Finally, the sector meets again

Topic number 1: Protein prices

Regardless of who we spoke to, there were two topics that can't be avoided in the sector at the moment. The first is the high price of protein. Since the beginning of the year, for example, spot prices for salmon have almost doubled at peak times. Although higher prices are a positive development, especially for producers, no-one expected prices this high and people aren’t exactly jumping for joy. Firstly, the current prices are not sustainable. Secondly, producers aren’t feeling the benefit of the high prices much as they are only selling low volumes (an important contributing factor in the current high prices), plus a substantial amount of their sales are governed by long-term contracts. Thirdly, people are questioning whether demand can be maintained at such high prices. And fourthly, companies further downstream in the value chain are suffering particularly from the current situation, as they cannot pass on the full price rise to consumers (at least not for the time being). Back to salmon prices: the broad consensus is that we can expect prices to fall again in the coming months, but to a higher level than previously.

Effect of raw materials inflation

Topic number two was how inflation is currently affecting raw materials. In salmon farming, feed accounts for about half of the costs, so costs for producers will inevitably rise at some point. As with sales, however, a certain proportion of feed costs is hedged with contracts, so price rises will be noticeably delayed.

This issue isn’t causing such deep worry lines, however. Even if salmon farmers are hit hard, producers of other animal proteins such as poultry, pork and beef are much more exposed to the effects of inflation, as they need a much higher amount feed to produce the same amount of meat. Thus the fish sector could even benefit, as meat prices should rise more steeply.