October 8, 2003
Denmark's Salmon & Groundfish Overview 2003
Denmark is by far the largest trader of fresh-frozen fish and fish products in the EU. Although Denmark records the largest landings in the EU, most of these are for industrial production of fishmeal and fish oil. Denmark imports large quantities of fish from the Nordic countries and sells fresh or processed product onward to other EU member countries.
Denmark imports 71 percent of product needs from countries outside the EU (Norway, Greenland, Faeroe Islands and Russia) and sells 89 percent of manufactured products within the EU; Germany (38 percent), France and UK. Danish seafood traders are also heavily engaged in selling fishery products from third countries directly to other EU markets.
With increasing exports over the past ten years, Denmark remains one of the world's leading seafood exporters and the largest in the EU. In value, fish exports remained unchanged in 2002 at DKK 16,3 billion (U.S.$2,1 billion). Exports of non-processed fish products remained almost unchanged in 2002, while processed seafood exports decreased slightly. Processed seafood exports now constitute 53 percent of total seafood exports.
Non-processed imports and processed seafood imports decreased by 2.8 percent and 8.2 percent respectively to DKK 6.2 million ($799,000) and DKK 3.5 million ($440,000) respectively.
In 2002, the total quantity of Danish fish and seafood exports was 703,000 MT, unchanged from the previous year. Imports of non-processed fish increased by 2 percent to 457,000 MT while imports of processed fish decreased by 10 percent to 124,000 MT. Denmark continues to export significant quantities of fish oil and meal processed from (mainly) imported raw material; a total of 418,000 tons in 2002.
All landings (including landings of other-EU and third countries) of edible fish in 2002 amounted to 494,000 MT, down from 570,000 Tons in 2001. Relatively high prices in 2001 increased in 2002 by 7 percent, which attracted fishermen from other nations (including the Baltics and Russia) to land their catch in Denmark. The price level is predominantly determined by prevailing export prices.
In general, quota levels determine catch while prevailing demand and price levels determine landings. Cod quota reductions are putting industries under great pressure. Decreased Danish cod catch is fully substituted by increased cod imports from other countries and imports of other species from, among others, fish from Lake Victoria in Africa and Hoki from new Zealand.
The reduction in quotas (especially for groundfish) has increased the Danish processing industry's needs for imports. Denmark is seeking raw material from all over the world. Seafood imports from U.S. have increased significantly in recent years. Imports of groundfish increased from 3,592 MT in 1999 to 5,500 tons in 2002, imports of groundfish fillets have increased from nothing (in 2001) to 1,474 tons in 2002 and imports of salmon decreased slightly in 2002.
Market exists for increased U.S. exports of smaller (about 1 to 2 kg) salmon, while the market for scallops and lobsters (around New Year) should be explored. Alaska pollack (frozen) has displaced imports from other origins and demand also exists for catfish. The Office of Agricultural. Affairs in Copenhagen can supply interested exporters with details of possible Danish importers.
Total Danish consumption in 2002 is estimated almost unchanged at 125,000 MT. These figures are only estimates and do not take into account stock changes. In general, Danish consumption is considered rather stable at about 24 kg. per person. Of this amount, only 6.5 kg are fresh fish.
Statistics on salmon include sea trout. Other uses included salmon that is salted, smoked or otherwise processed.
The only sea where Danish fishermen catch salmon is the Baltic, in competition with Swedish, Polish and Finish fishermen. Catch is forecast to remain unchanged in the coming years.
Danish production corresponds to less than 10 percent of total supply, which underscores the importance of trade to the industry.
The quality of Baltic salmon is considered excellent and it is especially good for smoking and curing.
There is no salmon farming in Denmark. There is, however, farm production of trout. This farmed production is only economically viable during the months when trout can be caught with roe.
Auction statistics are not longer published, as most salmon are caught and sold directly to industrial buyers.
Retail prices are more than six times as high as the price paid to the fishermen at landing. Although these prices include transport, handling, grocers and retailers profit, VAT (25 percent) and losses, a mark up of about four times seems more than adequate and would certainly facilitate increased imports.
No official statistics exist on Danish fish consumption. Consequently, consumption figures are derived from analysis of production and imports versus other known use (catches + imports - exports - other use). However, import statistics are widely believed to be underestimated. The reason for this is likely that imports for re-export are often not registered although, when re-exported, they are included in export figures.
Domestic consumption is expected to remain unchanged at a level of about 11,000 Tons. The increased availability of salmon from extensive farm production in other countries (especially neighboring Norway) has lowered the price considerably. Salmon has therefore become affordable for a larger group of consumers.
Imports of whole/eviscerated salmon in 2002 are estimated at almost 85,000 tons, almost exclusively from non-EU countries. Norway and Faeroe Islands are the main suppliers followed by Sweden and the U.S. Most of the salmon imported from Norway and the Faeroe Islands are farm- raised while salmon imported from Northern America is wild salmon. Imports from the U.S. include smaller salmon (1 to 2 kg) sold frozen in super markets and 6 to 9 kg. salmon. This latter size is smoked, portioned/sliced and exported to other European countries.
Norway and the Faeroe Islands are expected to continue to be the main suppliers. Increased imports from the U.S. and Canada depend on the price differences between farmed Norwegian salmon and the wild caught North American salmon. A growing market for U.S. salmon appears to be for Alaska salmon at a size about 1 to 2 kg. U.S. imported salmon at that size is sold by retail supermarkets, and is not processed and re-exported as is most other imported salmon.
Exports of salmon products are dominated by two categories; whole and smoked salmon. Trade contacts report considerable export of salmon fillets to the U.S. in recent months.
Smoked salmon is one of the very few products for which exports are increasing, although at reduced prices. In 1993, 8,081 tons was exported at a total price of DKK 925 million (U.S. $115 million). In 2002, 13,630 tons was exported at a price of DKK 1,020 million ($129 million).
Denmark has a small marine aquaculture sector that produces sea trout and no salmon.
The Danish government is very concerned about nitrate pollution in Danish waters and has taken stringent measures to reduced nitrate pollution from agriculture. Potential large numbers of fish farms are seen as a pollution threat to the Danish fjords, and the government is not interested in approving too many fish farms.
EU tariffs on salmon are as low as 2 percent.
Market Development Opportunities
Increased availability of salmon at affordable prices has led to increases in consumption. The versatility of the salmon has made it a popular fish among consumers. The market share for processed/ready-to-eat salmon is increasing and there is considerable room for additional expansion for this kind of dishes.
Medical recommendations continue to stress that eating fatty fish (e.g. salmon) is healthy and currently newspapers report that eating fatty fish once or twice a week reduces the likelihood of senility by as much as 35 percent. As most imported salmon from Norway and the Faeroe Islands is used by the industry, market opportunities exist for smaller, frozen salmon sold through the supermarkets. Danish supermarkets are importing directly and U.S. groups such as the Alaska Seafood Marketing Institute have been establishing contact with Danish supermarkets.
The groundfish category consists of the following species: cod, haddock, pollock, whiting, light and dark coalfish, and hakes. Cod is traditionally the biggest variety in this category (85 percent in 2000, decreasing to 54 percent in 2002). Actual landings depend on the Total Allowable Catch (TAC). Next to cod, haddock is the most important species of groundfish with a 19 percent share. Cod are caught in the Baltic Sea as well as in the North Sea.
While the quota (TAC) for the Baltic Sea has remained unchanged since 2002, the quota for the North Sea was reduced considerably for 2003, and is expected to remain at present level for 2004. Cod stocks in the Baltic Sea are rebounding, and agreement has been reached to use nets with larger mesh, in order to further increase the population. Such agreement seems unlikely in the near future for the North Sea. However, this is not expected to change the Danish supply situation notably, as cod landings will be substituted with other groundfish species and imports will come from other waters.
To supply the retailers and the industries, Danish seafood traders are looking for substitutes for the traditional cod consumption. In competition with the U.S. and others, importers are sourcing Nile perch or Victoria Bass from Lake Victoria. Such seafood arrives in Denmark fresh about 24 hours after landing at Lake Victoria and is distributed fresh around Europe within another 24 hours. Due to the high price of cod, prices are still competitive
Most whole/eviscerated groundfish is used for further processing into fillet and other processed products. It is estimated that about 5 percent of the domestic consumption is consumed directly as fresh fish. Of landed whole groundfish, approximately 50 percent is guts, fins, heads and other waste products. In spite of prices having increased 20 to 30 percent the last year, use seems to have remained stable.
An increasing share of the sales is now shifting from specialty fish retailers to supermarkets, which now assure a high quality through fast sales and special packing. While supermarket shares were about 15 percent just a few years ago, they are now estimated at about 50 percent, and forecast to increase to 80 percent in five years' time.
As EU quotas are decreasing, Russia has become Denmark's dominant supplier, supplying 40 percent of all imports in 2002. Sweden predominantly supply fresh cod fished in the Baltic Sea.While imports are unchanged and catches are lower, January to June 2003 export of fresh groundfish has increased 30 percent (or 8,600 tons) compared to the previous year. Danish catches of fresh ground fish is predominantly exported fresh to the European markets and imported groundfish (fresh or frozen) are used in the processing industry.
Danish imports of fresh frozen cod from Alaska (Aleutian Islands) have increased from 473 tons in 2000 to 5,500 tons in 2002. The fish are frozen on board the vessels, and after de-freezing in Denmark are salted, filleted and exported to the southern European countries. Interest also exists for imports of Alaska Pollock more than 1 kg., caught by line, frozen on board, Japanese cut.
Production of groundfish fillets is derived from the consumption figure for whole/eviscerated groundfish. There are approximately 15 factories that process groundfish into fillets. In addition to production of fillets, some of these factories also produce ready-to-eat dishes. Most of the production facilities for frozen fillet block have closed down, and exports (including to the U.S.) have ceased.
Imports of groundfish fillets totaled 16,799 tons in 2002, of which 78 percent is imported from countries outside the EU. Groundfish fillet exports totalled, 50,350 tons. Approximately 92 percent entered the EU market. Among third country buyers, the U.S. was a relatively large importer. A significant share of the groundfish fillets exported to the U.S. enters the burger industry. Denmark's biggest exporter of fish, A. Espersen A/S supplies all McDonald restaurants in Europe.
Imported fillets from the U.S. are further processed into fish fingers and ready-to-serve dishes, mainly for East European countries.