[[File:D31 fig 1.png|center|Figure 1]] ''Figure 1. Cod landings in Iceland, LWE. Source: Statistics Iceland''

[[File:D31 fig 2.png|center|Figure 2]] ''Figure 2. The total catch of cod by Icelandic boats by major fishing gear since 1982. Source: Statistics Iceland''

[[File:D31 fig 3.png|center|Figure 3]] ''Figure 3. Development in the Icelandic fleet''

[[File:D31 fig 4.png|center|Figure 4]] ''Figure 4. Average catch per vessel (tonnes)''

[[File:D31 fig 5.png|center|Figure 5]] ''Figure 5. Net profit in fishing and fish processing, 1993-2013. Matis''

[[File:D31 fig 6.png|center|Figure 6]] ''Figure 6. Norwegian catch of cod (tonnes) and corresponding ex-vessel value (mNOK, in nominal prices), 2000-2014. Source: Norwegian Directorate of Fisheries and Statistics Norway''

[[File:D31 fig 7.png|center|Figure 7]] ''Figure 7. Gear use development in Norwegian cod catches, 2005-2014. Source: Norwegian Directorate of fisheries.''

[[File:D31 fig 8.png|center|Figure 8]] ''Figure 8. Norwegian cod catch in 2014 by vessel length and gear use. Source: Norwegian Directorate of fisheries''

[[File:D31 fig 9.png|center|Figure 9]] ''Figure 9. The Norwegian fishing fleet, 1985 – 2014; number of registered fishing vessels, active fishing vessels and whole year operated vessel. Source: Directorate of Fisheries, Norway''

[[File:D31 fig 10.png|center|Figure 10]] ''Figure 10. Cod landings in Norway (LWE) from Norwegian and foreign vessels – 2000-2014. Source: Directorate of Fisheries, Norway''

[[File:D31 fig 11.png|center|Figure 11]] ''Figure 11. Norwegian cod landings – fresh, frozen and fillets – 2000-2014, LWE. Source: Directorate of Fisheries.''

[[File:D31 fig 12.png|center|Figure 12]] ''Figure 12. Seasonality in landings – monthly catches as share of total – Norway and Iceland, weighted average. Source: Directorate of Fisheries and Statistics Iceland''

[[File:D31 fig 13.png|center|Figure 13]] ''Figure 13. Atlantic cod landings in Canada, tonnes LWE. Source: FAO 2014''

[[File:D31 fig 14.png|center|Figure 14]] ''Figure 14. Total landings and value (in Canadian $) of Atlantic cod in Canada (DFO 2015)''

[[File:D31 fig 15.png|center|Figure 15]] ''Figure 15. Atlantic cod landings in Newfoundland by gear type. Source: MemU''

''Table 5. Atlantic region Fishing Fleet Information. Source: Fisheries and Oceans Canada, Regional Offices, Licensing Units'' [[File:D31 tab 5.png|center|Table 5]]

''Table 6. Newfoundland and Labrador Fishing fleet Information. Source: Fisheries and Oceans Canada, Regional Offices, Licensing Units'' [[File:D31 tab 6.png|center|Table 6]]

[[File:D31 fig 16.png|center|Figure 16]] ''Figure 16. Cod landings into the UK by UK and foreign vessels and prices achieved. Source: DEFRA''

[[File:D31 fig 17.png|center|Figure 17]] Figure 17. Value of cod Imported to the UK by exporting country 2000-2014. Source; HM Revenue & Customs

[[File:D31 fig 18.png|center|Figure 18]] Figure 18. Value of cod imported to the UK by type of product: 2000-2014. Source: HM revenue and Customs

[[File:D31 fig 19.png|center|Figure 19]] ''Figure 19. Canadian imports of Atlantic cod. Source: Statistics Canada, International Trade Division''

[[File:D31 fig 20.png|center|Figure 20]] Figure 20. Number of processing companies in Iceland. Source: Statistics Iceland and Mast

[[File:D31 fig 21.png|center|Figure 21]] Figure 21. Number of employees in processing and productivity 1992- 2013.

[[File:D31 fig 22.png|center|Figure 22]] ''Figure 22. Number of establishments “Processing and preserving of fish and fish products” (blue line) and enterprises in “Processing and preserving of fish, crustaceans and mollusc” (red line) in the period 2000-2013. Source: Statistics Norway''

[[File:D31 fig 23.png|center|Figure 23]] ''Figure 23. Development in the number of companies within different whitefish sectors, 2000-2015''

One persisting disadvantage for the Norwegian fish processing industry in Norway in the last 20 years, relative to competitor countries, is the extra-Norwegian labour cost level. The hourly wage in the Norwegian industry is at a level that is 6 times higher than in Poland, 61 % above UK and 37 % above France. With capital costs at a historical low level, automatization has become a necessity and a possibility. One efficiency increasing innovation, which has taken place in this industry in later years, is the establishing of dedicated gutting and grading lines for fresh fish landings from the coastal fleet. This has led to a great relief in the workload for the fishers, who no longer need to gut the fish – neither on board nor on land.

''Table 7. Licensed processing plants in NL. Source: Fisheries and Oceans Canada'' [[File:D31 tab 7.png|center|Table 7]]

''Table 8. NL fishing industry employment. Source: Department of fisheries and Aquaculture.'' [[File:D31 tab 8.png|center|Table 8]]

[[File:D31 fig 24.png|center|Figure 24]] ''Figure 24. Export value of cod from Iceland by 10 major countries. Source: Statistics Iceland''

[[File:D31 fig 25.png|center|Figure 25]] ''Figure 25. Export of cod according to production methods, % of value.''

[[File:D31 fig 26.png|center|Figure 26]] ''Figure 26. Price index of cod products, 2008 to 2015. Reference 4 quarter 2005 =100''

[[File:D31 fig 27.png|center|Figure 27]] ''Figure 27. Export value of different cod product categories, 2000-2012. Source: Statistics Norway''

[[File:D31 fig 28.png|center|Figure 28]] ''Figure 28. Norwegian exports of cod products, LWE, 2000-2014. Source: Statistics Norway''

[[File:D31 fig 29.png|center|Figure 29]] ''Figure 29. Export prices for main categories of Norwegian cod products (stockfish excl), 2000-2014. Statistics Norway''

[[File:D31 fig 30.png|center|Figure 30]] ''Figure 30. Export of fresh and frozen cod fillets from Norway, volume and price (FOB), 2000-2014''

[[File:D31 fig 31.png|center|Figure 31]] ''Figure 31. Norwegian export of clipfish (volume and prices), 2000-2014''

[[File:D31 fig 32.png|center|Figure 32]] ''Figure 32. Norwegian export of frozen cod (headed and gutted) to largest recipients''

[[File:D31 fig 33.png|center|Figure 33]] ''Figure 33. Canadian exports (in $ CND) of Atlantic cod. Source; Statistics Canada, international Trade division''

[[File:D31 fig 34.png|center|Figure 34]] ''Figure 34. Value of exports of cod from the UK by country of destination. Source: HM Revenue & Customs''

[[File:D31 fig 35.png|center|Figure 35]] Figure 35. Value of cod exports from the UK by type of product. Source: HM Revenue & Customs

This section of the Deliverable describes the structure of the value chain of Atlantic herring (Clupea harengus) focusing on the following countries: Norway, Iceland, Denmark, UK, Canada and Germany. In this section, we will describe landings, processing and consumption of herring. Figure 36 a visualization of the value chain, showing the different stages, and with arrows suggesting the most important flows through the chain. This is by no means a complete rendering of the many value chains for herring, but it illustrates some important features. The most important is probably that herring finds various ways from catch to consumption.

[[File:D31 fig 36.png|center|Figure 36]] ''Figure 36. The European value chain for herring''

 

 

 

*Some herring will be exported directly from Norway to Germany, some will end up in  

 

 

*Herring is exported from Norway to The Netherlands, but some of the herring going to The  

 

 

*Denmark receives much of their landings from Norwegian boats, much of the processing is  

 

 

*Different products categories might have different “routes” through the value chain, both  

 

=== Catch and Landings ===

The richest herring stocks in the Northeast Atlantic are found off the Norwegian coast (Norwegian spring-spawning herring, also known as Atlanto-Scandian herring), in Icelandic waters (Icelandic summer-spawning herring) and west of the Faroe Islands (Atlanto-Scandian herring). Herring is also found around the British Isles and in Skagerak. In 2014, world catches of Atlantic herring totalled 1.6 million tons. Almost 45% of those catches were registered by EU28-vessels, with Norwegian and Icelandic vessels accounting for additional 25% and 10% (see Figure 37). Catches by Danish and Finish vessels were around 130 thousand tons, vessels from the UK caught just under 100 thousand tons and Dutch and Swedish vessels registered 80-85 thousand tons. Other EU-fleets caught less.

[[File:D31 fig 37.png|center|Figure 37]] ''Figure 37. Herring catches in 2014. Thousand tons''

Like for many other pelagic species, herring catches can fluctuate a great deal between years. This is evident in Figure 38 and Figure 39 which shows the development of herring catches of vessels from five of the six countries included in this case study, Norway, Iceland, Denmark, the UK, and Germany, during the period 2000-2014. The figures also reveal a general downward trend during this period which is especially strong for Norway and Iceland. EU28-catches have on average been close to 700 thousand tons per year, while Norwegian catches have fluctuated between 600 thousand and 1 million tons.

[[File:D31 fig 38.png|center|Figure 38]] Figure 38. Development of herring catches of Norway, Iceland, Denmark, the UK and Germany 2000-2014. Thousand tons

[[File:D31 fig 39.png|center|Figure 39]] Figure 39. Landing of Atlantic herring in Canada by volume (metric tonnes live weight). Source: MemU

Modern herring vessels usually employ either purse seine or pelagic trawl. The vessels are typically also engaged in other pelagic fisheries, such as mackerel, capelin and blue whiting. The vessels are generally large (above 40 m length, often 60-70 meters, and/or larger than 1400 GRT), and most are equipped with on-board chilling facilities, some also with freezing facilities. Increasing boat size, more efficient fishing gear and fish-finding technology all contribute to a trend of consolidation of vessel and quota ownership for pelagic species across all main producer countries. This trend is thus driven by economies of scale in pelagic fisheries, as well as regulatory changes allowing for concentration. Purse seine was the main gear type used by vessels from Norway, Denmark and the UK, while Icelandic vessels more often employed pelagic trawl.

Norwegian catches have fluctuated a great deal in the last 15 years. They reached a high of more than 1 million tons in 2008 and 2009, but had in 2014 declined to 407 thousand tons. During the period 2000-2014 catches averaged 711 thousand tons. In Norway, most of the catches are registered by vessels larger than 28 m which operate purse seine. Up to quite recently, a substantial share of the herring catches was also caught by smaller vessels of the coastal fleet, for which it was an important fishery. Norwegian vessels land by far the largest share of their landings in Norway, with only a small proportion landed abroad. Some landings by foreign vessels, mainly Danish, are also registered in Norwegian ports. Norwegian vessels harvest the Norwegian Spring-spawning herring stock and North Sea herring. Icelandic herring catches have been relative stable around 240 thousand tons in the period 2000- 2014, ranging from 115 thousand tons in 2012 to 370 thousand tons in 2008. The last decade has witnessed a radical change in the composition of the Icelandic herring fleet. As late as 2003, nearly all herring was caught by relatively small vessels (50 GRT or less) employing purse seine, but catches of that fleet segment have diminished rapidly in recent years. Their place has been taken by modern large vessels (1400 GRT or larger) that can both employ pelagic trawl and purse seine. This fleet segment has in recent years registered around two thirds of all Icelandic pelagic catches, with slightly smaller vessels (1000-1400 GRT) catching additional 17% percent, and the smallest fleet registering the rest. Icelandic vessels generally land herring as fresh chilled or frozen whole (headed and gutted) or as frozen fillets. Icelandic vessels rarely land their catches in foreign ports. Icelandic vessels harvest the Norwegian Spring-spawning herring and the more local Icelandic Summer- spawning herring. Annual catches by the Danish fleet averaged 125 thousand tons during 2000-2014. Herring catches were only around 80 thousand tons in 2010-11, but have since rebounded and were around 140 thousand tons in 2013-14. The Danish herring catches are mostly registered by 11-16 vessels which are generally larger than 40 m and employ purse seine and pelagic trawls. In recent years, foreign vessels have been responsible for around half of herring catches in Denmark, while Danish vessels have landed have their catches abroad, mostly in Norway or Germany. The catch is generally landed directly to the processor, e.g. only 10 % of Danish landings in Denmark are registered at the Danish auctions the rest is landed directly to the processor (Ministry of Environment and Food, auction data). Danish vessels mainly operate in the North Sea. During the period 2000-2014, UK herring catches averaged 87 thousand tons, from a low of 53 thousand tons in 2014 and to a high of 126 thousand tons in 2005. The UK herring fleet is composed of 30 vessels larger than 40 m. Most of the herring landed by the UK fleet is captured in the North Sea. The UK fleet frequently lands its catches abroad; during the period 200-2014, 40-63% of the catches were landed in foreign ports, mostly in Norway and the Netherlands. Foreign vessels, above all from Denmark, Norway and Ireland, also often land their catches in the UK. German herring catches hovered around 60 thousand tons during 2000-2014. In 2009-2011 catches were on average around 40 thousand tons, less than half of what they had been five years earlier. The German fleet is dominated by one large pelagic trawling company (Parlevliet & van der Plas) that currently operates eight large, modern vessels, but small gillnet boats (12 m) also make up some of the herring catches. Total landings of Atlantic herring in Canada have declined by 56% since 1990 from 260,273 metric tonnes to 114,200 metric tonnes in 2015. Although the total landings of Atlantic herring have decreased since 1990, the total landed value has remained relatively stable averaging $36.3 million between 1990 and 2015. Atlantic herring in Canada is harvested from FAO Fishing Area 21 which includes the provinces of Nova Scotia, New Brunswick, Newfoundland and Labrador, Prince Edward Island and Quebec. There are eight main NAFO divisions for Atlantic herring in Canada. These include: (1) Scotia‐Fundy (4VWX) ‐ Four Areas (4Vn, 4Vs, 4W & 4X); (2) Southern Gulf of St. Lawrence (4T); West Coast Newfoundland (4R); and (4) East & South Coast Newfoundland (3KLP) ‐ One Area Three Zones (3K, 3L & 3P).In 2014 the majority (90%) of the landings were landed in Nova Scotia (39%), followed by New Brunswick (28%) and Newfoundland and Labrador (22%). Fishing gear used in Atlantic Canada for Atlantic herring include 2 types: (1) Fixed gear (traps, gillnets, weirs); and (2) Mobile gear (purse seines, tuck‐ring seines and mid‐water trawls). NAFO region 4R has MSC certification for purse seines, and the Gulf of St. Lawrence fall fishery is MSC certified for gillnets. Canada’s Atlantic herring fishery occurs mainly in the spring (April/May) and summer (July/August).

=== Trade in raw material/freshly caught fish ===

Landings often take place in a different country than the origin of the boat. The North Sea basin is to some extent a common market for landings, Figure 40. This trade sometimes takes place through an auction, like the Norwegian Norges Sildesalgslag, or through direct agreements between boats and processing facilities.

[[File:D31 fig 40.png|center|Figure 40]] ''Figure 40. The North Sea basin is to some extent a common market for landings. The size of each circle reflect landings in 2014. Red dots represent pelagic processing plants''

=== Processing of herring ===

The vast majority of the herring captured in the countries examined here was destined for human consumption. The share of herring for human consumption has been growing over time as can be seen as an example for the Norwegian catch, Figure 41. A small fraction is processed before landing (OBP is short for On-board Processing).

[[File:D31 fig 41.png|center|Figure 41]] ''Figure 41. Landings of herring in Norway by the Norwegian fleet by designated use. Source: Nofima''

In all countries, the bulk of the herring was primary processed by a few vertically integrated large companies. The companies either buy herring from vessels (as in Norway and Denmark) or catch the herring using their own vessels (and own quota, as in Iceland). They process it into the various commodities and use the rest material for fish meal and oil, also owned by the large companies. Many of them additionally sell their own products through marketing companies which they own fully or partially. The level of concentration in processing has followed suit with the concentration in the capture sector. The fish is produced mainly into fillets, butterfly fillets or headless and gutted herring; all as frozen products. Less than 10% of the overall catch is used fresh for salting or vinegar curing into fillets, fillets bits and headless and gutted fish intended for the Scandinavian and German market. Of the countries examined here, Denmark and Germany undertook most of the secondary processing, while the main producer countries (Iceland and Norway) exported unprocessed or primary processed herring products. The secondary processing in Scandinavia and Germany consists of making various marinated herring products in clear brines or sauces in jars, tins, plastic buckets or in vacuum packs Some of the herring is also canned into tins, e.g. as smoked or placed in various brines and sauces. In Norway there were around 100 primary processing plants specialising in pelagic fish in 1995, of which about 50 are left today, Figure 42. However, in this period production volumes have increased, so the explanation lies mostly in the construction of larger, more automated and efficient factories.

[[File:D31 fig 42.png|center|Figure 42]] ''Figure 42. Pelagic fish processing factories in Norway according to designated use of output. Source: Nofima''

Around 1500 jobs were created by the pelagic processing sector in 2013 and has reached peaks of up to 2200 jobs in the period 1995-2013, Figure 43. Employment varies according to fluctuations in quotas (reduced herring quotas is partly offset by increased mackerel quotas, but automation continues). Increasing automation is likely to result in fewer jobs in the future.

In recent years the herring primary producing companies in Iceland have become bigger and quite successful financially by focusing on, not only herring but additionally other pelagic fish species such as capelin, blue whiting, and mackerel. They have become large and vertically integrated by catching and landing fresh fish by own vessels, by primary processing and freezing the fish and finally by producing fish meal and oil from the discards and rest materials. Necessary investments in automation of filleting and in facilities for freezing and storage have been made. With this set up, the companies have been able to get an excellent return on capital, efficient use of the vessels, facilities and equipment.

The difficulty with pelagic fish species is their seasonality and the uncertainty in stock size and quota. The company’s focus on capelin for the first few months of the year (Jan-Mar) for freezing, roe production and fish meal and oil; blue whiting for fish meal and oil (Apr-June); mackerel for freezing (July-Sept) and finally herring (Oct-Dec).

Processing of herring in Iceland has changed considerably during the period under study (2001- 2014). In 2001 and the years before that, considerable part of the herring was salted and exported as salted herring, salted fillets and vinegar cured bits, but during the last few years salting has all but disappeared. The relative value of salted herring in terms of export value was about 19% in 2001 but from 2010 onwards the relative value was only about 1%. Now there is only one company salting herring in Iceland (Lodnuvinnslan). The main reasons for this is that the salting has not been streamlined and automated like the freezing and is still a manual process. Another reason is the fact that frozen herring products are uniform products that can be sold as commodities on the world market and in the last few years the demand for frozen herring and fillets has been strong and prices for the commodities high. On the other hand, production and sales of salted herring is based on producing for individual buyers using their specifications. Additionally, there may be tariffs on some of the salted products into EU. For these reason the large producers in Iceland have considered freezing to be more economical and the products easier to handle and sell long term. Seven companies in Iceland hold more than 10% of the herring quota each, and together own more than 95% of the total quota. Table 9 shows the top 8 companies holding the herring quota in Iceland, their turnover, profit and number of personnel for year 2014.

''Table 9. The top 8 companies holding herring quota, their turnover, profit, number of personnel and quota share in 2014. Source: Icelandic directorate of Internal Revenue; Icelandic directorate of Fisheries''

! 2014

! Turnover €

! Profit €

! Personnel

! Iceland herring quota

| HB Grandi

| 214.911.000

| 36.320.000

| 920

| 11,10%

| Síldarvinnslan

| 138.620.691

| 39.076.764

| 288

| 15,53%

| Samherji Iceland

| 119.106.000

| 24.898.000

| 410

| 13,74%

| Vinnslustöðin

| 84.291.961

| 7.217.947

| 340

| 9,98%

| Ísfélag Vestmannaeyja

| 79.763.659

| 18.679.726

| 283

| 13,13%

| Skinney Þinganes

| 59.608.139

| 11.624.014

| 247

| 19,59%

| Lodnuvinnslan

| 47.067.380

| 6.461.496

| 175

| 4,55%

| Gjögur ISK

| 29.558.037

| 9.505.276

| 90

| 10,23%

A handful of larger companies can be identified as the main actors in the processing of herring in Denmark, with a few minor actors existing as well. The sub-branch of processors of mackerel and herring (defined as those with 80 % of their production based on herring and mackerel) consisted of 14 companies in 2010 (last available year), Table 10.

 

!  

! 2006

! 2007

! 2008

! 2009

! 2010

| 17

| 18

| 18

| 16

| 14

| 672

| 732

| 746

| 593

| 518

The processing of herring shows a decreasing trend from 2000 to 2014, Figure 44. The volume peaked in 2000 at 85,000 tons and seems to be temporary stabilised around 50,000 tons in the last years. The type of products processed has changed over the time and the degree of processing is increasing. The main products of herring were all years “prepared and preserved”, which in volume have increased from 50 % to 66 % from 2000 to 2014, in value a slight increase from 57 % to 61 %. The high priced product of “Herring whole or in pieces in airtight containers” increased in the same period from 3.2 % to 4.6 % in volume, and from 10.8 % to 18.5 % in value. Low valued products as fresh or chilled, frozen whole, frozen fillets and flaps made up 40 % of the volume in year 2000 and decreased to 20 % in 2014. In value these product groups decreased from 26 % to 11 % of the total value of production of herring from Danish processing industry.

[[File:D31 fig 44.png|center|Figure 44]] ''Figure 44. Sales of herring-based products by the Danish fish processing industry. Source: Statistics Denmark. VARER1''

[[File:D31 fig 45.png|center|Figure 45]] ''Figure 45. Import of herring to Denmark, 2000-2014, volume (tons), in product groups''

 

 

''Figure 46 Imports of herring products into Germany from main exporting countries. Source: EUMOFA''

Herring processing for the UK a seasonal industry, which takes place from July to September. Herring predominantly enters UK processing as whole fish. A significant proportion of the companies involved in herring processing are vertically integrated into catching fish. According to EUMOFA, about 3 400 tonnes of herring were processed in the UK in 2013, down from 4 200 tonnes in 2009 when volume reached a peak for the period 2008-2013 (for which data is available). The dominant herring products in the UK are whole round, deli cut (headed, gutted, tail on or off), butterfly fillet, skinless single fillet, frozen herring roe, flaps, marinated herring, splits. The majority of fish destined for export undergoes minimal processing.

The majority of the herring processing plants in Canada are small to medium sized enterprises (SMEs) and the industry mainly is not vertically integrated, with the exception of one large processor which owns its own vessels. Most plants are multi‐species plants. There are 2 major herring processors in Atlantic Canada with one focused on canned herring and the other on first stage marinades. According to the Canadian Seafood Buyer’s Guide 2017 the number of herring processers in Atlantic Canada by province was 26 (NB), 15 (NL), 26 (NS), 3 (PEI), 7 (QE).

=== Trade with intermediate products ===

Tracing the herring through the value chain, one will find that there is an immense trade with a diverse range of intermediate products. One country’s export of intermediate products is another country’s imports. In this section, we will describe some of this trade. The volume of herring (LWE) imported in the UK in 2014 reached 13,000 tonnes of which more than 50% was whole fresh/chilled or frozen herring – directly landed by foreign fishing vessels, Figure 45.

About 30% of the LWE volume imported belonged to prepared or preserved (coated with batter or breadcrumbs, frozen, in airtight containers). About 70% of the total value of imports belonged to the latter group, being entirely supplied from countries within the EU, Figure 47. Outside the EU, over 90% of the import of herring by volume (LWE) came from Norwegian vessels landing their catch in the UK. In 2014 the highest share of the value of imports of herring was held by Germany, Denmark, Poland, Norway, Belgium, and Ireland, Figure 48. The disparity between volumes of import regarding Norway and Denmark as presented in (landings by foreign vessels) and 44 (imports by country) can be attributed to the different sources from which the data was gathered.

[[File:D31 fig 47.png|center|Figure 48]] ''Figure 47. Imports of herring into the UK by type of product. Source: EUROSTAT''

[[File:D31 fig 48.png|center|Figure 48]]

''Figure 48. Herring imports into the UK by exporting country. Source: EUROSTAT''

Almost the entire landings of herring in Iceland and Norway were destined for exports. The main markets have historically been Eastern Europe and Russia. However, these markets have recently become less important due to political reasons. Denmark supplies Central and Northern European countries while the UK – Western Europe and African countries. Figure 49 shows the main export markets for Norwegian herring products in terms of value. Eastern European countries account for a significant share of the market. However, the largest market, Russia, was closed in 2014, while Ukraine is in a special political situation resulting in declining imports. Similarly, trade to Nigeria has stopped, partly due to currency restrictions.

  [[File:D31 fig 49.png|center|Figure 49]]

 

''Figure 49. Exports of Norwegian herring by main Destination country. Source: Nofima''

Due to reduction in the quotas, the export has also decreased, Figure 50. The decrease is highest for the frozen whole herring that historically has been the most important export product. From a peak in 2009 with around 500 000 tons of frozen whole herring exported, the export was decreased by 81 % in 2016. At the same period the fresh whole decreased by 76 %. The other products has decreased by around 50 % since they peaked in the middle of the period of study. This means that the share of the frozen whole herring, that has been the most important product, has decreased from around 60 % in the beginning of the period to 40 % of the total export of herring in 2016.

  [[File:D31 fig 50.png|center|Figure 50]]

''Figure 50. Norwegian export of herring products 2006-2016. Source: Nofima''

The most important market for the frozen whole herring used to be Russia, with a share of 20-30 % before the market was closed in August 2014. This was the situation for the Norwegian spring spawning, Icelandic summer spawning and the North Sea herring. Nigeria also had a significant market share for the frozen herring in the years 2008-2011. In the last two years, Ukraine has been the biggest market for the frozen whole Spring spawning herring. However, this market has been relatively stable throughout the period of study. The Russian share seems to have spread to Belarus, Egypt and other countries. For the frozen whole North Sea herring, Netherlands was the biggest market in 2016. At the same time, Germany increased its share from 3 % to 24 % and became the second biggest market.

 

  [[File:D31 fig 51.png|center|Figure 51]]

 

''Figure 51. Average price per kg (NOK) 2006-2016. Source: Nofima''

[[File:D31 fig 52.png|center|Figure 52]] ''Figure 52. Export of herring products (tons), Iceland 2001-2014. Source: Statistics Iceland4''

[[File:D31 fig 53.png|center|Figure 53]] ''Figure 53. Export of herring products from Iceland, value. Source: Statistics Iceland5''

''5 - Conversion from ISK to € is based on the yearly average exchange rate from the Central Bank of Iceland Sedlabanki Islands, February 2016.''

The average price (in €/kg) was higher both for salted (and/or vinegar cured) but as said earlier the industry in Iceland has invested in freezing facilities and focusses on frozen herring. Average prices for preserved herring (consumer goods) were also considerably higher than that of frozen herring but tariffs, minimum 10% and long distances from final markets affect the amount of final goods produced and exported from in Iceland. In 2014 the total exported amount of preserved goods was 320 tons. Most of the Icelandic herring export goes into Russia or Eastern part of Europe, Table 11. The salted fish is however mainly sold to Scandinavia and Canada. Fish meal is mainly sold to Norway but some may go into UK and/or Denmark. Russia was in 2014 the most important customer for frozen Icelandic herring. In 2015 Russia banned import of Icelandic food, including that of herring.

 

|  % of value

|  % of value

|  % of value

In more details, the most important product group in the Danish export of herring products is fresh or chilled herring, Figure 54. This low processed group has increased from 40,000 t in 2000 to over 100,000 t in 2013 and 2014. In the same period, export volumes of other low processed products as frozen whole, flaps and filets has decreased from 30,000 t to slightly over 10,000 t the last years. Despite of this the volume of low processed products has increased over the period in absolute terms and in relative share; from 60% of the volume in 2000 to almost 80% in 2014. The higher processed herring product; prepared or conserved in whole or parts has decreased from 22% of the total export volume to 17% in the same years. Looking at value Figure 55, the processed values makes a considerable higher share of the total export value. The main product in value, prepared or preserved, has made up between 33 and 50 % of the total value, but the increase in fresh and chilled result in the value of higher processed products (prepared and preserved, salted, whole and whole or parts in airtight containers and other) has decreased from around 60 % of export value to a level of 50 % of the export value in the last years.

[[File:D31 fig 54.png|center|Figure 54]] ''Figure 54. Danish export of herring products, volume. Source; Statistics Denmark, KN8Y''

[[File:D31 fig 55.png|center|Figure 55]] ''Figure 55. Danish export of herring products, value. Source; Statistics Denmark, KN8Y and DNVALA''

The Danish export of herring products is focussed at a minor group of Northern European countries, Table 12. From 2006 to 2014 Germany has gained in importance to be the dominant export country with more than 60 % of the export volume and slightly lower share in value. The export to Germany has a higher share of low-priced products compared to Poland. It is very high (70 %) for the low processed products fresh and chilled herrings and 60 % for the flaps of herrings. Poland is the most important country of “Herrings, prepared or preserved, whole or in pieces (not in airtight containers),” which is the most important product in economic terms, though with Germany as almost as important (both in 2010 and 2014).

 

|  % of value

|  % of value

|  % of value

[[File:D31 fig 56.png|center|Figure 56]] ''Figure 56. Export of herring products from Germany by main destination country, value (€). Source: EUMOFA''

More than 70% of the herring exports in volume and value have been realized within the EU. The primary export product (>80% in volume and value) has been fresh or frozen whole herring. Frozen fillets have been the only significant value added herring product (10% in volume and value in 2014), exported primarily to other EU countries.

The main export destinations for UK herring are the Netherlands, Nigeria and Germany, together accounting for more than 60% of the volume and value of exports, Figure 58. The Nigerian market has expanded in the last several years and China has also emerged as an export market in 2014.

[[File:D31 fig 57.png|center|Figure]] ''Figure 57. Exports of herring products from the UK by type of product, volume. Source: EUROSTAT''

[[File:D31 fig 58.png|center|Figure]] ''Figure 58. Exports of herring products from the UK by country of destination, volume. Source: EUROSTAT''

''Table 13. Canadian exports of Atlantic herring by product category 2007.''

 

Atlantic herring accounts for ~28,000 tonnes (43%) of the total fishmeal production and contributes ~6000 tonnes of fish oil annually based on average production volumes reported (by FAO and IFFO) between 2001 and 2006.

[[File:D31 fig 59.png|center|Figure 59]] ''Figure 59. Canadian fish meal production by year. Source: Peron et al (2010).''

In 2007, the top 3 export destinations for Atlantic herring from Canada were: USA (51%), Caribbean (23%) and Europe (15%). The major destinations of Canadian exports of herring (includes Atlantic and Pacific herring) reported for 2014 are presented in Figure 60 and include the USA > Caribbean >Europe > Asia.

[[File:D31 fig 60.png|center|Figure 60]] ''Figure 60. Destination of Canadian exports of herring (Pacific and Atlantic) in Volume for 2014.''

The average export price of herring ranged from $1.45/kg for frozen (round and fillets) products to $4.00/kg for prepared herring, whole in in pieces, but not minced, Table 14.

=== Consumption ===

 

[[File:D31 fig 61.png|center|Figure 61]] ''Figure 61. Distribution of fish and seafood products by channel in Germany in 2013''

Iglo Foods was the leading producer of processed fish and seafood products in Germany in 2014, accounting for 2.7% of the volume of retail sales in the country, Table 15. A large proportion of the seafood products were marketed under retailers’ private labels.

''Table 15. Market shares by company for processed fish and seafood in Germany in 2014, % breakdown based on retail volume sales''

| B. Paulus GmbH

The registration of consumption of fish in Denmark is generated into types of fish products, not in species. It is therefore not possible to assess the consumption of herring products in Denmark. In product groups the processed fish and seafood in the group “Other preserved or processed fish and seafood-based preparations” dominates the household costs of fish, followed by fresh or chilled fish, Figure 62.

[[File:D31 fig 62.png|center|Figure 62]] ''Figure 62. Consumption of fish products in Danish households. 2000-2014, (€/household). Running prices''

Consumption of herring in the UK is relatively low. According to UK retail ScanTrack data from December 2015 (which however, does not include the discounters) provided by Seafish, herring as a species was ranked 27 in terms of value of sales at the end of 2015 amounting to £8.8 (€13) million, down 8.8% from the same point a year ago. Similarly, volumes have declined 6.5% to 1,309 t from 1,401 t in 2014. Average prices have gone down 0.8% to £6.74 (€10.24) /kg relative to 2014. Herring is available through the retailers as whole chilled at fish counters, fresh fillets, smoked fillets/splits (kippers), marinated fillets (rollmops), salted/in brine fillets and canned.

Ambient (canned) herring was ranked 9 th in terms of sales of ambient fish/seafood products, representing about a quarter of the value of all herring product sales. In September 2015 sales of ambient herring amounted to £2.2 (€3.3) million, down 11.4% relative to the same point in 2014. Corresponding volumes declined 16.9% to 300 tonnes.

Smoked kipper and smoked herring accounted for £10 (€15.2) million and £0.4 (€0.61) million respectively, with sales being stable or declining relative to 2014.

=== Conclusions ===

This chapter have described the value chain for herring from Norway, Iceland, Denmark, UK, Canada and Germany. The value chains share both similarities and differences, with a clear difference between the main fishing nations, Iceland and Norway, mainly being involved in the first stages of the value chain (catch and primary processing), and Denmark and Germany importing herring from these countries for secondary processing, where processing capacity and large consumer markets exist. Location of processing is also a matter of trade policy. For Non-EU members, there are import duties on processed products (with a duty-free quota). These matters will bed discussed in Deliverable 3.2.

In all countries, we see a decline in the catches of herring the last decade, due to lower quotas. A trend of consolidation of vessel and quota ownership for pelagic species was observed across all main producer countries. This trend is likely driven by the economies of scale which fishing for pelagic species benefits from and the low market prices of pelagic species. The vast majority of the herring captured in the countries examined here was destined for human consumption. The share of herring for human consumption has been growing over time. In all countries, the bulk of the herring was landed and being primary processed by a few large companies, often owning the fishing vessels capturing pelagic species. The level of concentration in processing has followed suit with the concentration in the capture sector. Vessels generally land their catches in national ports, but we also see that landings often take place in a different country than the origin of the boat. The North Sea basin is to some extent a common market for landings. Almost the entire landings of herring in Iceland and Norway were destined for exports. The main markets have historically been Eastern Europe and Russia. However, these markets have recently become less important due to political reasons. Denmark supplies Central and Northern European countries while the UK – Western Europe and African countries. With regards to Canada, while the majority of Atlantic herring is exported, a small volume is sold/used within Canada as bait or for fishmeal. Food exports are typically in the form of primary or secondary processed products (e.g. whole fresh/chilled/frozen, frozen fillets, smoked, salted or in brine [not dried or smoked], prepared or preserved whole or in pieces). Some of these products (e.g. first stage marinades) are further processed in the United States and then re‐imported back into Canada.

The analysis showed big variation in the value chains of different product categories, the main categories being frozen whole, frozen filets and frozen butterflies from the primary processors. Only a very small fraction is sold fresh. Tracing the herring through the value chain, one will find that there is an immense trade with a diverse range of intermediate products. One country’s export of intermediate products is another country’s imports. Correspondingly, we also see that the market for the different product categories varies a great deal, hence also the competition. The market dynamic for the different product categories are therefore very different. This will be analysed further in Deliverable 3.4, where we will evaluate industry dynamics and implications for competitiveness.

The global supply of salmonids comes from two sources –capture fisheries and aquaculture. Total supply of salmonids in 2014 reached more than 3 million tonnes WFE, an overall 1 % decrease compared to 2013. Wild catch showed a decrease of 21%, totalling about 840,000 tonnes WFE. Farmed salmon species increased by 7 % amounting to more than 3 million tonnes WFE. Atlantic salmon maintained and strengthened its position as the most important farmed species by far, representing 73% of total harvest quantity of farmed salmonids. Total harvest of Atlantic salmon in 2014 was approximately 2,226,000 tonnes WFE. Norway was by far the largest producer of Atlantic salmon,Table 16.

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Many salmonid species are globally traded commodities. As seen in Figure 63, the EU is the largest market for farmed salmonid species exceeding 1 million tonnes WFE in 2014, of which the supply of Atlantic salmon in 2014 totalled about 990,000 tonnes WFE. Norwegian Atlantic salmon accounted for 84% of all supply of Atlantic salmon to the EU in 2014, followed by the UK, Chile and the Faroe Islands, Figure 64.

''Figure 63. Global trade of farmed salmonids (Atlantic salmon, large trout, coho and chinook) in 2014, tonnes WFE. Source: Kontali'' [[File:D31 fig 63.png|center|Figure 63]]

''Figure 64. Supply of Atlantic salmon to the EU by main producer countries. Source: Kontali'' [[File:D31 fig 64.png|center|Figure 64]]

The focus of this section will be on value chains for Atlantic salmon arising from Norway, the UK and the Faroe Islands, a large proportion of whose production ends up in the EU. A generic value chain for farmed Atlantic salmon is presented in Figure 65. The activities comprising the value chain can be performed either by individual firms or integrated in the value chain of a single firm.

''Figure 65. Generic salmon value chain'' [[File:D31 fig 65.png|center|Figure 65]]

As seen in Figure 66, ova production comprises the smallest contribution to value addition in the supply chain for salmon in Norway. However this is true for all countries producing salmon products. By far the most value is added in the on-growing step in the value chain, where fish are grown from smolts to a market size. The following analysis will focus mostly on this step. From its origin in the 1980s up until mid ‘90s salmon aquaculture was mainly composed of small scale, family owned farms (Asche and Bjørndal, 2011a; Olson and Criddle, 2008). However, since then it has steadily evolved into an industry dominated by vertically and horizontally integrated multinational companies. This trend has been driven by economies of scale and scope at each link in the value chain (Olson and Criddle, 2008).

Salmon production is the most ‘mature’ of all aquaculture value chains examined here. In all major producer countries it is dominated by a several large scale companies, headquartered in Norway and Chile and with assets in all major producer countries, Table 17. The world’s 15 largest salmon farming companies’ harvested more than 1.6 million tonnes of Salmonids (Atlantic salmon, Coho salmon, Chinook, Big trout), representing more than 60% of the total harvest quantity in 2015. The Faroese salmon industry is by far the most consolidated, followed by Scotland and Norway (Asche et al., 2013).

''Table 17. Harvest quantity of Atlantic salmon, coho, chinook and large trout in 2014E (tonnes WFE)by top 15 companies. Source: Kontali'' [[File:D31 tab 17.png|center|Table 17]]

=== Egg production ===

The value chain for salmon starts with the production of eggs from broodstock (parent) fish. Since the genetic constituency of broodstock fish is critical for the performance of the generation grown out for the table, genetic selection for a set of traits (e.g. growth rate, disease resistance) tend to increase the productivity and the competitiveness of the producer. Since genetic selection is highly specialised task it is usually done by companies with main focus on genetic selection, including companies operating within a diverse range of livestock industries, as well as large-scale salmon producing companies who can afford building capacity in this regard.

==== Norway ====

In Norway, there were only 5 to 7 producers of ova, with combined output of 370 million Atlantic salmon eggs, Figure 66.

''Figure 66 Value chain for salmon in Norway. Source: Kontali Analyse AS'' [[File:D31 fig 66.png|center|Figure 66]]

==== UK ====

In the UK the share of imported ova has increased significantly since early 2000s, in 2014 reaching about 75% of the total number of ova laid down to hatch, Figure 67. The growth of imports of ova has been due to a growing share of imports of Norwegian origin, reaching about 80% of all imports of ova to Scotland in 2014, Figure 68. This is likely due to the presence of Norwegian companies operating in both locations and using the same production capacities.

''Figure 67. Number and sources of Atlantic salmon ova laid down to hatch in Scotland. Source: Marine Scotland'' [[File:D31 fig 67.png|center|Figure 67]]

''Figure 68. Import of ova by source. Source: Marine Scotland.'' [[File:D31 fig 68.png|center|Figure 68]]

In the Faroes, Marine Harvest Faroes imports eggs from the mother company in Norway or from the Faroese Aquaculture Research Station. Bakkafrost purchases salmon eggs from different external suppliers based in the Faroe Islands and Iceland. In order to ensure access to high-quality eggs, Bakkafrost’s strategy is to buy eggs from selected external suppliers that invest significant efforts and resources to improve product quality and performance.

==== UK ====

In the UK, the total number of smolts produced in 2014 was at roughly at the same level as in 2000, but has increased by 11.2% v 2013. There was an increase in the production of S1/2 smolts reaching 50% of the total in 2014. This can be explained by the increased need for continuity of supply throughout the year, Figure 69.

In 2014 the number of companies involved in freshwater production of Atlantic salmon was 26, operating 96 active sites, a decline from 60 and 184 respectively in 2000.

Figure 70 shows that the number of smolt production sites in all sizes except the largest (>1 million/year) has declined, particularly so in size bands of <250,000 smolts/year.

''Figure 69. Scottish production of Atlantic salmon smolts by type. Source: Marine Scotland.'' [[File:D31 fig 69.png|center|Figure 69]]

''Figure 70. Atlantic salmon smolt production sites grouped by number of smolts (‘000) produced per annum. Source: Marine Scotland.'' [[File:D31 fig 70.png|center|Figure 70]]

The total number of staff involved in smolt production has declined since 2000 to about 300 but the productivity per person has increased by about 50% over the same period, Figure 71. This is part of a value chain-wide trend for increasing productivity in the salmon industry and concentration of production into the hands and fewer larger firms (Asche et al., 2013).

 

In the Faroes, historically Bakkafrost has released smolts into the sea when the weight was between 50–60g. Over the last years, Bakkafrost has changed its strategy and waits until the size of the smolts has reached 100g before releasing them into the sea. Bakkafrost believes this has had a positive effect when measuring productivity and mortality, and hence contributed to improving its results. Bakkafrost has a long-term goal of increasing the size of the smolts further the coming years to 200- 300g each (Bakkafrost Annual Report, 2014).

On-growing is the main activity in salmon production. Since the production systems are ‘open’ (i.e. in exchange with the external environment) the suitability of environmental conditions play an important role in the competitiveness of the enterprise and eventually a country. Temperature is one of the most important water quality parameters in aquaculture. As seen in Figure 72, water temperature variation is lower in the Faroe Islands than in Scotland or Norway. This provides a more stable environment, with a fluctuation of only 6°C during the year. The lowest temperatures, approximately 5.5°C, are usually reached in February, and the highest temperatures, approximately 11.5°C, are reached in the late summer months.

''Figure 72. Comparison of ocean water temperature (°C) in Norway, Scotland and the Faroe Islands'' [[File:D31 fig 72.png|center|Figure 72]]

==== UK ====

In the production of Atlantic salmon has steadily increased since 1994 reaching a peak of nearly 170,000 tonnes in 2003 which had declined to 130,000 tonnes in the next five years, due to problems with overproduction and profitability, but has grown steadily again to nearly 180,000 tonnes in 2014, Figure 73. The value of the production reached its highest in 2013 at €800 million.

''Figure 73. Volume and value of Scottish salmon aquaculture output. . Source: Scottish Fish Farms Annual production Surveys 1981-2015'' [[File:D31 fig 73.png|center|Figure 73]]

In the UK, only 7 companies operate currently, four of which are foreign owned subsidiaries of large MNEs, Figure 74. Only two independent locally owned companies have survived to date: Wester Ross Fisheries and Loch Duart, which are also the two smallest companies in the sector in terms of turnover, Figure 75, holding 0.8% and 3.1% of the Scottish turnover respectively, Table 18.

''Figure 74. Number of salmon farming companies in Scotland. Source: Scottish Fish Farms Annual production Surveys 1981-2015'' [[File:D31 fig 74.png|center|Figure 74]]

''Figure 75. Turnover of salmon producing companies in Scotland for 2014. Source: FAME'' [[File:D31 fig 75.png|center|Figure 75]]

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=== Faroe Islands ===

In the Faroes, over the last 8 years, the average annual harvest growth rate of Atlantic salmon has been 26%, reaching a record high of about 70,000 tonnes gutted weight in 2014, Figure 76.

''Figure 76. Production of salmon in the Faroes, gutted weight and deployment of smolts'' [[File:D31 fig 76.png|center|Figure 76]]

Bakkafrost ́s share of the salmon production in the Faroe Islands is 62% and the company is one of the most vertically integrated salmon farming groups in the industry. Controlling the value chain from raw material, intake for fish oil, fishmeal and fish feed to value added processing, is essential for Bakkafrost’s position as high quality salmon producer. The Group’s sheer size and numerous crossing points with several parts of society, makes Bakkafrost an important player in the Faroese industry.

The Faroese aquaculture industry produces the largest Atlantic salmon in the world. The average weight of Faroese salmon in 2014 was 5.3 kg, Figure 77. The price difference between the different sizes of salmon has been historically big during the last years, where especially the 6+ kg salmon sizes have received a considerable price premium. This is due to a lack of supply of larger size salmon, as it requires good environmental conditions to produce large salmon. The longer the salmon is at sea, the more it is exposed to different complications. Bakkafrost aims at producing salmon with an average weight of around 5.2 kg, which is possible due to the Group’s favourable environmental situation.

''Figure 77. Average harvest weight kg WFE. Source: FarmControl'' [[File:D31 fig 77.png|center|Figure 77]]

According to an analysis by Kontali in comparison with Norwegian farmers, the average cost of production was 6-7% lower for Faroese farmers – a result of better biological performance, favourable environmental conditions, but also due to higher cost level in Norway in general. The strong biological performance has provided the possibility of harvesting larger fish. The Faroese salmon industry has experienced two “boom and bust cycles” in the period from 1990 to 2014. The first “bust” was in the period from 1993-1998, followed by a “boom” period from 1999- 2003, and then a new “bust” period swiped through the industry in the period from 2004-2008. The consequences can been seen in number of companies active in the salmon industry: In the early 1990’s more than 70 companies had fish farming or hatchery licenses. In 2005 this number was down to 15, and in 2015 the number was 4, Table 19.

Since in the Faroe Islands, one company – Bakkafrost - produces more than 60% of all Atlantic salmon in the country, the analysis below will focus on this company. Bakkafrost controls the entire value chain from own production of fishmeal, fish oil and fish feed to sales and marketing of finished VAP products, Figure 78. Control of the entire value chain is considered important to ensure availability, traceability and to be able to control the product flow on a daily basis.

''Figure 78. Vertical integration in the Faroese salmon value chain by company. Source: Syntesa'' [[File:D31 fig 78.png|center|Figure 78]]

The stabilizing impact on the EBIT of whole fish, gutted weight and VAPs is very clear in the period with EBIT of VAP increasing when market prices on whole fish is reduced. The strategy of diversifying Bakkafrost’s product mix has thus clear benefits for the Bakkafrost Group, Figure 79. It increases the revenue stability as salmon portions (VAPs) are sold on 3-18 month contract prices and whole fresh salmon on spot prices.

''Figure 79. EBIT at different links in Bakkafrost’s value chain. Source: Syntesa'' [[File:D31 fig 79.png|center|Figure 79]]

An important factor in minimizing the risks of diseases is the geographical location of the individual fish farming entity. As a consequence of merger and acquisition during the last 10 years synergy effects of operations and licenses have been obtained in the same geographical area, Figure 80.

Figure 80. Map of licenses operated in the Faroes in 2005 and 2015 with regard to shareholder ownership. Source: Syntesa [[File:D31 fig 80.png|center|Figure 80]]

According to (Asche and Bjørndal, 2011b) the availability of many fjords, stable water temperature (4-15°C) and good infrastructure have been instrumental in allowing Norway to become a world leader in salmon production. The growth in output through the 90s in Norway was due mainly to increases in productivity through improved FCRs and disease prevention, as no new licences have been issued between 1985 and 2002. Also a movement from sheltered to more exposed locations has accompanied those changes. This has led to a continuous decrease in the average production costs per kg.

In Norway the harvest quantity in 2015 was approximately 1,234,000 tonnes WFE of Atlantic salmon, Figure 81, an increase of 35,300 tonnes on 2014. The temperatures conditions during 2015 gave good growing conditions, but the biological potential for increased harvest was hampered due to challenges related to the biological situation, including sea lice, and harvest volumes ended up by 3%. The average harvest weight was down in 2015, ended at 4.96 kg, down by 3% compared to year before . The Norwegian production of "Large Norwegian companies", contributed to approximately 36% of the global harvest quantity of ocean-farmed salmon and trout in 2015 (Norwegian production only).

''Figure 81. Harvest quantity and value of Atlantic salmon Norway (1990-2015). Source: FAOSTAT'' [[File:D31 fig 81.png|center|Figure 81]]

The consolidation in the Norwegian farming industry has been very fast. Since 1994 the number of groups is reduced by nearly 75%, from approximately 362 in 1994 to approximately 95 today. The consolidation trend can be illustrated in Figure 82 which shows development in number of farming groups/companies in different categories/allocation of licenses. Twenty years ago there were five companies/groups running 10 or more licenses, controlling approximately 75 licenses all together. Today, there are approximately 20 companies in the same category, controlling nearly 790 licenses in total.

''Figure 82. Structural development of the Norwegian salmon industry. Source: Kontali'' [[File:D31 fig 82.png|center|Figure 82]]

 

Of the tree producer countries only the UK recorded significant import of salmon. The total volume of salmon import into the UK has been growing after a dip in 2003-2004 (when domestic production reached a peak) reaching a total of 113,000 tonnes LWE in 2014 valued at €550 million. However, international trade statistics do not distinguish between wild and farmed salmon. Thus import statistics include pacific salmon of the species Oncorhynchus.

More than 60% of the import in both volume and value came from outwith the EU and head-on gutted fresh fish accounted for more than 50% of the volume and value of imports in 2014, Figure 83.

''Figure 83. Volume of UK salmon imports. Source: EUROSTAT.'' [[File:D31 fig 83.png|center|Figure 83]]

Frozen fillets of salmon and prepared/preserved were there other main import product categories. Imports from within the EU were dominated by head-on gutted fresh fish which accounted for 50% of the volume and value of imports in 2014. The main import countries (not necessarily the countries of origin) have been Faroe Islands, Sweden and the USA, together comprising more than 70% of the volume and value of imports. Since Sweden does not produce salmon to any significant extent, this likely represents Norwegian salmon re- exported from Sweden.

=== Processing ===

==== UK ====

Significant level of processing was only observed in the UK, where also a large domestic market exists and, being member of the EU, no tariffs for exports of value-added products to other member states exist, unlike for Norway and the Faroes.

In 2014 there were 62 were dedicated salmon processing units, which were owned by 55 companies, most of which (52 companies) operating a single site each in the UK, Figure 84. The total number of jobs provided by the salmon processing industry were 4,648 FTEs. In 2014 77% of salmon processing employment was concentrated in 15 units with more than 100 FTEs each (24% of units), while the 39% of units with 1-10 FTEs each provided 2% of employment.

''Figure 84. Distribution of salmon processing units and jobs by size of processing unit as measured by FTE jobs provided. Source: Yordanova et al. (2014)'' [[File:D31 fig 84.png|center|Figure 84]]

==== Norway ====

In Norway there were approximately 70-80 processing and packaging plants specialising in salmon in 2014, adding around NOK 5,600 million to the total value of the salmon industry.

==== Faroes ====

=== Export ===

==== UK ====

The export of salmon from the UK is significant and has been growing steadily since 2008, reaching 150,000 tonnes (LWE) and value of €757 million in 2014. 56% of the export volume (LWE) and 58% of the value were due to exports destined to countries outside the EU. The growth in exports has come entirely from exports to countries outside the EU, Figure 85.

''Figure 85. Volume of UK salmon exports. Source: EUROSTAT.'' [[File:D31 fig 85.png|center|Figure 85]]

The main export product has been fresh gutted fish accounting for more than 90% and about 65% of the export value to non-EU and EU countries respectively. Value added products, including fresh and smoked fillets, occupy a larger share of the exports to EU countries than non-EU countries. The US, France and China were the main markets for British salmon exports, together accounting for more than 60% of the total volume and value of exports. The US and Chinese markets have been the primary drivers for the expansion of the UK salmon exports, while the French market, although significant, has remained stable of the period 2000-2014.

==== Faroe Islands ====

Virtually all of the salmon produced in the Faroes is exported. There are two main export products: whole fish (iced or frozen) and salmon fillet portions, also referred to as Value Added Products (VAP). Figure 86 illustrate clearly the increased importance of VAP or “Salmon, portion, frozen”. Similarly, “Salmon proteins etc.” has grown and in 2014 represented approximately 10% of the export volume, but only 3% of the export value.

''Figure 86. Exports of salmon products from the Faroe Islands, tonnes WFE. Source: Syntesa.'' [[File:D31_fig_86.png|center|Figure 846]

Bakkafrost is one of the leading processors of frozen salmon portions in the Faroes. It produces approximately 45% of its total gutted weight into portions, which are sold by leading European and US retailers. Another market segment important for the VAP products is industrial customers buying whole fillets for further processing and by-products. The most important markets are the European, US, Chinese and Russian markets, in which Bakkafrost mainly sells VAP products and whole fish, Figure 87. As a rule, VAP products are sold on long-term contracts and the whole fish is sold on the spot market. The current distribution network is based on transportation by ship to Europe and Russia and by plane to the US and China from the UK. The Group is able to distribute both fresh and frozen fish to the market. With the existing distribution network, Faroese salmon exporters are able to ship products to the UK within 20 hours by ship. From the UK, the products are distributed by plane to major airports in the US and China within 24 hours, with a total cost of DKK 8–14 per kg from factory to customer. Products planned for the European and Russian markets are transported by ship to Denmark or the UK within 2 days for further distribution on trucks.

''Figure 87. Export of Faroese salmon by country, value. Source: Syntesa.'' [[File:D31 fig 87.png|center|Figure 87]]

==== Norway ====

Similarly, in Norway, only a small proportion of the total harvest is consumed domestically, (less than 3%), with the rest being destined to export markets, Figure 88. The EU market is still the most important market for Norwegian salmon, and during 2014 its importance increased as Russia fell out. Approximately 74% of the total export from Norway was exported to EU in 2015, an increase from 70% the year before. Exports to USA, Japan and other markets similarly increased in 2015 compared to 2014.

''Figure 88. Norwegian exports of Atlantic salmon by export market: quantity. Source: Kontali'' [[File:D31 fig 88.png|center|Figure 88]]

The main export products are whole fresh salmon (representing 80% of total export) and fresh fillets (10%), Figure 89.

''Figure 89. Norwegian exports of Atlantic salmon by type of product: quantity. Source: Kontali'' [[File:D31 fig 89.png|center|Figure 89]]

While the volume of Norwegian exports has been relatively stable in the last four years, the total value of salmon exports has shown a stable increase, Figure 90. The value is linked to price and it can be seen on Figure 91 that prices have grown since a low point in 2012.

''Figure 90. Norwegian exports of Atlantic salmon (blue) and large trout (red): value. Source: Kontali'' [[File:D31 fig 90.png|center|Figure 90]]

''Figure 91. Weighted average price of Norwegian Atlantic gutted salmon, superior quality, FCA Oslo. Source: Kontali'' [[File:D31 fig 91.png|center|Figure 91]]

As can be seen on Figure 92, prices of Norwegian and Scottish salmon follow the same trend but Scottish salmon price was slightly higher than Norwegian for most of the year. This can be attributed to the presence of ‘Label Rouge’ certified salmon as well as a premium based on origin.