedding to Kate Middleton the previous year. It has graced Michelin-starred tables - Gordon Ramsay, Raymond Blanc and Rick Stein have all featured farmed salmon on their menus.

READ MORE: Salmon farms are turning Scotland's seas into an open sewer, claim campaigners

“It’s such a wonderful product, produced in a beautiful part of the world,” says Alban Denton of Loch Duart, which produces around 5000 tonnes of farmed salmon at its Sunderland and Uist operations. “What people see when they visit us in Scourie is a 250-year-old building that sits next to a slipway. In the morning the sun rises behind your back and in the evening its sets in front of your eyes. You can’t imagine a more beautiful environment.”

Loch Duart’s farmed salmon is at the top end of the industry: it was recently served for guests at the Los Angeles premiere of the seventh season of Game of Thrones. The fish, explains Denton, are fed a mainly marine-based diet, they’re kept in low-density pens which provide ample room to swim against the tide - the business was the first to be RSPCA approved – and native ballan wrasse act as ‘cleaner’ fish to pluck sea lice from the salmon, helping reduce the need for chemical-based medicines.

“The industry can’t succeed unless we look after the environment, the fish and the people,” adds Denton. “Failing to do even one of those will cause us problems.”

Some, however, fear parts of the industry are already in the grip of major problems. Last month a damning Holyrood report claimed fish farming could cause “irrecoverable damage” to marine life if urgent steps are not taken.

READ MORE: Salmon farms are turning Scotland's seas into an open sewer, claim campaigners

Holyrood’s environment, climate change and land reform committee warned “the status quo is not an option” and suggested a “precautionary approach” to further expansion. “Scotland is at a critical point in considering how salmon farming develops in a sustainable way in relation to the environment,” its report added.

The warning, in advance of a wider inquiry into salmon farming in Scotland being undertaken by the rural economy committee, comes against a background of a range of alarming factors which have cast a shadow over an industry heralded as a saviour for isolated communities where jobs are scarce and the economic benefits of a local fish farm can be impressive.

Sea lice, which feed on the skin and mucous of fish, have threatened to shatter the sector’s pure image, their presence compounded by questions raised over how data is recorded and released. Meanwhile high mortality rates – around a fifth of the industry’s production fails every year – have raised the hackles of welfare and environmental groups who also cite pollution from fish farm effluent and noise alarms designed to chase away seals which impact on dolphins, whales and porpoises.

With the pressure of rising international demand and ambitious targets to increase production from the current 163,000 tonnes – the industry’s currently valued at £765m – to 400,000 tonnes by 2030, there are now increasing calls for tighter regulation and a moratorium on expansion.

“Regulation of the industry is not up to scratch. It is failing and it needs over-hauling. It needs to be effective and enforced,” says Andrew Graham-Stewart, Director of Salmon and Trout Conservation Scotland.

“Salmon farming happens beneath the waves. Consumers would be horrified if they saw fish covered in sea lice. If they saw underneath the cages and how excrement builds up, it’s pretty horrible.

“If the consumer saw small wild sea trout caught a few miles away from a salmon farm covered in sea lice, being eaten alive, people would be shocked. But most of what goes on in the industry is hidden away. That’s why there is not more a public outcry about the conditions of farms.”

READ MORE: Salmon farms are turning Scotland's seas into an open sewer, claim campaigners

Demands for action appear to be growing. More than 35,000 people have recently signed a petition calling on the Scottish government to routinely test effluent from salmon processing plants for diseases, claiming polluted waste water could threaten wild salmon stocks.

“We should be very concerned. Any food production system that has such a high level of failure, high level of deaths of livestock before harvest and taken to market would point to big, underlying problems,” says Mark Ruskell, food and farming spokesman for the Scottish Greens MSP and member of the environment committee.

“The government sat down with the industry and set a target to double salmon farming production. The evidence we have seen is that will outstrip the capacity of the environment to sustain. Salmon farming is already reaching the limits.”

Until now, Scottish farmed salmon has all the ingredients of being a national success story; raised amid stunning scenery, healthy for consumers and a boon for highland communities. The industry is estimated to provide direct work for around 2000, and up to 10,000 when associated jobs are taken into account.

So what has gone wrong?

“In recent years we’ve had something of a perfect storm where medicine used to control sea lice has declined in efficacy, a general trend of warming seas due to climate change and El Nino,” says Ben Hadfield of Marine Harvest, which produces 60,000 tonnes of salmon every year for retailers like Sainsbury’s, Morrisons and Waitrose.

“What’s frustrating is the common over-statement of the environmental effects. I’m a diver, a fisherman and I work in this industry, and I don’t recognise some of what is said. We have a number of very determined activists paid to be negative. Many times it goes beyond science and is over-stated.”

There are, he admits, “challenges to overcome”. And the Scottish Government’s ambitious 2030 target of 400,000 tonnes of farmed salmon per year may be one challenge which falls by the wayside.

“Whilst I like ambition, we won’t be increasing production until we’re happy that the biological performance is improving at the same rate,” he adds.

READ MORE: Salmon farms are turning Scotland's seas into an open sewer, claim campaigners

Julie Hesketh-Laird of the Scottish Salmon Producers Organisation believes the sector is tackling its challenges and can continue to grow both in production levels and value.

“The industry is listening,” she insists. “It’s in no-one’s interests if the environment is damaged, and in everyone’s that the fish are healthy.

“There are problems, but the industry is fixing them. There are a lot of regulations in the industry and SEPA are doing a thorough policing job. Are there enough? I’d say yes, and if the regulations are not being applied, we’d ask why not?”

Perhaps influenced by the peaceful surroundings of Badcall Bay in Sutherland, where Loch Duart’s offices overlook a picture postcard scene of tiny islands and a setting sun, managing director Alban Denton calls for calm.

“There needs to be open debate,” he says, “but it’s in everyone’s interest that there’s an element of compromise.

“We should be proud of what we do and realistic that we - like every industry or business – are not perfect.”