Prices for Norwegian salmon have taken a huge dive while inventory at seafood producers is piling up. On Thursday, another major fish farming company reported “disappointing” results as salmon producers, hit by declining demand in key markets, feel like they’re swimming upstream.
Salmon producers like Marine Harvest are faced with large supplies of salmon that are attracting low prices. PHOTO: Marine Harvest
Bergen-based Marine Harvest, the largest producer of farmed salmon in the world, reported pre-tax earnings of NOK 457 (USD 83 million) million in the third quarter but that’s down from NOK 759 million in the same quarter last. The company also noted that only its “high share of contracts at favourable prices” reduced the impact on profit margins from a “steep decline” in spot salmon prices.
The price of salmon has been cut in half, to around NOK 20 per kilo, just since June. Seafood industry officials have said they’ve never seen prices fall so fast over such a short period. At the same time, record quantities of salmon are ready for market just when many consumers are reeling from financial hard times, not least in Europe.
Marine Harvest, which has operations in 21 countries, noted that global supply rose by 19 percent during the third quarter, leading to the sharp decline in prices in all key markets. “We are now preparing the organization for a challenging period,” said Marine Harvest chief executive Alf-Helge Aarskog.
Cermaq, another major Norwegian salmon producer with operations also in Chile, Canada and Scotland, has also seen strong earnings last year turn into losses this year. Cermaq, like its competitors, has been hit hard by falling prices and rising inventory.
“There’s simply more available salmon than the market demands,” analyst Anders Gjenemsjø told newspaper Dagens Næringsliv (DN) this week. Cermaq’s finance director, Tore Valderhaug, readily admits that fish-farming companies are losing money at today’s prices. Most need NOK 20 per kilo to cover costs.
With salmon one of the Norway’s biggest export products after oil, the seafood export agency Eksportutvalg for fisk, EFF has already increased its budget for marketing and promotion of Norwegian salmon and other seafood, in hopes of boosting demand. A looming glut of salmon on the market means many producers will be forced to freeze their fish, but they face capacity challenges there as well, according to Gjenemsjø of Norne Securities.