Norwegian salmon prices raise concerns

 

 

Norway's salmon producers are in line for at least two very profitable years as supplies tighten and prices reach unprecedented levels, but Marine Harvest, is concerned that prices may rise to levels that cause long-term damage to consumption.

 

Analysts have predicted prices will hover between NOK30 (US$5.09) and NOK35 (US$5.93) throughout the first half of this year, but because of lower fish growth rates this will climb to higher than normal levels in the second half of the year.

 

The Marine Harvest Group posted a loss of NOK3 billion (US$5.09 billion) for 2008 following the infectious salmon anemia (ISA) virus-induced meltdown of Chilean production but bounced back into the black last year with a profit of NOK1.3 billion (US$220.5 million).

 

The company is expecting a drop in its own harvest volumes of between 5% and 9% this year. This fall will be a result of issues in both Chile and Norway, also expecting a similar tight year in 2011.

 

There is very little frozen supply to fall back on this year. Meanwhile, Norwegian production has been hit by a particularly hard winter this year after two consecutive mild winters.

 

Over the last five years, the industry had been able to keep consumer prices in check by presenting the market with more products, particularly in Europe. This strategy has paid dividends and the Norwegian Seafood Export Council estimates European demand is increasing at a rate of 8% year-on-year.

 

Marit Solberg, Marine Harvest Norway managing director, worry is that the supply shortfall will push prices up to levels that end-consumers will find too great to stomach and they will subsequently shift their attention to cheaper, alternative species.

 

The total world harvest of farmed Atlantic salmon was 1.46 million tonnes last year, down just 2% from the 1.49 million tonnes harvested in 2008. The increase was largely thanks to ramped up production in Norway and Scotland.

 

Kontali Analyse chairman Lars Liabo expects the global harvest to fall a further 5% in 2010 to around 1.35 million tonnes.

 

Meanwhile, Norway will produce around 930,000 tonnes this year, Liabo predicted.