The farmed salmon industry continues to break new ground, with export revenues and prices reaching never-before-seen heights.

The root cause is a widening gap between production volumes and global demand, and although so far traditional markets such as France and the USA have remained largely unfazed by the exceptionally high prices as they have had to compete with Asian, Brazilian and Russian buyers for a limited supply of fish, the long term effects on markets could be significant. It is still the Norwegian producers that are successfully turning high product prices into record profits, while Chilean farms continue to suffer from disease problems and high feed costs that compound an overall production efficiency disadvantage. Moves to cut back Chilean production in 2014, part of an attempt to improve the profitability of the industry, will contribute to another year of tight supply to come. 

Prices

After trending strongly upwards for the first half of 2013, prices turned at the end of the summer as Norwegian farmers began harvesting greater volumes. In contrast to 2012, however, the slump was soon halted and reversed, and by the end of the year prices for Norwegian fresh whole Atlantics had unexpectedly surpassed previous levels and broken the 50 NOK per kg mark to reach an all-time record high. The weakening of the NOK against the EUR, by 15% over the year, was another contributing factor. Prices for Chilean product were slower to catch up, but positive export price development was seen for the major markets of the USA, Japan and Brazil in the second half of 2013. The forecast for continued high prices is good news for farmers, but many processors are uneasy about the price level, as high raw material costs tend to build up at the processing stage when large, consolidated retailers are slow to raise prices for consumers.

Norway

The Norwegian industry has been setting record after record in recent months, and export figures for the first nine months of 2013 continued this trend. The total value for this period of NOK 27.3 billion, as reported by the Norwegian Seafood Council, is the highest ever, NOK 6.1 billion higher than for the same period last year. A decrease of 36 700 tonnes in volume, to a total of 673 200 tonnes, reflects tight Norwegian supply, which was a key factor behind the record price levels.

With supplies limited, and the Kroner weakening against the euro, Norway concentrated more on the lucrative EU market in 2013. Total EU-destined exports amounted to 461 000 tonnes worth NOK 18.3 billion, representing a decrease of 1% and an increase of 37% respectively compared with the same period in 2012. Within the EU, exports to France, the largest market for Norwegian salmon, were down 6% in volume, to 90 400 tonnes, and up by 29% in value, to NOK 3.7 billion. In contrast, exports to Poland, the second largest market this year - and the leading salmon processor - increased by 9% in volume and 54% in value to 85 700 tonnes worth NOK 3.3 billion.

Norway’s trading relationship with Russia was somewhat tense in 2013, and salmon and trout imports were the one exception to a ban on imports of chilled fish products from Norway imposed at the beginning of 2014 for sanitary reasons. However, a number of Norwegian salmon firms have been subject to Russian controls, while Russian processors have expressed their displeasure at Norwegian prices.  These developments have seen January–September export volumes to Russia fall by 21% in 2013 compared with the same period in 2012. However, thanks to the high prices, export revenue was up by 11% over the same timeframe. 

Meanwhile, exports to Asia declined by 13% in the first three quarters, partly explained by a lack of the big fish that Asian markets generally prefer. The drop was most pronounced in the cases of Taiwan PC, Japan and China. China is another country that has had a strained trading relationship with Norway in the past, and its growing demand for salmon is currently met mainly by imports of wild Pacific salmon from Russia and the USA rather than farmed Norwegian product.

Trout

Norwegian exports of trout were up 30% in value to a total of NOK 1.6 billion. The fact that the corresponding increase in exported volume was only 1%, to 40 000 tonnes, reflects strong demand growth for trout in parallel with that for salmon. Russia is by far the biggest market for Norwegian trout, taking half of the total export volume in 2013. However, the Russian share of Norwegian trout exports is getting smaller, as it appears that importers are now shifting more towards Chilean product. Norway’s trout exports to Japan, China and Thailand were all up.

Chile

The Chilean salmon industry is starting to recover, partially due to higher prices being achieved by their domestic products in international markets. Some of these markets, such as Brazil and Russia, have been consolidated.

During the period January–September of 2013, total exports of salmonids came to 398 400 tonnes, a 16% increase if compared with the same period in 2012. On average, FOB price for salmonid exports decreased by 2% compared with the same period in 2012, to USD 6.2 per kg.

In the first nine months of the year, Atlantic salmon was the most exported salmon species, amounting to 224 000 tons of exports for a total of USD 1.62 billion, with an average FOB price of USD 7.2 per kg. In terms of quantity, a substantial increase of 39% was recorded while value was up 52% versus last year. Coho salmon was the second most important exported species, with 85 600 tonnes traded (+8%), which were valued at USD 302 million (-29%) compared with 2012, with an average FOB price of USD 3.6 per kg. In the case of rainbow trout, exported volume in the reporting period reached 87 600 tonnes, which means a 13% decrease in comparison with 2012. In terms of value, a 15% fall was registered. By volume, frozen salmon and trout were the main products exported, followed by fresh and chilled products.

In terms of volume, Japan was the main destination throughout the period for both Chilean salmon and trout, and Japan destined exports came to approximately 113 000 tonnes for a total value of USD 563 million. The USA followed, importing 93 000 tonnes from Chile worth USD 834 million, making it the top market in terms of value. Meanwhile, exports to Brazil were about 57 000 tonnes, 23% more than the same period in 2012. The value of these exports increased from USD 222 million to USD 340 million.

According to the executive vice president of Multiexport Foods, José Ramón Gutiérrez, the Chilean salmon industry is undergoing a crisis that differs greatly from the previous one. Despite full employment, good prices and a high level of production, producers are losing money. In fact, the Undersecretary of Fisheries and Aquaculture, Pablo Galilea, said the industry is losing a dollar per kg produced. Galilea said that though health issues have been brought under control after the “successful” regulations implemented after the crisis of the ISA virus, this has resulted in an increase in costs. Improving sanitary conditions will continue to be a focus for the sector, with the “vital” aim of relocating a third of the aquaculture concessions for salmon by 2015, as this affects 30% of the total.

Russia

According to data from the System Center for Monitoring of Fisheries and Communication, from January to November 2013, the Russian catch of salmon species decreased in 2013 by 8% compared with the same period in 2012, to 364 800 tonnes. During this period, exports of wild-caught salmon from Russia increased by 36% or 70 800 tonnes to reach a total of 114 000 tonnes. Approximately 30% of the salmon catch during January–November 2013 was exported to East Asia. Following demand trends worldwide, salmon species are in high demand in East Asia despite the global price increase for those species. The average export price of sockeye salmon for January–November 2013 increased by 4.2%, to USD 4.5 per kg. For other salmon species (pink salmon and chum salmon), the average export price went up by 4.6% to USD 1.9 per kg, compared with the same period in 2012.    

UK

The UK exported 8% more salmon in the first nine months of 2013 than in the same period in 2012, for a total of 80 400 tonnes. UK suppliers also benefited greatly from the high price level, which saw a 27% increase in the corresponding value, to USD 645 million. The USA is the major destination, accounting for 36% of the export volume – almost entirely fresh whole Atlantics. Meanwhile, efforts to establish UK salmon in East and Southeast Asia have met with some success, and export volume to these regions increased by 64% compared with the same period in 2012.

The growth in UK exports has been matched by its growth in imports, as demand for salmon on the domestic market continues to strengthen. Import volume was up by 13% in the reporting period, to 60 000 tonnes, while value went up by 32% to USD 470 million. The Faroe Islands is UK’s main supplier, and Faroese salmon, mainly fresh whole Atlantics, made up 42% of the import volume in the first three quarters of 2013. The UK also consumes large quantities of canned pink salmon, mainly from the USA. Good catches in Alaska have seen the price drop for this product in the second half of the year. 

Markets

Demand remains strong in major markets, and even where high raw material costs have made their way to the consumer, the dampening effect on demand has been much less than anticipated. The USA and Japanese markets were somewhat slower to gather momentum than the EU, but the upward trend in prices in the second half of the year points to firming underlying demand there as well. Consumers will inevitably begin to look for other protein sources when prices are too high, but salmon benefits from being largely distinct from other seafood in terms of substitutability, which means more direct competition with increasingly expensive terrestrial meats.

The EU is by far the largest single market for salmon, consuming more than all other markets combined. However, analysts predict that the balance will shift in favour of other markets within four to five years. Thailand is showing good growth, while Indonesia and India have been identified as having significant potential for the future. China, Russia and Brazil are already major players in the world market with combined imports of 342 000 tonnes in the first nine months of 2013. Of the producers looking to establish themselves in these markets, Chile has a clear geographical advantage in the case of Brazil and supplies essentially all of its salmon, and has also taken advantage of Norway’s lack of supply and continuing trade disputes to increase its share of the Chinese and Russian markets in 2013. However, the predicted cutback in Chilean production next year may halt this expansion.    

France

In the first three quarters of 2013, France imported 114 700 tonnes of salmon, a 3% drop compared with the same period in 2012. The value of these imports, however, was up 22% versus 2012, a result of the substantial rise in prices. Norway remains the number one supplier, taking a 59% share of the volume, followed by the UK and Chile with 13% and 7% respectively. Soaring raw material costs are squeezing margins for French smokers, and there are reports that some have been put out of business. The high Norwegian prices, and the lack of fish, has prompted more importers to look towards Chilean salmon, with Chilean-origin imports increasing by 63% in January–September 2013 compared with 2012.

Germany

Germany has shown good growth this year, importing 11% more than in the first 9 months of 2012, to a total of 99 200 tonnes. As in the case of France, high prices meeting with firm demand made the increase in value significantly larger, at 26%. Much of the increase has been driven by higher imports of value-added products, in particular frozen fillets and smoked, which made up 23% and 27% of the import volume respectively. This is good news for Polish smokers, who supply the major proportion of German smoked salmon imports, and also for Chile, which supplies frozen fillets. In fact, German imports of Chilean frozen fillets quadrupled compared with the same period in 2012, and Chile’s share of this market segment is now approaching that of China, the lead supplier.

Russia

The Russian salmon market in 2013 was characterized by the decreasing catch of salmon species in the Russian far east, increasing exports of salmon species from the same region and decreasing imports of fresh and chilled salmon into the Russian market. At the same time, increasing imports of frozen salmon and trout into Russia has prevented a deficit on the Russian market and helped to balance the overall supply. The potential market capacity for salmon species in Russia is estimated to be between 450 and 470 000 tonnes. 

In parallel with the increasing average export prices of salmon, the global average import prices of salmon and trout have also been driven significantly upwards. During January–November 2013, the average import prices of fresh and chilled salmon went up by 40% to USD 6.9 per kg compared with the same period of 2012. For fresh and chilled trout, the average import prices increased by 34% to USD 6.9 per kg and for frozen trout by 10% to USD 5.4 per kg. As a result of the global price increase for salmon species, exports of Russian salmon species grew, and salmon and trout imports into Russia decreased. Indeed, in January–November 2013, imports of fresh and chilled salmon and trout went down by nearly 22% to 115 600 tonnes, compared with the same period in 2012. At the same time, imports of frozen salmon and trout (mainly from Chile) increased by 1.9 times reaching 71 100 tonnes. An important factor behind this was a fall in the import fee for frozen fish, from 5% to 3.75%, from 1 September 2013. 

Japan

Japanese salmon imports follow a cyclical pattern, whereby farmed Chilean salmon is imported in large quantities between December and mid-summer, before being replaced by Russian and US catches of wild sockeye from then onwards. From January to September, of the total 148 700 tonnes imported – 5% less than 2012 – 60% consisted of Chilean-origin fish. Another particular characteristic of the Japanese market is that it imports the vast majority of its salmon in frozen form, with the result that leftover stocks can delay the transmission of consumer side demand to import prices. Following an influx of cheap surplus Chilean salmon in 2012, initially low prices began to rise steeply for both farmed and wild salmon in the third quarter of 2013, suggesting that these stocks have finally been used up. However, the delayed price response meant that the value of Japan’s imports was 22% less than 2012 in the first three quarters, for a total of USD 800 million.

USA

According to NOAA.gov, exports of salmon to the USA during the first nine months of the year were led by Chile, with 84 800 tonnes for a value of USD 833 million, and followed by Canada, with 62 400 tonnes worth USD 428 million. Over the first nine months of the year, the USA imported 220 600 tons of salmon products, which represents a 7% increase when comparing it with the same period in 2012. Total value of imports from January to September rose by 21% by the same comparison.

Meanwhile, over the same period, the USA exported 182 400 tonnes of salmon worth USD 713 milion. Compared with the first three quarters of 2012, these figures represent increases of 35% and 19%. China and Canada are the major markets for US exports, respectively taking 34% and 24% shares of the export volume over this period, and 24% and 36% of the value.