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Barents Sea cod, haddock TACs to bring 'no drama' to market

There were no big shocks when the quotas were set for the Barents Sea last week, and the market is not likely to be adversely impacted, top executives in the sector told IntraFish.

Major Norwegian cod catchers are not fazed by the reduction to the Barents Sea cod and haddock quotas announced last week, mainly because they were expected, but also because they are coming down from “historically high levels."

Charles Aas, an advisor at Norwegian fishermen’s sales association Raafisklaget, told IntraFish the quota decision was “no surprise.” The industry knew it was coming and it was just a question of by how much.

In June, the International Council for the Exploration of the Sea (ICES) recommended a 20 percent slash in the Barents Sea cod quota for 2018 to 712,000 metric tons, but the industry was never convinced the cuts would be quite as drastic.

In fact, Thomas Farstad, group director of whitefish at Lerøy Norway Seafoods, told IntraFish the reduction of 13 percent was "within the range we expected."

“We didn’t expect it to go down by the 20 percent that was recommended by the scientific community,” he said. "Over the years, it is rare that the outcome is the same as the advice."

As a result, Farstad is expecting a fairly stable cod market next year compared with this year and even with the 13 percent cut, it's unlikely to have a major impact on market pricing, he said.

“To some extent that is backed by observations already in the market: that when the recommendations were known in June, we haven’t seen a price increase since then, in fact we’ve seen a slight reduction in pricing since the recommendation."

Webjorn Barstad, managing director of Havfisk, agreed the quota was as expected.

"The market was prepared for something like this, so I don’t think it will cause a lot of fuss, because it’s been noted and roughly expected, so there will be no drama,” he told IntraFish.

In fact, according to Farstad, there are so many elements influencing the market price for cod, he “wouldn’t expect any major changes next year."

Other factors impacting prices within the whitefish sector include other species that can be used as substitutes in various products.

In addition, salmon prices have come down slightly and an increase in output is expected, which Farstad assumes will lead to more campaigns for salmon, for instance.

“If everything was exactly the same for next year as it was this year, you could expect a price increase on cod, but in the real world that’s not the case, so I expect a fairly stable market for next year," he said.

Aas said it is difficult to say for the moment what the reduction will mean for prices, “but it will not be negative, that’s for sure."

Currently, the price for frozen cod is around NOK 30 (€3.20/$3.80), he said, and it has been quite stable at that level for a while.

As of Oct. 10 the average price for fresh cod was NOK 23.66 (€2.50/$3) and for frozen it was NOK 27.46 (€2.90/$3.50), Aas said.

20f3fb5c067b5d37eca3ab3e50bd4a16 Cod Prices in Norway, fresh and frozen Photo: Raafisklaget

One other aspect that could influence the price for cod -- in particular fresh cod -- is the increased competition in the sector following the entry of large aquaculture companies into the fishing industry such as Leroy and SalMar.

“If the quota goes down and there is more competition for the fish, it will probably mean higher prices,” Aas said.

But in 2013-2014 the price on fresh cod was around NOK 11 (€1.20/$1.40) to NOK 12 (€1.30/$1.50) per kilo and now it is around NOK 24 (€2.60/$3) per kilo.

“There has been quite a big increase in the price in recent years, so the question is how much higher can they go?" he said. "I think the price will rise a little but not so much.”

Getting back to normal

Most in the industry, though, believe the reduction in quota is simply bringing it back to more normal levels after the “historical highs” of recent years.

“We’ve had historically high quotas on cod in the Barents Sea -- it’s not normal the quota we have had,” said Aas.

“So we are going down to more normal quotas. It’s been an extraordinary period and now it is correcting, normalizing.”

And while it is now at a more normal level, the quota is still well above average

Nevertheless, the industry in Norway, and all over the world, has built up a certain demand on cod which needs to be met so the quotas cannot go down too much.

“Of course if they do then the price will rise and there will also be more competition,” said Aas.

Barstad agreed the quota cut was “a case of normalizing."

“The quotas have been high and coming back, but we are still quite a bit above the median range for cod and have been for many years," he said.

“We still have to remember we are coming from an extremely high level and things are actually only just coming back to normal.”

Tighter market for haddock

It is a similar story for haddock which, like cod, has also been cut 13 percent in the Barents Sea for the 2018 fishing year.

But for this species the industry is more used to fluctuations.

"Haddock is a species which fluctuates a lot more than cod and so we’ve gotten used to the fluctuations in the quota for haddock so this is quite a normal thing,” said Barstad.

“Again this is coming down from very high levels, as expected, so no big disappointment.”

Farstad said the quota cut could translate into a tighter market for haddock, “but then again haddock is a much more limited market than cod."

“Here I believe currency fluctuations might be much more important than the actual cut in quota," he said.

Charles Aas said the reduction to the haddock quota was also not a surprise and it has also been at a high level for years.

“The haddock is still quite high, we’ve had problems fishing all the haddock these last two years,” he said.

Average prices for haddock are harder to judge – there are many formats and gears for haddock – but in general they have been increasing, said Aas, but will probably be “quite stable” for the next year.

As of Oct. 10 the average price for fresh haddock was NOK 15.35 (€1.60/$2) while the average price for frozen was NOK 23.01 (€2.50/$2.90), according to Aas.

0794ad57ef733632409408319d8e8f87 Norway haddock prices, fresh and frozen Photo: Raafisklaget

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