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Cephalopods sector suffering under COVID-19

07/01/2021

Cephalopods are a favourite item on restaurant menus, but perhaps less popular for home cooking, at least in western industrialized countries. This is reflected in the poor performance of the sector during the COVID-19 pandemic. As restaurants have had to close down, sales have dwindled and international trade has suffered. However, as some economies started to open up again, foodservice recovered partly, but then the “second wave” hit.

Octopus

Morocco increased its quota for octopus fishing during the summer by some 2 000 tonnes. At the same time, the length of the fishing season was increased. This went against the wishes of Spanish processors, who had petitioned against an increase in June. China has for many years operated a considerable distant-water fishing fleet, for a number of species. In August, news broke out that three new vessels were launched to go into operation in the octopus fishery off Morocco. Demand for octopus is generally good in China, but the domestic fleet is unable to satisfy demand.

Japan’s imports of octopus (all types) declined by 6.9 percent during the first half of the year compared to the same period in 2019. Asian suppliers, like China and Viet Nam, experienced significant declines in shipments to Japan. Imports from China declined by 14.7 percent to 4 398 tonnes, and imports from Viet Nam went down by almost 26 percent to 3 008 tonnes. However, imports from the main supplier, Mauritania, exploded: up 115.9 percent to 6 456 tonnes. Imports of octopus by the Republic of Korea declined by 8.4 percent to 32 158 tonnes during the first six months of the year. But the performance by the major suppliers varied a great deal. Imports from China increased by 7.9 percent, while imports from Viet Nam declined by 19.6 percent. The lockdown in major markets such as Spain wiped out restaurant sales, and this sector is extremely important to the sales of cephalopods. While imports into Spain registered a slight decline in February and March, import volumes dropped dramatically in April and May. Tourists were unable to visit

Mediterranean countries, and demand for octopus dropped. This put heavy pressure on prices, and the situation was aggravated by the fact that processors had to eliminate large older stocks before they could resume buying. During the first half of 2020 (January until 19 July) European imports of Moroccan octopus fell by as much as 27 percent. In addition, average prices fell by 14 percent. The lack of demand is not limited to Europe, though. In the United States of America, octopus imports have been on a declining trend since October 2019. During September 2019, import volume hit a high at 1 983 tonnes, but then fell back to a level between 1 000 to 1 400 tonnes per month in the period from October 2019 until March 2020. In April 2020 imports fell to 806 tonnes, and then further to 547 tonners in May and just 400 tonnes in June. By comparison, the United States of America imported 1 304 tonnes in June 2019.

Prices for frozen octopus started to fall immediately when the COVID-19 pandemic set in. In midsummer, prices reached their lowest levels since 2016. Another factor that has put even more pressure on octopus prices is the fact that Morocco increased its quota. Octopus supplies seem to be larger than demand, and prices declined until the restaurant sector partly re-opened and prices started to recover. In many countries, though, the “second wave” of COVID-19 started to be felt in the early autumn, and consequently negative effects are expected.

Squid

Chinese vessels have been fishing for squid outside the exclusive economic zone (EEZ) of Argentina for years, and they are now observed in great numbers around the Galapagos Islands in the Pacific. Recently, the Chinese authorities confirmed that about 350 Chinese squid jiggers were fishing in the area during the summer.

The California market squid season, which started on 1 April 2020, looks promising, although it is too early to call it a good year. Most of the catch is in the 8 – 10 count size range. Demand is down, and very little squid is being shipped abroad. The European Union had a further decline in squid and cuttlefish imports during the first half of 2020, as import volumes dropped from 136 707 tonnes in 2019 to 97 069 tonnes in 2020 (-29 percent). The greatest reduction was registered for imports from the Falkland Islands (Malvinas), which fell from 42 949 tonnes to just 17 758 tonnes (-58.7 percent). Morocco, on the other hand, increased shipments to Spain by just over 20 percent. In fact, Morocco has shipped a lot more squid and cuttlefish to the European Union this year. As of 26 July, the European Union had imported 40 percent more squid from Morocco compared to the same period in 2019. Prices, on the other hand, dropped by no less than 37 percent.

Japan’s imports of squid and cuttlefish have been on a slowly declining trend for some years. However, the decline in 2020 was only marginal. During the first six months of the year imports fell by 5.4 percent compared to the same period in 2019. The largest supplier was China, which only lost about 4.7 percent, but accounted for as much as 63 percent of the total. Peru shipped 56 percent less than in 2019, while Chile increased its exports to Japan.

China’s squid and cuttlefish exports dropped by almost 20 percent during the first half of 2020 compared to the same period in 2019. The major markets were Japan, Thailand and the Republic of Korea. Chinese imports of squid and cuttlefish, on the other hand, has been on a rising curve until 2019, but declined in 2020. During the first six months of 2020 imports fell to 151 433 tonnes from 189 371 tonnes in 2019. Indonesia held its own and became the major supplier, with 36 853 tonnes. Peru experienced a massive drop in shipments during this period, from 55 298 tonnes during the first half of 2019 to just 21 894 tonnes in 2020. US exports of squid and cuttlefish to China were just slightly lower in 2020 compared to 2019 but declined by 47.7 percent compared to the same period in 2018.

The United States of America was also characterized by lower imports. The declining trend noted in 2019 continued, and imports of squid and cuttlefish fell by another 20 percent during the first half of the year. The major supplier is still China, accounting for 44 percent of the total in the first 6 months of 2020. US squid imports rose nicely during January of 2020 and fell just slightly in February through April, but then fell dramatically once the COVID-19 pandemic struck. In May, imports fell by 57 percent compared to the same month in 2019, and in June imports fell by 64 percent. Prices also weakened.

Outlook

As the cephalopods industry is relying to a large extent on the restaurant sector as a main distribution channel, it cannot be expected that the market will recover until restrictions are lifted and the situation approaches some measure of normality. Unfortunately, the outlook for lifting restrictions is not very good, and in fact getting worse as many countries now seem to be heading for a “second wave” of the pandemic.

Octopus supplies are expected to stay abundant, especially as Morocco has increased its summer quota, and squid supplies should also be adequate. With the lack of demand through the restaurant and tourist sector, this will mean that the market may be over-supplied. Prices will remain low and likely fall even lower.

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