Cold water prawns – status 2015 and expectations for 2016
As previously reported in Seafood Insight, these have been turbulent years for cold water prawns with reduced quotas, dwindling availability and as a result, steady price increases. But what is the current market situation now, as the year comes to its end and what is the outlook for 2016?
Pending atmosphere in the market
Cold water prawn prices are higher than last Christmas sales and have continued to rise throughout 2015, due to limited availability and high demand. However, as the Canadian fishing season came to an end in the early fall, the price increase has stagnated and the curve is flattening, which could be an indication that the price has found its equilibrium between supply and demand. At the same time, demand has reached a high level and seems to have settled at the current level. Due to the high prices some retailers and industrial processors are starting to find alternatives to the cold water prawn in their products, e.g. using cheaper warm water prawns in sandwiches.
Signs that Christmas sales will be strong
In addition to substitution, some players in the market are seeking to reduce their stocks in expectation that the availability situation, and thereby prices, will change pending the 2016 quotas for the Greenlandic and Canadian fishery. Category Manager for prawns at Royal Greenland, Henrik Thune Cordsen, states: "The upcoming Christmas sales are looking promising. We expect a relative decline in volume Year-on-Year due to the relatively high prices. However, prawns are an essential part of many Christmas menus and dinner tables, especially in the UK and Scandinavia, and we believe that consumers will still prioritise prawns, even if they are more expensive than they used to be. At the same time, we are experiencing our customers stocking up for Christmas." He elaborates:"We do not believe that CWP have priced themselves out of the market, rather the demand has now found a plateau and the price has settled at the level that corresponds to the quality of the product. Cold water prawns are not, and should not be, a commodity, but belong in the category of goods that you mostly purchase for special occasions. In that sense, supply and demand has now driven customer- and consumer behavior to quite rapidly adapt to this new market situation."
Expectations for 2016
Recently the Greenlandic Institute for Natural Resources (the independent organisation of researchers and biologists who advise the government of Greenland) have published their 2016 advice for the Greenlandic prawn fishery. Their research shows that the quota reductions of recent years have borne fruit and the prawn biomass in West Greenland is increasing. In addition there seems to be a relatively large volume of new recruits (small prawns) on their way into the fishery. Following this finding, they have recommended that the Government of Greenland increases the quota for 2016.
This is exactly what happened when the Government of Greenland convened in mid-November to determine the Greenlandic quota for 2016. The Government set the quota for Western Greenland at 85,000 T, up from 73,000 T in 2015, but 5,000 T below the maximum recommendation from the Institute of Natural Resources.
The expectation for the Canadian quota for 2016 is that it will be set below the level of 2015. However, pending the biological advice for Canada, this has yet to be established.
Keeping the fishery sustainable
The increase in the Greenlandic quota leads many to believe that prices will drop again as availability is likely to increase slightly. However, Category Manager Henrik Cordsen appeals for calmness: "The increase in quota in Western Greenland is relatively small and we don't know if the current stock will keep increasing or if it is just a temporary spike. For that reason, the availability situation is expected to remain similar to 2015 next year and the same goes for prices. Above all, we want the fishery to remain sustainable."
In their report, the biologists called for caution: "The Institute of Natural Resources is not able to explain fully, how much of the increase in biomass is determined by unknown environmental and eco systemic factors. Prawns are a part of a complex eco system, in which cod [which prey on prawns] plays just one of the parts, but it is also affected by a number of unknown biological, chemical and physical factors, e.g. changes in ocean temperature."
This was also the conclusion at the International Cold Water Prawn Forum in Copenhagen, where Carsten Hvingel, scientist at Norway's Institute of Marine Research, warned that upticks in landings in the Barents Sea and Greenland could upset a delicate balance in the ecosystems. These are already under pressure from changing water temperatures, making the environment more beneficial for cod than for prawns. In summary, in the long run and in spite of the current spike, catches in the North Atlantic are still expected to decline.