Chile loses out with Costco to switch 2/3 of salmon contract to Norway

CostcoUS retail giant Costco Wholesale will switch around two-thirds of its fresh farmed salmon fillet supply to Norway, the US retail giant told Chilean packers during the Boston seafood show.

The move from Costco, which buys around 600,000 pounds of farmed salmon a week, will impact several Chilean processors, the hardest hit being Empresas AquaChile, Blumar Seafoods, Pesquera Camanchaca and Multiexport, sources said. The new contract will start in June.

This was the “cherry on the cake” of a gloomy show for the Chileans, one source said. During the show, it also emerged prices to the US are down, after rising for several weeks.

“In 2014, many pundits where forecasting a very good 2015 for Chile,” one source said.

For various reasons, the latest being the move from Costco, this does not seem to be panning out as forecast.

“All countries have huge, high-cost inventory and there are currency issues with the weak yen, ruble and real, one source said.

In addition, the US market not performing before lent and an expected huge run in Alaska is making the Chileans think that 2015 will be a much more complicated year than expected, sources told Undercurrent.

Although the reasons for the move from Costco are not clear, price and a general shift away from buying products that have been reared with antibiotics were cited by sources.

“They [Cosco] say they got a good deal from Norway, and also this is product with no antibiotics, although this possible reason is not clear 100%. I am sure there is more issues behind this decision,” one Chilean source said.

Several sources also questioned how the Norwegians would fare supplying Costco in big volumes. “This is a huge loss for Chilean packers, but is not clear how Norwegian packers can perform with this unique spec that only Chilean can perform,” one said.

Costso uses a trim F fillet with no fat on it and is notoriously stringent as a customer, sources said.

Norwegians target US

With the Russian market closed to Norwegian salmon and prices down year-on-year, the US market is taking more salmon from Norway.

In addition, the NOK/USD exchange rate has shifted considerably in the last year, because of the fall in the oil price.

This time last year, the rate was NOK 0.16/$1, but this has switched to NOK 0.12/$1 now.

At the same time, prices from Norway are also down. In week ten of 2014, the price level from Norway was around NOK 43 per kilogram, whereas it is NOK 39/kg at the moment.

Bigger volumes of salmon are going from Norway to the US as a result. For January to February this year, the US has imported 7,259t of salmon from Norway, worth NOK 353.22 million, up 32% in volume and value.

Buck against antibiotics 

At the start of March, Reuters reported Costco is working toward eliminating the sale of chicken and meat from other animals raised with antibiotics that are vital to fighting human infections.

Sources at Boston cited this move as part of the picture of the move away from Chile.

Speaking to Undercurrent, Jon Hindar, CEO of Cermaq, addressed the need for a shift away from antibiotics in Chile, which are being used to treat salmon rickettsial syndrome (SRS) and sea lice.

“In Norway and Canada, this [fish health] is currently going quite well,” said Hindar. “In Chile, we have a mixed bag. We have, as always, very good development on coho and a weak development for trout, as well as Atlantics in certain neighborhoods.”

Antibiotics can contain the impact of SRS, but this is “definitely not about throwing antibiotics at the fish”, he said. “Significant use of antibiotics is never a sustainable solution, so you need to find other ways to deal with such problems.”

Related news

Latest news

USCG confirms OPtimarin in Line for Ballast Water Approval

The United States Coast Guard (USCG) has confirmed that Norwegian ballast water treatment specialist Optimarin has become the first supplier to submit an application for type approval.

New order for Servogear

Servogear announces that they have received a new order from Brødrene Aa. 

Norwater AS reports boost in sales

The Norwater team reports of great interest and busy days in 2016. In a press release, they state that as of the first 8 months of the year, 2016 sales are already beyond target for the year as a whole.

Gaia-facts reaching ground control

The European Space Agency (ESA) has released the first data from the Gaia mission, which has the tremendous task of building the most precise 3D map of the Milky Way.

Polish delegation for Norwegian circular waste management

Against the background of the EU's ambitious waste management targets, Norwegian and Polish stakeholders met on Wednesday 14 September in Drammen.

Milestone at Mongstad Water Treatment Plant

SAR AS reports that an extensive upgrade to the water treatment plant at Mongstad reached a new milestone July. 

Servogear signs new contract with Özata Shipyard

Servogear has announced the signing of a new contract with Özata Shipyard in Turkey. The contract includes the delivery of Servogear Ecoflow PropulsorTMfor two 39 meter passenger catamarans (YN 41 & YN 42).

Statoil and Petrobras strengthen strategic partnership

Statoil reports that they have strengthened their cooperation in Brazil by signing a Memorandum of Understanding (MoU) with Petrobras.

TechInvent and Island Offshore/Centrica announced winners of ONS Innovation Award

TechInvent and Island Offshore/Centrica were announced winners of the ONS 2016 Innovation Awards, at the Innovation Awards Ceremony Tuesday 30 August.