Cod renaissance pressures exporters

Published on
July 17, 2012

With European cod stocks at unprecedented levels and quotas set to soar over the next few years, there’s heavy pressure on exporters to find new markets for the additional fish or see prices slide further toward unprofitability. In traditional cod markets, however, it’s the producers of other whitefish products that should expect to lose the most ground.

For the Barents Sea, the world’s largest cod fishery, the International Council for Exploration of the Sea (ICES) has recommended a 25 percent hike in the 2013 quota, which would take the total cod catch up to a record high of 940,000 metric tons, compared with 740,000 metric tons in 2012. 

Cod supplies from Iceland are also set to increase in line with a much-improved spawning stock. The country’s Marine Research Institute (MRI) has recommended that the government increase the quota for the year starting 1 September, 2012, to 196,000 metric tons, an 22.5 percent increase from the current season. 

The MRI has further suggested that Iceland’s quota could reach 250,000 metric tons by 2016.

Also moving in the right direction, ICES has said North Sea cod stocks are now at their healthiest level in 14 years, doubling in the last six years. While fishing opportunities in the North Sea recovery zone could yet reduce further, the industry remains optimistic that the positive turnaround points to larger quotas in the future. 

The proposed catch increases are certainly a well-deserved pat on the back for fisheries management, but exporters are fearful of the effects that the significantly greater supply will have on prices and subsequently their bottom lines. And their worries are not without reason: the current price of H&G cod in China stands at about USD 3,100 (EUR 2,542) per metric ton, whereas 18 months ago it was USD 5,500 (EUR 4,510). 

John Rutherford, director of the Frozen at Sea Fillets Association (FASFA), which represents trawler owners and distributors of frozen-at-sea (FAS) fish from Norway, Iceland, Faroe Islands, Spain, Russia, Greenland and the United Kingdom, believes that if cod prices continue to fall it’s plausible some of the quota will remain uncaught in the sea. 

“The economics have to work both for the catchers and for the consumers,” he said. “Some companies will take full advantage of the quota but I can see others saying, ‘Why should we work harder for no more money?’ There must be a floor in the price, below which the catchers simply won’t go to sea.”

In Norway, the 8 percent increase in the Barents Sea cod quota for the current season has contributed to a decrease in the export value of the country’s groundfish for the first-half of 2012. According to the Norwegian Seafood Council (NSC), groundfish exports totaled NOK 5.1 billion (EUR 685.9 million, USD 837 million) for the six-month period, representing a NOK 356 million (EUR 47.9 million, USD 58.4 million) drop, or 7 percent compared to the first half of 2011.

But if the proposed 2013 record-high quota is given the green light (to be determined by the joint Norwegian-Russian Fisheries Commission and finalized in October), NSC whitefish analyst Ingrid Hansen doesn’t believe markets will be saturated with cod. She told SeafoodSource that NSC doesn’t have any plans to chase after new markets but that it will work closely with exporters to explore current opportunities.

“Brazil has a good economy right now, but for us it’s traditionally a market for our clipfish and cured products. We see a lot of potential for cod in the United States, which is historically a market for Norwegian haddock. Portugal is also a good market for us and continues to be so despite its economic problems.

“It’s a challenge for the exporters, but at the same time that there’s an increase in the cod quota there is a decrease in the haddock quota,” said Hansen. “That’s just natural fluctuations in stocks, but the cod increase could cover the haddock decrease.”

Rutherford believes the current abundance of cod is probably an “artificial high rather than a long-term norm.” He also maintains the strong supply and greater affordability of the fish will be “very good news” for consumers in traditional markets like the United Kingdom.

“Cod is the ultimate whitefish; it’s the salmon of the gadoid species. Instinctively, people want to eat it and now there is this opportunity,” said Rutherford. “I am quite hopeful we will start seeing high-quality cod fighting back against pollock and pangasius being used in foodservice as well as pollock, pangasius and hake appearing in retail.”

He acknowledged that many consumers remain reluctant to believe that large volumes of sustainable cod are available but is in little doubt that “the right” information will eventually get through and “lay to rest some of the scares of the last decade.”

“The fish-and-chip market will pick up a little bit of the extra supply and it will enjoy the lower prices, but I do think cod will move more into foodservice and retail and some of the alternative whitefish species will be put on the back-shelf,” he said.

While there’s sure to be much more speculation surrounding the greater cod supply in the coming months, what’s certain is that even if Barents Sea and Icelandic stocks level off or naturally subside in the future, cod is moving closer to a position from which it could redefine the European whitefish market at least until the end of the decade.

Contributing Editor reporting from London, UK

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