Harina y Aceite de Pescado
European bass and bream sector to benefit from EU investment
The report analyses the market situation during the first quarter 2017
Bass and bream prices dampened by excess supply in 2017 as EU launches dual projects to enhance sector innovation, competitiveness and sustainability.
The EU farmed bass and bream industry has had to address a series of challenges in the last decade, the latest of which is the rapid emergence of Turkey as a major competing producer. The growing supply of fish to both old and new markets has prompted many stakeholders in the sector to call for an increased focus on research and innovation at all points on the supply chain. This would ensure that competitiveness is maintained in the long term, particularly for Greek companies still dealing with the after-effects of a long period of financial struggle. In response, the European Commission will invest a total of EUR14 million in two initiatives, PerformFISH and MedAID. These are sister projects, both funded and developed as part of the European Commission’s Horizon 2020 initiative, with the objective of creating shared knowledge and tools for enhancing the marketing strategies, governance structures and production processes of the EU’s aquaculture industry. As the largest aquaculture subsector in the EU, the bass and bream industry will be one of the main project beneficiaries.
These dual investments in the industry’s technological development, sustainability and competitiveness may be considered very timely in light of the current market situation. The rapid growth of Turkish output, combined with an increasingly favourable exchange rate for Turkish exporters, has been the primary factor behind a marked increase in the supply of bass and bream to EU markets over the last few years, and particularly over the last 18 months or so. Many industry participants are now concerned that the supply and demand balance is under threat, and to date in 2017, a pronounced price decline, particularly for bream, has provided some support for these claims. In the first quarter of 2017, the average unit values of Greece’s exports of fresh whole farmed bream and fresh whole farmed bass were down 12 percent, to EUR4.70 per kg and 4 percent to EUR5.26 per kg, respectively, compared with the first quarter of 2016. In Turkey’s case, the average unit values of bream and bass exports were down 27 percent to EUR3.74 per kg and 10 percent to EUR4.64 per kg, respectively, for the same period, although these declines correspond to respective increases of 5 percent and 13 percent in Turkish lira terms.
For Greek producers in particular, these price levels are steadily eating away the already narrow profit margins and, with further production gains expected in the medium term, cost reduction, value addition and market development will all be major areas of focus. These are also important concerns in Spain, the second largest EU producer, but a more expensive Spanish product targeted at consumers primarily in France and Portugal has afforded the industry a degree of protection from the intense competition in other EU markets from plentiful, cheaper Turkish fish.
With respect to the Turkish domestic market, prices (ex-farm, ice-packed) for 400-600 g and
600-800 g sea bream have increased. Prices for these size categories were higher in June 2017 by about 12-18 percent compared with February 2017, and 400-600 g sea bream in particular is currently in high demand. A similar trend has also been observed for all size categories of sea bass. On average, prices increased by about 7-11 percent during the same period.
According to industry sources, in the second quarter of 2017, it is estimated that Turkish hatcheries produced about 470 million juveniles (60 percent sea bass). Although it is difficult to ascertain how many juveniles were stocked in cages, according to the same sources, their number is higher than that of the first quarter of 2017 (400 million). Interestingly, the Turkish industry is generally not overly concerned with the possible supply-demand imbalances and its impact on prices, believing that emerging markets and growing demand will tolerate any increase in supply. To take advantage of the huge potential of the domestic market, Turkish producers are increasingly focusing on promoting domestic consumption through promotional activities including organizing festivals and “Fish Days” in different cities.
A number of vertically integrated, large-scale Turkish seabass/bream companies (also engaged in fish feed manufacturing) have acquired fishmeal and fish oil factories in Mauritania. Industry sources indicate that these acquisitions by Turkish producers have contributed to the availability of good quality fishmeal for local fish feed production. According to the same sources, improved quality of local fish feed has had a positive impact on fish growth rates and feed conversion ratios at the sectoral level.
Italy is the largest importer of farmed bass and bream in the EU, and Italian import volumes have been steadily growing for a number of years now, totalling 12 700 tonnes in Q1 2017, a 7 percent increase over the same period in 2016. Greece has traditionally been Italy’s favoured supplier; Italy is generally an origin-sensitive market. However, lower-priced Turkish fish have been making up a rapidly growing proportion of Italy’s imports, rising to a 26 percent share in the first quarter of 2017. Overall, Italian trade statistics in Q1 2017 reflected broader market trends, meaning higher volumes and falling prices, particularly for bream. In addition, another EU Horizon 2020 project, PrimeFish, which focused on seafood market research, recently reported that high prices, the inconvenience of bones in whole fish, and lack of knowledge regarding preparation and cooking techniques are the biggest obstacles to seafood consumption in Italy and other major EU markets.
In the first quarter of 2017, France imported 12 percent more bass and bream than the same period in 2016, for a total of 3 560 tonnes worth EUR18.3 million. After showing considerable resistance to the allure of attractively priced Turkish fish during the earlier stages of Turkey’s expansion, French importers are now showing signs of following their European counterparts in this regard, increasing the total proportion of bass and bream purchased from Turkey to 18 percent in the first quarter of 2017, up from 7 percent in the same period last year.
Domestic demand in Spain for both bass and bream appears to be healthy, with increased imports, lower exports and high domestic production being absorbed primarily by Spanish consumers. The Spanish economy is performing relatively well at present, which is providing a boost to private consumption, spurred on by the prevailing lower price level this year.
In addition to the traditional large Mediterranean markets for bass and bream, the Netherlands and Portugal are both notable for posting consistent increases in import volumes for the past number of years, to the point where they now both constitute major markets in their own right. Indeed, Spain’s top export market, Portugal, was the second largest importer of bass and bream in the world in 2016, rising above France. The Netherlands has become Turkey’s top European market, importing large volumes of whole fresh fish as well as fillets.