Gained NOK 3.5 billion due to a weaker krone
The sharp fall in the value of the Norwegian krone in March following the global introduction of strict measures to prevent the spread of Covid-19 provided a boost to Norwegian seafood exporters.
Without the depreciation of the krone, the value of exports for the first four months of this year would have fallen by four per cent. Instead, it increased by six per cent to NOK 36.7 billion. Of this total figure, the weaker krone contributed NOK 3.5 billion, according to figures from Nofima.
The extensive infection prevention measures in place posed many challenges to the seafood industry.
Thees included increased costs for transporting Norwegian seafood to foreign customers, reduced access to air freight and falling market prices. Many exporters had to adapt when customers abruptly stopped eating in restaurants and began eating at home instead.
‘The sharp fall in the value of the Norwegian krone has provided some relief in relation to the negative impact that Covid-19 restrictions have had on seafood exporters, but the overall picture is not a positive one for exporters. The figures for April and May show export revenues falling, even taking into account the current value of the krone, and with the prospect of reduced buying power going forward in many key markets there is a risk of a continued decline,’ says Thomas Nyrud, researcher at Nofima.
Nyrud has been working to calculate the impact of currency exchange rates on Norwegian seafood exports as part of a four-year research project funded by the FHF – the Fishery and Aquaculture Industry Research Fund.
In March, the price for Norwegian salmon was eight per cent lower than at the same time a year earlier. In April, the price was down 16 per cent. If the krone had not fallen, these decreases would have been 21 and 29 per cent respectively. The export value of fresh salmon was almost identical for the same period in 2020 and 2019. Adjusted for currency effect, the fall in export value was eight per cent during the first four months of this year.
In the case of fresh cod, exports decreased sharply in March and April. Compared with 2019, prices increased by 10 per cent in March and two per cent in April. Once the effect of the falling value of the krone is removed, prices fell by six and 13 per cent respectively.
Seafood producers who would have done well even without the fall in the value of the krone include those supplying frozen mackerel, frozen herring fillets, dried and salted cod and saithe, and frozen salmon fillets. Good volume growth on products that generate strong revenues such as frozen mackerel and herring fillets provided a boost to the export value of pelagic products totalling 34 per cent. Adjusted for the krone exchange rate, this growth was still good at 21 per cent.
A final report showing the currency effects for the period 2016-2019 is available to download from Nofima’s website in Norwegian language.