| PUERTO CHACABUCO, Chile
PUERTO CHACABUCO, Chile A deadly fish virus and scarce credit have clobbered the salmon sector in Chile, the world's No. 2 producer, and industry workers like Cecilia Leue are panicked.
Packing choice cuts of bright orange Atlantic salmon at a plant in the town of Puerto Chacabuco in Chilean Patagonia, dressed from head to toe in white plastic overalls, Leue has watched the industry shed 6,000 jobs since infectious salmon anemia (ISA) emerged in 2007. She worries she could be next
"Fish is the only industry here. The issue of the ISA virus worries us a lot," the 20-year-old said through a mask.
"Scarce work because of the ISA virus affects us all," she added, stacking packets of salmon destined for a supermarket in Germany. "We are all worried how the market will react."
Leue and a team of around 650 workers wash, decapitate, gut, section and pack around 110 tonnes of Atlantic salmon a day.
Chile exported a record 445,000 tonnes of salmon and trout in 2008, worth just under $2.4 billion, up sharply from 2007 levels of 397,000 tonnes as salmon farmers harvested fish early to avoid ISA, which is like a deadly flu or cold for the most common Salar species, or Atlantic salmon.
But Chile's leading industry association, SalmonChile, expects output to fall around 30 percent in 2009 to around 320,000 tonnes because early harvesting will mean production gaps this year and sees similar output levels in 2010.
It expects to see a recovery in 2011. Salmon is one of Chile's main exports after copper, fruit and wood pulp.
Demand for salmon is firm on international markets and prices are near record highs despite the impact of the global crisis, industry officials say, but the crisis is closing avenues to financing needed to combat the virus.
"We call it the perfect storm," said Emilio Rodriguez, who heads operations for Acuinova Chile in the Chacabuco area, part of the Pescanova group which is one of Chile's top 10 producers. "The industry is being pounded on two sides."
"You have the outside world, which will not finance you in times of (global) crisis ... and to that you have to add the sanitary crisis affecting the industry."
Atlantic salmon takes three years to grow from egg to adult, so early harvest means producers miss out on harvesting fully-grown fish later in the cycle.
"We know it is a crisis which is going to last all of 2009 and part of 2010," said Rodriguez, whose company has turned increasingly from Atlantic salmon to other species like Cojo salmon favored in Japan and trout, to which ISA is not fatal.
World No. 1 seafood producer, Norway's Marine Harvest, the biggest industry player in Chile, said last month a "dramatic" deterioration in Chile meant it would no longer be able to break even in that market this year. It expects sales volumes will fall to 30,000 tonnes in 2009.
Chile's salmon industry has faced a series of fish diseases in recent years, as well as algae.
Multiexport Foods, a leading Chilean salmon producer, said on Wednesday it had been hit by an algae bloom in southern Chile that can kill fish via asphyxia. Its shares fell nearly 7 percent after the news.
Chile's salmon industry is implementing a series of reforms to try and combat ISA, taking lessons from other producers like Norway, Canada, Scotland and the Faroe Islands, who have all fought the virus.
Environmental groups accuse Chile's salmon industry of poor sanitary conditions. They complain that submerged cages are overcrowded with salmon, and that producers use too many chemicals and antibiotics.
Producers are trying to spread fish out more to avoid virus contagion and isolate affected populations. They also are taking steps to improve plant cleaning and water treatment. But they are struggling to raise the $250 million it will cost to carry out those measures.
"(The global crisis) has an impact, not on the demand side ... but on the financing side for all the changes that need to be implemented," said Rodrigo Infante, CEO of SalmonChile.
However ISA is deemed not harmful to humans and producers say they can continue to export even affected fish.
"You can't tell if a fish has ISA or not, but it is important to make clear there is no health problem for humans," said Victor Soto, who manages the production floor of Acuinova's plant in Puerto Chacabuco, which lies 1,010 miles south of the capital, Santiago.
(Editing by David Gregorio)