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Norway salmon farmers may beat sanctions by sending Chilean fish to Russia

Mon 11th August, 2014 5:09pm
By Camilla Knudsen 
    OSLO, Aug 11 (Reuters) - Norway's leading salmon farmers 
could escape the worst of Moscow's sanctions on Western 
countries by redirecting some of their produce from farms in 
Chile to Russia, a top producer and analysts said on Monday. 
    Norway's fish-farming sector was thrown in turmoil last week 
when Russia, which consumes nearly 7 percent of the world's 
farmed salmon, banned all Norwegian seafood in retaliation for 
Western sanctions on Moscow over its role in the Ukraine crisis. 
    The ban dragged Norwegian salmon prices down by around 10 
percent, forcing farmers in the world's biggest producer to find 
new markets for the fish, which were in some cases already 
packaged and sent off to Russia when the ban came into effect. 
    "We expect that Chile will be able to cover some of the 
demand coming from Russia, and any gaps in the market would then 
be covered with fish from Norway," said Astrid Vik Aam, a 
spokeswoman for fish farmer Cermaq  CEQ.OL , which produces half 
of its fish in Chile.  
    "There will be a bit of rearranging in the market." 
    She added that Cermaq would then supply regions that 
normally get salmon from Chile, like the United States and Asia, 
with produce from Norway. 
    Cermaq and Marine Harvest  MHG.OL  - the world's biggest 
fish farmer - are also among the biggest producers in Chile and 
analysts said the cost of redirecting fish is not overwhelming 
as Chile already supplies some European markets. 
    "A lot of Chilean salmon is already destined for the EU and 
competes directly with Norwegian produce so it's not terribly 
demanding to send a ship, let's say to Saint Petersburg instead 
of Amsterdam," said Georg Liasjoe, an analyst at ABG Sundal 
    Cermaq shares rose 9.5 percent on Monday while Marine 
Harvest gained 4.3 percent, both rebounding from big falls the 
previous week. Still, both are trading below levels seen before 
Russia's sanctions were introduced. 
    Another effect of the sanctions could be that Russia will 
buy more frozen salmon, due to longer shipping times and the 
market uncertainty, resulting in a broader shift in the market 
from fresh fish to frozen produce, said analysts and producers. 
    Also, the tiny Faroe Islands - an autonomous country within 
Denmark but outside the European Union in the North Atlantic - 
could come out a winner as Moscow's ban does not apply to its 
fishing sector. 
    Its biggest producer, Oslo-listed Bakkafrost  BAKKA.OL , is 
already counting on increased business. 
    "If it is true that the Faroe Islands are not included in 
the ban, we will clearly increase salmon exports by a lot to 
Russia," Chief Executive Regin Jacobsen said. 
    "There will be others, perhaps Chile, that will fill the 
gap, so the total market balance will not that greatly 
affected," Jacobsen said. 
    Norway produces over half of the world's farmed salmon, well 
ahead of Chile. High salmon prices have left its producers with 
ample cash, using in part to expand operations abroad.  
    The Nordic country generates nearly $1 billion a month from 
seafood exports. 
 (Writing by Balazs Koranyi; Editing by Pravin Char) 
 ((Balazs.Koranyi@thomsonreuters.com; +47 2331 6596; Reuters 
Messaging: balazs.koranyi.thomsonreuters.com@reuters.net)) 
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