Norway

During the last week of May this year the chief characters of Norway Pelagic were touring Europe to raise the equity of the newcomer with 200-300 million NOK. That was almost exactly one month before the planned start of the latest Norwegian giant: the world’s largest producer of herring and mackerel. Norway Pelagic represents the two major Norwegian trends of making larger units and of bringing fish to the stock exchange. But the new fusion also represents the answer to an old, unsolved problem – overcapacity.

There has been too much steel and too little fish. The land-based capacity has more than doubled the amount of fish, giving the players at sea the upper hand in price negotiations. So the leaders on land have been talking and making strategies and trying to join forces to create a big company that could reduce the capacity and create international pelagic might. It wasn’t easy. During the first few months of 2005 Domstein Pelagic, Global Fish and West Coast made a serious effort, but failed.

Mighty mackerel!

In January 2007 there was a final breakthrough, gathering some of the biggest producers of herring and mackerel in the Atlantic. The West-Norwegian companies Domstein Pelagic, Global Fish, Bergen Fiskeindustri and Koral Fisk agreed to join forces. Later on, in springtime, North Norwegian Bernt Hansen followed, making the group able to control capacity of 280,000mt of fish for consumption. The goal is to control 400,000, but they don’t have to use it all.

The turnover of the merging companies was close to three billion NOK in 2006. The emission in May brought in 220 million NOK, and the total stock value is about 500 million NOK. Domstein is the biggest owner, and the main office will be in the Domstein Måløy. It’s not on the stock market in Oslo yet, but the ambitions are clear and realistic.

Austevoll has it all

However, Norway Pelagics, the competitor in Austevoll, South of Bergen, has certainly not stood still watching. In October 2006 Austevoll Seafood was noted on the Oslo Stock Exchange. Though it is still dominated by the Moegster family and rooted in the small fishing community of Austevoll, the pelagic specialist has operations in the important fisheries of Chile, Norway and Peru. These operations and productions include fishing, fishmeal, fish oil, canned fish and frozen fish processing in all three countries. Austevoll Seafood Norway is also into salmon farming, salmon processing and production of high concentrate Omega 3 oil. You will struggle to find a company with a better hold of the value chain. Concerning pelagic fish for consumption, the 80,000t of the Austevoll Company cannot be compared with the total flow of Norway Pelagic. But all together the 21 plants handled 1.2 million fish in 2006, including 650,000 from own South American vessels. The total turnover the same year was 3.5 billion NOK and the plans are to grow.

Fish and finance

The aim of this article is not to list big companies and new mergers along the Norwegian coast. But the Norway Pelagic merge and the growth and stock exchange listing of Austevoll Seafoods represent a recent trend. The last run began two years ago when the tank ship tycoon John Fredriksen showed off his hunger for farmed salmon. After more than a year of buying, merging and structuring the final result was the new Marine Harvest, led by the energetic and extrovert Atle Eide. Comprising the old Marine Harvest, Pan Fish, Stolt Sea Farm and Fjord Seafoods it is the biggest farmed seafood company in the world, with an annual turnover close to 16 billion NOK in 2006. It is also the biggest seafood company at the Oslo Stock Exchange, but certainly not the only one.

If we go back to the year 2000, Fjord Seafood actually was the only one. However, the last two years has brought the smell of fish into the corridors of the old Oslo Børs building. If we include Salmar, noted in May, we count nine: Marine Harvest, Domstein, Lerøy Seafood Group, Aker Seafoods, Cermaq, Austevoll Seafood, Marine Farms, Codfarmers and Salmar. The listing of Norway Pelagic would make it 10, and raising the total seafood stock value to between 40-50 billion NOK.

Foreign finance?

What does this tendency actually mean? The most obvious point is that it means money. According to the Norwegian periodical Norsk Fiskerinæring, the listed companies have got hold of more than 15 billion NOK in fresh money since 2005. Of course the position in the stock market also make the fish industry more visible and reputable. And the seafood business is getting more transparent as well. But we can’t avoid the fact that stock listing also makes the seafood industry more international or, in other words, less Norwegian. According to Norsk Fiskerinæring, foreign ownership is much higher among seafood companies than the other companies at Norway’s only stock exchange. Concerning Marine Harvest, the majority of the shares are even owned by foreigners, but this is in part due to the fact that Norwegian born Fredriksen has flagged out (and he lives in London).

Eternal fish?

The question of big and small units has also been one of the biggest issues in fishery politics over the last 18 months. The relatively numerous coastal fleet represents tradition and means a lot to coastal villages and to the industry within them. On the other hand there are reasons for letting the most active, clever (and wealthy) fishermen and vessel owners have the opportunity to buy quotas from other vessel owners and divide the cod and haddock on fewer keels. This can make it easier to establish profitable units with attractive jobs and more modern comfort.

The process has all the elements necessary to make a catfight, and some had their claws sharpened when the new Minister of Fisheries and Coastal Affairs, Helga Pedersen, put the structuring on hold and opened up a possible reverse of the moves made by her predecessor. This year the two biggest issues have been: “Can you own the fish quota you by forever?” and “How small vessels should be included in the structuring”. The last proposal from the Ministry was marked by the need for compromise. The size group of boats within the length range of 10-15 metres has been focused on. The Ministry now wants to start the structuring at 11 metres.

And for those who have bought quotas they thought were eternal? The quotas can be kept for 25 years, counting from 2008. The new regulation was approved by the Norwegian Parliament on 5 June. One week before that, the research institute and think-tank Chatham House in London concluded that Norway is a world leader in fishing management.

Blue and green

Merging science is not necessarily easier than merging money and fish. Establishing a new scientific structure with leading marine and agricultural institutes under one management has so far been a tug of war between the agricultural and the marine side, but might give some good scientific results when the new baby starts to walk next year.

The Norwegian seafood industry is never short of arguments and conflict, but almost everyone with a fish to sell or cut, has been pleased with 2006 and 2007. Exports of seafood in 2006 totalled NOK 35.6 billion. This was an increase of no less than NOK 3.8 billion compared to the previous year and NOK 4.1 billion higher than the previous record year of 2000. The total export volume was 1.9 million tonnes.

The strong growth is attributable to an increase in exports of salmon and price increases in respect of most products. The market showing the biggest growth was the EU, in particular France, Denmark and the UK. France was Norway’s largest individual seafood market. It should also be mentioned that the value of farmed fish passed the value of wild fish for the first time in history (54%).

If we jump to 2007, the first five months of the year have shown new growth. 15.2 billion NOK means an increase of 1.8 billion or 13 per cent. The value of cod increased the most.

The billionaire and the little shrimp

While the traders and stockbrokers have been focusing on money, Norway’s richest and most famous fisherman has actually been focusing on fishing. After earning his first fortune in pollock fishing in Alaska, Kjell Inge Røkke managed to gain control of the leading industry group, Aker, which includes Aker Seafood. Of course Mr Røkke is still focused on money, and he is deeply involved in developing the krill fisheries in Antarctica. But in May he started to fish for shrimp outside Oslo in his new, wooden boat, selling to the catch to tourists and shrimp lovers afterwards. For those who cannot afford stocks, fresh shrimp in Oslo could be a good alternative.