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GLOBEFISH - Information and Analysis on World Fish Trade

Slightly lower supplies in 2019

24/06/2019

While farmed whitefish supplies will increase slightly, it is expected that supplies of wild-caught marine groundfish will be lower than last year. Cod and Alaska pollock supplies will decrease and cod prices are expected to stay high and even rise. Saithe, which is lower priced, may take over part of the market from the high-priced cod.

Resources

There was a small increase in global supplies of whitefish in 2018, according to the Norwegian fisheries analyst company Kontali who gave a presentation on the subject at the North Atlantic Seafood Forum in Bergen in March 2019. Farmed whitefish production increased by 4 percent, while capture fisheries decreased by 2 percent. Thus, the total whitefish supplies increased only slightly in 2019. Iceland’s share of the North Atlantic cod fishery is swelling. In 2019, cod landings in Iceland are expected to increase by 13 percent to 285 000 tonnes, haddock catches are expected to increase by 66 percent to 60 000 tonnes, saithe landings are predicted to go up by 43 percent to 70 000 tonnes, but catches of Atlantic redfish are expected to decrease by 2 percent to about 60 000 tonnes.

The US Pacific cod fishery is seeing increasing competition from the Russian Federation longline fleet. The Total Allowable Catch (TAC) is being reduced in 2019 and probably also in 2020. Prices are dropping, mainly due to the Russian Federation competition. The TAC for Pacific cod in the eastern Bering Sea is expected to drop to 166 475 tonnes in 2019 and further to 124 625 tonnes in 2020. However, the TAC of the Russian Federation for Pacific cod is increasing to 155 800 tonnes for 2019, some 16 percent higher than in 2018.


Processing

Chinese processors have been dominating the processed whitefish market for years, depending on imported raw material from Europe and North America. The main advantage of Chinese processors has been the low wages, but that advantage is now disappearing. Labour costs in China are rising, but Chinese processors are still competitive. A main reason for this appears to be that they have been able to develop their skills over the years, and therefore are able to do specialized cuts that require skilled labour and high quality production. China has built up a large volume capacity for processing and they are not likely to drop out of the game because their costs have gone up. There has been some consolidation in the Chinese processing industry, as some bankruptcies have occurred and some of the large operators have bought companies in financial trouble. This process of mergers and acquisitions will continue throughout 2019.

According to Kontali, there has been a global supply increase of saithe since 2015, but the markets for salted and dried saithe have been weak. Prices have been low and this is now thought to offer an opportunity for Chinese processors to switch from cod to saithe. The price difference between saithe and cod has widened. In 2017, the difference in price for raw material was EUR 1.82 per kg, while in 2018 it had increased to EUR 2.32 per kg.

Trade

The EU28 market for groundfish has increased by 10 percent between 2012 and 2017, according to the European Seafood Federation. In 2017, the EU28 market for groundfish totalled 3.12 million tonnes, of which 89 percent was imported. Nearly 40 percent of this total was cod. EU28 fisheries are not even close to being self-sufficient. In 2017, EU28 landings of groundfish amounted to 512 700 tonnes, including the seven most important species (cod, saithe, haddock, hake, redfish, Alaska pollock and whiting).

Iceland is taking market shares from Norway in the US cod market, according to Kontali. Iceland’s cod exports to the United States of America now account for 12 percent of Icelandic total exports of cod, up from 5 percent in 2009. Chinese imports of whole frozen cod declined by 8.4 percent to 190 067 tonnes in 2018. The main suppliers were the Russian Federation (101 300 tonnes, +4.7 percent), the United States of America (35 100 tonnes, -22.4 percent), and Norway (30 800 tonnes, -19.3 percent). Alaska pollock exports from the Russian Federation fell by 13 percent to 706 700 tonnes in 2018. Even so, pollock still accounts for 39 percent of the country’s seafood exports, which amounted to 2.2 million tonnes in 2018.

The United States of America, and particularly Alaska, has aggressively promoted the consumption of American seafood by Americans. This campaign has been apparently successful, as reported by a survey by the Alaska Fish Radio. The survey included some 4 000 American respondents and 40 percent said they would be willing to pay a higher price for salmon and other seafood if it came from Alaska. Chinese demand for whitefish is increasing. According to statistics from the US National Fisheries Institute (NFI), there is more H&G Alaska pollock going to China than what is being exported in the form of double frozen blocks. While it is difficult to say how large the Chinese domestic market for Alaska pollock is, the Nordic Group has estimated it at between 350 000 and 400 000 tonnes in 2018. Moreover, this market is growing by more than 15 percent per year. 

EU28 and US imports of Alaska pollock from China are declining. In 2017, imports from China into these two markets dropped by 7.6 percent, and preliminary numbers indicate a similar drop in 2018. Russian Federation exports of frozen whole Alaska pollock declined by 12.4 percent in 2018, to 728 400 tonnes. The main markets were China (510 200 tonnes, -15.1 percent), the Republic of Korea (197 000 tonnes, -5.9 percent), and Belarus (10 400 tonnes, -11.1 percent). Significant growth was recorded for markets like Tajikistan, Germany and Nigeria, but the volumes were rather low. Norwegian exports of frozen whole cod also dropped by 23.9 percent to 53 100 tonnes in 2018. The main markets were China (25 100 tonnes, -27.5 percent), Lithuania (6 100 tonnes, -39.2 percent) and the United Kingdom (5 900 tonnes, -23.0 percent).

Prices

The high cod prices are pushing UK consumers away from cod and haddock and turning them in the direction of Alaska pollock, according to Young’s Seafood. This trend is strengthened by the expansion of low-priced food chains like Lidl and Aldi on the UK market. The statistics support this trend. The UK retail sector sold about 26 900 tonnes of Alaska pollock in 2018, up from 24 800 tonnes in 2017 (+8.3 percent). During the same period, the retail sector sold 47 200 tonnes of cod or less 2.2 percent, and 19 800 tonnes of haddock or less 2.5 percent.

Outlook

There will be less marine groundfish on the market in 2019, but there will be slightly more farmed whitefish. Cod supplies will be down, which will help maintain high price levels or even push prices up. Norwegian catches of groundfish (including cod, haddock, saithe and redfish) in 2019 are expected to decline by 13 percent over 2018 to 635 000 tonnes, while catch of these species by the Russian Federation is expected to drop by 20 percent to 442 000 tonnes. Alaska pollock producers will be turning away from production of blocks and fillets and move to producing more surimi and more consumer products. One US integrated seafood company is now working under the motto “ABB – Anything but blocks” and emphasizing production of higher value products.

In the processing sector, China is experiencing higher production costs. Over time, whitefish processing may be returning to Europe, thus saving transport costs. Nevertheless, the Chinese processing sector is still competitive because of their skills and quality. According to the Norwegian Polar Institute there will be some major changes in the distribution of fish stocks in the Barents Sea as a result of climate change. The Barents Sea ice is melting, opening up the ocean to areas where cod can live. As a result, there may be an increase in the cod stocks in this region in the future. 

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