Project Year 2016
Currency devaluation is good news
The lower exchange rate for the Norwegian krone in recent years has boosted the international competitiveness of the Norwegian seafood industry.
Scientists at Nofima have developed an index to measure the competitiveness of seafood prices based on the exchange rate, visualising the impact of fluctuations in the exchange rate on the competitive situation in the seafood industry.
With high production volumes and a relatively small domestic market, the Norwegian seafood industry is dependent on selling most of its products abroad. Since Norway’s economy is small and heavily dependent on oil, the Norwegian krone (NOK) fluctuates widely.
Of the NOK 22.4 billion increase in the export value of all seafood from 2012 to 2015, NOK 14.1 billion is related to the lower exchange rate. The remaining growth of NOK 9.3 billion can be attributed to changes in volumes, prices and the product mix exported.
“New export records have been set in recent years. However, we think it is problematic to use export value as a performance indicator, especially for whitefish and the pelagic sector. Export value, measured in Norwegian kroner, is a very imprecise measure of performance,” says scientist Thomas Nyrud.
Currency fluctuations have affected the competitiveness of seafood from other countries too, such as Iceland in the whitefish market, and Chile, Ireland and Scotland for salmon. Norway has improved its competitive position vis-à-vis Iceland and Scotland & Ireland in particular as a result of the weak krone in recent years.
The seafood sector is more exposed to turbulence in the foreign exchange markets than the rest of the Norwegian export industry. This is because most of the international trade is done in the four major currencies (euro, US dollar, British pound and Japanese yen), while the other Norwegian export industries are generally exposed to a slightly broader portfolio of currencies.
Profitability and currency
The scientists have studied profitability in the fishing industry from 1993 to the present day and found that exchange rate fluctuations are an important factor in all the years with the best and worst results.
For example, within whitefish we find that of the five most profitable and the five least profitable years in the last 20 years, the result in seven of the years coincided with major currency fluctuations.
The Fishery and Aquaculture Industry Research Fund (FHF)