It seemed the whole of the Norwegian seafood industry had turned up in the northern town of Tromsø to eat farmed halibut, chat and... celebrate at its annual, Spring get together. After three years of low prices, a strong Krone killing export markets and no profits in the fish bank, the end of 2004 and the first few months of 2005 showed signs of improvement. The currency situation had improved, interest rates were lower at bank, sales had grown and the Russians were hungry for Norwegian seafood. On top of that Norway's fishing tycoon Kjell Inge Røkke had shown that it still was possible to build powerful units on wild, Norwegian fish.
Then, just over a week later when everyone had well digested their halibut and returned home, the EU commission declared a punitive duty on Norwegian salmon. The Norwegian fish and seafood sector are a combination of wild catch and farmed product, welded at the pinbone. Fishfarmers and the fishermen belong to the Norwegian Seafood Federation (NSF) and farmed salmon represents almost one third of Norwegian seafood exports. When this business is threatened by punitive duties in this case, it has a knock-on effect across the whole seafood business in Norway. But it does not choke off hope for the future and a strong sense of optimism.
Export growth
"After several years of recession and stagnation in the seafood business, 2004 turned out to be a turning point in a positive direction. Once again the seafood business could show good results as a whole", chair Lisbeth Berg-Hansen told members at the NSF AGM. She pointed out that the value of seafood export, after three years of decline, had grown from NOK26 billion (€3.2 bn) to NOK28 billion €3.45bn). No one was arguing but the picture is a little bit more complex. The year 2003 was one of the worst negative years for the Norwegian seafood business since it became broke away and became independent of Sweden in 1905. For the shrimp industry 2004 was almost as bad. The rest of the industry had to face higher prices for raw materials from the fishermen. However the good news is that the export value of both farmed salmon and trout, white fish and pelagic fish grew in 2004.
Dried profitability
Other signs of improvement -- and of change -- were to be found in the annual report of scientist Bjørn Inge Bendiksen at the Tromsø Fiskeriforskning Institute. His focus is on the profitability of the fish processing industry, and his study showed there had already been an improvement in 2003. However, in 2002 the Norwegian fish processing industry lost 700 million Krone (€86.4m). The following year the 429 participating companies had only balanced the books, with no profit. Dried codfish (stockfish) and dried salted fish (clipfish) were the only silver flashes in the cloudy water. Stockfish is less prone to competition, and the clipfish producers profit from a steadier and year-round production by supplementing product with frozen raw materials. Still there is one thing to keep in mind: some of the firms that contributed to the negative results in 2002 went bankrupt. So this also raised the average profitability of the survivors. The structure of the fishing industry is changing, but very slowly. Bjørn Inge Bendiksen says that seafood companies are the bedrock of coastal communities, and their diversity reflects the varied fishing fleets and different fisheries targeted along the long Norwegian coast.
Røkke hope in Vardø?
One of the most dramatic bankruptcies in the new millennium was the closure of one Norway's largest and northern-most processing plants in Vardø, Finnmark county. Aarsæther Vardø was a 'flagship' of the whitefish industry in northern Norway. A year after closure, having turned Vardø into a kind of ghost ship, the factory was seen as a symbol of megalomania and a pointer to a troubled and troublesome fishing industry. However Spring 2005 has seen smiles back on people's faces in Vardø following a strategic move by leading Norwegian industrialist and tycoon Kjell Inge Røkke.
Røkke and the seafood branch of his international industrial empire are always a focus for controversy.
According to Norwegian law, fishing vessels should be owned by fishermen, not by the industry. And in the North of Norway they prefer the quotas, the boats and the industry to be owned by people from the northern region. Røkke is a capitalist with his office in the capital Oslo. The Røkke-companies seem to do very well, both in the fish processing sector and other industries. He was recently praised in Philadelphia by former US president Bill Clinton for rescuing the local industry there. The Røkke-controlled, Norway Seafoods plants in Northern Norway have also shown better profitability than the local average.
So his move this year was met by approval in local communities and accepted by the government, although others reacted badly. Norway Seafoods has now taken control of two major seafood companies, West Fish-Aarsæther group and Nordic Sea Holding. The new group will be called Aker Seafoods and will own 29 licenses for cod, pollack, haddock, and shrimp and will account for about nine per cent of Norway's cod quota. Aker Seafoods will own five of the biggest fish factories in the north of Norway. It has about 1,350 employees and a combined turnover of around NOK 2.5 billion. The company will be listed on the stock exchange this year.
Farming Billions
Nonetheless, we cannot say that Aker Seafoods is the largest Norwegian seafood company. In 2004 the turnovers of both Cermaq, Fjord Seafood and Lerøy Seafood Group passed three billion Krone (€300m). In the same year, Marine Harvest, Stolt Sea Farm and Pan Fish were bigger than Norway Seafoods while Domstein ended up just behind. Of these seven Norway Seafood and Domstein are the only two dedicated to wild fish. The Cermaq-turnover of NOK 3,7 billion (€370 million) is based on fish feed and farmed fish. Fjord Seafood, Pan Fish and the recently merged Marine Harvest and Stolt Sea Farm, produce and sell farmed salmon and salmon trout. Selling salmon worldwide is the core activity of Lerøy in Bergen. But Lerøy also exports all kinds of seafood. The fish feed division of Cermaq is dependent on the catches by both Atlantic and Pacific purse seiners. Domstein is the biggest owner of Fjord Seafood. Fenced and hooked fish are deeply connected, and farmed cod might become the new salmon.
So, returning to the Brussels' effect, a punitive duty on salmon exports to Europe affects all Norwegians. The Tromsø meeting was too important to miss for the politicians and that included Prime Minister, Kjell Magne Bondevik. He denounced what he called 'unreasonable accusations and actions' from the EU, saying it would be brought before the World Trade Organisation (WTO), might face retaliation with extra duties on several EU-coming into Norway. He said he would speed up work to lower the trade barriers that Norwegian fish face today in Asia. "Thailand and Indonesia cannot replace France and Germany", Domstein CEO, Rolf Domstein said. The negotiations between Norway and the EU keep going on, even though some Norwegian salmon in EU has lost out to Chilean. And some of the Norwegian seafood that used to go South, will be sent Eastwards. One silver lining has been that Russia, so far in 2005, has been the most important single Norwegian fish.
