NORWAY: Minimum Price for cod under serious strain

Almost a month ago I wrote a post on the Norwegian Minimum Prices for selected fish species. Cod is one the species covered by this system.

This year prices for cod products sold at retail outlets have been rather low. Salted cod, very popular in Portugal as “bacalhau”, has been one of those products that have experienced very low prices during late 2008 and throughout 2009. Most of the “bacalhau” marketed in Portugal has, as main ingredient, salted dried codfish, usually from Norway (Bacalhau da Noruega).

The fishermen’s Sales Organisation, having the monopoly of sales in a large area in Norway, the “Norges Råfisklaget”, did set the price of the raw material at levels that put the processing companies (drying and salting cod) between the hammer and the anvil as retail prices in the main export markets (e.g. the EU) did not recover to the expected levels.

In actual fact a number of processing companies in Norway had purchased cod at a rather high price and build up substantial stocks as no buyers were found in the export markets.

Some Norwegian websites specialised in fish and fish trade, such as www.fiskeribladetfiskaren.no (in Norwegian), have been publishing news on this subject. I was astonished by the numerous comments posted by readers (fishermen and processors). As you can imagine fishermen, in their comments, defended the minimum prices while buyers (processors) appeared to be against the system.

The situation of some of the processors seems so desperate, at least in the Northern part of Norway, that some have asked the government to provide help, in the same way fishermen have been helped because of the financial crisis.

My reading is that such system of Minimum Prices can only work in a market where competition from imported product can be suppressed by means of, for example, a “tariff wall”. The products sold through the Minimum Prices are not intended for the final consumers but rather subject to further processing and export outside Norway. There, in the real (export) markets, Norwegian cod will have to compete with produce from Iceland and Russia. It will also face competition from other fish species, such as pangasius or tilapia.

As a final comment I would like to add that some in Norway, in particular the Association of Fish Buyers” (Fiskekjøpernes Forening) are opposing an increase of 20% in catch quotas for cod next year, as requested by the Federation of Owners of Fishing Vessels (Fiskebåtredernes Forbund). The Fish Buyers fear that such an increase will further contribute to the low prices of cod in Norway’s export markets.

Will the Norwegian government give in to the pressure of the Fish Buyers and provide subsidies to the processing sector?

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