GLOBEFISH - Information and Analysis on World Fish Trade

Drop in total export revenues expected in 2019 as trade tensions take a heavy toll

Global fish production is expected to be flat year-on-year for 2019, with a 3.4 percent decline in capture fisheries production offset by a 3.9 percent increase in aquaculture harvests. Cephalopods and cod are among the wild stocks for which supplies have been tight, while anchoveta production was also lower in the first Northern fishing season in Peru from April to July. Meanwhile, the growth trajectory of the aquaculture sector remains steady, driven in 2019 by a forecasted increase in supplies of the major farmed finfish species – salmon, tilapia, pangasius, seabass and seabream. However, shrimp production in Asia is expected to drop sharply, particularly in India. Both aquaculture and capture harvests have been affected by higher water temperatures this year, with heavy farmed Atlantic salmon mortalities reported in Northeastern Canada and a productivity decline observed for Pacific cod stocks.

Although global per capita fish consumption continues to grow at around half a percent per year, world trade in fish and fish products is expected to contract this year in volume and in US dollar terms. This loss of momentum is in line with forecasts issued by the World Trade Organization (WTO) for the lowest growth in total merchandise trade in a decade due to various economic headwinds. Many large economies are now on the brink of recession as a result of persisting trade tensions and further Brexit delays, leading to a general weakening of demand. It should be noted that the US dollar has generally been stronger in 2019 and this inevitably accentuates declines in the value of trade as expressed in other currencies.

The tariffs introduced by both China and the United States of America have negatively impacted bottom lines all along the supply chain for a number of heavily traded species, including lobster and tilapia. For other commodities, such as bivalves and small pelagics, the impact of trade tensions has been lower and the demand outlook is more positive. Aside from the direct impact of the tariffs on US-China trade flows, the wider geopolitical uncertainty is also translating into an increasingly cautious decision-making environment for seafood businesses, consumers and investors alike. From a somewhat more positive perspective, the potentially permanent transformations that are taking place in key markets such as those for cephalopods, lobster, groundfish and tilapia may boost aggregate demand in the longer term and foster new trading relationships as Chinese exporters seek out alternative markets and US buyers look for new suppliers.

After reaching record heights last year, the FAO Fish Price Index fell in the first half of 2019 primarily due to price declines for many important farmed species, reflected in the relative larger drop in the aquaculture index. Traded prices for shrimp, salmon, pangasius and tilapia were all lower in the first six months of the year, a consequence of both increased supplies and faltering demand. Prices are also weaker for frozen and canned tuna with limited prospects for recovery, although more positive indications are reported for fresh tuna.

Based on year-to-date performance, imports into the United States of America are expected to fall marginally in 2019, while Japanese import growth should slow but remain positive. Price declines for multiple commodities imported into the EU28 will contribute to an estimated 2.8 percent fall in import value this year, a reversal of positive indications in 2017. Declines in imports are also projected for Latin America and most emerging economies in Asia, but China is the notable exception. The forecasted 12 percent increase in imports into China is somewhat unusual considering the broader trends and is explained largely by significant increases in shrimp imports from Ecuador and India. This is likely related to the Chinese government’s crackdown on illegal (unreported) trade through Viet Nam.

On the export side, the challenging trade environment, combined with a drop in shrimp production in Asia and generally weaker prices, is contributing to lower export revenues for many large producers. India, Indonesia, the Philippines and Thailand are all expected to see a decline in export value in 2019. The world’s largest seafood exporter, China, will also see a decrease in export revenues due in large part to contractions in trade with the United States of America across multiple commodity categories.

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