Íslandsbanki Seafood Research May 2014 North America ... America... · Íslandsbanki Seafood...

Íslandsbanki Seafood Research May 2014

North America Seafood Market Report

3North America Seafood Market Report

Foreword Dear reader,

Íslandsbanki provides comprehensive financial services to individuals, corporations and institutional investors. Íslandsbanki and its predecessors have worked closely with the seafood industry for over a century, financing the first Icelandic motorised trawler in 1904. The Bank started its international operations in 1999 by providing financing solutions to the fishery sector on the east coast of Canada.

In addition to providing customized services to the seafood industry, Íslandsbanki has published research reports on various markets and species since 2003. Through these reports, we strive to provide insights into the key trends and issues affecting the industry.

It is a pleasure to present this Seafood Market Report on the United States and Canadian seafood markets. For further information about Íslandsbanki’s seafood industry services, and prior research reports, please visit our website at www.islandsbanki.is/seafood.

The Íslandsbanki Seafood Industry Team

Key Highlights

• With total production of 4.2 million MT, the United States is the third largest fishing country in the world and one of the most important consumer markets for seafood.

• Canada produces approximately 800,000 MT annually and is the ninth largest seafood exporting country.

• Alaska pollock is the most important U.S. species by volume, representing 31% of total landings. Crab is the highest value species.

• The Canadian seafood industry is concentrated in the Maritime Provinces. Coldwater shrimp and herring are the highest volume species while lobster is the most important species by value.

• Canadian aquaculture is growing rapidly. Canada is the fourth largest producer of farmed salmon, behind Norway, Chile and Scotland.


Íslandsbanki Íslandsbanki is a universal bank in Iceland with total assets of EUR 5.6 billion. A leader in financial services in Iceland, Íslandsbanki has a 25-50% market share across all domestic business areas, including Retail Banking, Corporate Banking, Capital Markets and wealth management. Building on over 135 years of servicing key industries in Iceland, the Bank has developed specific expertise in the Seafood, Energy and Offshore Service Vessel industries domestically and within the North Atlantic region. Íslandsbanki ranked first among financials in the Icelandic Customer Satisfaction Index and was voted ‘Best Bank in Iceland’ by Euromoney. Íslandsbanki´s Commercial Loan Portfolio by Industry

Commerce & services

Real Estate

Seafood

Industrial & transportation

Construction

Other

8%

25%

25%21%

14%

6%

As of December 31, 2013, seafood accounted for approximately 21% of the Bank’s commercial loan portfolio, underscoring the importance of the sector to the Bank.

Source: Íslandsbanki


Seafood Industry Team

Linda G. Lyngmo Project ManagerSeafoodlinda.lyngmo @islandsbanki.is

Elvar Orri HreinssonAnalystSeafoodelvar.orri.hreinsson @islandsbanki.is

Timothy H. SpanosExecutive Director International Lending timothy.spanos @islandsbanki.is

Runar JonssonExecutive Director Seafoodrunar.jonsson @islandsbanki.is

Vilhelm Mar ThorsteinssonManaging Director Corporate Banking vilhelm.thorsteinsson @islandsbanki.is

Ragnar GudjonssonBusiness Manager [email protected]

Olafur Hrafn OlafssonCredit Manager Seafoodolafur.hrafn.olafsson @islandsbanki.is

Íslandsbanki employs an experienced team of bankers who focus on the Seafood Industry. The team is part of the Corporate Banking unit, providing innovative services to domestic and foreign seafood companies, as well as publishing well regarded industry reports.

Over the years, many leading seafood companies in Iceland and abroad have been customers of the Bank. Íslandsbanki team members have participated in several of the industry’s benchmark transactions.

Seafood Team Members


Table of Contents

The Global Seafood Industry

08. Global Seafood Market

09. Global Seafood Production

11. Major Commercial Fisheries

12. Marine Capture Production

14. Global Trade

15. Global Seafood Consumption

The United States Seafood Industry

18. State of the Resource in the U.S.

21. U.S. Main Fishing Areas

22. U.S. Seafood Production

28. U.S. Seafood Trade

34. U.S. Aquaculture

37. U.S. Consumption

The Canadian Seafood Industry

40. Canada’s Major Fishing Areas

41. State of the Resource in Canada

44. Canadian Seafood Production

50. Canadian Seafood Trade

56. Canadian Aquaculture

59. Canadian Consumption


The Global Seafood Industry

8 North America Seafood Market Report

Global Seafood Market Fish and other seafood products are an important source of protein. According to the Food and Agricultural Organization of the United Nations (FAO), seafood accounted for 16.6% of the world population’s intake of animal protein in 2009. Seafood supply grew at an average rate of 3.2% per year during the period from 1961-2009, outpacing the average growth rate in the world population of 1.7% p.a. Increasing demand for seafood has been driven by growth in the world population and increasing per capita consumption, reflecting a shift to healthier eating choices and rising income levels in developing countries.

Compared to other sources of animal protein, the Seafood industry is extremely diverse. There are almost 2,000 species in FAO’s capture production database with many different types of species and pro ducts being produced to meet consumer demands which vary based on regional preferences, income levels, supply, distribution infra structure and other factors. Although there has been a recent trend towards consolidation, the Seafood industry remains highly fragmented.

Source: FAO


Global Seafood Production Total global production of seafood was relatively stable in 2012. According to FAO, total production increased by 0.5% from 156.2 million metric tons (MT) in 2011 to 157.0 million MT in 2012, following a 5.0% increase in 2011. According to the OECD-FAO Outlook, global seafood production is projected to increase by 3.1% to 161.9 million MT in 2013. Total production is expected to continue to rise in subse-quent periods, reaching 181 million MT by 2022.

Source: FAO; OECD-FAO

Global Seafood Production

10

8

6

4

2

0

200180160140120100

80604020

0

19801983

19861989

19921995

19982001

20042007

20102013

20162019

2022

Wild Caught Aquaculture Population (r.axis)

Milli

on M

TBillion


Global Seafood Production The volume of fish harvested in wild fisheries has stabilized at approxi -mately 90 million MT while aquaculture production has steadily in creased. In the last ten years, aquaculture production has grown at an average annual rate of approximately 6.1% and is expected to surpass wild caught seafood as the main source for human consumption by 2015. Wild caught seafood accounted for 58% of total production in 2012 compared to approximately 70% in the early 2000s.

The majority of wild caught seafood is harvested in marine fisheries. The volume of fish caught in inland waters has been increasing, reaching a record 11.6 million MT in 2012, but represents less than 15% of total capture production. In contrast, aquaculture production is concentrated in inland waters which account for roughly 70% of total aquaculture production.

There has been an increasing trend in the proportion of seafood production used for direct human consumption. In 2011, approximately 85% of total production was for direct human consumption with the remaining 15% used for non-food purposes, including the production of fishmeal and fish oil.


Global Seafood Production (Million MT)

2008 2009 2010 2011 2012

Wild Caught

Inland 10.2 10.5 11.3 11.1 11.6

Marine 79.9 79.6 77.7 82.6 79.7

90.1 90.1 89.0 93.7 91.3

Aquaculture

Inland 36.0 38.0 41.7 43.5 45.5

Marine 16.9 17.7 18.3 19.0 20.2

52.9 55.7 60.0 62.5 65.7

Total Global Fisheries 143.0 145.8 149.0 156.2 157.0


Major Commercial Fisheries The chart below provides an overview of major commercial fisheries:

Source: FAO; Íslandsbanki

Aquaculture42%

Wild Caught58%

Freshwater29%

CarpTilapiaCatfishPangaius

SalmonShrimpOystersMusselsClams

SquidScallopsClamsOysters

ShrimpCrapLobster

SkipjackYellowfinBigeyeAlbacore Bluefin

AnchovetaSardinesHerringMackerelCapelinMenhaden

PollockCodFlatfish Haddock

Freshwater7%

Marine13%

Marine51%

Fish Shellfish

MolluscsCrustaceansTunaPelagicsGroundfish

Global Seafood Production157 million MT


Marine Capture Production The volume of fish harvested in marine waters decreased by 3.5% from 82.6 million MT in 2011 to 79.7 million MT in 2012 primarily due to a decline in the anchoveta catch. Anchoveta is the highest volume species harvested in marine fisheries. The anchoveta fishery is highly variable with catch rates impacted by water temperature (El Niño and La Niña) and changes in the fishery management regime during the past ten years. The anchoveta catch fell by 43% from 8.3 million MT in 2011 to 4.7 million MT in 2012. Excluding anchoveta catches, marine capture production reached a recent high of 75.0 million MT in 2012.

After anchoveta, the next highest volume species in marine capture fisheries is Alaska pollock. The top fifteen species accounted for approximately one-third of marine capture fisheries production in 2012.


Major Species for Marine Capture, 2012 (Million MT)

Anchoveta

Alaska Pollock

Skipjack Tuna

Sardinella, nei

Atlantic Herring

Chub Mackerel

Scads, nei

Yellowfin Tuna

Japanese Anchovy

Largehead Hairtail

Atlantic Cod

4.7

3.32.8

2.31.8 1.6

1.4 1.11.21.31.4


Marine Capture Production

China is the world’s largest seafood producer with total production of 57.3 million MT in 2012. With marine capture production of approximately 13.9 million MT, China accounted for 17% of total marine capture production in 2012. The next five largest countries by volume are Indonesia, the United States, Peru, Russia and Japan. Together, these countries accounted for approximately 42% of the


Marine Capture Production, 2012 15 Largest Producing Countries, in Addition to Canada (Million MT)

China

IndonesiaUSA

PeruRussia

JapanIndia

Chile

Vietnam

Myanmar

Norway

Philippines

Korea

ThailandMalaysia

Canada

13.9

5.4 5.1 4.8 4.1 3.6 3.42.6 2.4 2.3 2.1 2.1 1.7 1.6 1.5 0.8

Major Fishing Areas for Marine Capture Production, 2012

Pacific Ocean

Atlantic Ocean

Indian Ocean

Other

2%

59%24%

15%

total volume harvested in marine fisheries. The fifteen largest fishing nations produced 71% of the global marine catch.

More than half of the total marine catch was harvested in the Pacific Ocean.


Global Trade Fish and seafood products are among the most traded food commodities worldwide, with trade volumes and values reaching new highs in 2011. The seafood supply chain is complex, as fish products often cross national borders several times before final consumption, due to the outsourcing of processing to comparatively low wage countries such as China, India, Indonesia, Thailand and Vietnam. In addition to being an important source of protein, the fishery and aquaculture sector provides livelihoods and income, both directly and indirectly,

1 Currency amounts are in USD unless otherwise noted Source: FAO; OECD-FAO

for a significant share of the world’s population. Trade volumes and values are expected to continue to rise with developing countries accounting for the bulk of world exports.

The total value of seafood production was approximately $217.5 billion1

in 2010, with an estimated $119.4 billion of fish food production attributable to aquaculture.

Top Ten Importers of Fish and Fisheries Products in Addition to Canada, 2011 (USD billions)

JapanChinaUSA

NorwayChina

ThailandSpain

VietnamFrance

USAItalyChile

Germany

DenmarkUKSpain

Korea

CanadaSweden

Canada

Netherlands

17.7

7.8 7.3 6.6 6.3 5.64.3 4.0 3.6

17.6

2.7

Top Ten Exporters of Fish and Fisheries Products, 2011(USD billions)

17.2

9.58.2

6.34.6 4.5 4.2 3.6

5.94.2


Global Seafood Consumption Per capita consumption of seafood has increased steadily since the 1960s, reaching an estimated 19.0 kg in 2012. However, consumption varies widely among regions and countries, reflecting differences in the availability of fish and other foods, traditions, income levels and other factors. Asia accounts for approximately two-thirds of total consumption with 85.4 million MT in 2009. China accounted for half of this number with total consumption of 42.6 million MT or approxi-mately 31.9 kg per capita (per capita consumption in the rest of Asia averaged approximately 15.4 kg). China has been responsible for most of the increase in per capita fish consumption, owing to a substantial increase in fish production, in particular from aquaculture.


According to the OECD-FAO Outlook, total consumption is expected to increase from approximately 131 million MT in 2011 to 161 million MT in 2022. However, the rate of growth is expected to decline, due to slowing population growth and higher fish prices relative to red meats. Per capita fish consumption is projected to rise on all continents except Africa, where population growth will outstrip supply. The highest growth rates are expected in Asia while many developed countries are expected to show little to no growth.

19.0

World Europe Africa Asia Americas

20.5 21.623.3

21.2

10.1 10.7

24.0

9.7 9.2

Average Consumption of Seafood Products (kg per capita, per year)

2010-2013 2019-2022


Global Seafood Consumption

Despite a rapid rise in the consumption of poultry, and to a lesser extent pork, average per capita consumption of seafood exceeds that of other animal proteins on a global basis. Annual per capita consumption of poultry increased by 140% from 5.5 kg in 1994 to 13.2 kg in 2012. Over this same period, pork consumption grew by 54% while seafood consumption grew at a slower rate of 38%. Per capita consumption of seafood is projected to grow by 7.3% during the period from 2012-2022, which trails only poultry at 9.8%.


Annual Animal Protein Consumption (kg per capita)

Seafood Poultry Pork Red meat

7.0

8.05.5

8.28.4 8.6

13.9

11.612.3 12.7

10.813.2 14.5

16.3 19.2 20.6

1994 2003 2012 2022


State of the Resource in the U.S. The Magnuson-Stevens Act is the primary law governing marine fisheries in U.S. federal waters. Enacted in 1976, the Act established eight Regional Fishery Management Councils, which serve as the front line of fisheries management where region specific management mea-sures (such as fishing seasons, quotas and closed areas) are initiated, developed and ultimately adopted in a fully transparent and public process. Under the Act, councils are required to:

• Develop and amend fishery management plans

• Convene committees and advisory panels and conduct public meetings

• Develop research priorities in conjunction with a Scientific and Statistical Committee

• Select fishery management options

• Set annual catch limits based on best available science

• Develop and implement rebuilding plans

Source: NOAA Fisheries


State of the Resource in the U.S.

CrabU. S. commercial fishermen harvest several different species of crab. As a group crab, is the most valuable species in the United States. There are different fishery management regimes in place for the various species of crab. As an example, the Alaska snow crab fishery is managed according to size, sex and season. Only male crabs of a certain size may be harvested and fishing is not allowed during mating and molting periods. Every year, managers set the harvest, limit for the next fishing season using the most recent estimates of crab abundance.

PollockAlaska pollock is the most landed species in the U.S. with total volume of 1.3 million MT in 2012. The two primary global pollock resources are the U.S. Bering Sea fishery and the Russian fishery in the sea of Okhotsk. For more than 30 years, the U.S. has maintained safe harvest levels for Alaska pollock, and the U.S. Bering Sea pollock fishery is now the largest whitefish fishery in the world.

In 2005, the Marine Stewardship Council (MSC) completed a com-prehensive four-year review of the U.S. Bering Sea pollock fishery and concluded that the fishery met MSC criteria for a responsible and

sustainably managed fishery. The total allowable catch for the U.S. Bering Sea pollock fishery has averaged 1,244,000 MT annually for the 20-year period ending in 2010. The TAC for 2013 was 1,259,000 MT, a 3.9% increase from 2012.

SalmonPacific salmon is harvested in fisheries operating along North America’s West Coast, from Alaska to California. Commercial fisheries for salmon are among of the most valuable fisheries in the United States, second only to crab. In the U.S., the Pacific salmon is managed by the Pacific and North Pacific Fishery Management Councils and the Alaska Department of Fish and Game. In Alaska, management of salmon fisheries in federal waters is deferred to the State. Salmon fishery management largely relies on in-season assessment of how many salmon return to freshwater to spawn.

Commercial fishing for Atlantic salmon is currently prohibited by law. Only farm-raised Atlantic salmon can be found in the market.



ScallopAtlantic sea scallop is the most important scallop species in the U.S. In the early 1990s, the fishery for Atlantic sea scallops in the north-eastern U.S. was not sustainable — the population was near record lows and fishing was at a record high. Today, the Atlantic sea scallop population is near record highs and the fishery operates at sustainable levels. The Atlantic sea scallop fishery is now not only one of our most valuable fisheries but also the most valuable wild scallop fishery in the world. U.S. commercial fishermen harvest sea scallops year round, primarily using New Bedford scallop dredges. Managers determine a total allowable catch for the scallop fishery based on estimates of the scallop population. They allocate this catch amount to different groups of the fishery, depending on their permit type and historical catch, through “days-at-sea” and number of trips to special access areas.

ShrimpThe most important shrimp species harvested in the U.S. are brown shrimp and white shrimp. Shrimp are essentially an “annual crop” – most shrimp do not survive longer than 2 years. Although scientists monitor shrimp abundance to ensure the stock is healthy, it’s not an important of a consideration for fishery managers as with other seafood species. Instead, managers consider historic harvest amounts and fishing rates in developing a management strategy for the fishery. They also look at the amount of surviving parents and environmental conditions, such as weather and water temperatures. As long as environmental conditions are favorable, shrimp are very productive and can rebound from low abundance one year to high abundance the next.


State of the Resource in the U.S.


U.S. Main Fishing Areas

The Pacific Coast is the largest U.S. fishery by volume with approx-imately 70% of total U.S. landings. The largest species by volume caught off the U.S. Pacific coast is Alaska pollock, which represents 31% of total U.S. landings. While the fisheries off the U.S. Atlantic coast are smaller when measured by volume (accounting for 16% of total landings), they generally consist of higher value species such as crab and scallop.

Pacific Ocean Major Fishing States: Alaska, California, Oregon, Washington, Hawaii

Total Landings: Volume: 2.9 million MTValue: $2.5 billion

Main Species:Pollock, cod, Pacific salmon, hake and crab

Gulf of Mexico Major Fishing States:Louisiana, Mississippi, Texas, Florida (West Coast), Alabama

Total Landings: Volume: 590,000 MTValue: $760 million

Main Species:Menhaden, shrimp, crab and oyster

Atlantic Ocean Major Fishing States:Virginia, Massachusetts, Maine, New Jersey, Rhode Island, Maryland

Total Landings: Volume: 691,000 MTValue: $1.9 billion

Main Species: Menhaden, Atlantic herring, lobster, crab and scallop


Pacific

North Pacific

NewEngland

Mid-Atlantic

SouthAtlantic

CaribbeanGulf ofMexico


U.S. Seafood Production


U.S. Seafood Production Volume The U.S. was the third largest fishing country in the world by volume in 2012 and one of the most important markets for seafood. During the past 20 years, total commercial landings averaged approximately 4.2 million MT. In 2011-2012, total volume rebounded off the low reached in 2009, primarily due to an increase in the pollock catch.

In 2012, total landings were 4.2 million MT, in line with the long term average. This represented a decrease of 6% compared to 2011 when total landings were at the highest level since 1997.

Pollock is the highest volume species with total landings of 1.3 million MT in 2012, followed by menhaden (639,700 MT) and cod (330,500 MT). These three species accounted for 54% of total landings in 2012.

Commercial Fisheries Production, 2012by Species

Pollock

Menhaden

Cod

Salmon

Sole

Hake

Other

31%

6%

7%

4%

8%15%

29%

Commercial Fisheries Production by Species (Thousand MT)

5,0004,5004,0003,5003,0002,5002,0001,5001,000

5000

Pollock HakeMenhaden SoleCod OtherSalmon

2007 2008 2009 2010 2011 2012



U.S. Seafood Production Value The total value of U.S. landings has generally been increasing since 2002. During this period, the total value rose by 61% from approxi-mately $3.2 billion to $5.1 billion. In 2012, the total value decreased by 4.5% from 2011, roughly in line with the volume decrease.

The highest value species consist primarily of shellfish species, including crab, scallop, shrimp and lobster. Together, these species accounted for 44% of the total value. Salmon was the most valuable finfish species.

Crab

Scallop

Shrimp

Salmon

Lobster

Pollock

Cod

Halibut

683

562

512

489

466

356

209

159

Commercial Fisheries Production by Species (USD millions)

2012

2011

2010

2009


Commercial Fisheries Production by Species (USD millions)

7,0006,0005,0004,0003,0002,0001,000

0

Crab LobsterScallopPollock

ShrimpCod Halibut Other

Salmon

2007 2008 2009 2010 2011 2012


U.S. Seafood ProductionValue per MT

The charts below depicts the development in the price of the major shellfish and finfish species from 2007-2012. The average price per MT of scallop increased by 49% over this period (from $14,568 to $21,640) while the average price of lobster decreased by 36% (from $10,383 to $6,654).

The average price per MT of salmon increased by 79% (from $949 to $1,696). The average price per MT of cod has stabilized following a sharp decrease in 2009.

25,000

20,000

15,000

10,000

5,000

0

Price Development of Major Shellfish Species (USD per MT)

2007 2008 2009

Scallop Lobster

2010 2011

21,640

6,654

4,0693,607

2012

ShrimpCrab

2,0001,8001,6001,400

800600400200

0

Price Development of Major Finfish Species (USD per MT)

2007 2008 2009 2010 2011

632

1,696

272

168

2012

Pollock MenhadenSalmon Cod



U.S. Seafood ProductionLandings by State Alaska continued to lead all U.S. states in both volume and value with total landings of 2.4 million MT valued at $1.7 billion. Pollock and cod accounted for 67% of total landings in Alaska, but only 31% of value. Salmon was the most valuable species landed in Alaska with 26% of the total value despite accounting for just 11% total volume.

Massachusetts ranked fifth in terms of volume with 3.2% of total landings, but was the second most important state in terms of value, reflecting the importance of the scallop fishery. Maine ranked third in terms of total value, as it led the country in Lobster landings for the 31st consecutive year with 82% of the total. Lobster accounted for almost half of Maine’s commercial fishery landings.

Commercial Fisheries Producton, 2012 by Volume (Thousand MT)

Alaska

Louisiana

Virginia

California

Massachusetts

2,424

389

210

160

135

Commercial Fisheries Producton, 2012 by Value (USD millions)

Alaska

Massachusetts

Maine

Louisiana

Washington

1,692

618

449

310

276

State

Alaska

Louisiana

Virginia

California

Massachusetts

Other

Total

Thousand MT

2,424

389

210

160

135

895

4,212

%

57.6%

9.2%

5.0%

3.8%

3.2%

21.2%

100%

State

Alaska

Massachusetts

Maine

Louisiana

Washington

Other

Total

USD millions

1,692

618

449

310

276

1,752

5,097

%

33.2%

12.1%

8.8%

6.1%

5.4%

34.4%

100%



U.S. Seafood Production Landings by Ports

Dutch Harbor, Alaska led the nation as the port with the highest volume of commercial seafood landings for the 15th consecutive year. New Bedford, Massachusetts was the leading U.S. port in terms of value for 12th year in a row. Four of the top ten U.S. ports in terms of

Top 10 Ports

Dutch Harbor, AK

Empire-Venice, LA

Aleutian Islands (Other), AK

Kodiak, AK

Reedville, VA

Intracoastal City, LA

Pascagoula-Moss Point, MS

Cameron, LA

Alaska Penninsula (Other), AK

Astoria, OR

Total

Thousand MT

341

227

207

178

176

156

113

104

87

77

1,666

%

8.1%

5.4%

4.9%

4.2%

4.2%

3.7%

2.7%

2.5%

2.1%

1.8%

39.5%

Top 10 Ports

New Bedford, MA

Dutch Harbor, AK

Kodiak, AK

Aleutian Islands (Other), AK

Honolulu, HI

Alaska Penninsula (Other), AK

Empire-Venice, LA

Bristol Bay (Other), AK

Naknek, AK

Galveston, TX

Total

USD millions

411

214

170

119

100

99

80

79

78

74

1,424

%

8.0%

4.2%

3.3%

2.3%

2.0%

1.9%

1.6%

1.5%

1.5%

1.5%

27.9%

volume and five of the top ten ports in terms of value were located in Alaska, highlighting the importance of the industry to the State’s economy.




U.S. Seafood Trade


U.S. Seafood Trade Balance The U.S. is the fifth largest exporting country and the second largest importer of seafood. The U.S. imports around 90% of its seafood. Total seafood imports increased by 27% from $13.3 billion in 2009 to $16.9 billion in 2011 and have remained relatively stable since then. Total exports rose by 38% from $4.0 billion in 2009 to $5.5 billion in 2011 and remained relative constant in subsequent periods.

The country’s annual seafood trade deficit can be seen in the following figure.

U.S. Trade Balance in Edible Fishery Products

USD

billio

ns

Total Imports Total Exports Trade Balance (Export - Import)

20

15

10

5

0

(5)

(10)

(15)2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013



U.S. Seafood Exports China has been the largest export destination with approximately 25% of the total export value in 2013. Since 2010, exports to China have increased by 59% from $912 million in 2010 to $1.4 billion in 2013. The three largest export destinations, China, Canada and Japan, account for 56% of the total export value.

Export Destinations(USD millions)

1,6001,4001,2001,000

800600400200

0China Canada Japan South

KoreaGermany Netherlands France

2013 2012 2011 2010

Export Destination, 2013by Value

China

Canada

Japan

South Korea

Germany

Netherlands

France

Other

25%

8%

25%

3%3%

6%

13%

17%



U.S. Seafood Exports Salmon is the most valuable export species. The total value of salmon exports was in excess of $1 billion and accounted for approximately 19% of the total value of seafood exports in 2013. Pollock is the second most important export species followed by lobster.

The increase in total export value from 2009-2011 was primarily due to increases in salmon, pollock (due in part to an increase in the total allowable catch during this period) and lobster.

Exports, 2013by Species and Value

11%

7%5%

36%

10%

5%

19%

3%4%

SalmonPollockLobsterSurimiCodCrab FlatfishScallopsOther

Exportsby Species (USD millions)

6,000

5,000

4,000

2,000

1,000

0

Salmon Pollock Lobster Surimi Cod Crab Flatfish Scallops Other

2007 2008 2009 2010 2011 20132012



U.S. Seafood Imports

China, Canada, Thailand and Indonesia accounted for 48% of the total import value in 2013. Since 2010, imports from India have almost tripled while imports from Chile have more than doubled. Imports from Thailand fell 25% during this period.

Imports, 2013by Country and Value

China

Canada

Thailand

Chile

Indonesia

Vietnam

India

Equador

Other

16%

9%

7%

26%

8%8%

15%

5%

6%

3,500

3,000

2,500

2,000

1,500

1,000

500

0

Imports by Country (USD millions)

2013 2012 2011 2010

ChinaCanada

Thailand

Indonesia

Vietnam Chile

EcuadorIndia



U.S. Seafood Imports Shrimp is the most important import species. In 2013, the value of shrimp imported into the U.S. was $4.7 billion, which represented 28% of total seafood imports of $16.6 billion. The value of imported salmon increased 27% from $1.82 billion in 2010 to $2.32 billion in 2013 and accounted for 14% of total imports in 2013.

Imports by Species (USD millions)

Shrimp Salmon Tuna Crab Lobster Tilapia Scallops Cod Other

18,00016,00014,00012,00010,000

8,0006,0004,0002,000

02007 2008 2009 2010 2011 20132012


Imports, 2013by Species

25%

14%

28%

9%8%6%

6%2%2%

ShrimpSalmonTunaCrabLobsterTilapiaScallopsCodOther


U.S. Aquaculture


U.S. Aquaculture Aquaculture volume peaked in 2004, with total production of 607,570 MT. Since 2004, aquaculture production has declined by 31%. The volume for 2012 was 420,024 MT, an increase of 6% from 2011.

Aquaculture Production

Thou

sand

MT USD thousands

700

600

500

400

300

200

100

0

1,200

1,000

800

600

400

200

01990 1998 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

Volume Value (r.axis)

Despite the decrease in volume since 2004, the value of aquaculture production has been growing steadily for the past two decades, peaking in 2011 with a total value of roughly $1.1 billion. In 2012, the value declined by 9% to $1.0 billion.

Source: FAO


U.S. Aquaculture

Channel catfish is the largest U.S. aquaculture species by volume followed by American cupped oyster. These two species accounted for 61% of 2012 production volume. Channel catfish was also the highest value species, accounting for 32% of the total value of U.S. aquaculture production.

Volume Value

Aquaculture Production, 2012 by Species

37%32%

6%

31%7%

17%

10%

8%

8%

15%

24%7%

Channel catfish

American cupped oyster

Red swamp crawfish

Pacific cupped oyster

Northern quahog (hard clam)

Other

Channel catfish

Red swamp crawfish

Atlantic salmon

American cupped oyster

Northern quahog (hard clam)

Other



U.S. Consumption


U.S. Consumption

U.S. animal protein consumption peaked in 2004 and has declined in recent years due to a reduction in the consumption of red meat. During the past five years, per capita consumption fell by 9 % from 90.9 kg in 2007 to 82.3 kg in 2012. Consumption of seafood as a percentage of total animal protein consumption has been relatively stable at approximately 8%.

In the U.S., most seafood is consumed away from the home. The food service segment represents approximately 66% of total seafood sales

compared to 33% for retail. Per capita seafood consumption fell by 10% in the last two years from 7.2 kg in 2010 to 6.5 kg in 2012.

The largest product category is fresh and frozen fish and shellfish, which accounts for almost 75% of total consumption.

Annual Animal Protein Consumption (kg per person)

20002001

20022003

20042005

20062007

20082009

20102011

2012

89.3 88.0 90.9 90.4 91.4 90.8 91.0 90.9 88.4 86.6 85.6 83.3 82.3

SeafoodPoultryPorkRed meat

Annual Seafood Consumption (kg per person)

20002001

20022003

20042005

20062007

20082009

20102011

2012

6.9 6.7 7.1 7.4 7.5 7.4 7.2 7.2 7.2 6.8 6.5

7.57.3

CuredCannedFresh and frozen

Source: ERS/USDA; NMFS


Canadian Seafood Industry


Canada’s Main Fishing Areas

The Canadian fisheries and aquaculture industry is concentrated on the Atlantic Coast. The Maritime Provinces of Newfoundland and Labrador (NFL), Nova Scotia, Prince Edward Island (PEI) and New Brunswick, accounted for 77% of total landings and 82% of the total value of Canada’s commercial fisheries production in 2012.

Atlantic Coast Provinces: Newfoundland & Labrador, Nova Scotia, Prince Edward Island, New Brunswick and Quebec

Total Landings:Volume: 674,000 MTValue: CAD 1.9 billion

Main Species:Shrimp, herring, snow crab, lobster, scallop and clams

Aquaculture: Volume: 87,130 MTValue: CAD 406 million

Pacific Coast Provinces: British Columbia

Total Landings: Volume: 130,000 MTValue: CAD 213 million

Main Species: Hake, salmon, halibut, clams and crab


Inland Provinces: Ontario and Manitoba

Total Landings: Volume: 29,000 MTValue: CAD 67 million

Main Species: Ontario and Manitoba are the most import-ant inland fisheries, comprising about 90% of total freshwater landings


Source: Fisheries and Oceans Canada


State of the Resource in Canada The Canadian seafood industry is highly regulated with resource management and capture (both wild and farmed) governed by policies set by both federal and provincial governments. The federal government has jurisdiction over the resource, from its natural habitat to the landing dock, and is also responsible for the following:

• Management and regulation of fishing licenses and leases

• Setting of quotas

• Approving the transfers of quotas

• Monitoring fishing gear and vessels

• Establishing fishing areas and seasons

• Handling (landing, loading, and transporting catches)

• Boating safety and surveillance in fishing areas

• Fish inspection and marketing standards

Harvesting is governed by federal fish harvesting licenses and associated quotas are administered by the Department of Fisheries and Oceans (DFO). Quotas are rights granted by DFO to holders of a fish harvesting license to fish a certain volume of a specific species, either exclusively or in competition with other licensed parties. The DFO determines the total allowable catch (TAC) for each species based on scientific advice. Harvesting is regulated through a quota and enterprise allocation system.

The provincial governments are responsible for land-based activities such as fish processing and issuing water lot leases for aquaculture operations. All fish processing plants in Canada require a combination of federal and provincial licenses to operate.

Source: Agriculture and Agri-Food Canada



State of the Resource in Canada

LobsterLobster is Canada’s most valuable seafood export and an iconic Canadian species exported around the world. There has been a general upward trend in landings in recent decades. In 2009, total landings were 56,554 MT; the second highest on record in the last 20 years. The lobster resource is managed through various measures including limits to the number of licences, trap limits, length of fishing seasons, number of fishing days, total allowable catch quotas (in the offshore lobster fishing area) and size restrictions.

ScallopThe sea scallop (giant scallop) is one of the most important commercial shellfish species in Canada. Management measures include entry limits, total allowable catch quotas for each fishing area, meat counts, vessel and dockside monitoring and industry-managed closures designed to protect juvenile scallops and increase yields.

ShrimpCanada exports more coldwater shrimp than any other country in the world and shrimp is Canada’s fourth most valuable seafood export. Canada’s shrimp populations are healthy and sustainably managed and landings are above the average over the last 15 years. Annual fishing quotas are in line with scientific advice to maintain the future health of the populations.

Fishery management measures include minimum trawl mesh size, specialized equipment to minimize bycatch, at sea and dockside monitoring and the use of closed areas.


HerringThe herring fishery is the largest small pelagic fishery in eastern Canada with annual landings of 123,000 MT in 2012. Many different types of management tools have been applied to the herring fishery, including quotas, season and area closure during spawning periods and enhanced monitoring.

Snow Crab (Queen Crab)Canada is the world’s largest producer of snow crab, accounting for about two-thirds of the global supply. Snow crab is the second most valuable Canadian fishery export product. There are approximately 60 Snow Crab Management Areas in Canada spanning four DFO regions. In 2010, 4,326 snow crab fishery licenses were issued. The management of the snow crab fishery is based on annual total allowable catch, quotas, effort controls, size limits, minimum mesh size of traps, fishing seasons, areas and soft-shelled (also known as white crab) protocols.


State of the Resource in Canada


Canadian Seafood Production


Canada Seafood Production Volume

The total volume of commercial landings in marine waters has steadily declined during the past several years. During the past five years, total landings fell by 21% from 1.0 million MT in 2007 to 803,400 MT in 2012. Total landings decreased by 6.4% in 2012 following an 8.6% decrease in 2011.

Commercial Fisheries Production by Species (Thousand MT)

1,000

800

600

400

200

0

Shrimp HakeHerring OtherSnow crab Lobster

2007 2008 2009 2010 2011 2012

Commercial Fisheries Production, 2012by Species

Shrimp

Herring

Snow crab

Lobster

Hake

Scallop

Other

19%

7%

7%9%

12%

15%

31%

Coldwater shrimp and herring were the highest volume species in 2012. Together, these two species accounted for approximately one-third of total landings.

Among the six highest volume species, herring and shrimp contributed the most to the decline in total landings during this period, falling by 56,000 MT and 39,000 MT, respectively. In contrast, lobster landings increased by 26,000 MT (53.0%) during this period.

Source: Fisheries and Ocean Canada


Canada Seafood ProductionValue

Despite the decline in total landings, the value of Canada’s commercial fisheries has recovered in the past two years, following steady declines from 2007-2010. The total value increased by 1.0% to CAD 2.1 billion in 2012 following a 28.7% increase in 2011. The increase in total value in 2011 was primarily due to price increases for lobster and crab. The decline in value from 2007-2010 reflects the strengthening of the CAD relative to the USD and other major currencies.


Commercial Fisheries Production by Species (CAD millions)

2,500

2,000

1,500

1,000

500

0

LobsterHalibutClams / Quahaug

Snow crabOther

Shrimp Scallop

2007 2008 2009 2010 2011 2012

Despite accounting for less than 10% of total landings, lobster is the most valuable species, representing 31% of total value in 2012. Crab and shrimp are the next most valuable species. Together, these three shellfish species accounted for approximately 68% of the total value of Canada’s commercial fisheries.

Commercial Fisheries Production by Species (CAD millions)

2012

20102011

2009

Lobster

Snow Crab

Shrimp

Scallop

Clams/ Quahaug

Halibut

429

347

114

67

64

663


Canada Seafood ProductionValue per MT The chart below shows the development in the price of the six most valuable species from 2007 to 2012. The chart highlights the increase in the prices of lobster and crab since 2010.


14,000

12,000

10,000

8,000

6,000

4,000

2,000

0

9.73

8.86

4.62

2.402.32

2.14

2007 2008 2009 2010 2011 2012

Halibut Shrimp ScallopLobster Snow crab Clams/Quahaug

Price Development of Major Species(CAD per MT)


Canada Seafood Production Landings by Provinces

The two most important Provinces in terms of volume and value are Newfoundland and Labrador and Nova Scotia. In 2012, NFL accounted for 34% of total landings and 30% of the value of Canada’s commercial fisheries. Nova Scotia accounted for a higher proportion of the value due to its emphasis on higher value shellfish species. Located on the west coast of Canada, British Columbia is the third most important province, representing 16% of total landings and 10% of total value.


Volume Value

Commercial Fisheries Production, 2012by Province

Newfoundland & Labrador

Nova Scotia

British Columbia

New Brunswick

Quebec

Prince Edward Island

Nova Scotia

Newfoundland & Labrador

British Columbia

New Brunswick

Quebec


34% 36%

16%

4%

10%

8%

30%

9%

7%

30%

9%

7%


Canada Seafood ProductionLandings by Provinces The tables below reflect the most important species in terms of total landings and value by province.

Commercial Fisheries Production, 2012by Volume

Commercial Fisheries Production, 2012 by Value (CAD millions)

Nova Scotia MT % Quebec MT %Scallop 48,708 21% Shrimp 18,742 33%Herring 46,612 20% Queen crab 13,528 24%Lobster 43,049 18% Herring 7,952 14%Other 97,834 41% Other 17,315 30%Total 236,203 Total 57,536

New Brunswick MT % NFL MT %Herring 25,467 34% Shrimp 102,678 38%Lobster 13,484 18% Queen crab 50,462 18%Queen crab 9,218 12% Capelin 31,153 11%Other 26,310 35% Other 89,080 33%Total 74,480 Total 273,373

PEI MT % British Columbia MT %Lobster 12,147 38% Hake 46,913 36%Herring 9,040 28% Redfish 16,584 13%Crab, other 1,942 6% Flatfishes 10,075 8%Other 9,201 28% Other 55,947 43%Total 32,330 Total 129,519

Nova Scotia Value % Quebec Value %Lobster 382.2 50% Queen crab 61.1 38%Scallop 104.0 14% Lobster 41.6 26%Queen crab 90.8 12% Shrimp 33.9 21%Other 191.5 25% Other 25.5 16%Total 768.5 Total 162.1

New Brunswick Value % NFL Value % Lobster 107.2 53% Shrimp 247.8 39%Queen crab 50.8 25% Queen crab 216.9 34%Herring 11.6 6% Greenland turbot 50.2 8%Other 31.1 15% Other 118.0 19%Total 200.7 Total 632.9

PEI Value % British Columbia Value %Lobster 112.4 79% Halibut 33.0 15%Queen crab 9.4 7% Queen crab 27.3 13%Herring 5.5 4% Clams/quahaug 26.1 12%Other 15.8 11% Other 126.7 59%Total 143.1 Total 213.1



Canadian Seafood Trade


Canadian Seafood Exports

Canada is the ninth largest seafood exporting country and sixteenth largest importer of seafood. Historically, Canada’s seafood exports have exceeded its imports, resulting in annual trade surpluses. Canada’s export volume was flat in 2013 compared to 2012 at approximately 595 million MT. However, volume has been trending downwards since 2007. In contrast, the value of Canada’s seafood exports increased by 6.4% from CAD 4.2 billion in 2012 to CAD 4.4 billion in 2013 and was up 14% compared to 2007.


Export Destinations (CAD millions)

3,000

2,500

2,000

1,500

1,000

500

0US Europe China Japan Hong Kong Russia UK

Export Destinations, 2013by Value

US

China

Japan

Hong Kong

Russia

UK

Other

14%

10%

3%

6%

2%

63%

2%

The main market for Canadian seafood was the U.S., accounting for 63% of total export value in 2013. China is the second largest export destination with 10% of Canada’s export value followed by Japan at 6%. Exports to the U.S. increased by 8.5% to CAD 2.8 billion in 2013 from CAD 2.6 billion in 2012.

2013

20112012



The most valuable Canadian export species in 2013 were lobster, crab, salmon and shrimp. The combined value of these species represented 70% of the total export value. The increase in the export value of lobster and crab was primarily due to higher export volumes.


Exportsby Species (CAD millions)

5,0004,5004,0003,5003,0002,5002,0001,5001,000

5000

Lobster ScallopCrab Salmon OtherShrimp, prawn Herring

2007 2008 2009 20132012

2013

20112012

Lobster Crab Salmon Shrimp, prawn

Herring Scallop

Exports (CAD millions)

1.167

826

662

440

152 150



Nova Scotia led Canadian provinces in 2013 with exports of CAD 1.1 billion. New Brunswick’s exports have increased by 45% since 2009, reflecting the increasing importance of farmed salmon exports.


Exports, 2013by Province and Value

Nova Scotia

New Brunswick

British Columbia

Newfoundland

Quebec


Other

24%

5%

20%

4%

23%

5%

19%

1,100

1,000

900

800

700

600

500

Exports by Provinces (CAD millions)

2008 2009 2010 2011 2012 2013

1,062

1,012 904

827

Nova Scotia New BrunswickBritish Columbia Newfoundland


Canadian Seafood Imports

The value of Canada’s seafood imports increased by 7.8% in 2013 to CAD 3.0 billion, despite a 5.1% decrease in volume. The U.S. is Canada’s most important trading partner, accounting for 36% of total imports. Asia was also an important supplier, representing more than 30% of total import value.


Imports by Country (CAD millions)

1,200

1,000

800

600

400

200

0US ChileChina IndiaThailand Vietnam

Imports, 2013 by Country and Value

US

China

Thailand

Vietnam

Chile

India

Other6%

4%

5%

14%12%

23%

36%

2013

20112012


Canadian Seafood Imports

Shrimp accounted for 18% of the total import value in 2013. The total value of shrimp imports was CAD 528 million, an 8% increase from 2012. The value of imported salmon increased by 17% to CAD 468 million in 2013 and represented 16% of total import value. Shellfish accounted for more than 30% of the total value of seafood imports in 2013.


Importsby Species (CAD millions)

3,000

2,500

2,000

1,500

1,000

500

0

Shrimp, prawnTuna

Fish, NESCrab Other

SalmonLobster

2007 2008 2009 2010 2011 20132012

Imports, 2013by Species and Value

Shrimp, prawn

Fish, NES

Salmon

Lobster

Tuna

Crab

Other

18%

8%

8%

4%

16%

17%

29%


Canadian Aquaculture



According to FAO, Canada ranked 25th among world aquaculture producers in 2012. During the past 20 years, Canada’s total aquaculture production has increased at a CAGR of 6.8% from approximately 47,000 MT in 1992 to 174,000 MT in 2012.

Atlantic salmon is Canada’s top aquaculture product, representing about 62% of total production in 2012. Canada is the world’s third largest farmed salmon producer. Other key aquaculture species are mussels, oysters and trout.


The value of aquaculture production has increased in line with the rise in total volume during the past 20 years. In 2012, the total value of Canadian aquaculture products was CAD 825 million. Atlantic salmon is the most important species, representing 72% of the total value in 2012.

Volume Value

Aquaculture Production by Species

Thou

sand

MT

CAD

Milli

ons

200180160140120100

80604020

0

900800700600500400300200100

0

Salmon SalmonOther OtherMussels MusselsOysters TroutTrout Oysters

2002 20022008 20082006 20062007 20072005 20052004 20042003 20032009 20092010 20102011 20112012 2012



Aquaculture production is equally divided between the Pacific and Atlantic coasts. In 2012, British Columbia accounted for about 48% of total production volume, followed by New Brunswick at 18%, Prince Edward Island at 14% and NFL at 12%.


According to FAO, aquaculture employs about 15,500 people in full-time, well-paying jobs that are primarily located in smaller coastal and rural communities. Canada’s farmed salmon industry provides more than 10,000 jobs alone.

Volume Value

Aquaculture Production, 2012 by Province

British Columbia

New Brunswick

PEI

Newfoundland

Nova Scotia

Ontario

Quebec

British Columbia

New Brunswick

Newfoundland

Nova Scotia

PEI

Ontario

Quebec

48% 49%

14%

5%5%6%

2% 2%1% 1%

18%24%

12%

14%


Canadian Consumption


Canadian Protein Consumption

Per capita consumption of animal proteins has decreased by approximately 10% since 2000. Similar to trends in other parts of the world, consumption of red meat has fallen while consumption of poultry has increased. Per capita seafood consumption increased by 12% to 8.6 kg in 2011 from 7.7 kg in 2010, but is below the levels seen in the early 2000s. The downward trend in per capita seafood consumption is primarily a result of lower landing volumes. As a percent of total animal protein consumption, seafood has remained relatively stable at approximately 8.5%.


Annual Animal Protein Consumption(kg per person)

20002001

20022003

20042005

20062007

20082009

20102011

108.8 109.0 108.0 106.5 107.2 102.9 103.9 105.9 102.1 101.6 98.2 98.0

Red Meat Poultry Seafood


DisclaimerThis report was produced by Íslandsbanki hf.

The information in this report is based on publicly available data and information from various sources deemed to be reliable. The information has not been independently verified by Islandsbanki hf. (“Islandsbanki”) and Islandsbanki does not guarantee that the information is comprehensive or accurate. All views expressed herein are those of the author(s) at the time of writing and may change without notice. Islandsbanki holds no obligation to update, modify or amend this report or to otherwise notify readers or recipients of this report in the event that any matter contained herein changes or subsequently becomes inaccurate.

This report is informative in nature and should not be interpreted as a recommendation to take, or not to take, any particular investment action. This report does not represent an offer or a solicitation to buy, sell or subscribe to any particular financial instruments.

Islandsbanki accepts no liability for any potential losses or other consequences arising from decisions based on information in this report. Any loss arising from the use of the information in this report shall be the sole and exclusive responsibility of the investor. Before making an investment decision, it is important to seek expert advice and to become familiar with the investment market and different investment alternatives.

Various financial risks are at all times present during investment activities, such as the risk of no yield or the risk of losing the capital invested. International investments include risks related to political and economic uncertainties as well as currency risk. Each investor’s investment objectives and financial situation is different. Past performance does not indicate or guarantee the future performance of an investment.

Reports and other information received from Islandsbanki are intended for private use only.

This material may not be copied, quoted or distributed, in whole or in part, without the prior written consent of Islandsbanki.

This report is a brief summary and does not purport to contain all available information on the subject covered herein.

Regulator: The Financial Supervision Authority of Iceland (www.fme.is)

United States. Neither this report nor copies of this report may be distributed in the United States. Distributing the report in the United States may be a breach of applicable laws or regulations.

Canada. The information provided in this publication is not intended to be distributed or circulated in any manner in Canada and should not be construed as any kind of financial recommendation or advice provided within the meaning of Canadian securities law.

Other countries. Laws and regulations of other countries may also restrict the distribution of this report.

This summary does not constitute any solicitation of services by Islandsbanki in the United States or Canada.

For further information relating to this disclaimer see: https://www.islandsbanki.is

Íslandsbanki Seafood TeamÍslandsbanki, Kirkjusandi, 155 Reykjavík, IcelandTel.: +354 440 4500

For more information, please visit our websites:www.islandsbanki.is/seafood [email protected]

Íslandsbanki Seafood Research May 2014 North America ... America... · Íslandsbanki Seafood...

Documents

Transcript of Íslandsbanki Seafood Research May 2014 North America ... America... · Íslandsbanki Seafood...