It's Groundfish Forum time, and the 24th annual event is being held this year at The Westin Hotel in Cape Town, South Africa. The world's whitefish situation is always in flux, a heady cocktail of harvests, processors and markets that span the globe but oftentimes compete for the same customers. This year hasn't been any different, but here are the topics that, so far, have risen to the top.
Exchange rate havoc. The strong dollar has completely upended the “normal” market for whitefish. With most products traded in dollars, the domino effect on buyers and sellers – not to say the poor processors and traders – has been severe, and made for a lot of changes.
Russian posturing. It’s hard to know how seriously to take Russia’s declarations, but they are certainly carrying out on some of their commitments. From kicking out foreign owners to incentives to supply to the domestic market to a potentially huge program to purchase upwards of $1 billion in new vessels, if there is truth to these plans, Russia will not be just the story of the year, but the story of the decade.
China’s decline. While China has been the go-to country for processing for decades, the increasing middle class that we’ve been promised for so many years appears to be a reality. Along with that has been an adjustment in trade flow (more product is staying in-country) and a collapse of some pure processing companies. At least one former behemoth is reportedly completely out of the processing business, and with giants such as Espersen moving their operations to Vietnam to take advantage of comparable low-cost labor (and perhaps the new Trans Pacific Trade Partnership), China’s famous craftsmanship doesn’t seem to be so bulletproof anymore.
Cod’s comeback. For cod suppliers, thankfully, prices have recovered to a rate that allows them to make money. Though margins aren’t huge, they are beating expectations (look at the results of Havfisk, for example). It’s a far cry from the doldrums of one year ago. Prices for frozen H&G cod from Norway in week one were up by more than 40 percent. Last week, they were up by more than 33 percent over 2014, and 75 percent over prices in 2013. It's especially good news in a climate where the cod supply is strong.
German’s fish finger fight. It seems to go on and on and on and…you get the idea. German frozen fish producers and discounters seem unable to convince consumers that they should pay more for their fish. Or are they? New research indicates Germans aren’t as frugal as we all think. So is it truly a price resistance, or a lack of imagination?
Iglo + Findus = it’s about time. Neither of the private equity owners of these groups were able to unload these giants for years, probably because no company in its right mind saw a true future in frozen. Enter Nomad Foods – an aggressive American group claiming they have it all figured out. Well, we’ll see. Don’t expect miracles. CEO Stefan Descheemaeker has said that the battle against private label will be about “evolution” of products, not necessarily big R&D initiatives. At any rate, it’s a company with a lot more ability to negotiate with major buyers – and with major sellers, incidentally. Young’s, left behind in the UK, will likely specialize, but may go back to its successful roots under veteran Pete Ward.
American. While it was “about time” for Iglo and Findus, it was the “nick of time” for the largest Alaska pollock quota holder. There are a lot of reasons the company ended up under the heavy burden of some $1 billion in debt, and a lot of rumors about how, exactly, they were going to get out from under it. Ultimately, it was an Avengers-eque Power Group of seafood executives and old friends that came to the rescue. With those minds steering the ship, the industry can breathe a sigh of relief that it won’t run aground.
Pollock nomenclature. OK, this seems like a small thing, and maybe it ultimately will be. But American pollock producers insist it will give them an edge. US senators last month introduced a bill that aims to allow producers to take the “Alaska” out of Alaska pollock as a trade name for the fish. The theory goes that it will help US producers differentiate themselves from Russian product. The caveat is that to truly take advantage will require much more aggressive “Made in the USA” promotion. The catch? Any US product processed in China and sent back has to do even more linguistic judo.
Whiting in the water. The Pacific whiting TAC is always a challenge to harvest for a range of reasons. This year, tens of thousands are still in the water, and though companies targeting them are working hard, so far, it’s been a challenge. That means the expectations set this time last year will be much lower.
Bering Sea shutdown. Nobody likes to unravel the tangled web of Bering Sea fisheries science and political management – except the NOAA eggheads, god love them. And while an effort by Greenpeace to keep Alaska pollock harvesters from trawling in the Bering Sea canyons just failed, there is no getting around the very real fact of Chinook and chum salmon bycatch. Too many of these get taken, and BAM! With close to 50 percent of the major wild whitefish harvest made up of pollock (around half from the US), the whitefish industry would be thrown into chaos.
Of course, there are dozens more factors – a fascinating surimi picture, big farmed whitefish deals, personnel changes and early signs that haddock may be recovering -- and I invite you to drop me a mail and let me know what I may have missed. But I’m looking most forward to seeing how the above factors will affect 2016, and once the Groundfish Forum forecast comes out.
PS – we’ve organized all our top groundfish stories on www.intrafish.com/groundfish in case you need to do more homework before this week's meetings.
Comments? Contact:drew.cherry@intrafish.com
Twitter:@drewcherry
