Norway’s vibrant seafood industry contributes a significant amount to the country’s economy. Live catch and farmed fish make up one of the most important export products after petroleum and metals, accounting for NOK 39.1 billion (USD 5.8 billion) or 4% of Norway’s total export revenues, making Norway the second largest exporter after China.
Norway’s seafood success shows no signs of abating. Last year marked a new export height for the industry. The Norwegian Seafood Export Council (NSEC) said no fewer than 506 exporters with customers in 132 countries around the world bought Norwegian exports totalling NOK 39.1 billion, the fourth record year in a row.
Aquaculture is one of Norway’s most international industries. The country exported NOK 20.2 billion of farmed fish, slightly more than half of its total seafood exports. The bulk of that was Norwegian salmon, a record NOK 18 billion, which went to 98 countries, mostly to France.
Once considered a supplementary business to agriculture, farmed fish now exceeds live catch. The fish farming industry dates back to just the 1960s, but really began to take off in the 1980s when large-scale salmon production became truly successful. This has been imperative for employment in Norway’s small coastal communities, as well as an important source of foreign trade. More than 4,000 people are employed in Norwegian aquaculture.
|France and Russia are the most important markets for Norwegian seafood. A total of 15 countries imported Norwegian seafood for more than NOK 1 billion each in 2008.
Source: Norwegian Seafood Export Council, Statistics Norway
Russia – Norway’s New Biggest Market
France was, up until 2007, the overall largest export market for Norwegian seafood. But in 2008, Russian exports reached NOK 4.05 billion, edging it marginally ahead of France. Russia is also the largest export market for Norwegian trout.
The other big trends have been a growth in exports to countries outside the European Union, particularly Eastern Europe and Africa. Nigeria, for example, has become the second largest importer in the world for frozen whole herring and is now Norway’s third largest market. Poland became a more important export market for salmon than Denmark for the first time in 2008. Cod, Norway’s most important ground fish export, was one of the only fish last year to fare worse. Portugal is Norway’s largest market for clipfish.
“In a year which has been strongly impacted by the economic crisis, it is pleasing to see that the demand for Norwegian seafood, with the exception of cod, has remained strong,” said Terje Martinussen, NSEC Managing Director.
|Harvest volumes this year look set to grow, despite an overall fall in the industry globally.
© Marine Harvest
Aquaculture Outpaces Live Catch
Going forward, aquaculture will become an increasingly large part of the global seafood market. The Food and Agriculture Organization forecasts that aquaculture production will grow to about 85 metric tonnes in 2030. Aquaculture will then supply nearly half of all available seafood in the world, with most of the growth coming before 2015.
This is good news for aquaculture nations such as Norway, which will fill up the growing demand for seafood. The country is the single largest exporter of farmed Atlantic salmon and has several companies dominating this market. Marine Harvest, for example, is the world’s largest producer of farmed salmon with almost one-fourth of the entire market and a presence in 18 countries. Akva Group is the market leader in aquaculture equipment with more than a 50% market share for all cage systems, barges, feed technology and software in the world.
“Norway’s competitive advantage stems from its geography, human capital, and effective regulations,” said Jørgen Christiansen, Marine Harvest Communications Director. “A long and protected coast line with adequate temperatures and weather conditions make Norway a very good country for salmon farming. In addition, we have taken advantage of the highly skilled suppliers and research institutions and the authorities’ ability to regulate the industry.”
Marine Harvest projects that harvest volumes of salmon from Norway will grow this year, despite an overall fall of about 3-11% globally for the industry. The fall is largely the effect of the outbreak of Infectious Salmon Anaemia (ISA) in Chile. Fish diseases - which lead to high mortality and low growth - still represent the greatest economic threat to the industry.
Another concern has been customer behaviour in the wake of the current financial crisis. Marine Harvest is upbeat after seeing recent encouraging signs. The company said European demand remained robust during the Christmas season and saw a 9% supply growth out of Norway in January without signs of weakness. It further expects that salmon should be relatively protected in a recession.
“We find good reason to believe that the salmon industry, like the food industry, is less hit by the financial unrest than other industries,” said Åse Aulie Michelet, Marine Harvest Chief Executive Officer.
|Export Value by Seafood Sector
Harvest volumes this year look set to grow, despite an overall fall in the industry globally. Source: NSEC/SSB
Taking Stock in Seafood
Salmon prices, in particular, are highly volatile and represent a continuous risk. The lack of predictability makes it difficult for buyers and sellers to plan their investments and operational activities with a long-term perspective.
Fish Pool, established in Bergen in 2006, is the first authorized marketplace for the buying and selling of financial salmon contracts at an international level. It has the same set of rules as an exchange and oversight by The Financial Supervisory Authority of Norway (Kredittilsynet). Last year, Fish Pool reached close to 130 trading members and more than NOK 1 billion in underlying turnover with a doubling in volume to 65,477 tonnes from 2007.
“The ongoing global financial crisis has had a positive influence for hedging at Fish Pool as the physical players are seeking to secure their costs and income in a turbulent market,” said Fish Pool. “Need for diversification of portfolios has made salmon derivatives an interesting instrument for investors in a rough stock market.”
The more traditional type of trading takes place on the Oslo Stock Exchange. Here there are more than a dozen listed Norwegian seafood companies making up the OSE 30 Consumer Staples Sector sub-index, mostly fish farming companies such as Marine Harvest, which make up close to half the weighting of this sub-index. The other seafood related companies on this sub-index include Aker BioMarine, Aker Seafoods, Austevoll Seafood, Cermaq, Codfarmers, Copeinca, Domstein, Grieg Seafood, Leroy Seafood Group, Marine Farms, Norway Pelagic, and SalMar. The equipment company Akva Group is listed under the OB standard index.
|The seafood industry’s share of Norwegian exports 2008
In 2008, the seafood industry was responsible for 4.1% of Norway’s total export revenues. Seafood is one of Norway’s most important export industries. Source: NSEC/SSB/EFF
Profitable Fishing Fleets
Fishing continues to be good business for Norway. Seafood exports provide direct employment for 28,000 Norwegians. More than 10,000 of these are fishermen by main occupation. The annual fishing fleet had NOK 1.5 billion in operating profits for 2007 and an operating margin of 14.1%, according to the Norwegian Directorate of Fisheries. This margin is on par with peak years in 1998, 2001, 2005 and 2006.
“The underlying reasons for the positive trend in profitability over the 15-year period are several,” the directorate said. “Three of our most important stocks are in far better condition now than in 1990 (Norwegian spring spawn herring, North-East Arctic cod, and North-East Arctic saithe). Prices for the most important fishing teams have also been positive in this period. At the same time, the number of fishing vessels has declined and this has contributed to the reduced costs and increased productivity.”
Norwegian fishermen are catching just as much fish as ever. Last year, Norwegian vessels delivered 2.4 million tonnes of fish, crustaceans, and molluscs for a landed volume of NOK 12 billion, roughly the same as the previous year, according to Statistics Norway.
Cod fishing is the most important of fisheries, measured by the landed value. The cod catch last year rose to 214,000 tonnes with a value of NOK 3.5 billion, representing more than a quarter of Norway’s total catch value. Herring came in second at NOK 2.8 billion. Norway consumes three quarters of the catch and uses the rest, such as blue whiting, sand eel, and Norway pout, for the production of meal, oil, and animal feed.
Overview of the Norwegian Seafood Industry 2008
Fishing fleet: 6,798 vessels 10,276 fishermen, primary occupation
2,592 fishermen, secondary occupation
Processing: 503 companies 10,400 employees
Aquaculture: 1,267 grow-out licenses 4,337 employees
Exports: 506 exporters 132 countries
Export value: NOK 39.1 billion
Source: Norwegian Seafood Export Council, Statistics Norway,
Directorate of Fisheries, NOFIMA, Ministry of Fisheries and Coastal Affairs