A Greek tragedy looms large

The dire state of many Mediterranean sea bass (Dicentrarchus labrax) and sea bream (Sparus aurata) producing countries’ economies is testing most producers, but nowhere more so than in Greece.

In production terms, Greece has always been the world’s bass and bream powerhouse. However, a domestic banking system that’s failing to support the country’s aquaculture sector, along with increased competition from rival nations and the resultant increase in total global output is taking its toll.

Turkey was forecast to produce a total of 108,000 metric tons (MT) of bass and bream in 2013, which would be a 12 percent increase on the previous year’s output of 95,000 MT. Meanwhile, Greece’s production was expected to top out at 94,000 MT, a decline of 7 percent from the 101,000 MT it harvested in 2012.

While still unconfirmed, Turkey’s production is nevertheless expected to have overtaken that of its neighbor for the first time last year. The country’s output has grown by approximately 30 percent over the last five years, compared with 10.5 percent for the sector as a whole.

Total global bass and bream production for 2013 was forecast to reach 342,000 MT. Market observers say this output is excessive, which is supported by the fact that for long periods of the last 12 months, both species have been sold on European wholesale markets for considerably less than the EUR €4 (USD 5.44) to EUR 4.50 (USD 6.12) per kg it currently costs to produce them.

For many established producers, the last big sector crash, which took place seven years ago, is still all too fresh. In the four to five years that followed, farmers tried to avert another boom and bust cycle by putting fewer juveniles in the water for grow-out. However, to overcome their latest cash flow problems and to reduce the impact of high feed prices, too many producers have taken to farming too many fish. Furthermore, many have been criticized for harvesting their fish too early and there has been a glut of small-size fish on the market.

Looking ahead, observers reckon two important steps can stabilize the Greek fish-farming industry. Firstly, the banking system needs to be restructured to offer producers loans at lower interest rates and to give them access to much-needed investment capital. Secondly consolidation of the big players operating in the market could make them more commercially competitive.

A merger between rivals Selonda and Nireus has long been talked about but was always quickly dismissed by both parties. However, after years of frosty relations it’s been hinted that a deal might not be such a long shot anymore, particularly if it improves the financial situation of the two businesses. Both recently reported that their profits slumped for the first three quarters of 2013, despite increases in their volume of fish sales.

Selonda also attempted a merger with another Greek competitor, Dias, in April last year. However, this long-planned deal may not go ahead after Dias filed for bankruptcy protection in September. A hearing was scheduled for late January.

While some large Greek producers and investors have publicly stated they are confident there won’t be a repeat of the 2007 crash, and they rightly point out that fish farming is widely regarded by authorities as an industry that could resurrect the fortunes of the country, behind closed doors they will be very concerned by their precarious position.