As the COVID-19 pandemic lingers on, the effects on the seafood market are worsening. In particular, prices for fresh fish are under pressure, while frozen and packaged products remain the preferred choice among consumers. There is no quick relief in sight, and it is now expected that the situation will last well into 2021. Meanwhile, the International Council for the Exploration of the Sea (ICES) is suggesting higher quotas for Atlantic cod and haddock.

Supplies

Research undertaken by the Norwegian research institute Akvaplan-niva indicates that the Norwegian coastal cod, which is a stationary stock spawning along the coast of northern Norway, may have moved further north because of warmer waters, and found new spawning grounds around Svalbard. Until now, the Arctic region of the Barents Sea has been the domain of the Northeast arctic cod which is a migratory stock that has been quite abundant in recent years. If the indications uncovered by this research is correct and lasting, this will have an important impact on the future protection and sustainable management of both of these cod stocks.

The International Council for the Exploration of the Sea (ICES) has recommended a 20 percent increase in the total allowable catch (TAC) for Atlantic cod for 2021, much to the delight of harvesters. The recommended TAC amounts to 885 600 tonnes. For haddock, the recommended quota is 232 537 tonnes, up by 8.2 percent compared to 2020. In recent years, the final agreed quota has exceeded the advice by ICES.

The Russian Scientific Fishery Institute has revised its quota advice for whitefish, and increased the Alaska pollock quota slightly for 2021, to 3.2 million tonnes. Over the past ten years, Russian TAC has fluctuated between 2.76 million tonnes and 3.21 million tonnes. After a relatively normal A season for the pollock fishery in Alaska, harvesters are now uncertain about how the B season will turn out. The season started on 10 June and will last until 31 October 2020. The B season is expected to yield about 750 000 tonnes, most of which goes for surimi, pinbone-out fillet, or deep-skin fillets.

Markets

In May, China reported that the seafood market was beginning to recover. Demand was good for the May Day holiday, especially for some groundfish species like black cod, Alaska pollock, and flounder. While in the past, Alaska pollock was mainly imported for processing and re-export, an increasing amount is now retained in the Chinese market for domestic consumption. While the banquet and restaurant market is still weak, retail sales are moving up. “Arctic cod” promoted by the Norwegian Seafood Council is also in demand.

The COVID-19 pandemic has affected sales of fresh and frozen cod from Norway, although it does not really show in export statistics for the first six months of the year. Exports of whole fresh cod declined just marginally during this period, from 28 211 tonnes in 2019 to 27 317 tonnes during the same period in 2020. For whole frozen cod, statistics actually show a slight increase in shipments, from 29 409 tonnes during the first half of 2019 to 30 008 tonnes during the same period in 2020.

However, late in the period the decline is more pronounced. In week 26 (22 June to 27 June), there was a noticeable reduction in shipments of fresh whole cod from Norway, as exports fell by 22 percent to 260 tonnes compared to the same week in 2019. Exports of frozen whole cod, on the other hand, increased by 58 percent to 852 tonnes, and frozen fillets of cod increased by 104 percent to 282 tonnes. The shift from fresh to frozen products is in line with the trend observed since the onset of the COVID-19 pandemic. Consumers now prefer frozen and pre-packaged products.

The COVID-19 pandemic has inflicted economic hardship on the European consumer, and this may have caused a certain change in consumer purchasing habits. Instead of buying the more expensive “skrei” (spring cod from the Lofoten region), consumers are turning to the less expensive Saithe. The Norwegian Seafood Council’s representative in Spain sees great opportunities for Saithe on the Spanish market, since Spaniards like the taste. Saithe’s distinctive flavour goes well with Spanish cooking, which which often involves preparation methods like frying and baking, and is good value for money. Consequently, there is a shift away from “skrei” to Saithe.

Trade

During the first three months of 2020, Norwegian exports of whole frozen cod declined by some 7.6 percent, to 18 780 tonnes. The largest reduction was to China, the largest market, which imported 20 percent less compared to the same period in 2019. Exports to the United Kingdom of Great Britain and Northern Ireland were also down, by 18.5 percent, to 2 650 tonnes. The Netherlands increased imports of frozen whole cod during the first three months of 2020, from 12 195 tonnes in the first quarter of 2019 to 14 289 tonnes in the same period in 2020. However, there was a drop in imports from Norway (-8.7 percent to 8 072 tonnes), while imports from the Russian Federation shot up by 364 percent to 4 720 tonnes.

China also had an increase in imports of frozen whole cod during the review period. Total imports were up by 7.4 percent to 43 817 tonnes, compared to 40 815 tonnes during the same period in 2019. Again, the Russian Federation registered the largest increase in exports to 25 508 tonnes (+34 percent), while the United States of America reported a decline of 21 percent to 6 884 tonnes.

Norway, the second largest supplier, more or less held its own at 8 579 tonnes, slightly down from 8 725 tonnes during the first three months of 2019. But while imports of frozen whole cod were up, Chinese exports of processed frozen fillets were down by 13.5 percent, to 22 304 tonnes. The same trend was noted for Alaska pollock. China imported 6.3 percent more frozen whole Alaska pollock during the first three months of 2020 than during the same period in 2019, but exports of frozen Alaska pollock fillets dropped by almost 25 percent, to 36 389 tonnes. The Chinese processing industry, which closed down during the COVID-19 lockdown, re-opened again, but is not quite up to full capacity. New COVID-19 cases may slow down the re-opening process.

The Russian Federation saw an increase in its exports of whole frozen Alaska pollock, which went from 270 910 tonnes during the first three months of 2019 to 305 949 tonnes during the same period in 2020. The largest market was China, which accounted for as much as 83.6 percent of the total. Exports to the Republic of Korea went up by 22 percent, to 45 976 tonnes. German frozen Alaska pollock imports went up by 6.8 percent to 45 577 tonnes, of which 25 406 tonnes came from China (55.7 percent of the total), while 13 701 tonnes came from the United States of America (30 percent of total).

Surimi

Retail sales of packaged surimi products have been increasing substantially in the United States of America. This is a direct result of the COVID-19 pandemic, because consumers want packaged, “protected” products they can consume at home. Surimi’s shelf life is longer than for fresh fish, it  is easy to prepare and is relatively inexpensive. Thus it appeals to a lot of consumers who want to maintain their consumption of healthy seafood.

In the foodservice sector, on the other hand, the picture is a lot bleaker. About 70 percent of the surimi sold in the United States of America is in the form of salads sold through delis and salad bars, and this sector has seen a dramatic drop in sales during the pandemic. Self-service salad bars experienced a 100 percent drop in sales as buffet and self-service options were banned.

Prices

Chinese processors of cod and haddock have suffered from reduced orders from the foodservice sector, and this has resulted in prices being pressured. Prices for Barents Sea cod and haddock in China (H&G, C&F China) started a steep dive at the beginning of the year, and so far, they have stayed low. However, in June there were signs of improvement, as demand was slightly up and prices were expected to follow suit. As foodservice units in the United States of America and Europe are starting to re-open, demand is improving. But as the foodservice sector has been hard hit, prices for fresh cod and haddock have been hit much harder than frozen products.

Russian frozen Alaska pollock prices fell by as much as 28 percent in the spring of 2020 as a result of the COVID-19 pandemic. Russian producers and exporters still expressed optimism that the markets would recover soon. Asian markets showed signs of improvement in May. But as it appears that the first wave of COVID-19 in the United States of America has not yet reached its peak, that market is not likely to recover so rapidly.

Outlook

While there were signs of recovery in late May and early June, the outlook at the beginning of July is not that optimistic. There are indications of a “second wave” of COVID-19 in several main markets, and this may set recovery back by months. Prices have come under strong pressure, mainly because of the closing down of the foodservice sector, and although this sector is re-opening in some markets, consumers may be slow in drifting back into restaurants and delis. Many consumers are being very cautious and are preferring packaged “safe” products for home consumption.

The groundfish market will not fully recover until the COVID-19 pandemic is over, and the pandemic does not appear to be over until an effective vaccine is in place. So the outlook is very bleak for the rest of 2020, and maybe well into 2021.