THE Norwegian fish farming industry was thrown into turmoil overnight by Russia’s decision to ban food imports, including fish, from the West.
The US, countries in the European Union and Norway – although not a member of the EU – have all been blackballed.
Shares in salmon farming companies, including Leroy, Cermaq and Marine Harvest ASA, fell on the news that Russia was retaliating against economic sanctions imposed by western countries over its Ukraine policy.
Oslo’s 13-strong Seafood Index lost on average 8.7 per cent in value yesterday. Marine Harvest, which earns less than four per cent of its sales revenue from Russia, said it was monitoring the situation closely.
The benchmark prices for salmon fell to just over NOK 35.6 a kilo on the news.
The shock also comes a day after Norway announced record seafood export sales for July and for the first seven months of 2014.
Russia is a major buyer of Norwegian trout and salmon and some pelagic fish varieties such as herring.
The announcement was made by the Russian Prime Minister, Dmitry Medvedev, who also included meat, cheese, vegetables and dairy produce as well as fish on the banned list.
Russia is the third largest importer of Norwegian farmed salmon, accounting for just under 10 per cent of exports.
Already some Norwegian salmon breeders are telling their country’s broadcast media there is an urgent need to find other markets to replace the lost Russian business.
But Ole Kristian Kjellback, a director at the farming company Polar Quality, told the Norwegian broadcaster, NRK, that while Russia was an important customer, he did not sense any crisis atmosphere, adding that the people who would suffer most would be the Russian public.
‘As one market disappears another opens up’, he added.
Pareto Securities ASA analysts Henning Lund and Fredrik Steinslien said the uncertainty will impact share prices negatively, estimating that a year-long ban at worst could cut global demand by seven per cent and prices by 14 per cent next year.
Norway also sells whitefish and pelagic fish to Russia and that will also impact on the catching industry’s earnings and probably on prices.