Big quota brings big challenges

In theory, having a large catch quota is a nice situation to be in; not least it endorses the good management practices that are probably in place. But as Norway is finding out through its record cod allocation this year, it’s not as simple as just selling more fish.

There was much fanfare when this year’s total allowable catch (TAC) for cod in the Barents Sea was set at 1 million metric tons (MT) by the Joint Norwegian-Russian Fisheries Commission, an increase of 33 percent or 249,000 metric tons.

Norway, with a 446,740 MT share of the TAC initially felt finding markets for all its additional cod — some 107,000 MT — wouldn’t be an issue, particularly as the haddock TAC had been reduced. But that hasn’t proved to be the case and the result of the oversupply has been that cod prices have tumbled all over Europe.

According to the Norwegian Seafood Council (NSC), the average export price for the country’s fresh cod last month was NOK 15.30 (USD 2.62, EUR 2.03) per kilogram, a drop of 28 percent or NOK 5.92 (USD 1, EUR 0.79) compared with the average price in April 2012. At the same time, its export volume of whole fresh cod increased by 179 percent from 3,646 MT in April 2012 to 10,160 MT in April 2013. This was the first time that this export product had exceeded 10,000 MT in a single month.

Addressing delegates at a recent Master Conference organized by the NSC, Morten Hyldborg Jensen, sales and marketing director of primary processing with Norway Seafoods, one of Europe’s leading processors of fresh and frozen whitefish, said the large abundance of cod in the Barents Sea should be an opportunity for the whitefish industry, but at the moment it’s proving a challenge “because the market doesn’t seem to be able to absorb all this fish that comes within a relatively short period of time.”

Jensen believes a lot of the issues the Norwegian whitefish sector faces are attributable to the unstable supply of raw material.

“If you are within the whitefish sector and you are basing your production on fresh fish, it’s a challenge that 75 percent of our cod is caught in the first five months of the year,” he said.

Norway Seafoods, which has a turnover of NOK 2.2 billion (USD 376.1 million, EUR 292.3 million) and handles 70,000 MT of whole fish per year, is now with the help of local fishing communities trying to get the fishing season extended so that it can supply its customers with more of a year-round supply of fresh products and also frozen products that are based on single-frozen only.

“If we were to base our products on twice-frozen then we would be competing with low-cost production countries like China and we are out of the competition,” said Jensen.

Cod’s low price point has meant that resources are limited for innovation, he added, particularly as the Norwegian whitefish industry predominantly comprises several small companies. In addition, the retail trade hasn’t been any way near as proactive as the sector would like.

“We go to retailers with lots of products but we find it very challenging to get new business,” said Jensen. “We have the fish, we have the ideas, but we need the retail sector to be more aggressive.”

In the meantime, Norway Seafoods has been using its three core retail brands — Norway Seafoods (Norway), Thorfisk altid frisk (Denmark) and Côté Phare (France) — to test the viability of new preparations and packaging.  Jensen describes these new products as “basic,” and added that ideally the company would like to bring “higher complexity” to its range and move into areas like ready meals.

Not surprisingly, cod utilization is the main area of focus but the group is also using salmon, plaice and other species, he said.

The goal is to make whitefish like cod, haddock and saithe appeal to larger consumer demographics in the same way that salmon does.

“Salmon is trendy whereas whitefish is mainly preferred by seniors. We have to find a way to make whitefish sexy,” said Jensen.

Perhaps then, the retailers will come a calling.


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