Positive outlook for the salmon industry
According to a recent report published by FAO Globefish, the most obvious unknown is the situation in Russia, which could potentially deteriorate if an economic downturn continues to hurt importers, creating a relative surplus - as even those suppliers excluded from the ban will face increasing difficulty securing competitive prices on the Russian market.
In the shorter term, there is also the question of whether the EU and US markets will be capable of replacing early-year demand that previously came from Russia. On the contrary, it is also possible to envisage a situation where Moscow lifts the ban, economic recovery in the EU and the US gathers pace and supply growth is flat or even negative. The upward pressure on prices in such a situation would likely be substantial. Meanwhile, production costs and disease risks, as always, represent further sources of unpredictability in the market, the Globefish report explains.
Prices Farmed salmon prices started 2014 much higher than they did in 2013, but have since followed a broadly similar pattern, although faster growth in the pens meant higher harvest volumes earlier in the summer. Later in the year, in early December, prices took a sudden dive, dropping more in one week than they have in over a decade and causing some turmoil in the markets. The underlying cause of the sharp decline was the over-reliance of Norwegian producers on Europe to absorb excess volumes that would traditionally have been directed to Russia. The price of the less-seasonal Chilean fish, meanwhile, began to decline somewhat from exceptionally high levels at the end of the second quarter as efforts to redirect product to the Russian market proved insufficient to offset a fall in prices in the USA and Brazil. For wild salmon, prices for Alaskan sockeye and pink salmon decreased, while chum and coho prices were up somewhat compared with last year.
Markets Global demand for salmon continues growing, driven primarily by income growth and urbanization together with a widespread shift in preferences towards healthy eating and sushi-type food items. Other important reasons for the continued popularity of salmon is the unique and excellent taste of the fish, its nutritional benefits, its versatility in terms of product possibilities and its lack of any obvious substitutes. The USA is currently leading the way of the traditional established markets, while China and Brazil continue to represent ever more important sources of demand as their growth continues, with Chile as the main beneficiary. The major uncertainty presently is obviously Russia, where a collapsing currency and economic problems are hurting importers.
France The Globefish report underlines that France is notable out of the major EU markets for registering a pronounced decline in salmon imports in 2014. This indicates weakening consumer demand, resulting from a combination of high prices and bad publicity for farmed salmon. A recent Entreprises du Traiteur Frais (ETF) survey showed 9 out of 10 French consumers buy salmon once a year, with smoked salmon in particular considered a festive product. The ETF survey also showed that many French consumers are unaware that smoked salmon is smoked in France, which could represent a potential branding opportunity.
Germany The German import market is generally characterised by a more diverse product range, although this is largely because processing, such as smoking, takes place outside the country rather than locally. This may be changing, however, as the fresh whole Atlantic proportion of German salmon imports is growing relatively fast compared to other segments, with Norway the main beneficiary. Frozen fillet imports from China have also increased significantly, while smoked imports from Poland are down this year.
Japan Trade statistics suggest the Japanese market for salmon has been undergoing something of a transformation recently. The Chilean supply of coho has been reduced as farmers there focus more on Atlantic salmon production, sending prices soaring, while Russian sockeye is also scarce. Japanese importers appear to be responding by increasing purchases of frozen fillets, primarily Atlantic, to make up some of the shortfall. In general, demand appears to be firm, with reduced supply pushing up price levels substantially.
USA US salmon consumption is rising, and trade statistics point to strong demand growth, despite the downtrend in prices in the second half of 2014. Chile continues as the USA’s main salmon supplier, exporting 100,230 tonnes during the first nine months of 2014, which represents an increase of 18% compared with the 84,770 tonnes shipped in the same period of 2013. In terms of value, an increase of 31% (US$ 1,090 million against US$ 830 million) was registered. Canada was the second ranked country with 47,340 tonnes (-24%) worth US$ 380 million (-11%).
