That’s why the cod had trouble
The global financial crisis and an historic price fall hit the cod sector in 2009. Measures implemented by the authorities could not prevent many actors experiencing major problems, a fresh report from Nofima shows.
The report, which was commissioned by the Ministry of Fisheries and Coastal Affairs, documents a dramatic fall in prices and incomes in the period from 2008 to winter 2010. Some sections of the fishing fleet and cod processing industry were harder hit than others.
“It was extremely difficult times for the cod sector given the uneasiness that accompanied the financial crisis,” say Bent Dreyer and Bjørn Inge Bendiksen from Nofima, who jointly wrote the report.
When the global financial crisis widened, the Norwegian cod sector soon felt the consequences. The anxiety in the financial markets led to capital drying up. The price uncertainty coupled with the lack of capital meant the fish ended up in storage instead of being sold. Many of the countries that are important markets for Norwegian cod experienced major problems. Owing to difficulties with selling the catch, the fishery came to a halt right in the middle of the high season.
Iceland, one of the main competitors for the Norwegian products, was hit particularly hard by the financial crisis. As well as the Icelandic currency loosing value, they had to sell fish at extremely low prices. This was favourable for the buyers, but unfavourable for the Norwegian competitors.
Other conditions also contributed to making the cod industry vulnerable during and after the financial crisis. Profitability had been poor for a long time and as the price of cod was extremely high prior to the financial crisis the price fall was huge when the financial crisis occurred.
In order to help the situation, the authorities implemented a series of measures. These included offering loans and guarantees, funds for marketing and subsidies for the transportation of fish between different regions. The cod quotas were also increased.
“Despite the fact that the quotas were caught, the value of the cod in 2009 dropped by a full NOK 735 million compared to 2008,” says Bendiksen. “Consequently, increasing the quotas didn’t compensate for the price fall.”
More strings to one’s bow
The smallest vessels, salted fish producers and cod farmers were the hardest hit. But those who had incomes from other sources coped better to handle the problems.
“Some actors made significant changes to their operating and production patterns compared to previous years,” says Dreyer. “We saw a striking increase in cod that was frozen onboard the vessels. Several were saved by their part-ownership of salmon farms and pelagic fish, which experienced good profitability while the cod sector struggled.”
This year’s winter season was completed without major problems. Important markets are once again buying cod, but at far lower prices than in previous years.