Chile's salmon sector prepared to weather trade disruptions caused by Russia’s invasion of Ukraine

Chilean Salmon Council Executive Director Joanna Davidovich.

As a result of Russia's invasion of Ukraine and resulting international sanctions, the world’s energy and food markets are in turmoil. Despite the uncertainty, Chile’s salmon farmers are well-positioned to weather the storm, according to Chilean Salmon Council Executive Director Joanna Davidovich.

According to Davidovich, whose organization represents AquaChile, Australis, Cermaq, Mowi, and Salmones Aysén, which together produce more than half of Chile’s farmed salmon, a recent effort toward market diversification will limit the industry's exposure to the Ukraine crisis.

Currently, the top three markets for Chile's salmon are the United States, Japan, and Brazil, which together received more than 70 percent of Chilean salmon shipments in 2021. Russia was a  fourth, importing 50,689 metric tons (MT), or 7 percent, of Chile's salmon-export volume, according to Chile’s Customs Office.

In 2021, the value of all Chilean exports to Russia reached USD 623 million (EUR 561 million), with salmon and trout representing nearly half that total at USD 292 million (EUR 263 million), La Tercera reported. Chile's salmon exports to Russia have been on a downward trend, as its exports by volume dropped 17.7 percent in 2021 from 2020 levels. And Chile's salmon and trout shipments to Ukraine are minor, totaling 257 MT in 2021.

At the same time, according to Davidovich, Chile's salmon exports to other markets are on the upswing. Exports to Mexico reached 24,438 MT last year, a 78.3 percent jump when compared to 2020, though the total represented just 3.4 percent of Chile’s salmon exports. Despite the difficult conditions affecting global commerce in 2021, Chile still managed to send a record USD 5.18 billion (EUR 4.56 billion) of salmon and trout abroad thanks to steady increases in demand, Davidovich said.

The Chilean Salmon Council and its member-companies are carefully monitoring the conflict between Russia and Ukraine , with an eye to issues involving logistical challenges and a rise in oil prices, in addition to the risk that the confrontation may escalate and affect other markets. Davidovich noted mounting supply-chain bottlenecks that have been exacerbated by the conflict are likely to impact Chile's seafood exports. And the expulsion of some Russian banks from the Society for Worldwide Interbank Financial Telecommunication (SWIFT) system will make it harder for international companies to conduct businessin Russia.

“We see solid demand throughout the world for Chilean salmon, but right now there is high uncertainty, marked by factors such as COVID, increasing inflation, and uncertainty about how long the Russian-Ukraine conflict will last and the impacts it will have on the world economy,” Davidovich, who was hired in July 2020, told SeafoodSource. “We hope that this conflict can be resolved as soon as possible and that it does not continue to escalate.”

In response to the conflict, salmon exports to Russia have had to be redirected to other markets, “which has been achieved without major difficulties,” mainly to Asia, including China, Taiwan and Southeast Asia, Davidovich said.

Chile is becoming more adept at shifting its exports in response to changing market conditions. In response to the COVID-19 pandemic, China began restricting imports of salmon and other seafood in the wake of rumors that a spike of COVID-19 in Beijing was linked to imported salmon.

In response, Chilean authorities took steps to calm China's fears, but the damage was done; In 2019, China received 5.3 percent of Chilean salmon shipments, but that number decreased to 3.1 percent in 2020 and to 2.2 percent in 2021 (receiving 16,090 MT). As a result, China fell out of the top five foreign markets for Chilean salmon.

“In 2019, China was a market with similar characteristics [to Russia] and in 2020, when the COVID-19 crisis came, it significantly restricted the market. It placed restrictions associated with the health emergency and Chile was able to overcome this situation, redirecting products to other markets, maintaining competitive prices," Carlos Odebret, president of the Magallanes Salmon Farmers Association, told La Tercera. "So the ability to be flexible in this type of situation is high, especially in a scenario in which there is a growing demand for seafood all over the world."

SalmonChile President Arturo Clément previously said he expected China to soon become one of the world's biggest salmon markets, and that Chile is well-positioned for that eventuality. He said on 2 March Chile's salmon sector will continue to lean on its diversification efforts to minimize the impact of regional trading disruptions.

“We deeply regret the drama that is taking place in Ukraine. In such a globalized and interconnected world, these armed conflicts have an enormous human impact and certainly have harmful effects on all economic sectors,” he said. "As an export sector, [Chilean] salmon farming is well-diversified, from Latin American to Asian markets, which protects us.”

Photo courtesy of Joanna Davidovich/Twitter


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