Cermaq Chile’s managing Director Steven Rafferty has a stoic view during times of coronavirus.
Businesses of all shapes and sizes have faced some of the most challenging conditions of their lives during COVID-10. Though the salmon farming industry is beginning to emerge scuffed but rather robust.
Talking to SalmonBusiness from Cermaq’s Latin American base in Puerto Montt, Managing Director Steven Rafferty explained the Mitsibushi-owned salmon farmer’s current situation.
“Like Europe, we’ve been functioning fine, we harvested our fish according to schedule – we’ve not done anything like delaying or heavy freezing,” he said.
“I can’t comment on other companies, but I don’t believe that there’s an enormous stock that’s being built in Chile. I’ve read that huge amounts of frozen stock will be carried out into 2021 but I don’t see that. There’s also limited frozen storage space so it’s not likely huge, maybe a few thousand tonnes. We will see what happens in the few coming months,” he said.
US and Brazil
The Managing Director said that the HORECA segment in the US, which is basically closed (or had a very limited opening), has “of course, had a huge impact.”
“We’ve limited food service, which was around 40-50 per-cent of the market. It’s mainly going into retail. It’s pushed prices down even though consumption and demand, in our view, is good. Most of these types of healthy food are in higher demand but with the supply into a smaller market, the price is coming down. It’s the same with Brazil, which is a bit more open.”
When talking, the Scotsman keeps a calm head in the face of the current pandemic gripping markets around the world. It’s an attitude which can only be built from years of experience in salmon farming. “I don’t fear for the markets going ahead,” he said.
“Of course with the Chilean market, we are dealing with two markets which are a bit more volatile, which have different attitudes to COVID-19. Although prices are very low, it’s a very short term thing,” he said.
Fluent-Spanish speaking Rafferty explained that he started out in the early days when Marine Harvest was owned by Unilever. From a finance background, in 1996 he came to Chile for the first time as Marine Harvest Chile’s Finance Director. What’s the difference in Chile and Scotland, for example?
“There used to be a big difference. If you go to farms on seawaters sites or RAS hatcheries, you won’t see too much difference between the countries. The biggest is course the processing. It’s a much heavier processor of value-added cuts as opposed to whole fish industries.”
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“The issue with Chile is to keep product flexibility, of course, we can produce an enormous amount of fillets and value-added products. We don’t have to do that if there is a market for whole fish. The Russian, Chinese and Brazil markets all have a preference for whole fish. The US is all cut products more or less. If Cermaq has a fish entering its processing plant, we can decide to make six or seven different products depending on which is the most attractive markets or customer,” he said.
Operational
“We continued with our normal stocking plans and have not decreased,” he said. “I’ve read that smolt stock is coming down. With Cermaq, one of the big advantages is that we are owned by Mitsubishi. In times of crisis, that is a very big help. I don’t say we worry about cash but we have very long terms partners with a lot of funding. They said continue your plans as originally planned.”
How did you use your extensive background and experience in salmon farming to deal with the pandemic?
“I think anyone like me, that’s been in senior positions in the salmon industry for 20 years, all of us have dealt with a lot of crisis. One thing industry does is to make you stay calm,” said Rafferty.
True when the industry often has to deal with issues such as ISA, algae blooms, price shocks and oversupply.
“I don’t say I am better than anyone else because I am not, but we’ve all seen it and its easier to stay calm and say its a short term thing. The success of the salmon industry is not based on one or two years, but it will start growing again while developing new markets. Short term reactions will harm the long term.”
In terms of the prices, Rafferty said that tough times can give companies a breather to be more innovative, and even increase profitability until the market returns.
“It does give you a bit of a chance to revise internally along those lines and to tell people in the company: ‘Yes, we have a crisis but don’t worry about it, you can run a fantastic growth segment,'” he concluded.
