Weekly Product Updates

W15 Salmon Update: Challenges and Concerns in Norway's Salmon Industry: Currency Shifts, Export Decline, and Rising Low-Quality Production

Market & Price Trends
Published Apr 17, 2024
In W15 in the salmon landscape, Norway's seafood export growth has halted, with a 14% YoY decline in Mar-24, signaling a turning point driven by various factors such as quota restrictions and moderating global food prices. Despite this decline, premium products like cod and snow crab saw record export values in Q1-24, offering some resilience. However, the salmon aquaculture sector faces a concerning trend of increasing low-quality fish production, reaching record highs in Mar-24. Factors like winter damage and adverse weather conditions contribute to this rise, prompting concerns about the industry's export prospects and regulatory implications.

End of Norway's Seafood Export Boom

The Norwegian seafood industry faces a period of adjustment as previously dominant factors like currency and high food prices recede. Lower export volumes due to quota restrictions and potentially softer demand due to moderating global food prices present challenges for the industry. Norway's remarkable three-year streak of seafood export value growth ended in Mar-24, with a year-on-year (YoY) decline of 14%. This decline extended to Q1-24, with a 3% YoY decline compared to Q1-23, marking a turning point for the industry.

The previously favorable exchange rate, where a weak Norwegian krone (NOK) boosted export value, began to diminish in Mar-24. Export volumes for key species like salmon, cod, herring, mackerel, and king crab experienced a decrease compared to the same period in 2023. Reduced catch quotas implemented for sustainability purposes are a contributing factor. While salmon prices remained strong, they did not exhibit the significant increase observed in Mar-23. A moderation in global food inflation has likely impacted Norwegian seafood price growth.

Despite the overall decline, the European Union (EU) remains Norway's primary export market, with Q1-24 value exhibiting a modest 1% YoY increase. Record export values were achieved for premium products like cod, snow crab, and trout in Q1-24, somewhat mitigating the decline. The continued focus on high-value products offers a potential path for export value growth despite volume constraints. The long-term sustainability of this approach hinges on maintaining strong market demand for premium Norwegian seafood products.

Rising Low-Quality Salmon Production Raises Concerns in Norway

The salmon aquaculture sector in Norway confronts notable hurdles stemming from a rising percentage of low-quality fish output, presenting a considerable obstacle for the Norwegian salmon industry. Data from the Norwegian Food Safety Authority reveals a persistent issue with low-quality salmon, categorized as "produced fish," (low-quality) exceeding 35% for eight consecutive weeks in 2024. This culminated in a new record high of 38.8% in mid-Mar-24, double the figure observed during the same period in 2023. The data suggests a seasonal pattern, with winter months historically exhibiting a higher number of "produced fish." However, a more concerning trend is the year-on-year increase in low-quality output since 2018. The Norwegian Fisheries Minister has expressed concerns about the negative trajectory and its potential impact on the country's salmon exports.

In Norway, farmed salmon are graded into three categories: high-quality, normal, and "produced fish." Salmon with deformities or wounds fall under the latter category and cannot be exported unprocessed. A major Norwegian salmon producer acknowledges the severity of the situation. Factors like increased winter damage, jellyfish blooms, and cold weather conditions were cited as contributors to the high production of low-quality fish. Previously, one of the main salmon producers sought an exemption from regulations prohibiting the export of unprocessed "production fish," but Norwegian authorities rejected its request on Mar-24.

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