Based on the available volume, 2011 was an excellent year for the salmon industry: Total supply amounted to 3,111,200 t and was thus not only above the previous year’s results (just under 2.83 million t) but also broke the earlier record of 3 million tonnes in 2009. At the root of these achievements is salmon farming which is characterised by remarkable stability and, following slight drops in production in 2009 and 2010 (due to ISA losses in Chile) is currently rising again at an above-average rate. All forecasts predict that this year more than 1.8 m t of farmed salmon will be placed onto the market. More optimistic scenarios even anticipate production in excess of 1.9 m t. But even if salmon farming was the motor behind the good results in 2011 this record was still only possible because the wild salmon fishery also contributed an impressive volume. Based on preliminary estimates the total catch probably amounted to just over one million tonnes.
As in 2009 Russia made a decisive contribution to the good result of the wild salmon fishery in 2011. With 476,000 t they also (for the second time since 2009) caught considerably more salmon than Alaska. And it is not even certain that this figure reflects the actual catch volume because, despite some advancements on the part of the Russian control authorities it has so far not been possible to completely solve the problem of illegal fisheries in the largely deserted Far East. Opinions vary on how much wild salmon is caught illegally. Whilst the regional head of fisheries professed two years ago that in the waters around Kamchatka a maximum of one in ten salmon fell prey to illegal fishing activities, fish industry representatives assumed much higher figures. Valery Vorobiev, Director of the fishery enterprise Akros, one of the biggest companies in the region, even estimated that illegal catches amounted to 100,000 t per year. The decline in high-value species in the officially registered catch lists could be an indirect sign in support of this. Poachers are of course particularly on the look out for king, coho and sockeye because they are the most lucrative booty.
The number of king salmon that enter Russian rivers for spawning is said to have fallen by two thirds since the early 1990s. A lot of fishes do not even manage to get as far as the rivers because they have already fallen prey to illegal fishermen in the sea. The situation is much the same for sockeye which is mainly caught off the coast using drift nets, often illegally. In some years Japanese customs offices register larger import volumes than the Russian catch statistics officially declare. These figures give rise to assumptions that about half of the sockeye catch is illegal. Coho stocks have decreased, too. Coho spawns later than the other species and can be caught as late as November which enables commercially organised illegal fishermen to concentrate fully on this salmon. During his lecture at this year’s North Atlantic Seafood Forum (NASF) in Oslo Lars Liabø presented provisional figures which confirm the low share of high-value salmon species in Russian catches (the named figure for the total catch volume in 2011 differs from the value in the previous table but still allows certain conclusions to be drawn).
Whilst king salmon account for only 0.26% of Russian salmon catches their share in the whole Pacific region is twice as high at 0,50%. For coho the figures for Russia are 1.05% catch share compared to 1.57% in the Pacific, and for sockeye the difference is even greater with 6.69% in Russia and 15.40% in the whole Pacific. These figures are only an indication of how underrepresented king, coho and sockeye are in the Russian salmon catch figures, since Russia’s official catch figures are of course also included in the total Pacific catch. This probably makes the discrepancy seem lower than it actually is.
Nearly 270,000 t wild salmon filleted in China in 2011
Russia’s wild salmon catches thus mainly consist of the less valuable pinks and chums (keta). Both species can easily be sold on the Russian domestic market, however, where both demand and buying power are growing. Exports have risen strongly, too. In 2011 Russia exported 164,000 t of wild salmon or nearly two thirds more than the previous year. Fresh fish is practically of no significance here, for 97.5% of all salmon are exported frozen (head off/ gutted). 23% of them were sold to Japan, 12% to Korea. The biggest and most important target market, however, is China which purchased nearly 60% of Russian wild salmon, despite a much higher price in 2011 (annual average = 2.75 USD/kg) than in 2009 when pink and keta cost only 1.8 USD. China’s filleting factories have immense raw materials requirements and nearly 270,000 t of wild salmon (round weight) were imported in 2011. These raw materials mainly come from Russia and the USA (Alaska), with Japan contributing a certain share (20,000 t), too. The biggest buyer of “Chinese” wild salmon fillets (alongside the USA) is the EU. Their imports have risen almost constantly since 2002. In 2011 the EU imported just under 35,000 t of wild salmon fillets from China. In 2010 imports had even amounted to 40,000 t.
This year it will probably be more difficult for China to satisfy their demand since both Russia and the USA have announced a decline in wild salmon catches for 2012. In Alaska the catch could fall by 25% compared to the previous year. The Alaska Department of Fish and Game (ADF&G) expects the total catch to amount to 132.1 m salmon. For comparison: in 2011 the catch was 177 m fishes. Hardest hit is pink for which a 40% decrease is expected. The expected drop in the sockeye catch is much smaller at 4%. Possible increases for keta (+12%) and coho (+23%) will not be able to offset these losses. Russia also wants to reduce its fishing quota for pink, in volume terms the most important salmon species, by half in 2012, announced the Research Institute for Fishery and Oceanography (TINRO) in Vladivostok.
The fact that European demand for wild salmon fillets from China is currently lower than in the previous year has quite different reasons, however. For one thing, a very large amount of farmed salmon is currently being placed onto the market at low prices, and for another the euro’s weakness has still not been fully overcome which makes imports from China relatively expensive. Apart from that, it is unclear what price companies from Alaska will be asking for their MSC certified salmon at the European Seafood Exposition (ESE) in Brussels. It is quite possible that some customers will want to stock up on certified products before a large section of Alaska’s wild salmon fishery pulls out of the MSC programme.
Low farmed salmon price lowers wild salmon expectations, too
It remains to be seen how wild salmon will position itself regarding prices. Competition with farmed salmon is likely to become harsh. Most analysts expect prices to fall in the second half of the year when new production from Norway and Chile is placed onto the market. Mikael Clement, Analyst from the Norwegian Pareto Bank, believes that the price of farmed salmon could fall to a level of around 20 NOK whilst he sees the annual average at around 28NOK/kg. Analysts at the UBS Bank expect an average price of around 25 NOK, and expectations at Norne Security are only slightly higher at 26 NOK. It seems to be generally accepted that prices will be unusually volatile this year, with kilogram prices of below 20 NOK being just as possible as above 30 NOK. In order to keep the price level in the EU more or less stable (the EU is most important target market for fresh farmed salmon from Norway) excess and cheaper fish is to be sold preferably to Russia and other countries. A sustainable easing of the market situation for wild salmon is hardly to be expected for 2013 either. Whilst this year 1.753 m t of farmed Atlantic salmon are anticipated the volume could rise even further to 1.862 m t in the coming year.
The extreme price swings for farmed salmon in the year 2011 make any predictions concerning the development of the salmon markets in the present year very difficult. In France, traditionally the most important salmon market in the EU, fresh salmon imports from Norway have fallen by about 10%. To make up, consumers more often chose frozen fillets from China, particularly pink and chum of Russian and US origin. Since 2009, sales of frozen fillets in France have risen from 16% to the current 21% of total import volume of salmon. The opposite can be observed in Russia: on the one hand Pacific salmon exports to China, on the other a strong increase in imports of fresh salmon and trout. Russia imported 94,200 t of fresh salmon from Norway in 2011 – about one third more than in the previous year. If imports of frozen salmon and trout products are added to this, Russian imports amounted to 151,000 t.
The USA export some of their wild salmon, but particularly pink, to China for filleting, but on the other hand also re-import an increasing quantity of the resulting double frozen fillets. Fresh wild salmon from Alaska are a welcome seasonal addition to fish supply, particularly on the west coast. At present Chile is trying to win back its US market share for fresh salmon (that they had lost due to the ISA crisis) with low-priced offers. Chile exported nearly 30,000 t of fresh salmon to the USA in 2011. Chilean aquaculture supplies almost solely Pacific king and coho salmon, along with trout, to Japan. Both species have to compete with wild catches from the North Pacific. In contrast to the fishing sector, however, Chile’s aquaculture, which produced substantial quantities of 17,000 t of king and 156,000 t of coho in 2011, has the advantage of being able to deliver their fish all the year round.
What will MSC withdrawal mean for Alaska’s salmon companies?
The decision taken by some salmon suppliers in Alaska to pull out of the MSC programme has led to considerable disquiet on the wild salmon market. Behind this decision are nine companies that process about 75 per cent of Alaska’s salmon catches. Their decision has angered quite a few customers, particularly in Europe where most processing companies and retail chains have given their full support to MSC and undertaken a lot to familiarise their customers with the blue sustainability label. Although the salmon that are caught in the 2012 season will still be able to carry the MSC logo they will have to forgo this privilege when the current certificate runs out on 29th October 2012.
The reason representatives from Alaska gave for their disputed decision is that MSC certification had not made Alaska’s salmon stocks more sustainable. On top of that, the expensive certification process was unnecessary because Alaska’s constitution of 1959 laid down sustainable fisheries management anyway. The prevailing conviction in Alaska is that the quality and the image of wild salmon weigh more than the MSC logo. As an alternative, Alaska is offering its customers a different FAO based certification model, “Global Trust”, which is allegedly just as good and reliable but costs less because there are no licence fees for the logo. A comparable certification model is also used by the fisheries of Iceland and Canada.
It is not yet clear, however, whether Alaska’s decision was wise and whether it will pay off for the state in the long run. It could be that the Alaskans have carelessly underestimated the significance of the MSC label for Europe. Many major salmon buyers have shown rather limited enthusiasm (to put it mildly) for Alaska’s unilateral step. Nearly all of them have geared their marketing strategies to the MSC programme and invested large sums of money in advertising – investments which could now be lost… because now the companies in Alaska will have to convince their traditional customers that their new label is just as valuable and credible as the well-known MSC label. In the long run that could be just as expensive for Alaska as MSC’s certificates and licences were. On top of that, there is a risk that important customers will be lost. The German retail chain Globus is already looking for MSC certified alternatives to Alaskan wild salmon and hoping to find what they are looking for in Russia. Customers in France, the UK and Japan, too, have shown little sympathy for Alaska’s withdrawal from the MSC programme and are likewise looking for new suppliers.
So perhaps it will be wild salmon companies in the Russian Far East that will benefit from Alaska’s withdrawal which might unexpectedly open the doors to lucrative markets. Companies like the fishery enterprise JSC Gidrostroy from Iturup, the largest of the Kurile Islands, which catches nearly 40,000 t of pinks and 10,000 t of keta in offshore pound nets are already registering strong growth of interest in their wild salmon. Gidrostroy was awarded the MSC certificate on 10 September 2009 – the first of Russia’s fisheries to achieve this – and two further fishery enterprises could complete the assessment process in the course of the present year. That would mean that a further 21,000 t of MSC certified wild salmon would become available on the market. And there could be more to come, because it is already now recognisable that the new developments in Alaska are giving Russian wild salmon companies a strong boost to their efforts towards more sustainability and improvements in fisheries management.