Tuesday, December 16, 2014

16/12/2014: Putin effect drastically alters international salmon trade

What Does Vladimir Putin Have to Do With the Price of Fish? At least when it comes to salmon, quite a lot, Bloomberg reports.

In the tit-for-tat sanctions between Russia and nations opposing its annexation of Crimea, one retaliation by President Vladimir Putin in August was to include fish in a banned list of products from the European Union, Norway, Canada, the US and Australia. 

That made Chilean salmon farmers happy as Russia came knocking to replace the 110,000 tons of the fish it buys from Norway alone in a year, driving up prices. 

Didn’t last. The ruble’s 29 percent slump against the dollar since October 1 caused Russian demand to plunge, said Akiyo Matono, managing executive officer at Nippon Suisan Kaisha Ltd. 

Matono’s company is one of the biggest fish suppliers in Japan, which in turn is the world’s largest consumer of salmon. Explaining his business and the Putin effect in an interview in Tokyo, Matono said the world faces shortages of salmon and other marine products such as shrimp. 

That’s creating acquisition opportunities that Japan’s global trading houses, Itochu Corp, Marubeni Corp and Mitsubishi Corp are grabbing. 

Fish farming isn’t for the faint of heart. An earthquake off Chile in 2007 destroyed hatcheries in that country, while the quake and tsunami in 2011 did the same along Japan’s Pacific coastline. Virus epidemics have also reduced the world’s salmon population. 

Demand, though, keeps rising as more people in emerging economies adopt new diets that come with more disposable income, according to Matono. Prices for one kilogram (2 pounds and 3.3 ounces) of salmon are at US$9 this year compared to the 2013 average of US$7.50, he said. 

“We’re seeing people in China, Singapore and other places in Southeast Asia starting to eat salmon,” Matono said. 

“As demand in the traditional markets of Europe, Japan and North America remains, the world’s wild fish population is maxing out. The only way to meet demand is through farming.” 

Nippon Suisan, known as Nissui, invested in Chile’s salmon farms in the late 1980s as the government privatized an industry that at the time produced 5000 tons a year. Nissui’s main operation in Chile aims to produce 50,000 metric tons of salmon in 2018 from 30,000 tons now. Another 2000 tons will be added from a revival of fish farming in Japan since the tsunami three years ago. Overall Nissui aims to expand production at its salmon farms by two-thirds by 2018 as consumers in China and Brazil add the fish to their menu. 

Japan’s biggest trader Mitsubishi agreed to buy Norwegian salmon farmer Cermaq ASA in September in a deal that valued the target at US$1.4 billion. The purchase is likely to spark further industry mergers, Advisory Research Inc, a fund with stakes in several salmon farmers including Cermaq, said in October. 

“Recently Japanese traders have been putting quite a bit of money into marine products,” Matono said. 

“That’s good for raising the value of assets in the industry. If they preserve their assets it should be good for the future. From now on, the traders are very much a competitor.” 

Nissui, too, is looking for acquisitions, Matono said. He declined to give any details beyond saying the search is global.

Read more HERE.

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