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Tighter market balance mitigates COVID-19 impact for seabass and seabream sector

07/01/2021

Given the high proportion of seabass and seabream sales that are dependent on the severely impacted restaurant sector, the industry was at risk of being severely affected by the pandemic. However, a timely drop in production has pushed up prices and staved off the worst effects of widespread lockdowns for now.

Production

A recent report by market research firm Kontali has estimated the total drop in production in 2020 at 6.3 percent, a total decline of around 30 000 tonnes. A contraction in supply was expected due to sharp drops in juvenile stocking for both species in the major producing countries, Greece and Turkey, over the previous year. Persistently low prices since 2018, a lack of price competitiveness for Greek exports and a deteriorating economic environment in Turkey all contributed to this reversal of a strong multi-year upward production trend. The fragile Greek industry has been more cautious about expansion than its Turkish counterparts, focusing instead on consolidation.

In addition to the drop in output in Greece and Turkey, Spanish farmers experienced heavy losses due to Storm Gloria earlier in the year, which will see Spain’s harvests fall by some 40 percent on an annual basis. Of the smaller producers, Croatian harvests have apparently been good this year after a concerted effort to expand the industry there. All farmers have reported added logistical costs due to COVID-19 restrictions affecting haulage, which have been particularly challenging for smaller producers.

Trade and markets

COVID-19 restrictions saw restaurants shut down all across the continent and severely depressed activity in tourism centres all around the Mediterranean. For seabass and seabream, which are popular seasonal restaurant species, this was a significant blow to aggregate demand, translating into an estimated drop in sales of 20 to 30 percent. This impact has been relatively greater in the market for larger fish (> 600 g+), which fetches the highest prices. For more distant export markets such as the United States of America, which had previously been important sources of new demand, spiking logistical costs saw export volumes fall significant in the first half of 2020.

However, the dramatic drop in Spanish supply due to the Storm Gloria escapes turned out to be something of buffer against the worst market effects of the pandemic. Excess volume from producing countries, particularly Greece, could now be directed to the Spanish market to make up the shortfall. Rapid marketing adjustments to avail of increased demand at retail and a delay of harvesting schedules also helped to prop up prices and maintain cash flow.

Prices

Tighter supply in 2020 saw prices for both seabass and seabream rise compared with last year, despite the pandemic’s effects on Hotellerie-Restaurant-Café (HORECA) demand. In the first six months of the year, export prices for fresh whole seabass out of Turkey and Greece averaged EUR 3.76 per kg (+7 percent) and EUR 4.90 per kg (+8 percent) respectively. Meanwhile, Turkish and Greece exports of fresh whole bream averaged EUR 3.70 per kg (+11 percent) and EUR 4.88 per kg (+6 percent) respectively.

Outlook

The end of the year is generally a weak period for the seabass and seabream sector and prices have already taken a downturn as we move into the last quarter. While the effects of COVID-19 on the market have been somewhat less severe than expected, the sector is still faced with significant uncertainty, high logistical costs and accumulating biomasses. Delayed harvests also mean increased harvest weights at a time when demand for large fish is very weak. Thus, seabass and seabream aquaculture firms can expect continuing financial pressures as they work to adapt their marketing strategies and product compositions to the new market landscape. On the bright side, however, tight supply is expected to continue into 2021, and prices could rise further if the HORECA sector shows significant recovery.

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