Saving Seafood

Chinese processing still dominant, but cracks starting to show

January 17, 2019 — A recurring theme at the 2019 Global Seafood Market Conference, taking place from 15 to 17 January in Coronado, California, U.S.A., has been China’s dominance in the skilled processing sector, and whether rising labor costs would push that processing elsewhere.

A burgeoning middle class in China has steadily driven up the labor costs for skilled processing, particularly in the large groundfish processing sector. The trade for groundfish has historically been dominated by Russian exports to China, and Chinese re-exports to the European Union after processing.

Yet despite the rising labor costs, Chinese importing for processing show no signs of slowing, according to statistics from Rabobank International.

“They’ve had huge wage increases already,” Gorjan Nikolik, a senior industry analyst for Rabobank International, said. “They should not be this competitive, and yet they are.”

Between 2012 and 2017, Russian exports of groundfish to China decreased by more than 50,000 tons. Even with the decrease, the trade between Russia and China was still by-far the largest in the world in terms of volume, and the amount of groundfish exported from China to the E.U. barely slowed.

Those numbers tell the story of Chinese processing still representing a huge portion of the market, given Chinese exports of groundfish to the E.U. are almost exclusively processed.

Read the full story at Seafood Source

Brexit may not have desired outcome for UK fishermen, but US could see upside

January 25, 2018 — The exit of the United Kingdom from the European Union – colloquially known as Brexit – doesn’t pose a major threat to American exporters, and it could provide some upside, according to Rabobank Global Seafood Industry Senior Industry Analyst Gorjan Nikolik.

Speaking at the 2018 Global Seafood Marketing Conference on Wednesday, 24 January, Nikolik laid out the three most probable scenarios facing Great Britain in its move away from the E.U.: a hard Brexit, a soft Brexit, or a soft-ish Brexit with a free trade agreement. Nikolik dismissed a fourth option, “Bremain,’ where the U.K. reverses course and decides not to leave the E.U., as doubtful and not likely to cause major change to existing trade.

A “hard” Brexit, in which the U.K. would break off from the E.U. without any negotiated special agreements, would be “the worst outcome for everyone,” Nikolik said. Trade barriers would be high, the price of imported goods would increase by an estimated 11 percent, the total labor force in the U.K. would decline by 1.3 million people by 2030, and the British pound would lose approximately 30 percent of its value, according to economic modeling cited by Nikolik.

On the other hand, a “soft” Brexit would sustain many of the U.K.’s ties to the E.U., potentially including its continued membership in the continent’s single market. Under this scenario, prices of imported goods would rise by an estimated three percent and the British economy would grow by a predicted 1.6 percent annually, as opposed to 1.3 percent under a hard Brexit and 2.1 percent under the “Bremain” scenario.

E.U. negotiators will push back hard against efforts for a truly soft Brexit, Nikolik said, as it gives too much away while clawing back little in return. Nikolik’s pick for the most probable outcome is a soft Brexit with a free trade agreement.  Such an agreement would result in an estimated 700,000 fewer laborers working in the U.K., and hike the cost of imported goods by around six percent, Nikolik said. It would also result in a 1.6 percent expected GDP growth rate, he added.

Read the full story at Seafood Source