Norway has maintained its dominant position as leading seafood exporter to both the European Union and Russia, despite the economic crisis hitting important markets such as Portugal and Italy.
In 2012, Norway exported NOK 51.6 billion in seafood and accounted for 32 million seafood meals globally, according to figures from the Norwegian Seafood Council. The country sold 2.36 million tons of seafood abroad last year, 78,000 fewer tons than 2011 and NOK 1.8 billion less in value.
The EU is still Norway’s most important seafood market, accounting for 57% of exports last year at a value of NOK 29.6 billion. That represents a NOK 1.3 billion fall from the prior year caused by low prices on cod and salmon, despite the increase in the volumes of salmon sold, primarily to France.
“In spite of economic difficulties in major seafood markets, Norway has held its strong position and increased its market share,” said Terje E. Martinussen, Norwegian Seafood Council chief executive, during a presentation of 2012 exports in Tromsø. “Twenty percent of EU’s imported seafood comes from Norway, while the same figure for Russia is as high as 38%.”
Dramatic Shift in Russia
Russia made a quantum leap last year as a premier buyer of Norwegian seafood, beating out France, its nearest competitor. Last year, Norway exported NOK 6 billion to Russia -- which was also the biggest growth market -- compared to France with an export value of NOK 4.9 billion.
Russia has increased its exports of Norwegian salmon by 57% since 2010 to 132,700 tons in 2012. In 2000, salmon and trout made up less than 4% of Norwegian seafood volumes - in 2012, 52%.
“(Russia) has for a long while been the largest market in volume, but in 2012 it was the definite largest in value,” said Jan Eirik Johnsen, Norwegian Seafood Council director for Russia, at the council’s salmon seminar in Oslo in February 2013. “2012 was the first year where salmon exports (to Russia) were higher in volume than pelagic herring, so there has been a dramatic shift.”
Part of the reason for Russia’s rebound is its robust economy, which in some ways resembles now more Norway’s than the tumultuous European economies. Russia is currently experiencing 4% GDP growth, 6% inflation rate, and only 6% unemployment. Meanwhile EU countries such as Portugal, Italy, Greece and Spain are still struggling with high unemployment, particularly among youth.
“The (Russian) economy has increased its purchasing power,” says Johnsen, citing a survey among the five biggest retailers in Russia, Magnit, X5 Retail Group, Auchan, Dixy Group and Metro Group, which opened approximately 2,000 new outlets to reach 12,000 in 2012. “Norwegian salmon and trout come out best. They are the two most popular fish among Russians.”
Getting to Market
Another reason for the rise in Norwegian seafood exports to Russia is the improved distribution and logistics for fresh fish, especially in the regions outside Moscow and St. Petersburg. In the south district, for example, there was a rise in distributed volumes of Norwegian salmon from 9.4% in 2011 to 13% in 2012, according to Johnsen. However, the two metropolitan cities account for the biggest consumption of Norwegian salmon, followed by the Volga region.
Still, the market is also known for its challenges. There are only 19 Norwegian exporters that can export fresh fish to salmon and trout, and an additional ten which can only export frozen products. Part of the problem is that Norwegian seafood exporters need to be approved by the Russian veterinarian services Rosselkhoznadzor, but there are no plans for the required physical inspections and there have been very few lately. There are also vague procedures for reopening withdrawn licenses or removal of limitations to export.
Another stumbling block is a recent adjustment in the implementation of a law. As of November 2012, the freezing of fresh fish does not qualify as a high enough degree of processing to apply to the rules in Kaliningrad, a free economic zone in Russia. Prior to that, fish frozen in Kaliningrad could be taken to mainland Russia without tolls, which are now 10% for Norwegian salmon and trout.
Chilean Salmon Comeback
Norwegian salmon also faces more competition from salmon produced in Chile, which has returned back to normal production levels since a salmon disease crisis in 2010. Bjørn Hersoug, professor at the NFH in the University of Tromsø, points out that Chile has started to cautiously open up areas in Region XII, announced a new fisheries law in December 2012, and established eight macro zones which will be up and running in 2015.
“Chile is definitely back in business,” says Hersoug. “The biomass is back to where it was before the crisis.”
Some Norwegian industry players have seen this as an opportunity. In October 2012, Cermaq acquired the struggling Chilean company Cultivos Marinos Chiloé for an enterprise value of USD 110 million, increasing its total production capacity to 180,000 tons. The deal also secures continuous sales of Cermaq’s fish feed from its subsidiary Ewos to CMC, a current customer.
“We currently observe a challenging market for most farming companies, but we are convinced that a continued increase in the global demand for salmon will strengthen the industry’s profitability,” said Jon Hindar, Cermaq chief executive. “The access to more capacity in one of the most interesting global salmon areas is therefore of the utmost importance for Cermaq.”
Salmon is the largest Norwegian seafood export at a value of NOK 29.6 billion in 2012, up NOK 449 million from the previous year. The volume of Norwegian salmon and fjord trout exports grew 18% during that time to 1.1 million tons, setting a new record volume of salmon exports.
(Photo credits: Cermaq)