Prawn market oversupplied

POs and processors in prawn supply and demand talks

Efforts to find ‘acceptable outcome for all concerned’

UK POs say that a reduction in effort and output is needed in the prawn fishery to balance supply and demand in the oversupplied Nephrops sector, reports Tim Oliver.

Nine mainly Scottish and Northern Irish POs have issued a statement saying that the Covid-19 pandemic has made an already difficult market situation worse, and they are in discussions with prawn processors to try to assess demand and find solutions to the oversupply problem that are acceptable to both catchers and processors.

Kevin McDonell, chief executive of the West of Scotland FPO and chairman of the Association of Scottish FPOs, said that the POs and processors were aware of the problems in the prawn sector and were trying to do something about them.

He said that a few prawn boats had returned to sea – there were some local pockets of activity, but nothing of any real significance.

“We’ve been in exploratory discussions with processors as to how we can find a way out of this,” he told Fishing News.

“It was always going to be a difficult year in terms of market supplies with the level of fishing last year, and the coronavirus has multiplied that by a couple of hundred times.”

He said it would be difficult to manage an effort limitation scheme because the sector was so diverse, from big twin-riggers working out of Fraserburgh down to small boats working on the west coast.

“We’re exploring all the options to see what the best way is we can get through this situation,” he said. “Nobody is under any illusion it’s going to be any time soon. It’s going to be a long road out of this for us, I think.”

The aim would be to get through the crisis with as much of the fleet intact as possible, but there was then the question of what ‘normal’ would mean when things did eventually stabilise, in terms of how the industry would be operating, price structures and more. “It’s just a whole new world we’re entering,” he said.

Jimmy Buchan, chairman of the Scottish Seafood Association, which represents the processors, said that the industry was facing ‘very, very challenging times’ – but one good thing coming out of the crisis was that competitors were now seeing the need to co-operate and work together.

He said: “There never was a truer word than ‘we’re all in this together’, therefore there’s no point in one trying to undermine the other – that will only be a race to the bottom.

“Common sense is prevailing, and while they are direct competitors to one another, it’s good to see the industry coming together in its hour of crisis.”

He said that a second small ‘crumb of comfort’ was that Europe, which was three weeks ahead of the UK, was slowly returning to ‘some sort of normal lifestyle’, such as eating out in restaurants, which was good for the seafood market. But social distancing was still in force and numbers of tables were restricted, and this year was going to be ‘very, very difficult’ for the industry.

Prawns were the most valuable species landed in Scotland in 2019, when the Scottish fleet landed 23,370t of Nephrops worth approximately £73.5m, just ahead of mackerel at £73m.

Joint statement from FPOs

“The significant decrease in market demand for Nephrops arising due to the Covid-19 pandemic has exacerbated an already precarious situation of oversupply within the UK Nephrops sector.

“Higher than normal landings volumes of whole prawns and prawn tails due to good fishing throughout 2019 was already starting to negatively impact market price during the first quarter of 2020, before the effects of the lockdowns in domestic and export markets fully took hold.

“Throughout the month of April and into May, most prawn vessels have been tied up, and most factories have remained closed. However, during that time some vessel operators continued fishing for Nephrops, with some supplying buyers at prices that many within the sector have viewed as undermining the market’s pre-existing price structures.

“One of the roles of UK fish producer organisations (FPOs) is to help facilitate a level of raw material supply that matches with market requirements, to support price integrity throughout the supply chain. UK POs share the desire of fishermen and processors to return to some form of normality as soon as practically possible.

“Naturally, the fleet wants to be back at sea, fishing for a fair price, while the onshore sector wants to restart production and see an upswing in demand as soon as possible.

“And whilst the resumption of activity will at least partly be determined by factors outwith industry control, such as lockdown rules in target markets, it is necessary to consider how a managed, gradual resumption of activity can best be achieved in practice, to avoid filling up cold stores which are already well stocked and putting excess downward pressure on quayside prices, resulting in fishing and processing becoming unviable.

“Affected UK POs are therefore united in their belief that a combination of effort and output restrictions will be necessary to restrict supplies to an already oversupplied market due to the ongoing low level of demand.

“The reality is that going forward, landings need to balance with the new level of demand to prevent excess supply ending up contributing towards the establishment of a cheaper and, for some, unviable market.

“UK POs are currently in dialogue with the Nephrops processing sector to establish both what the current market demand requires and what is viable for vessels, with a view to finding a solution that leads to an acceptable outcome for all concerned.”

The FPOs that have signed the statement are the Anglo North Irish, Anglo Scottish, Fife, North East of Scotland, Northern, Northern Irish, Orkney, Scottish Fishermen’s Organisation and West of Scotland.