Norway’s continued increase in export value being almost entirely attributable to a weak krone is causing concern in the seafood industry, according to the Norwegian Seafood Council (NSC).
The Scandinavian country exported NOK 13.1 billion (USD 1.2 billion, EUR 1.1 billion) worth of seafood in May 2023, an increase of NOK 816 million (USD 75.7 million, EUR 70.2 million) year-over-year. NSC CEO Christian Chramer advised in a press release that the weakened krone alone was responsible for the value rising by around NOK 1.5 billion (USD 139.1 million, EUR 129 million). Without it, there would have been a decline in export value, according to Chramer
NSC’s press release also stated that when measured in euros and U.S. dollars, May’s export value fell by 8 percent and 5 percent, respectively, and that Norwegian products reached 115 countries, which is two fewer than the same month last year.
The relative strength or weakness of Norway's currency in global marketplaces has always been a significant factor in Norway's seafood export earnings.
Chramer said ongoing weakening of the krone is due to a combination of factors, including interest rate differentials, fluctuations in global oil prices, the krone being a “minor” currency that’s vulnerable to economic uncertainties, and overall market sentiment.
Chramer told SeafoodSource that within several export-oriented industries, including the seafood sector, businesses are facing challenges due to the weak krone.
“They are raising concerns that although a low krone exchange rate can boost income through higher export revenues, it also results in increased costs for input factors. Additionally, recruiting foreign labor becomes more challenging in the face of a weakened krone,” he said. “Stability and predictability are highly desired, and significant currency fluctuations introduce uncertainty and hinder long-term planning.”
The industry is also seeing disruption in core markets, with soaring food inflation particularly affecting Europe – Norway’s top destination for products.
Chramer said economic development in many of Norwegian seafood’s important European markets is “weak,” noting that Germany is already in recession and French households’ inflation-adjusted purchases of food in April were at their lowest level seen since 2009.
According to NSC’s analysis, many consumers are changing their shopping habits by choosing cheaper products and buying more food on sale. They are also reducing their consumption of meat and fish, Chramer said, pointing to a fall in the total home consumption of seafood products, including salmon and cod, in all major European seafood markets in recent months.
“For the time being, restaurant consumption is not greatly weakened; however, it is natural to expect a weakening there as well,” he said.
With European markets and consumers struggling with food inflation and other economic difficulties, NSC has observed a shift whereby Asian and North American markets are importing more Norwegian seafood. The company reported May’s trade share split at 68 percent for Europe, 21 percent for Asia, and 9 percent for North America.
“A weaker economic growth is expected in the Eurozone than in both the [United States] and our largest markets in Asia,” Chramer said. “We’re already seeing a shift in total Norwegian seafood exports from Europe to overseas markets such as Asia and North America. This shift is likely to continue if the situation persists.”
Despite the clear challenges, there are still a few positive trends in European markets, Chramer said. For instance, herring fillet exports are on the rise.
“In Germany, consumption has grown, and Poland dominates. A lot of the herring that goes to Poland ends up in Germany. There is robust growth [in exports] to Poland compared to last year. In May, 2,200 metric tons (MT) of fillets went to Poland. This is double as much as the same month in 2022,” he said.
Norway's king crab exports in May reached their highest-ever level, with increased landings resulting in more exports of both frozen and live king crab of 53 MT and 45 MT, respectively. This raised their export value by 137 percent, or NOK 18 million (USD 1.7 million, EUR 1.5 million).
The export of fresh saithe was also strong in May, Chramer said.
“This might be an example of [consumers] choosing cheaper products when the prices rise," he said.
Norway's exports to the United States rose 30 percent, or NOK 251 million (USD 23.3 million, EUR 21.6 million), in May – the biggest increase across all its markets and a volume rise of 16 percent to 8,345 MT. NSC’s U.S. director, Anne-Kristine Øen, was unavailable for comment. The council, however, pointed to remarks she made earlier this year, which confirmed a strong increase in demand for Norwegian salmon in the American market.
“The demand for salmon, in general, has increased sharply after the pandemic. We had increased food prices through 2022, and the salmon is still competitive compared to other proteins,” she said.
NSC confirmed that for the year to-date, the United States is the third most important market for Norwegian seafood exports and the largest growth market in value terms. It is also the largest growth market for Norwegian salmon exports.
Photo courtesy of the Norwegian Seafood Council
