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Norwegian plan to freeze 40,000 tons could put pressure on frozen salmon.

Norwegian Plan to Freeze 40,000 Tons Could Put Pressure on Frozen Salmon

Fisheries minister welcomes farmers move as way to halt depression in fish prices. Meanwhile, projection sees Japanese import requirements and consumption slipping in 1990.

While Asian shrimp farmers are beginning to talk in perhaps wishful terms about capping production, Norwegian cultured salmon producers are doing something about the overproduction that has resulted in lower prices in the fresh segment. This year they will take pressure off the market by freezing some 40,000 tons.

Although this is hardly good news for frozen salmon packers in the USA and Canada (the former of which, by the way, just happens to be the No. 1 customer of Norwegian salmon, buying 18,000 tons last year), it is viewed in many seafood quarters as necessary to check a further price slide. One such quarter is Japan, whose own rising domestic output of both wild and farm-raised salmon will provide 60% of the 350,000 tons projected to be consumed at home in 1990.

"Last year Japanese traders had a difficult time selling imported product in Japan and absorbed losses," reported Hiroshi Suzuki, director of trade for Nichiro, in an address on the salmon market given to the Seafood '90 Japan Conference in Kyoto. He added that the 1988 carryover of 231,000 tons was the largest in three years.

"Freezing salmon should bring about a sound balance earlier than many people anticipate," Svein M. Munkejord, Norwegian Fisheries Minister, told delegates. "However, I have no control over prices. I can tell you only that production will decrease."

But Munkejord did suggest that the frozen salmon will not be discounted -- instead it will be sold at "full price." He added that "the remainder will remain in inventory until the right time."

The fisheries minister advised his Kyoto audience that while Norway -- which exports 90% of its tonnage -- sold 59% more salmon in 1989 than the previous year, the increase in production outgrew consumption. Some 60-70% of the Scandinavian country's output is farmed Atlantic salmon.

Do the Norwegians seriously aim to crack the Japanese market, which generally prefers Pacific species with 3-4% fat content compared to the Atlantic variety's 8-10%?

"Frozen sales are not, or will not, depend on the Japan market," said Munkejord. "But we do hope to sell there."

During a period open for questions from the floor, one man told the minister: "There is discontent in the industry about freezing salmon because it will create a big stock that will not help prices."

Munkejord responded: "It is not my duty to study that problem because the government is not involved (the decision to freeze was made by the country's private fish farmers association). But I appreciate the question."

He followed through by saying that the accumulation of unsold tonnage was not likely to be great for two reasons: "not so much salmon is now swimming in cages; more fresh salmon will be sold."

At this point Odd Berg, marketing director of the Norwegian Salmon Marketing Council, got up from his seat and advised: "We haven't frozen any fish yet. But our plans are to take out 40,000 tons. Typically, we sell 20,000 tons to the frozen market every year. But if we sell more fresh, we won't have to freeze as much... We're trying to stabilize the market. But at the moment it's affected the price level by $1."

Interestingly, the Norwegians are forecasting a harvest of 150,000 tons in 1990. Next year's yield will be cut to 140,000, with a further 10,000 ton reduction in 1992 bringing it down to 130,000.

But some doubt has been expressed about these figures. One longtime analyst of the Norwegian scene told Quick Frozen Foods International: "In my opinion output this year will not be much more than 100,000 tons. For one reason, they don't have enough seed. Anyway, in the end prices are going to be dictated by wild catches. Remember, the tail doesn't wag the dog."

Hans-Heinrich Peterson of West Germany's Nordsee GmbH used the question-answer session to offer the following observation: "Formerly salmon was largely thought of as a gourmet item to be consumed around Christmastime. But now prices are so low that nobody's making money, and the housewife gets lousy quality."

He wanted to know what the Norwegians would do to improve quality.

Minister Munkejord responded by saying that steps are now being taken to eliminate so-called "production salmon" from export trade. But he also noted that different markets exist for both low-priced and top-quality products: "Salmon no longer is only a gourmet item."

The View from Japan

Quality, of course, is ichiban in Japan, but price too is becoming a top concern now that a 3% consumption tax is being tacked onto all retail sales, and beefed up promotions from meat and poultry exporters are inroading the popularity of fish. Nichiro's Suzuki addressed these and other issues in his presentation.

"Competition between wild and cultured species will be harsher in the next few years," he predicted, "and the lower cost will determine which one will survive the competition."

He remarked that quality problems of some salmon could lead to reduced prices. More processing, however, could be the answer. As for Atlantics, it will be difficult to top last year's imports of 9,500 tons unless pricing is right and quality is raised, said Suzuki.

The Nichiro executive noted that while geography handicaps Chilean coho in the Japanese market, its high quality is advantageous for sales. Hence imports should continue to increase.

Suzuki called on world producers to standardize their product offerings and to heighten value added processing by turning out more fillets and portions.

On the distribution front, fresh salmon expanded in relative terms last year at the expense of frozen. Nonetheless, Alaska's firm hold as the largest supplier of frozen wild salmon remains ensconced.

The Nichiro trader urged salmon culturists in particular to upgrade their freezing capability because the Japanese have a "long memory for poor quality."

Suzuki painted last year's salmon supply and demand picture as follows: 470,000 tons were placed on the market with only 372,000 consumed, leaving a carryover of 95,000. Some 231,000 tons actually represented 1988 surplus stocks. Of the new production, 52,000 was caught in waters off northern Japan or through joint ventures with the USSR; 21,000 tons represent domestically cultured coho. On the import side of the ledger, 126,500 tons were wild species, while 23,500 were farm-raised.

His personal projections for 1990 call for a 10,000 ton fall in import requirements to 140,000, with total consumption slipping to 350,000 tons. New domestic supplies will total 204,000 tons, added to a 95,000 ton carryover. Surplus stocks for 1991 will be in the range of 89,000 tons.

Emphasizing the importance of salmon remaining competitive in price with other protein foods, the Nichiro executive presented the following statistics on price and annual consumption per household: 1983 -- 174 yen per 100 grams/5.45 kilos; 1988 -- 191 yen per 100 grams/4.40 kilos.

"Tracking over the last 10 years has shown us that if prices are higher than 180 yen consumption falls below four kilos," calculated Suzuki. "But it jumps to five or six kilos if the price goes down to 170 yen."

PHOTO : Svein M. Munkejord (right), Fisheries Minister of Norway, takes questions in Kyoto about

PHOTO : the decision made by Norwegian salmon producers to freeze 40,000 tons. At his side is R.

PHOTO : Tanabe of the Japan Marine Products Importer Association, who moderated the salmon panel.

PHOTO : Yoshihide Uchimura, president of the Japan Fisheries Association, served as chairman of

PHOTO : the Japan Seafood '90 Conference in Kyoto which drew more than 300 delegates from around

PHOTO : the world.
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Publication:Quick Frozen Foods International
Date:Apr 1, 1990
Previous Article:Product explosion and market reaction to Asia's black tigers and China whites.
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