Seafood, especially salmon, ranks as Norway’s second-largest export industry behind oil, and import bans announced Thursday by Russia sent shares in Norwegian seafood companies diving on the Oslo Stock Exchange. Analyst Kolbjørn Giskeødegård of Nordea Markets called news of the bans “quite dramatic.”
“If we take this news literally (based on reports that Russia intends to immediately block imports of fruit, vegetables, meat, fish and dairy products from Norway, the EU, the US, Australia and Canada), it means that the largest single market for Norwegian salmon needs to find a new home overnight,” Giskeødegård told Dagens Næringsliv (DN).
That’s because Norway exports around 2,500 tons of salmon to Russia every week. With the salmon farming season at its highest right now, Giskeødegård said Russia’s ban on seafood imports comes at a very unfortunate time and can lead to a “considerable” drop in salmon prices.
He cautioned that details of the ban were unclear, and it was still uncertain whether the import ban announced Thursday by Russian Prime Minister Dmitry Medvedev involved only certain types of seafood or whether all Norwegian seafood will be blocked from entering Russian markets. The ban comes in retaliation for EU and US sanctions against Russia that in turn were in retaliation for Russia’s military intervention in Ukraine.
Investors, however, were already selling off shares, with the price of shares in major seafood producers like Marine Harvest falling 9 percent by 11am and both Cermaq and Salmar falling by 6 percent.
Are Kvistad of the seafood industry association FHL (Fiskeri- og havbruksnæringens landsforening) told DN that it was difficult to immediately grasp the consequences of a Russian import ban on Norwegian exporters.
“We don’t know whether this will apply to all types of seafood and all Norwegian seafood producers,” he said, echoing Giskeødegård’s uncertainty. “We have to wait and see, and hope we get more details during the course of the day.”
Kvistad said that annual export revenues from sales to Russia amount to NOK 4.8 billion (USD 800 million) just for salmon, and to NOK 6.5 billion for all Norwegian seafood including herring and mackerel. There have been earlier conflicts over salmon exports to Russia, and he noted that only a portion of Norway’s salmon producers have been approved for export to Russia. “They’re grown accustomed to (Russian) restrictions that come and go,” Kvistad told DN. “They’ve gotten used to having to adjust and adapt.”
Kvistad said key industry players were in close contact with Norwegian authorities, while others noted that Russia’s apparent blacklisting of Norwegian seafood was sudden and unexpected. Analyst Georg Liasjø of brokerage firm Sundal Collier had said as late as early Thursday morning that the likelihood of sanctions against Norwegian salmon was “as low as the risk of losing at Russian roulette, one out of six.” A ban on Norwegian seafood imports will dramatically increase prices for Russian consumers, which could in turn backfire on their political leaders.