'Scotland wouldn't try to sell this to France': Will lifting Norway's low-grade salmon export ban really increase prices?
An increase in production fish prices could be offset by a fall in prices for higher grade fish, analysts told IntraFish. There is also brand reputation to consider.
Norwegian salmon farmers could potentially benefit from a price increase on low-grade fish if the country's current export ban is overturned, according to analysts. But the situation is complex.
In Norway, farmed salmon is graded as superior, ordinary or production fish. Salmon with deformities are deemed production fish, and it is illegal for Norwegian companies to export these fish without processing them first.
A dialogue about the situation is now set to begin between the EU and Norway.
Should the current export ban be cancelled, Norwegian salmon farmers would be able to sell their production fish to a wider set of buyers, creating a more favorable competitive landscape.
<b>What is production fish?</b>
- Norwegian farmed salmon is graded by the industry itself, according to a joint industry standard (NBS 10-01) from 1999.
- The classes are superior, ordinary and production. The vast majority of the fish, typically over 90 percent, is superior. The proportion may vary somewhat from season to season, and country to country.
- There are requirements for fish in each class based on color, spots, wounds, firmness, damage and shape.
- The description of superior is "a first-class product with properties that make it suitable for all purposes. The product is without significant defects, damage or defects and has a positive overall impression."
- The lowest quality fish, production, cannot be exported out of Norway until it is corrected. Typical signs of this can be sexual maturation, wounds, deformities or treatment errors.
- There is no official or independent third-party that assesses the fish (apart from in special cases where the Norwegian Food Safety Authority can stop the export of production fish).
Another seafood analyst agreed, saying the limited processing capacity within Norway is currently a “big deal” for domestic salmon farmers.
Prices for downgraded fish will be lower due to the restricted processing capacity, he said, adding it is especially difficult for non-integrated salmon farmers without any in-house processing facilities.
“Without an export ban, Norwegian salmon farmers could get better prices on this salmon category as there would be more available buyers,” the analyst said.
However, whilst prices for production grade fish could increase, this rise could be offset by potentially lower prices for higher grade fish.
If a salmon farmer currently has 30 percent production fish and 30 percent committed to fixed price contracts, only the remaining 40 percent of harvest volumes are available for direct exports, and this lower supply of high-grade whole fish has likely put upward pressure on prices for superior grade.
“The total impact on the farmers’ price achievement is thus not clear cut, and one price factor could offset the other," Kaland said.
“I don’t think Mowi expected the appeal to be granted, but it put the issue higher up on the news agenda,” the analyst said.
“Based on fish health, I think it’s wise to process the production fish immediately,” Rolland said.
Most production fish takes the shortest routes to Norwegian customers via Norwegian retailers, and opening up this chain for export increases potential risks to the Norwegian salmon brand.
“Even if a ban could lead to different price dynamics, Norwegian retailers are already keen customers that take big volumes of the production fish," Rolland said. "If Scotland had big volumes of low-quality fish, it wouldn't try to sell this to France."
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