QUOTA SITUATION

The quotas for this year are not finally set, but ICES has recommended a Total Allowable Catch (TAC) for herring in the North Sea of 500.000 MT, which is an increase of 50.000 MT. For Norwegian Spring Spawning Herring (NSS-herring) the 5 costal states (Russia, Norway, Iceland, Faeroe Islands and EU) have basically agreed on a TAC of 825.000 MT for year 2004 – in line with ICES, which means an increase of 115.000 MT from 2003. However, last year the division of the quotas took almost the first half year to negotiate. Also this year it is expected to take some time.

EXPORTS

Reduced export value in 2003
The export of frozen herring from Norway was reduced by 337 mill NOK in 2003 compared to 2002. This is for the most part due to lower prices in all markets and a week US dollar. Another reason for the decrease is reduced imports of pelagic fish by the industry in Norway in 2003 compared to 2002.
The export of frozen herring fillets/flaps from Norway ended at about 96.000 MT in 2003 which is an increase of 35.000 MT from 71.000 in 2002. This is due to increased imports by Poland, Germany, Belarus and Russia.

Year 2003 was a record year for Norwegian export of herring to Russia. No other year has there been exported a larger quantity of herring to Russia or any other country. Herring export from Norway to Russia ended at amazing 184.000 MT. The top year before this was 1997 with 172.000 MT from Norway to Russia.

However, according to a Norwegian exporter, 2003 has been “a quite good” year with more “normal” prices and with stocks sold out both in Norway and in the markets. The quality of the herring has been very good and it has also been very big – a lot of herring at 380 – 400 grams. 2004 will be more difficult with regards to the size as there is now more small herring available and it will be a challenge to start selling first 300 and then 250 grams herring after the market is spoiled with big herring.

Iceland reduces the export of herring

For the first 9 months of 2003 Iceland exported 23.000 MT of herring products, which is a decrease of 10.000 MT compared to the same period last year. This decrease is probably due to low catches in the Icelandic fjords and to small herring sizes - the Icelandic industry having started the year with large stocks of small herring. Exports of frozen herring fillets are down by 7.000 MT to 11.000 MT. Of this volume, 3.000 MT went to Poland and the same to Norway. This herring (to Norway) was most probably re-exported to other markets.

Herring exports from EU increased

In the first 8 months of 2003 the export of herring from EU increased by 10.000 MT to 102.000 MT compared to the same period in 2002. However, average unit values are down. For frozen herring, average values fell by an average of -9% while average values for frozen herring fillets are down by -32%.

Good demand in Central and Eastern Europe

Herring demand in Central and Eastern Europe has been good this year particularly in Poland and Russia. This is probably due to several factors, including more stable prices, good quality herring and increased total demand/consumption of herring. These countries also imported more herring fillets/flaps in 2003 compared to 2002.
In contrast, there is a slight decrease in herring imports into the Ukraine. This is explained by low meat prices during 2003, which resulted in a switch by Ukrainians from other protein products, including herring, towards meat.

In Poland there is uncertainty concerning the country’s EU membership. The Poles are inexperienced regarding the process for quota allocation within the EU and there is some concern regarding the eventual distribution of shares. In addition, many producers are considering whether to produce for the EU market or just for the domestic market. Many production facilities do not come up to EU standards and there is a view that several companies will not survive EU membership. There is also likely to be a trend towards fewer and larger companies in Poland, as is likely to be the case in other new EU-member countries, as a consequence of membership.

OUTLOOK

If quotas are finally set at the level mentioned, there will be a total catch increase of approximately 165.000 MT (up 50.000 MT for North Sea Herring and 100.000 MT up for NSS-herring). In theory, this points to weaker prices for 2004. Also, as mentioned previously, the herring will be of smaller size in 2004, which is more difficult to sell than large herring. However, there will be no capelin catch this year and also slightly reduced mackerel quotas which should increase the financial pressure on boats. Also a slight strengthening of the US dollar is helping the exporters positively, but the currency is fluctuating, so this may hit both ways. Some exporters have, however, managed to negotiate a switch from US dollars to Euros.

Ingelill Jacobsen
© 2004 FAO