Norwegian seafood exports to Ukraine, Russia and the Eurasian Economic Union

Share of Norwegian seafood exports

• Ukraine accounts for 1.8% of the total export value of Norwegian seafood. Norway exported seafood worth NOK 2.2 billion to Ukraine in 2021. Salmon, trout, herring and mackerel are the main exports to Ukraine.
  
  
• Russia accounts for 0.2% of the total export value of Norwegian seafood. Norway exported seafood worth NOK 248 million to Russia in 2021. Exports to Russia consist mainly of live salmonids (smolt for farming), feed and ingredients for feed.
  
  
• The Eurasian Economic Union (EU), including Russia, accounts for a total of 1.7% of the total export value of Norwegian seafood. Norway exported seafood worth NOK 2 billion in 2021. The Eurasian Economic Union consists of Russia, Belarus, Kazakhstan, Kyrgyzstan and Armenia. Salmon, trout, herring and mackerel are the main exports to the Eurasian Economic Union.
  
  
• Belarus accounts for 0.9% of the total export value of Norwegian seafood. Norway exported seafood worth NOK 1.14 billion to Belarus in 2021. Trout, herring and salmon make up the main exports to Belarus.
  
  
• Air freight of seafood to Asia accounts for 12 per cent of Norwegian seafood exports. Norway exported seafood by air to Asia worth NOK 14.5 billion in 2021. Air transport is used mainly for fresh salmon and trout and live king crab.
  
  

Sanctions and consequences for seafood trade

(Updated 24.3.2022)

"Sanctions against Russia are increasing in strength and scope. The consequences this has for trade in Norwegian seafood are still unclear. The various measures may affect individual sectors within seafood trade in different ways. Some will face tougher competition, increased prices and other species will see demand rise. There is also uncertainty as to whether an import ban will only include direct imports or whether, for example, processing in third countries such as China will also be stopped", says Tom-Jørgen Gangsø, Director of market insight and market access with the Norwegian Seafood Council.

Russia's invasion of Ukraine impacts seafood trading in several ways

1. The war itself means that exports to Ukraine are virtually impossible.

2. Sanctions have been levied against Russia which have consequences for trade in Russian seafood. This in turn has consequences for, among other things, the competitive situation for Norwegian seafood globally.

The most important sanctions against Russia that have been implemented so far:

• Prohibition of imports of Russian seafood and suspension of Russia's MFN status which gives higher tariffs to some countries
  
  
• Prohibition of calls for Russian vessels in countries such as the United Kingdom and Canada
  
  
• Introduced restrictions on the use of the SWIFT payment solution for a variety of financial institutions
  
  
• Other measures and consequences for the value chain, e.g., humanitarian considerations and the principled assessments of individual companies. The list of companies that are choosing to stop trading with Russia is growing in scope

3. Russia imposes sanctions on the West that have both direct and indirect consequences for trade in Norwegian seafood. Russia has, among other things, introduced a no-fly zone over Russian territory.

4. High energy prices have had consequences for the entire value chain, from catch to table. This includes fuel prices related to catch and production, but also transport of seafood. Prices are rising for several input factors for catching and producing seafood. Both Russia and Ukraine, for example, are major producers of input factors for feed production. In sum, all this contributes to increased food prices, including increased seafood prices.

Overview of some of the most important consequences for Norwegian seafood

Flight bans over Russian territory

The flight ban over Russian territory mainly affects fresh salmon and trout and live king crab transported by plane. For the time being, the Asian exporters can fly normally, while western exporters have to route their seafood exports via other destinations. This results in longer flights and more expensive air freight.

More than 100,000 tonnes of salmon must find new buyers

For salmon, it is expected that increased costs and less capacity for shipping to Asia will be able to turn the flow of goods from Norway towards the EU and North America.

For Chile and the Faroe Islands, a shift away from the Russian market could increase exports to the United States.

Export prices remain at a historically high level. A negative volume trend due to lower biomass helps to explain the strong salmon price despite the loss of the market and increased shipping costs.

Exports to Ukraine, Russia and Belarus totalled NOK 1.8 billion or 2 per cent of total exports of salmon in 2021.

The loss of Russia, Belarus and Ukraine will have the greatest effect on Faroese salmon exports. In 2021, 22,940 tonnes (23 per cent) of Faroese salmon exports went to Russia, Belarus and Ukraine.

It is estimated that a total of 120,000 tonnes of salmon will have to find other markets. Norway's share of this is 49,000 tonnes and will largely go to the EU.

Trout exporters are looking for alternative markets

Exports of trout from Norway to Ukraine and Belarus totalled NOK 1.16 billion or 23 per cent of total trout exports in 2021. In addition to the logistics and distribution challenges due to the no-fly zone over Russia, Norwegian trout exports are being challenged by being sold to fewer markets compared to salmon. The trout players are now working to find alternative markets, and it is expected that the USA and Asia will become more important.

Demand for Norwegian king crab is expected to increase

The United States is the largest consumer market for both snow crab and king crab. The fact that the United States has introduced a ban on imports of Russian seafood thus has major consequences. There is no one who can replace the Russian volume of red king crab, and it is expected that the demand for Norwegian king crab will increase significantly when stocks in the USA gradually decrease. Norway currently exports both frozen and live king crab to the United States.

• The United States, China, Japan and South Korea are the main markets for the consumption of king crab and snow crab. These four markets account for approx. 95 per cent of the global supply. Russia is the dominant supplier of king crab in all markets.
  
  
• Russia accounts for 30 per cent of the global supply of snow crab, while Norway has a share of 5 per cent. Red king crab is only caught by Russia and Norway currently, and the shares are 94 per cent and 6 per cent, respectively.
  
  
• Russia had significant growth in exports of both live king crab and snow crab to the Chinese market in 2021, despite coronary restrictions. Russia is likely to export and land significantly larger volumes in China in the coming months. However, what can prevent this is new austerity measures as a result of the corona situation in the country.

Increased competition for Norwegian cod

For the Norwegian whitefish species, such as cod, haddock and saithe, the loss of Ukraine, Belarus and Russia has very little effect as both imports, consumption and processing to these markets are minimal.

The biggest consequences will arrise if Russian fish are blocked from western markets. This will contribute to increased demand from other non-Russian suppliers of cod, including Norway. All cod products will increase sharply in price. This will lead to increased competition for Norwegian raw materials internationally and may pose profitability challenges for the Norwegian land industry (fillet, salt, clip fish, stockfish).

More than 99 per cent of Russian cod is exported frozen, either as whole fish or fillets. Very much of the whole fish is exported to China for further processing and re-exported from there to Europe and the USA as frozen fillets.

Some whole fish is also exported to Europe for further processing, for example as clip fish in Portugal, fillets in Poland, and salted fish in Spain. In Italy and Portugal, Russia's share of cod consumption is lowest, at 10 and 9 per cent, while it is highest in the United Kingdom, Germany and Sweden.

Continuing uncertainty over the situation with Russian Alaskan pollock seems to increase the demand for saithe.

Herring stored in Lithuania will need to find new markets

A portion of the Norwegian herring that is normally sold to Ukraine and Belarus via cold storage in Klaipeda in Lithuania will have to find new markets, preferably in the EU area.

The current situation will affect the market for round frozen herring. The change will probably not be very significant in the short term, since the halt to exports to Ukraine came at the very end of the herring season. Due to the early start of the season for NVG herring, much of the herring reached the market before the outbreak of war. If the restrictions on Belarus are tightened, the situation in the fillet / "flap" market will also be tightened.

Norwegian herring exports to Ukraine and Belarus, including cold stores in Klaipeda, Lithuania, account for a total of 10.8 per cent of total Norwegian herring exports (38,000 tonnes).

Mackerel exports are affected to a lesser extent

For Norway, mackerel exports will be less directly affected as Norway's primary markets are in Asia. Re-routing volumes from Ukraine and Russia will increase competition in individual markets, perhaps especially in Europe and Africa. Given that quotas are likely to fall, that Ukraine is a relatively small market, and that Russia is not a major player in the most important markets for Norwegian mackerel, the situation in Ukraine and the sanctions against Russia will not affect the flow of goods to a great extent. For the Faroe Islands, the loss of Russia as a market is dramatic, and there may be increased competition in individual markets as a result.

Norwegian mackerel exports to Ukraine and Belarus, including stocks in Lithuania, account for 6.7 per cent of total Norwegian mackerel exports (26,000 tonnes).

Cold water prawns must find new buyers

Ukraine is not a major consumer market for Norwegian prawn. 2.9 per cent, or 413 tonnes, of the total exports of prawn from Norway go to Ukraine. No prawn exports to the EU have been registered. Prawn from other supplying nations that originally went to the Russian and Ukrainian markets must now find other markets, such as China, Sweden, Norway or markets such as Morocco, Albania or Bulgaria, where the prawn are hand-peeled and re-exported to other consumer markets.

Commentary from Norwegian Seafood Council

24. March 2022

"Sanctions against Russia are increasing in strength and scope. The consequences this has for trade in Norwegian seafood are still unclear. The various measures may affect individual sectors within seafood trade in different ways. Some will face tougher competition, increased prices and other species will see demand rise.

There is also uncertainty as to whether an import ban will only include direct imports or whether, for example, processing in third countries such as China will also be stopped", says Tom-Jørgen Gangsø, Director of market insight and market access with the Norwegian Seafood Council.

1. March 2022

The situation in Ukraine continues to escalate. The Ukrainians are fighting for their country at the same time as the flow of refugees out of the country is growing rapidly.

So far, food in general, or fish and seafood in particular, are not directly affected by the EUs sanctions list.

“For seafood, there is a full stop of exports into Ukraine. Norwegian fish exporters report that they are trying to find other markets for the fish that were bound for Ukraine. This is also the situation for other nations such as Chile and the Faroe Islands, and it is expected that the competitive situation will intensify in other markets”, says Tom Jørgen Gangsø, Director of Market Insight and Market Access at the Norwegian Seafood Council.

“At the same time, the airspace is closed. This also affects air freight of seafood from Norway to Asia. For the time being, Asian exporters and importers actors will be able to fly as normal, while the western exporters will have to send the fish around Russia. This means a longer journey and higher air freight costs. Lower freight capacity than normal will also mean less flexibility”, says Gangsø.

• A large proportion of exports to Ukraine and Belarus go via the Baltics and partly Poland. From there, it is transported further by car and partly by rail into the market. Deliveries to Ukraine have come to a complete halt, and it appears that deliveries from the Baltics and Poland to Belarus and other EU countries will be halted under the prevailing conditions.
  
  
• The same applies to the transport of pelagic species by rail and ship traffic into the Black Sea.
  
  
• On February 24, Russian authorities ordered all Russian trucks back to Russia. Some of these trucks are usually used to transport fish to both Ukraine and other EU countries.
  
  
• On Wednesday, February 23, the Ukrainian central bank stopped all payments abroad.
  
  
• Finnair stopped all flights over Russia from 27 February to 6 March. The EU and several other countries have closed the airspace to Russian aircraft and Russia has responded by closing the airspace to 36 countries, including Norway.
  
  
• In Norway, some whitefish and shrimp are landed from Russian vessels. This largely goes to freezer terminals. Much of this goes to re-export, but some is also purchased for the Norwegian processing industry. Some frozen cod is bound for example to the clip fish industry and some shrimp for processing in Norway. 
  
  

24th February 2022

“The situation in Ukraine is both very serious and unclear. When it comes to the consequences for Norwegian seafood exports to the country, it is too early to say for sure. We are monitoring the situation and will keep Norwegian seafood exporters up to date as best we can”, says Tom Jørgen Gangsø, Director of Market Insight and Market Access at the Norwegian Seafood Council.

It is expected that exports to Ukraine will be challenging and that international sanctions and countersanctions will affect international trade, also for Norwegian seafood exports to the Eurasian Economic Union.

Export statistics

Export figures for Norwegian seafood to Russia, the Eurasian Economic Union and Ukraine for 2021.

The Eurasian Economic Union consists of Russia, Belarus, Kazakhstan, Kyrgyzstan and Armenia. Salmon, trout, herring and mackerel are the main exports to the Eurasian Economic Union.

Percentage measured by value of Norwegian seafood exports in total for 2021:

Quotas, flows of goods and consumption of Russian cod

Quotas
Russia has almost one third of the global quotas for Atlantic cod, in addition to about half of the global quotas for Pacific cod.

Russian cod accounts for about a third of the global volume of these two species combined, with an estimated catch of just over 500,000 tonnes of total round weight in 2021.

More than 99 per cent of Russian cod exports are frozen whole and frozen fillets.

Flows of goods
Most Russian exports of frozen whole cod are processed in China before being re-exported as fillets to the USA and Europe, but some other markets are also included: to Eastern Europe, where most of the volume is re-exported as fillets, and to clip fish production in Portugal.

Russia also has a significant export volume of frozen fillets, most of which goes to the EU, but some also is exported to the United States.

Consumption 
Consumption of Russian cod is significant in many markets. Most are sold as frozen fillets, except for Portugal where most are consumed as clip fish. In countries such as the United Kingdom, Sweden and Germany, around 30 per cent of cod consumption is Russian cod.

In France, Poland, Spain and the USA, around 20% of the total cod consumption is from Russian cod. Measured in volume, the United Kingdom is the largest market for consumption of Russian cod, with a consumption of over 70,000 tonnes of round weight per year.

The United States is the second largest market, with around 40,000 tonnes, while countries such as France and Spain consume around 30,000 tonnes of Russian cod a year.

When it comes to Russian landings of fish in Norwegian ports, in 2021 these amounted to 112,182 tonnes, measured in round weight, according to the Norwegian Directorate of Fisheries. Of these, most were cod, haddock and saithe.

Source for consumption statistics: Kontali goods flow analysis, based on 2018 figures