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Demand outpaces supply for Canadian salmon

US, Asian demand pushes up salmon prices. New emerging markets also bolster demand.

Canadian salmon farmers have a problem, but it's a good problem to have. Demand for their salmon in the United States is growing but producers can only push out so much.

BC Salmon Farmers Association (BCSFA) Executive Director Jeremy Dunn told IntraFish the United States consumed significantly more seafood in 2015 than 2014.

Canada exported 75,102 metric tons of Atlantic salmon to the United States worth CAD$579.1 million ($431.3 million/€405 million) in 2015, 69 percent more in volume and 63 percent more in value compared to 2014.

Two-thirds of 2015's export volume and value was from British Columbia: 50,150 metric tons of Atlantic salmon to the United States worth CAD$384.7 million ($286. million/€270.2 million).

Dave Mergle, managing director of British Columbia-based Ocean Quality, sees demand and consumption of seafood, particularly salmon,  increasing in the long term due to healthier eating habits, more access to better quality seafood and a growing aging population.

"We're on track to meet or slightly exceed US volumes last year," Dunn said. "We have very defined markets with a huge demand. Exports are constrained by production capacity. If we had more salmon to sell, it would sell."

This growing demand yet limited supply is pushing up prices and it shows. The United States is paying more so far this year for its Canadian salmon.

Through September this year, the United States brought in 60,707 metric tons of whole Atlantic salmon from Canada, or 81 percent of what it bought in all 2015, and paid CAD$580.7 million ($432.2 million/€405.9 million) for it, already more than last year's total value.

Mergle said, "the market is responding to a shortage of supply. The global salmon supply has been up and down this year, but mostly down and this is affecting accessibilty and general market prices."

Cermaq's Lise Bergan agrees with Dunn that the US market is hot right now.

"The US market had been growing over that past couple of years, but currently there is simply not enough fish. Also in the US there is a significant underlying demand," Bergan told IntraFish. "The demand is strong leading to high prices and our sales organization would really like to be able to offer more salmon to our customers than we currently can."

The majority of exported fish is in the form of head-on-gutted but there's still demand for fillets, said Dunn.

US imports of Atlantic Canadian fillets so far this year through September amount to 7,074 metric tons worth CAD$96.9 million ($72.1 million/€67.7 million). By comparison, all US imports in this category in 2015 amounted to 5,984 metric tons worth CAD$72.6 million ($54 million/€50.7 million).

Ken Taylor, sales director of Marine Harvest North America, told IntraFish US demand has benefited the company and he expects US salmon consumption to increase in 2017.

Salmon farmers expect demand will grow in the upcoming holiday season.

Christmas is a peak season for smoked salmon as well as fresh salmon in many markets and this adds to the strong demand," said Bergan.

"Sales during December are always good for us, as we are only selling whole fish from our Canadian operations most will channel through distributors into the restaurant segment throughout North America," said Taylor.

Mergle said the holiday season is historically a time period in which demand for seafood increases.

"Demand is certainly up between October and through the end of the year regardless of supply," he told IntraFish. "Foodservice becomes a much more robust channel."

He added, during the summer time, people turn to picnics and outdoor BBQs, which veer toward traditional proteins, but people opt for salmon and seafood options when cooking indoors during the winter time.

Asia picks up 

Global Canadian aquaculture exports are already better so far this year than for the whole of last year.

"The global price of salmon is up so that's helping to increase the total price of exports," said Dunn, adding Canadian salmon is highly desired in Asian countries.

"Canadian salmon has been increasing its exports to Asia in the last couple years and we will continue to grow that market if the prices allow," Taylor added.

Total Canadian aquaculture exports through Sept. 30 reached nearly CAD$817.7 million ($609 million/€574.3 million). That is already more than the entire export value of 2015 of $772.2 million ($575.1 million/€542.4 million), which set a record year for the country's aquaculture exports.

Aquaculture export volumes through the end of September are about 88,600 metric tons, about 87.4 percent of the nearly 101,400 metric tons exported in all of 2015.

After the United States, the top markets for whole Atlantic salmon from British Columbia by export value are China, Japan, Taiwan and South Korea.

Exports through September to all these countries are already more than what they were in all of 2015.

Canada exported CAD$34.6 million ($25.7 million/€24.2 million) worth of whole Atlantic salmon through September this year to China, far more than the CAD$9.2 million ($6.9 million/€6.5 million) for all of last year.

In terms of volume, China imported 3,871 metric tons so far through September, which is more than double the 1,254 metric tons the country imported in all of 2015 from Canada.

Canada exported 1,456 metric tons of whole Atlantic salmon worth CAD$12.3 million ($9.2 million/€8.6 million) to Japan through September. By comparison, the country exported 793 metric tons worth CAD$6.6 million ($4.9 million/€4.6 million) in 2015 to the island country.

"Whereas the Asian market is growing in total, there are large differences within Asia," said Bergan. "However, the underlying growth is significant and linked to the economic growth in Asia."

Mergle told IntraFish, "our business into Asia increases year over year and we have healthy exports to China."

Dunn said meeting these growing demands with limited supply is a "challenge ... but it's a good challenge to have."

Emerging markets

Some countries are showing a sudden interest in salmon, such as South Korea and Ukraine.

"Our markets are continuing to be diversified," said Dunn.

In South Korea, there were no imports from 2011 to 2014, but then exports in 2015 were 3.3 metric tons worth CAD$26,492 ($19,729/€18,607). So far, through September this year, the country imported 42 metric tons of whole Atlantic salmon from Canada worth CAD$356,415 ($265,241/€249,114).

Ukraine took in CAD$614,285 ($457,486/€431,455) worth of salmon from New Brunswick through September this year after importing nothing from Canada since 2012.

The same is seen with Qatar, Nigeria, India, Kazakhstan, Bermuda, Saudi Arabia and Georgia.

These countries didn't import any Canadian aquaculture products from 2012 to 2015 but started to in 2016, although in small amounts.

"We started exporting to other countries we haven't before such as Indonesia, Thailand, Singapore, Japan and the Netherlands," said Mergle. "You want to diversify your markets for many obvious reasons. If you can do that, you have more options and alternatives to grow your busiess in different ways."

He added certain markets also perform better at different times, which is another advantage to diversification.

He sees the reason behind this is a growing demand globally for high quality salmon as well as a growing middle class in certain countries, which drives demand.

"Obviously if there are increasing demands, that will push prices up and producers want to take advantage of that."

Meeting demand

Dunn said production plans in 2017 include another moderate increase.

"With new sites and larger sites that were amended in 2015-2016 coming on stream," the sector should expect a moderate increase in production in 2017, Dunn told IntraFish.

He said there were four new sites approved in British Columbia in the summer of 2015: two for Marine Harvest, one for Grieg and one for Cermaq.

"Each of the companies received some amendments to some sites that will also allow production increases. So now they've had more fish in the sea in the last 16-18 months and that's starting to bear fruit for the upcoming production cycle."

Taylor told IntraFish Marine Harvest Canada's 2017 volumes will be very similar to 2016.

Bergan said Cermaq expects the global farmed Atlantic salmon production to "remain stable in the next year."

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