In this paper, we analyze total factor productivity change in the Norwegian salmon aquaculture sector from 1996 to 2008. During this period, the production has on average been growing with 8% per year. At the same time, the price of salmon has stabilized indicating that an increase in demand is driving the production growth rather than increasing productivity in the sector.
A Malmquist index approach is used to calculate total factor productivity change applying data envelopment analysis to construct the underlying production frontier. Furthermore, the bootstrap approach has been applied to construct confidence intervals for the Malmquist change indices. The results show a total factor productivity change of 1–2% a year, where the contribution from technical efficiency change is between 0.2 and 1.2% and technological change is between 0.6 and 0.8%.
The results show that productivity growth has slowed down over the years indicating that demand growth is the main driver of production growth. Furthermore, as productivity growth is slowing down production growth can only happen when the production area is increased. The scarcity of suitable production sites can potentially be the most limiting factor to future production growth in the salmon aquaculture industry.