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Small Pelagics - June 2014

01/06/2014

New mackerel and herring quotas drive price movements for 2014: up for herring, down for mackerel.

After long discussions, the North Sea mackerel and herring agreements have finally been signed, but not all nations are happy. With the mackerel quota for 2014 increased by 33%, the question now becomes, where will all the extra mackerel go? Quotas established for herring, on the other hand, will make for scarcer supplies. 

Mackerel

At long last, the mackerel agreement between Norway, the EU and the Faroe Islands has been reached. This is a long-term, five-year agreement, which should put an end to the debate that has been going ongoing for some time now. For 2014, the mackerel quota for the EU amounts to 611 205 tonnes. Iceland is not yet part of this agreement. But according to EU Commissioner for Maritime Affairs and Fisheries, Maria Damanaki, the door is still open.

As a group, Norway, the Faroes and the EU are content with the agreement, however Denmark is extremely unhappy as the agreement means a 20% reduction for their mackerel quota. According to the Danish Pelagic Producers’ Association, Danish players are claiming that the agreement rewards the Faroes for five years of illegal and irresponsible fishing.

Greenland is also unhappy as the agreement mandates that they are prevented from fishing an experimental quota of 100 000 tonnes. This year, applications for Greenland mackerel quotas amounted to almost five times the allocated quota, which is 60 000 tonnes. Last year, 53 881 tonnes of mackerel were caught in Greenland waters. As Greenland does not have a fleet large enough to catch the entire quota, vessels from countries such as Russia, Iceland and China have also applied for quota allocations.

In Galicia, mackerel fishermen are sorely disappointed with the quotas for 2014. The total quota for the Cantabrian and Northwest area is set at 6 480 tonnes, which according to the fishermen is “ridiculous” and will cause great losses to most of them. The Spanish Minister of Agriculture, Food and Environment, Miguel Arias Cañete, has described the problem of quota distribution between the fleets of Galicia, Asturias and the Basque country as “complicated” (Source: Undercurrent News).

In the South Pacific, fishing nations have recommended limiting the jack mackerel quota to 440 000 tonnes in 2014, which means there will be no change compared with 2013. However, Peru has set a high quota that may disrupt these plans. Realistically however, the jack mackerel stocks are not in great shape in this region, so there may be little chance that the quotas will actually be filled.

Norwegian mackerel exports declined in 2013 compared with 2012, but there are now signs that this will change in 2014. While Norwegian exports of frozen whole mackerel dropped from 263 400 tonnes in 2012 to 245 100 tonnes in 2013 (-6.9%), exported volume increased during the first quarter of 2014 by 13.7% when compared with the same time period in 2013. Prices are also strengthening. The average export price (FOB Norway) during the first quarter of 2013 was NOK 9.69, while in 2014 it increased to NOK 11.92.

The main markets for Norwegian frozen mackerel are Japan and China, which both took about 52 000 tonnes in 2013. Turkey, The Republic of Korea and Romania are also important markets for this product. While the top markets have all increased their imports of Norwegian mackerel, the Netherlands imported less in 2013.

The quota increase for Northeast Atlantic mackerel (to 1.24 million tonnes) will create new and exciting market conditions. However, it will be a great challenge to sell the 300 000 extra tonnes of mackerel this year, and the big question now becomes, where will all of the extra fish be sold? Russia and Ukraine are traditionally good markets for Norway and European exporters, but in view of the political situation at present, there is great uncertainty about trade boycotts. Turkey, which in recent years has increased its imports of small pelagics, could be a possible market. However, Turkey has a tax-free agreement with Norway and consequently buys almost exclusively from Norway. The other consideration is that Turkey typically purchases small sizes (200–400 g), and little is known about the size and quality of this year’s catch. Another possible market is China, which has increased imports of round frozen mackerel from Norway by almost 50%, to 14 500 tonnes during the first quarter of 2014 compared with the same time period in 2013. FOB export prices from Norway to China have also significantly increased during this period, from NOK 8.98 in 2013 to NOK 11.93 in 2014.

Since late 2012, frozen mackerel prices have been on a general rise. There have been some very noticeable ups and downs, especially for large sizes, but the general trend has been an increase in prices. For smaller sizes (

As predicted, with a massive increase in the quota, prices are bound to come down. How far down remains to be seen. Much depends on how active the exporters will be in promoting the extra product, and especially how the political crisis in Russia and Ukraine develops.

Herring

The north Atlantic herring agreement was reached between the EU, Norway, Iceland and Russia at the end of March 2014. The total allowable catch was set at 418 487 tonnes, which is a 33% reduction compared with the 2013 TAC. The Faroes, however, refused to sign the deal, in spite of the recent success of the mackerel agreement. Norway received 61% of the quota, or 255 277 tonnes.

The lack of a firm deal regarding herring quotas in the North Sea has created a difficult situation for several nations, and fishermen in Denmark are now complaining that the lack of an agreement is causing great losses to their industry. In fact, they have calculated that the loss to Danish fishermen amounts to EUR 13 million so far. The Danish fleet catches most of its Atlantic herring quota in Norwegian waters, as this is cheaper than fishing in EU waters due to  shorter distances to landing ports.

A new herring product called ‘virgin herring’ has been introduced by the Norwegian research institute Nofima (Norwegian Institute for Food, Fisheries and Aquaculture). The product is made from filleted fresh small North Sea herring that are lightly salted and matured, giving it a mild taste. The new product was launched in attempt to provide an alternative to matjes herring, which in some years has been produced in larger quantities than the market has been able to absorb. Virgin herring is currently being tested in a number of markets.

In spite of catches being reduced, Norway experienced a slight increase in frozen herring exports for the year, from 205 100 tonnes in 2012 to 212 400 tonnes in 2013. Export prices (FOB Norway) fell only slightly, from NOK 7.91 per kg to NOK 7.28 per kg. However, there were some significant changes in the direction of trade with Russia increasing their imports of Norwegian herring from 60 000 tonnes in 2012 to 78 700 tonnes in 2013. Ukraine imported less, from 58 300 tonnes to 40 000 tonnes. Lithuania increased its imports from Norway, as did the Netherlands.

In the first quarter of 2014, the Norwegian export volume of frozen herring dropped by 12.3%, to 51 500 tonnes compared with the first quarter of 2013. But at the same time, prices declined slightly as well.

Germany, which is a major market for herring fillets from Norway, imported considerably less in 2013 than in 2012. Imports from Norway dropped by 43.7%, and imports from Denmark were reduced by 21.5%. The greatest reduction was registered for UK exports of frozen herring fillets to Germany, which were down from 8 200 tonnes in 2012 to 2 600 tonnes in 2013 (-67.9%).

In Japan, herring sold well in 2013, with imports growing by a healthy 28.9%. The main supplier was the USA, which accounted for as much as 69% of total imports of fresh and frozen herring. Other main suppliers such as Russia, Norway and Canada also increased shipments to Japan in 2013.

While mackerel prices have been on an upward trend over the past two years, herring prices have clearly gone the other way. Prices for whole frozen herring have been sliding since the beginning of 2012, while frozen fillet prices have been more stable, although on a slight downward trend with seasonal peaks every June. The seasonal June peak will come this year as well of course, but it is expected that post-June herring prices will turn and increase for the rest of 2014.

Capelin

After a slow start, the capelin season in Norway and Iceland is now taking off. However, the quota for 2014 has been dramatically reduced. In 2012, the allocated quota was 221 000 tonnes, in 2013, 119 000 tonnes and in 2014 it is only 38 980 tonnes. By the middle of February 2014, only some 19% of the quota had been landed. This is significantly less than in 2013, when 64% of the quota had been landed by this time.

Anchovies and sardines

Peruvian scientists are predicting a strong El Niño this year, which is expected to have a major effect on fisheries off the west coast of South America in 2014. This will affect primarily the anchovy fishery and the giant squid fishery. Thus, there may be less raw material available for the fishmeal industry this year.  This year’s El Niño started already in February, and may be as strong as in 1997–1998, which was the strongest ever recorded. With these predictions, Peru has recommended starting the season earlier than usual.

The Pacific anchovy resources off Chile and Peru are under scrutiny. A team of researchers from the Fisheries Development Institute (FIFG) in Chile have started a study of the juvenile anchovy stock to provide a resource assessment that will give guidance to the authorities regarding future quotas.

Chile has already reduced the sardine and anchovies TACs for 2014 by 38% and 65%, respectively. Thus, the Chilean pelagic industry is preparing for a tough year. In Peru, as much as 99.1% of the total Pacific anchovy quota has been allocated to the industrial fleet. Peruvian Minister, Gladys Triveño, announced that this was good news for the industry and that the biomass has improved. The total quota allocated amounts to 2 304 000 tonnes.

Meanwhile, on the other side of the South American continent, Argentina is also studying the anchovy biomass. According to a study published by a research group from the National Institute of Fisheries Research (Inidep), the anchovy biomass now exceeds 700 000 tonnes. The Federal Fisheries Council (CFP) has announced that a maximum allowable catch of 120 000 tonnes is possible. However, this greatly exceeds the actual landed catch, which in 2013 was just over 18 000 tonnes.

Canned sardines

As reported in Globefish Highlights January 2014, Namibia will not be producing any sardines in 2014, and this may affect the availability of canned sardines on some markets, most noticeably in Africa and Europe.  Apart from that, there is little movement on the canned sardine market. Import volumes were stagnant in 2013 compared with 2012. There was a slight decline in German imports, which went down by 10%. The decline was suffered mainly by the largest supplier, Morocco.

France imported slightly more canned sardines in 2013, and there was a change in the relative positions of main suppliers Morocco and Spain in favour of Morocco. Imports into the UK and the USA saw the same trend as in Germany, with roughly a 10% decline in import volumes. Some changes in the positions of the main exporters to these markets were registered. In the USA, Thailand lost ground (-38.5%), as it did the UK (-45%), while Morocco strengthened its position in both of these markets.

In recent news, a new cannery is being built in Brazil, in Sao Concalo do Amarante in Fortaleza. The new cannery will have a 60 tonne per day capacity, and will be operational by mid-April 2014. The main products will be canned small pelagics in tomato sauce or oil.

Outlook

The outlook for 2014 demonstrates that there will be more than adequate supplies of mackerel, but significantly less herring than in 2013. This should result in price reductions for frozen mackerel, as well as increasing efforts on the part of the main exporters to find new markets. In the herring industry, one may expect tighter supplies and slight price increases.

Market focus: herring in Russia

The herring market in Russia is characterized by mixed-usages; a significant part of Pacific herring is exported while Atlantic herring is used mostly as raw material for processing. According to www.fishnet, in 2014, the forecast of the Russian herring catch is estimated to be 350 000 tonnes, of which only 10% will be provided by Atlantic herring, while the rest will be made up of Pacific herring caught in the Russian Far East. It is expected that there will be a shortage of 150 000 tonnes of herring on the Russian market due to the decreased TAC for both Atlantic and Pacific herring. Traditionally, Russia has been the leading importer and consumer of herring, therefore, the processing companies are currently deciding whether to wait for the improvement of the supply situation with Atlantic herring, or to substitute with Pacific herring, which is currently exported in large volumes (around 100 000 tonnes) from the Russian Far East to the Southeast Asian countries.

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