For buyers of farmed Atlantic salmon, 2017 was a year of two very different halves, with a dramatic shift in the supply over the course of the 12 months, according to Faroese producer Bakkafrost Group.
In its new annual report, the company states that the effect of biological challenges in Norway and Chile in 2016 caused limitations in supply and lasted for the first half of 2017, with the global supply of the fish falling by five percent year-on-year. Most notably, the EU’s supply fell by 8.5 percent, while prices reached record highs.
However, an improved biological performance from the end of 2016 and through the summer of 2017 turned the situation around. In the second half of 2017, the global supply increased by 8 percent and the supply to the European Union rose by three percent. Globally, salmon supply totaled 2.26 million metric tons (MT) whole fish equivalent (WFE), which represented an increase of 1.7 percent.
The increase in supply volumes in the second half of 2017 led to a better balance between supply and demand, and as a result, prices adjusted down to a more moderate level compared with 2016, Bakkafrost said. In the last quarter of 2017, the supply and price picture was completely different from the last quarter of 2016, whereby the global supply climbed by 12 percent (a reversal from being down nine percent in 2016) and European spot prices fell by 31 percent (down from a 54 percent increase in 2016).
On the European market, the shift in supply and shift in price level have contributed to increased purchase interest from both traditional and new markets, the company said. In France, which is one of the biggest salmon markets in Europe, the number of large-scale retailers offering fresh salmon products increased in the last quarter of 2017 and in the beginning of 2018.
“It could be that both producers and end consumers will benefit from the increased availability, as prices have come down to a level that seems to be profitable for the whole value chain and affordable for the end consumer,” the report said.
Bakkafrost also recognized that the two largest producing countries, Norway and Chile, which combined account for approximately 80 percent of the global volume, both saw an increase in their harvests again last year. Their respective increases of 36,700 MT and 74,700 MT WFE also accounted for approximately 80 percent of the global growth.
The company delivered total operational earnings before interest and taxes (EBIT) of almost DKK 1.4 billion (USD 231.9 million, EUR 188 million) in 2017, up from DKK 1.2 billion (USD 198.8 million, EUR 161.1 million) in 2016. It harvested 54,615 MT of salmon (gutted weight), up from 47,542 MT in 2016 and 50,565 MT in 2015, and expects to harvest 51,000 MT in 2018.
