Groundfish supply very strong - Groundfish supply was very good in the course of 2009, with prices tending downward. This trend is likely to continue in 2010, as Russian Alaska pollack production is expected to grow further during the coming year. The impact of low cod prices was felt particularly by the aquaculture industry, reducing drastically the prospects of future profits, and many farms had to close down.

More groundfish to US market

In the first half of 2009, US imports of groundfish, both block and fillets showed a 14% growth compared with the same period of 2008. In fact, total imports of cod-like groundfish reached 75 000 tonnes during the January-June 2009 period. The reason for this increase can be mostly attributed to higher imports of blocks and slabs rather than to increased fillet imports.

China remains the top exporter of both fillets and blocks/slabs to the US market (with shares of 77% and 84% respectively) shipping 38 200 tonnes (+9%) and 21 300 tonnes (+20%) of these products to the US during the first six months of 2009. This country is mainly reprocessing imported Alaska pollack from the USA and Russia.

Iceland is the second main exporter of fillets to the US market, supplying 5 100 tonnes during January-June 2009, up 19% from the previous years. This trend is in line with the higher quotas for cod from Icelandic waters in 2009. As far as blocks and slabs are concerned, the Russian Federation ranks second in the top exporters to the US despite the limited quantity shipped, only 1 800 tonnes in the first six months of 2009.

Alaska Pollack supply good

Alaska pollack is the main groundfish species captured in the world, and thus any change in supply and supply prospects has an immediate impact on the world market. The Alaska pollack fisheries and the stocks in the Sea of Okhotsk are reportedly very good. In 2010, total Alaska pollack catches worldwide are expected to reach 3 million tonnes, of which 1.7 million tonnes will come from Russia. This is a 400 000 tonne increase over the 2009 figure. The expected increase in supply has already had a negative impact on prices, as prices dropped from USD 1 700/tonne in January 2009 to USD 1 350/tonne at present. Further declines are expected. The Marine Stewardship Council (MSC) certification process for Russian Alaska pollack is still under way.

China is again the top provider of Alaska pollack fillets to the EU market, particularly to the German market and this year also to the French market. Germany, main market for Alaska pollack in Europe, imported 75 000 tonnes of frozen Alaska pollack fillets during the first half of 2009, 18% less compared with the same period of 2008. Sixty percent of these imports originated from China (45 300 tonnes, almost 5% more compared with the previous year). On the French market, China contributed with 61% (12 900 tonnes) of total frozen pollack fillets during January-June 2009, 12% more compared with 2008.

Other important suppliers of Alaska pollack to the German market are the USA and Russia each with a share of 18% (13 500 tonnes and 13 200 tonnes respectively) despite a decline of 54% and 21% in Alaska pollack shipments. The decline in US exports is in line with reduced catch quotas. Both countries are also important exporters of Alaska pollack to the French market.

The US pollack fishing industry is awaiting the decision on the next year’s total allowable catch (TAC). The final TAC for 2010 will only be announced after the meeting of the North Pacific Fisheries Management Council in December 2009. In the meantime, there is speculation about the possible increase in the TAC. Late last year a proposal of 1.23 million tonnes was made, but more recently a 10% increase from the 810 500 tonnes this year to about 900 000 tonnes for next year was mooted. The final decision will depend on the recruitment of juveniles to the Bering Sea pollack population and on the analysis of survey results by scientists.

It is important for industry for the TAC to be set as early as possible because the Bering Sea pollack stocks will affect global whitefish supply and demand, especially for surimi, pollack roe and fillet and H&G products. The forecast for the output of Alaska pollack by the US fleet for the full year indicates a decline of nearly 40% from the 125 670 tonnes produced last year.

Norwegian cod export growing

In the first six months of 2009 Germany experienced a 31% drop in frozen cod fillet imports totalling a mere 7 700 tonnes. China remains the top supplier to this market with a 56% share, equivalent to 4 300 tonnes, down 36% from 2008. During the first half of this year, UK frozen cod imports have down by 8% mainly caused by the decline in Chinese (second main supplier, 6 700 tonnes) and Danish (in fourth position, 3 600 tonnes) exports. These countries shipped 41% and 20% less cod to the UK in the first half of 2008. The effect on overall imports by the UK was counterbalanced by the top supplier, Iceland (26% share), which increased its exports by 36% in this first six months of 2009 reaching 9 500 tonnes.

Norway and Russia have reached a fishing quota agreement for the Barents Sea for 2010, with a 82 000 tonnes increase in the cod quota from 2009 to 607 000 tonnes. Norway’s share will amount to 271 000 tonnes, up 16% from 2009. The haddock quota will rise from 194 000 tonnes to 243 000 tonnes in total, of which Norway’s quota will amount to 116 000 tonnes. The rise in the quotas is attributed to the healthy stocks. In Norway, cod exports are growing as stocks increase and production trends are favourable and, with a recovering market, prices have become attractive again for buyers.

Difficult year for Argentina

Argentina is the world’s main hake fishing country. Argentinean landings of hake in the first half of 2009 totalled 186 467 tonnes, which represents an 11% fall compared with the same period in 2008. The lower level of  landings  is  a  trend  observed  in  all  species,  hubbsi (-2%), hoki (-29%) and southern hake (-32%), with hubbsi being the main species captured with a 72.5% share in total landings. Landings of hubbsi hake in Argentina have been falling continuously since 2005, and the resource is considered to be in a critical state. However, according to research performed by the National Institute of Fisheries Research and Development (INIDEP) at the beginning of the year, the resource might be showing some signs of recovery. The study showed a higher level of juveniles compared with last year, and even more significant, a higher number of specimens in the age group prior to the reproductive stage than in 2005. These results allow some optimism for the future state of the resource.

In order to improve the management of the hake fishery, the national authorities announced a plan to implement an individual capture quota system. The system is expected to start operating at the beginning of 2010.

During the first semester of 2009, Argentinean exports of hubbsi hake products grew by 11% in terms of volume (65 800 tonnes) compared with the same period in 2008, but given a 19% drop in unit value of imports, the total revenues for hubbsi exports fell by 10%, totalling USD 148.6 million.

Frozen fillets are the main exported product, with 39 419 tonnes worth USD 102 2 million. They account for 64% of total volume and 74% of total value of exports of hubbsi. The main destination for Argentinean frozen fillets in the period reviewed is Brazil, with a 46% share followed by the USA market (12%) and Italy (10%). Sales to Brazil grew significantly in the period surveyed. The second main exported product is whole frozen hake, with a 30% and 21% share in total volume and value. Markets for these products are more diversified, with Jordan being the main buyer in terms of volume (18%), followed by Spain (15%) and Cameroon (9%).

The fishing industry in Argentina is going through a very difficult period. This is caused by several factors. Apart from the low availability of raw material in the hake sector, the international market situation has pushed down prices. The lower income makes it difficult to cope with higher costs and a significant proportion of wages in the total cost of production (which in some cases reaches 60%). Discussion over higher salaries caused conflicts and strikes. The European hake market appears to have been fairly flat in the first half of 2009. In Germany, imports of frozen hake fillets remained at 2008 levels. The USA is the top exporter (26% of total) with 2 400 tonnes, more or less the same quantity sold during the same period of last year. Argentina and Peru, in second and third positions respectively,  accounted  for  1 900  tonnes  (+26%)  and  1 600 tonnes (-27%) during the period in question.

The situation for frozen hake in Italy is also not very dynamic. Imports increased by 12% during the first part of this year compared with 2008. All top suppliers kept their deliveries more at the same levels as 2008: Argentina at 5 500 tonnes, South Africa at 2 800 tonnes and Spain at 2 300 tonnes.

Groundfish prices likely to go down further

Supply is expected to continue to be high in 2010, leading to further reductions in groundfish prices. The economic crisis also impacted demand for groundfish products, and, in addition groundfish has not been very successful in promoting its image as a product from capture fisheries. Competing whitefish products such as tilapia, pangasius and catfish have managed to take market share away from groundfish, at a time of low groundfish prices. Cultured species are often more suitable for restaurant and catering, as they guarantee size and quality – which is not always the case for capture fish products.