The price of salmon has seen a drastic decline in the past few months, rocking the boat for the Norwegian fishing industry and salmon farmers who have enjoyed several years of record profits. Business newspaper Finansavisen (FA) reports that prices will continue to sink during the second half of the year and many are now freezing their harvest in hopes that markets will improve.
While the cost of one kilo of salmon came in at NOK 45 (USD 8 ) in April, spot prices now indicate that fishermen can expect no more than NOK 25 (USD 4.5) per kilo, not much of a profit for salmon farmers who have a production cost of NOK 20 to 25 (USD 4 to 4.5) per kilo. Industry stock is in decline on the Norwegian stock market (Oslo Børs).
Contract prices remain slightly higher, but have also been affected, “a September to December contract just closed at NOK 28.50 (USD 5). This means that contract prices for the second half of the year are down by NOK 9 (USD 1.8) in six weeks,” Søren Martens, managing director of Fish Pool, a Bergen-based fish exchange market, told FA.
There are several reasons for the decline, but volume has had a definite impact. “When salmon farmers have new Atlantic salmon to put out for fall, the seine nets will have to lie fallow for three months and thus there has been a high rate of slaughter lately.” Edvard Tanche-Berg, head of trading company Wannebo International told FA. “At the same time, the high price of salmon has scared away low-cost customers, because you are not delivering a cheap product at NOK 40 (USD 7.5) per kilo.” Restaurants and catering companies are substituting salmon on their menus with cheaper white fish or shrimp.
“The drastic drop in salmon prices has been surprising, but we now believe it has hit rock bottom,” Henning Lund, analyst with RS Platou Markets told FA. Lund is doubtful that prices will bounce back any time soon as the same degree of demand seen in previous years just does not exist. “Last autumn we saw prices drop to about NOK 33 (USD 6), which was soon followed by an increase in demand that pulled the price back up again. Now that the price has dropped again, the unsettling part is the apparent lack of interest at the current low cost,” Kolbjørn Giske, seafood analyst at Nordea Markets told FA.
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