Steven Rafferty is holding down the fort in locked-down Chile. Despite historic lows, the experienced salmon farmer believes prices will recover.
SalmonBusiness has extensively reported on the Chilean industry situation, where salmon is currently being sold at prices as low as USD 3 per kilo. With production costs around USD 4.2 per kilo, it means that the sales are being hit with bruising losses.
At the helm of operations in the Latin American country, Cermaq Chile MD Steven Rafferty shared his insights on the industry.
“The prices have been low, my impression is that we are at the absolute bottom at the moment,” he said, adding that “demand is still extremely good”. For Cermaq Chile itself, in US major supermarkets and retailers, demand has increased around 15 per-cent compared to last year.
But the MD said but it’s impossible to compensate for the supply as the price has come down so much. Though he was optimistic about the road ahead.
“I believe that this will recover very quickly now. The volume from the Chilean industry, I believe next year, and it started in January, is much lower than that’s been reported by companies such as Kontali, etc. I think volumes will be extremely down next year. I expect a very positive reaction on the price very soon”.
He said that this was down to several things. “Certain companies are reducing volume. Smolt inputs were very low in the first half of 2020. They were down about 20 per-cent from January to June”.
“So those fish would have normally been harvested around about March to July 2021. There’s a big hole”. He added that although the smolt inputs recovered in recent months, there’s been a big smolt increase from July to September. “A lot of that fish will not hit the market until 2022,” he said.
“There’s some very big fish being harvested in Chile at the moment in terms of weight. And the reasons the volumes are very high during October-November is that the farmers are having to harvest those fish, and can’t delay them until next year as they will be too big. It’s having a big impact in terms of exports. The exports over the last four to five weeks have been very high to both the USA and Brazil”.
He said that fish, that have grown very well and would normally be harvested in 2021 as well, have had to be harvested and sold early.
“We’ve got a situation where a lot of fish are being harvested in 2020, that which should be next year, and we have low smolt input so we will have a double impact in 2021. And it’s my belief is that the volumes from Chile are going to be significantly lower,” he added.
Rafferty explained that Brazil’s markets have been so severely impacted that the industry has never seen prices so low.
“Last week, it reached its lowest point ever in terms of the price of all time. That’s due to the fact, though a temporary thing, all these big fish also have other markets like China and Russia,” he said.
In terms of how Cermaq is working around this, Rafferty said: “To Brazil right now, we have just stopped selling and are keeping the fish. We do not have this excess of very big fish, biological control is good and we’ve been harvesting as normal up until now. So we sold the volumes that we predicted pre-COVID so we have not had any delays and now we have got flexibility to adjust according to demand”.
Looking ahead, he concluded that: “Once the big fish are harvested over the next few weeks, that market will recover rapidly. There will be a shortage of supply in both the USA and Brazil, next year”.