Further shake-up in coldwater shrimp sector as Canadians delay season

Disagreements between ship owners and processors put a hold to the start of the season.

The global coldwater shrimp market is only getting more complex, as the start of the Newfoundland and Labrador fishing season is being delayed because of price disagreements between shrimp producers and harvesters in the area.

“Newfoundland and Labrador harvesters have not begun fishing yet,” Keith Sullivan, president of the Fish, Food and Allied Workers Union (FFAW), told IntraFish.

In a normal year, vessels start operating around May 1.

There has been a significant quota cut and so far prices offered by processing companies are lower than last year, and fishermen certainly need good value for the product," he said.

The situation is not improving at the moment. There are further negotiations scheduled for mid-June, but harvesters are not in a rush to start landing the lower quotas approved this season.

The fishing season runs until the end of the year, although in a normal period, everything is caught by September, Sullivan said.

“I certainly hope that with the much lower supply -- there was a 63 percent cut in our biggest fishing area -- that the market is able to pay higher prices.”

Coldwater shrimp markets have adjusted over the past few years to the lower global supply, with some drastic moves in demand. This year, however, things might start to stabilize.

In 2016, the shrimp quota in Northern Canada's six area was cut by 42 percent, and in 2017, it was reduced a further 63 percent, to 10,400 metric tons, a situation that has led to a reshaping of the dynamics in the industry.

“In the past two to three years, with the lack of shrimp supply, prices skyrocketed and that led to a decrease in demand. Now, prices are probably 20 percent lower than the peak in 2015, so I think demand will start to pick up, and prices too,” Tom-Harry Klausen, CEO of Stella Polaris, told IntraFish.

“I think the market is improving quite a lot, we have a better situation after 2016, from March this year I think things are moving much more dynamically," he said.

“Demand will of course not go back to levels of 2015 because the fishery is smaller now. It's a new market scenario and we are moving in smaller volumes, but it's increasing,” Klausen said.

In larger sizes, industry insiders agree that prices are already starting to see an increase.

In Newfoundland and Labrador, processors are also seeing the supply situation as a new reality, rather than a cyclical change.

“Global supply overall will be low, we in Canada want to have a sustainable fishery, even though it’s been very painful on the way down,” Sullivan told IntraFish.

“[The recovery of the fishery] will be highly dependent on the environmental conditions, climate changes of the past decades are not good for shellfish reproduction. All indicators are pointing at a much lower supply, because I don’t see any opportunities for any large increases from other countries,” he said.  

In addition, over the past few years, and up until 2016, there was another factor added to the equation, the supply of pink coldwater shrimp from the west coast of the United States.

This product had not historically competed with the Canadian Borealis, but it started to be in high demand as volumes were abundant, prices were low and Canadian shrimp prices became unaffordable.

However, the lower volumes coming from Oregon since last year have reversed this new trend, and the fishery is not a concern for Canadians at the moment.

“With the fall in supply of coldwater shrimp from the east coast, many pink coldwater shrimp [west coast] exports have gained ground, but the eastern product is much more preferred, its quality is better and is more sought after in Europe,” Robert Rierson, CEO of Tradex, told IntraFish.

Last week, a strike in Oregon that lasted over a month came to an end, but volumes from the fishery are not sufficient to threaten Canadian exports.

Meanwhile, processors in Norway are seeing the shortage from Canada as a positive sign for their exports, which are mainly sold into the United Kingdom, a very competitive market.

“The UK cooked and peeled sector is the most important, and there is a lot of competition there, so if the fishery of Newfoundland and Labrador has lower volumes, that means Norwegian exporters can have a larger share of the market, which is good for us,” Tor-Edgar Ripman, marketing director at the Norwegian Fishermen's Sales Organization (Norges Rafisklag), told IntraFish.

In Norway, prices of FOB are starting to recover, but fishermen will still switch to cod and haddock fishing before landing the full shrimp quota, because it financially makes sense, Ripman said.

Klausen said although both warmwater shrimp and pink shrimp took part of the Atlantic coldwater shrimp share, the product still will have demand and a specific market.

"With the cuts in quota in Canada, I also think than the Norwegian fishery this year will be lower than last year, so the larger sizes will slowly see an increase, and the smaller sizes as well."

According to various players, there were some frozen inventories available a couple of months ago in Newfoundland and Labrador, but the stocks are running low at the moment.

"The quota cuts in Canada had a significant impact on the market, and it’s already happening, exporters already say that this is affecting the large sizes, and the delay in fishing of course will reduce the supply further," Ripman said.

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