Lower sales prices have been keeping export revenues stable despite rapid volume growth. Many companies have been unable to cover production costs. The recovery in prices expected next year is urgently needed to prevent further financial damage.

Production

Global production of seabass and seabream has flattened out in 2019, with lower supply growth expected for both compared with recent years. Relative to the same period last year, supply was significantly higher in the first six months of 2019 but is tightening going into the second half of the year. Turkey is now the top supplier of both species, after 7–8 years of rapid growth. The Greek sector has suffered from an inability to maintain consistent profitability while other smaller EU28 producers such as Spain, Italy and France have not pursued aggressive growth strategies. Current supply levels are too high for the market to absorb and the resulting price decline has been inflicting damage on the bottom lines of almost all Mediterranean aquaculture companies, particularly in Greece. Efforts to reduce costs at the farm level have not been sufficient to outweigh the fall in sales prices, driven largely by an influx of cheaper fish from Turkey.

The difficult market conditions of the last couple of years are clearly reflected in the recently reported financial results of the Greek aquaculture sector. Both Nireus and Selonda, two of the largest companies, have reported financial losses for the first half of 2019. This has extended a pessimistic outlook that has seen Greek company valuations plunge. For Nireus and Selonda, this period of poor performance has coincided with the ongoing sales process that began in mid-2018 after a group of investors led by a US private equity fund reached an agreement to acquire both companies and
merge them with the previous acquired seabass and seabream aquaculture firm Andromeda. The general consensus is that once completed, the consolidation of the sector will lead to cost reduction due to economies of scale and lend itself to better coordination of marketing and branding strategies. In the meantime, however, the Greek industry is again marked by cash flow difficulties and growing debt levels.

In Turkey, the major contributor to supply growth over the last few years, sector expansion has been slowed by the currency crisis of 2018 and subsequent recession, as well as the deteriorating conditions in the wider market. As the business outlook worsened, aquaculture companies have adjusted their production targets accordingly, as evidenced by a sharp drop in juvenile stocking in 2019 to the lowest levels in eight years. A similar decline has been reported for Greece, Turkey’s closest competitor in terms of volume.

Elsewhere, Mediterranean producers are faring better than their counterparts. In Croatia, in particular, the industry is growing and profitability is improving according to reports. Croatia producers, along with numerous other seabass and seabream farmers, have been quick to take advantage of the new Aquaculture Stewardship Council (ASC) standard for meagre, seabass and seabream.

Markets

The major market trends of the past few years have continued into 2019. Turkey’s share of the total market continues to expand, helped by low prices, a very weak lira, excess supply and Turkey’s proactive approach to developing consumer bases in the Middle East region. A particularly striking example of the penetration of Turkish fish is the rapid growth in Greece’s imports of Turkish origin product, a fact that reflects the difficulties that EU28-based producers have faced in competing with Turkey, even in their domestic markets. At the same time, Turkey has been more successful in adapting to a broader shift in consumer preferences towards convenience products, increasing sales of fillets of seabass and seabream in Northern Europe in particular. Another core consumer trend that has been driving changes in the seabass and seabream sector is the growing demand for sustainably produced foods. Ecolabels have proven to be an effective means of communicating this sustainability to consumers, and the new ASC standard for meagre, seabass and seabream is proving popular amongst seabass and seabream producers.

Trade

Although total export volumes of seabass and seabream have risen steadily over the last few years, falling prices have prevented export revenue growth. The total value of all reported exports of seabass and seabream in the first six months of 2019 amounted to EUR 605 million, approximately on par with the same period last year and about EUR 10 million below the first half of 2017. Seabass accounted for EUR 289 million of this total, some 12 percent below the same period in 2018. Greece had a 36 percent share of the total export value while Turkey accounted for 30 percent due to a lower average selling price in euro terms. Turkey’s share has been growing consistently at the expense
of Greece, having been around 22 percent five years ago. Spain remains the third largest exporter, with a value share of 7 percent.

On the import side, Italy accounted for a 29 percent share of the total value in the first half of this year, followed by Spain, Portugal, France and the Netherlands, with shares of 13 percent, 9 percent, 9 percent and 6 percent respectively. Growth has been most promising amongst the smaller markets, particularly the United States of America, which imported around twice as much seabass and seabream in the first half of 2019 compared with the same period five years ago.

In the Russian Federation, imports of both species increased in the first six months of this year. According to Federal State Customs data, Russian Federation imports of fresh and chilled seabass amounted to 1 800 tonnes during the review period, a 15 percent increase over the same period in 2018. Imports of fresh and chilled seabream reached nearly 1 800 tonnes, representing an 11 percent increase from 2018. Turkey is by far the leading supplier of seabass and seabream to the Russian Federation market with over 99 percent of the volume on the market. Turkish supply is
directed to Moscow and St. Petersburg and sold through modern retail stores and restaurants.

Prices

While prices for seabass and seabream have fallen as production increased, prices for seabass have diverged considerably from those of seabream due to the relatively larger gap between supply and demand. As of the end of the third quarter of 2019, prices for 300–450 g Greek seabass on the Italian market were down to EUR 3.60 per kg, compared with EUR 4.20 per kg during the same period last year. Prices for the same sized seabream were around EUR 4.40 per kg for the same period, approximately flat compared with 2018.

Outlook

Overall, estimated juvenile stocking levels in 2019 will be the lowest since 2014 at around 1 million individuals. Seabass and seabream grow to marketable size within 12–15 months, meaning that 2020 supply levels are expected to be significantly reduced compared with recent times. This should suffice to lift prices from current levels, particularly considering the progress that Turkey in particular has made in developing new markets and products. With the growing number of ASC certified farms and the consolidation of the Greek sector, there should now be an opportunity for the industry as a whole to stabilize aggregate production growth at sustainable levels.