The global economic crisis had a strong impact on the cod industry. (Photo: Frank Gregersen, Nofima)
Historic price drops attacked the cod industry: report
Wednesday, September 08, 2010, 02:20 (GMT + 9)
The Ministry of Fisheries and Coastal Affairs commissioned a report by the Norwegian Institute of Food, Fisheries and Aquaculture Research (Nofima) which shows that measures taken by the authorities could not preclude the cod sector from historic price drops in 2009. The report demonstrates a steep plunge in prices and incomes in between 2008 and winter 2010.
It was noted that certain sections of the fishing fleet and cod processing industry suffered more than others.
“It was extremely difficult times for the cod sector given the uneasiness that accompanied the financial crisis,” said Bent Dreyer and Bjørn Inge Bendiksen from Nofima, the report’s authors.
As the global financial recession expanded its reach and capital dried up, the Norwegian cod industry felt its belt tighten. Price uncertainties plus a dearth of capital led to fish surpluses.
|Cod fisheries. (Photo: Frank Gregersen, Nofima)
Many major Norwegian cod importing countries were hit hard. The difficulties experienced selling seafood took the fishery to a halt at the heart of the high season.
Key rival Iceland was slammed harshly by the economic crisis as the Icelandic currency lost value, which meant Icelanders had to sell their fish at exceptionally low prices.
The cod industry remained vulnerable even after the financial crisis -- profitability had been meager for a while and, as cod prices were dramatically high before the crisis, price drops were dismal when the recession hit.
Authorities employed measures such as offering loans and guarantees, funds for marketing and subsidies for the transportation of fish between different areas and swelling cod quotas to help the struggling industry.
“Despite the fact that the quotas were caught, the value of the cod in 2009 dropped by a full NOK 735 million (EUR 95 million) compared to 2008,” told Bendiksen. “Consequently, increasing the quotas didn’t compensate for the price fall.”
The smallest vessels, salted fish producers and also cod farmers all incurred the most losses.
“Some actors made significant changes to their operating and production patterns compared to previous years,” said Dreyer.
“We saw a striking increase in cod that was frozen onboard the vessels. Several were saved by their part-ownership of salmon farms and pelagic fish, which experienced good profitability while the cod sector struggled,” Dreyer added.
The latest winter season finished without major problems. Major markets are purchasing cod once again, although at far lower prices than before the crisis.
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By Natalia Real