Seafood, the most traded food globally, is operating with a broken supply chain. Bottlenecks are apparent at both processors and distributors. If the seafood market were working efficiently, harvesting output would have fallen more dramatically. To date, lower seafood prices have failed to stop this oversupply, which means that seafood waste is rising.
Seafood is the most traded food commodity in the world, followed by soybeans and wheat.[i],[ii] In 2018, global seafood trade totalled USD 164.1 billion, having increased at an annual growth rate of 4% between 1976 and2018 [iii] and is projected to reach USD 194 billion by 2027.[iv] Seafood trade comprises aquaculture and wild-catch production, with the former accounting for 46% of total seafood production in 2018.[v]
Supply chain disruption
Seafood supply chains have been dramatically affected by the COVID-19 pandemic.[vi] As of April 2020, fishing activity had declined by around 6.5% compared to the previous year. More than 90% of small-scale fishers in the Mediterranean and Black Sea were forced to cease fishing because of their inability to sell their catch. Furthermore, many fish farmers have been unable to sell their harvest, requiring them to hold on to large quantities of live fish or destroy them.[vii] This has reduced their cash-flow, as lost income and additional expenses, such as prolonged storage costs, impact their business.
Further along the supply chain, suppliers and processors are struggling with unplanned closures.[viii] Processing facilities have been affected by labour shortages because of workers’ exposure to COVID-19 and quarantining requirements – see Figure 1.[ix]
Figure 1: Total Number of Reported COVID-19 Cases in Seafood Processing and Harvesting Activities.[x]
The transportation of seafood products, both as a raw product to processors and from the processors to the retailers, has been hampered by restricted border access, health inspection delays and civil action. For example, Chilean truckers are planning to strike on August 27.[xi] Air freight routes have suffered because of widespread cancellations. [xii], Transporting salmon products by air has risen in price by at least 50% in 2020.[xiii]
Supply chain disruption is likely to shrink the seafood trade in 2020. Forecasts suggest that developing countries will be disproportionately affected, in part due to trade policies that restrict seafood exports which fail to meet tightened environmental standards.[xiv]
Trade restrictions imposed on seafood exports because of the pandemic have led to an oversupply in the domestic markets of producing countries. In turn, this has resulted in falling domestic seafood prices and rising levels of food waste.[xv]
Identifying Major Exports of Seafood Products
Planet Tracker has assessed 224 harmonised system codes (HS6 Codes) in order to detail the trade of fresh, chilled, frozen and processed fish products between countries, from 2015 to 2018. In 2018, the top 10 traded items by value constituted 47% of total seafood trade. Salmon and shrimp/prawns together accounted for 69% of the top 10 traded seafood commodities by value. Both products lines have been severely affected by the pandemic.
We discuss this in further detail below.
Table 1: Top 10 HS6 Codes by Value, 2018. * USD inflated to 2019 dollars.
|HS Code||Description||Global Export Value in 2018 (USD* million)||Percentage of total (%)|
|030617||Frozen shrimps and prawns, excluding cold-water varieties||16.97||14.00%|
|030214||Fresh or chilled Atlantic or Danube salmon, excluding fillets||13.74||11.34%|
|030743||Frozen Cuttlefish and squid||6.05||4.99%|
|030389||Unclassified frozen fish, excluding fillets||3.99||3.29%|
|030441||Fresh or chilled Pacific, Atlantic or Danube salmon fillets||3.67||3.03%|
|030481||Frozen, Pacific Atlantic or Danube salmon fillets||3.13||2.59%|
|030499||Minced fish meat||2.73||2.25%|
|030489||Unclassified frozen fish fillets||2.14||1.77%|
|030541||Smoked Pacific, Atlantic and Danube salmon (includes fillets, but excludes offal)||2.13||1.76%|
Declining Shrimp Exports Illustrate Trade Difficulties
The shrimp/prawn sector entered 2020 having already experienced two years of oversupply and associated price declines.[xvi] This has worsened during the pandemic as there remains too much supply in the face of falling demand. In 2018, Ecuador was the second largest shrimp exporter after India, accounting for 17.7% of global trade of frozen tropical shrimp and prawns.
Ecuadorian shrimp and prawn exports are expected to fall by 50% in the second half of 2020 because of the pandemic,[xvii] the decrease primarily driven by lower demand from Chinese markets.[xviii] However, the Ecuadorian market remains vastly oversupplied. This is due to pandemic-related bans in regions such as Jinan and Shanxi, after traces of the virus were found on packaging.[xix] Many shrimp farms have been forced to stop production, as operating costs are not being covered by sales revenue. Some farmers have reported a 56% decrease in shrimp prices, from USD 2.50 per lb to USD 1.10 per lb.[xx]
Decrease in Salmon Prices Illuminates Oversupply Problem
The price of salmon also reveals a sorry tale for harvesters. The price is down 18.1% over a 12-week period (in USD/kg),[xxi] across the major production regions – Norway, Chile and Scotland.[xxii] Scottish salmon reached the lowest price levels in years, with 1-3kg fish falling below USD 5.30/kg.[xxiii] Primarily driven by this revenue decrease, Leroy Seafood reported a 58% reduction of operating profit in Q2 2020.[xxiv]
Even with the increase in seafood retail sales in 2020, in some countries,[xxv] supply outstrips demand as much of the hospitality sector continues to operate below capacity. Broadly, the restaurant to retail sales ratio is around 60/40.[xxvi] The very recent bounce in the price of Scottish salmon has been attributed to the UK’s “Eat Out to Help Out” scheme, in which the Government subsidises meals for consumers eating in restaurants. As this scheme only operates for the month of August, the salmon price increase is likely to be temporary.[xxvii] Norwegian price decreases have been partially mitigated by the Chinese demand, but despite this exports to China from Norway are still 39% lower year-on-year.[xxviii] Salmon prices are expected to remain low until the end of 2020 – see Figure 2.
Figure 2: Scottish Salmon Prices, Head on Gutted (HOG) weight, 2020.[xxix],[xxx][xxxi]
Implications for food waste
Demand has fallen faster than supply. This has been reflected in the declining prices of many species including salmon, shrimp, crab[xxxii], lobster[xxxiii] and catfish.[xxxiv] This is particularly notable for those species which are important for the hospitality industry.[xxxv] Some countries such as Indonesia or Vietnam are still producing seafood products, but are unable to access international markets because of logistical disruptions.[xxxvi] The outcome is either opting for storage or disposing of the seafood.[xxxvii]
However, the storage option has its limitations. Extended periods of storage by these mid-stream players – processors, traders, exporters and importers – will impact on their operating costs. The longer the company waits for more favourable market conditions, the higher the operating costs. Management is forced to assess whether it is worth taking this risk. If not, the waste route becomes the default outlet.[xxxviii],[xxxix]
So, can the seafood industry adapt? There are signs that some processors are aligning with online retailers, which has simplified and shortened supply chains. Demand for packaged, frozen and canned[xl] products has risen as households stocked up on non-perishable food, at the expense of fresh seafood options. An opportunity exists to use this ‘unwanted’ fish protein for aquaculture feed, but logistics appear to be frustrating even this option. So, the industry looks set to send vast volumes of edible seafood to landfill.
 Excluding aquatic plants.
 Shrimp in this context refers to HS Code 030617 (Crustaceans; frozen, shrimps and prawns, excluding cold-water varieties, in shell or not, smoked, cooked or not before or during smoking; in shell, cooked by steaming or by boiling in water).
 As of 24/08/2020.
[i] Food Processing Technology (2014). The ten most traded food and beverage commodities.
[ii] Terazono (2016). Salmon leaps past shrimp in global fish market.
[iii] FAO (2020). The State of World Fisheries and Aquaculture 2020.
[iv] Allied Market Research (2020). Seafood Market Expected to Reach $193,913.6 Million by 2027.
[v] FAO (2020). The State of World Fisheries and Aquaculture 2020.
[vi] OECD (2020). Fisheries, aquaculture and COVID-19: Issues and policy responses.
[vii] FAO (2020). Addendum to The State of World Fisheries and Aquaculture 2020: Summary of the Impacts of the Covid-19 Pandemic on
the Fisheries and Aquaculture Sector.
[viii] Fish Focus (2020). Impact of Covid-19 on UK Seafood Processors.
[ix] FAO (2020). Addendum to The State of World Fisheries and Aquaculture 2020: Summary of the Impacts of the Covid-19 Pandemic on
the Fisheries and Aquaculture Sector
[x] Korban, Cherry (2020). COVID-19 cases in the seafood, fisheries and processing industry continue to rise.
[xi] Craze (2020). Chile’s salmon industry faces fresh angst as truckers plan to sever supply routes.
[xii] FAO (2020). COVID-19: Impact on global fish trade.
[xiii] Poulson (2020). Schenker: “In some cases, the air cargo costs more than the fish itself”.
[xiv] Asche, Smith (2020). Trade and Fisheries: Key Issues for the World Trade Organization.
[xv] Charlton (2020). Here’s how COVID-19 creates food waste mountains that threaten the environment.
[xvi] Fletcher (2020). How COVID-19 is impacting the global salmon and shrimp sectors.
[xvii] Feijóo, Harkell (2020). Ecuador’s shrimp sector announces ‘severe contraction’ in production, exports.
[xviii] Feijóo (2020). Ecuadorian shrimp export volumes expected to fall by 50% in the coming months.
[xix] Undercurrent News (2020). Chinese province is latest to ban the sale of Ecuador shrimp.
[xx] Feijóo (2020). Ecuador shrimp farms halt activities rather than lose money.
[xxi] NASDAQ (2020). NASDAQ Salmon Index.
[xxii] Ramsden (2020). Chile salmon prices go on falling, Scottish rebound, Norwegian dip.
[xxiii] Ramsden (2020). Scottish salmon prices may have hit bottom with week 33 lift.
[xxiv] Ramsden (2020). Leroy’s profits halve as COVID-19 kills salmon prices in Q2.
[xxv] Welling (2020). UK retail seafood sales eclipse the £4 billion mark for first time thanks to COVID.
[xxvi] Fletcher (2020). How COVID-19 is impacting the global salmon and shrimp sectors.
[xxvii] Ramsden (2020). Chile salmon prices go on falling, Scottish rebound, Norwegian dip.
[xxviii] Feijóo (2020). Oversupply pushes China salmon market down, says Goycoolea.
[xxix] Ramsden (2020). Chile salmon prices go on falling, Scottish rebound, Norwegian dip.
[xxx] Council of the EU (2020). COVID-19 transport measures: Council adopts temporary flexibility for licences and port services.
[xxxi] Ramsen (2020). COVID-19 recap, June 12: China cancels imports amid new outbreak; Seafood supply chains vulnerable.
[xxxii] FAO (2020). Crab fishing season devastated by COVID-19.
[xxxiii] FAO (2020). COVID-19 sending lobster market into collapse.
[xxxiv] FAO (2020). Pangasius prices hit bottom as COVID-19 shuts down core markets.
[xxxv] FAO (2020). COVID-19 darkens outlook for global seafood market in 2020.
[xxxvi] CBI (2020). COVID-19 disrupts seafood markets and production.
[xxxvii] FAO (2020). Food Loss and Waste in Fish Value Chains.
[xxxviii] FAO (2020). The Impacts of COVID-19 on Loss and Waste in Fish Value Chains
[xxxix] Fletcher (2020). An analyst’s outlook on the post-COVID seafood economy.
[xl] Ward (2020). A renaissance in canned fish consumption during COVID-19…is it good for food loss and waste?