There has been a “phenomenal” growth in global production and consumption of salmon in recent years, and the sector is poised for further success in 2017, according to the consensus of a group of panelists representing the industry at the National Fisheries Institute’s Global Seafood Market Conference on Wednesday, 18 January.
The seemingly inexorable rise of salmon could not be slowed in 2016, despite a massive algae bloom that caused a 19 percent drop in production in Chile, and sea lice and disease issues causing a four percent drop in production in Norway. Combined, that resulted in a seven percent drop in global salmon production over 2015, which caused Atlantic salmon prices to spike. However, a projected rebound in supply will likely result in stable or somewhat lower farmed Atlantic prices in the latter half of 2017, the panel agreed.
Norway continued to lead the way globally in salmon production, with an estimated output of 1.2 million metric tons (MT), most of which was sent to markets in the European Union. Chile was second with 600,000 MT of production, with Canada in third with production around 150,000 MT. Other countries produced a combined 380,000 MT, according to a Kontali Analyse report referenced by the panel.
Despite its overall decline in production, Chile still managed to import more Atlantic salmon to the United States, Far East and E.U., with less salmon going to Brazil and Russia. Prices for farmed salmon in the U.S. hovered between USD 3 and 6 (EUR 2.82 and 5.65) in 2016, with prices rising sharply in the winter and spring and leveling in the summer.
“Ultimately fish moves to where it gets the best returns, returns for Chilean salmon sold to U.S. have been very good,” a panelist remarked.
The secondary impact of the algae bloom in Chile is just starting to be felt in markets now, the panelist said, as fish sizes have been smaller, and that trend is likely to continue through the first half of 2017, he said.
Globally, farmed Atlantic salmon supply is estimated to grow by three percent in 2017, and world demand is expected to continue growing at a pace of about six to eight percent annually.
In regard to wild salmon, which is caught in the waters of four countries – the U.S.A., Russia, Canada and Japan – the panel focused on sockeye, which has the largest share of value to U.S. seafood companies due to its prevalence in Alaska and the premium price it commands.
Frozen and fresh sockeye from Alaska is about 10 percent of the U.S. market, and non-exported production has been growing, according to the panel. The domestic market in the U.S. heavily favors wild Alaskan sockeye salmon, especially when sold fresh in-season, it agreed.
The panel also discussed the market for salmon in China, where demand is growing and will continue to increase.
“It’s a relatively new species there,” a panelist said. “In my mind, I have no doubt Chinese demand for salmon will grow.”
However, the attention of the panel eventually turned back to Chile, and how its volume of production affects the prices U.S. retailers charge for salmon sold in restaurants and grocery stores in the U.S.
“I’m hoping for some kind of balance in Chile, where we can find a better realistic retail price that works for both sides. The Chilean salmon farming industry lost USD 750 million (EUR 704 million) last year…the reality is, if we had a repeat of 2015 in Chile, there are going to be a lot less producers around, a lot less people employed in Chile, companies would go bankrupt and ultimately, pricing would have gone up anyway because of that. The fact that industry is profitable this year, for the long-term sustainability of the industry, it’s very positive,” one panelist said.