World Cod Supply

The Pacific cod fishery is playing an increasingly important role in Alaska���s fishery portfolio. Thanks to growing prices, ex-vessel value of the P-cod fishery is expected to easily surpass $200 million in 2007, despite a modest reduction in harvest quota. The increasing price trend for Alaska cod is driven by global supply and demand dynamics.

While large-scale development of farmed cod has been the focus of a great deal of industry trade press coverage (including a June, 2006 article in the Seafood Market Bulletin) harvest of wild cod stocks remains the primary source of the world cod supply. Global cod stocks have been declining over the long term and in recent years Atlantic cod fishery managers have been aggressively reducing quotas to facilitate stock recovery.
According to FAO Fishstat data through 2005, total world harvest of wild Atlantic and Pacific cod declined from 1.8 million metric tons in 1997 to 1.2 million metric tons in 2005.

The decline in world supply has heightened demand for all cod, driving up Atlantic cod prices and increasing marketplace acceptance of Pacific cod products as substitute for Atlantic cod. For Alaska producers, the result is a growing price for a fairly stable volume of cod.

 

 

 

Supply Trend, Atlantic cod
Atlantic cod makes up the lion���s share of world capture fishery production of cod (10-year average 73 percent) but Atlantic cod harvest has declined sharply in the last decade, down 39 percent from 1.375 million metric tons in 1997 to 842,000 MT in 2005. FAO harvest data is only current through 2005, but 2006 and 2007 harvest quotas for the three major Atlantic cod producers show a continuing downward trend in market supply.
Norway, Russia and Iceland are by far the largest producers of Atlantic cod, accounting for 76 percent of the world Atlantic cod harvest in 2005. The Norwegian harvest quota was reduced in 2006 and in 2007 quotas were reduced for all three of the major producers, according to Fishery Ministries of Iceland and Norway. The net result for the three major producers is a 27 percent reduction, from a harvest of 642,000 MT in 2005 to a quota of 517,000 MT in 2007.

The 2007 quota reductions for Norway, Russia and Iceland bring the world Atlantic cod supply down to approximately 700,000 MT, a decline of nearly 50 percent in 11 years.

 

Supply Trend, Pacific cod
The Pacific cod fishery provides approximately one-quarter of the world cod supply, averaging 27 percent from 1996 to 2005. Pacific cod stocks appear to be generally more stable than Atlantic cod. Though harvest has declined in the last decade, the decline is modest, down 15 percent from 429,000 metric tons in 1997 to 362,000 MT in 2005. Harvest has fluctuated between 330,000 MT and 370,000 MT since 2000.

Alaska is the single largest producer of Pacific cod, accounting for two-thirds of the world supply between 1996 and 2005. Russia and Japan produced 19 percent and 12 percent respectively, with some additional volume from minor fisheries in Canada and Korea.

The Alaska P-cod quota has been steady at or near 250,000 MT for several years but the allowable catch recommendation for 2008 calls for a substantial reduction, to approximately 200,000 MT.
Allowable catch in the Bering Sea and Aleutian Islands has been declining steadily from its peak in 2003 and the 2008 quota reflects a continuation of that trend. This is offset to some degree by recent increases in allowable catch for the Gulf of Alaska and state-waters Pacific cod fisheries.

 

Implications for Alaska
In the short term, Alaska producers are likely to continue benefiting from the global decline in cod supply that has driven up cod prices, irrespective of Alaska harvest volume. Alaska produces less than 20 percent of the world cod supply, even with Atlantic cod harvests at their current low point. A significant change in harvest of Alaska cod (either up or down) will have a limited impact on the tight global supply and strong prices for cod.

In the longer term, there is strong potential for a major change in the current balance of supply and demand for cod. The goal of stock restoration efforts is to increase biomass and subsequent harvest of the species, so it is reasonable to expect that today���s quota cuts and other conservation efforts in Europe will have that desired effect. Success of those efforts sets up the potential for a confluence of supply growth as large-scale cod farming efforts achieve critical mass and move large volumes of product into the marketplace. Based on research conducted for our June, 2006 article on farmed cod, it is possible that aquaculture production of cod will reach 200,000 MT by 2010 (equal to the 2008 Alaska quota) and may reach 1 million MT as early as 2015, on par with the anticipated global harvest of wild cod in 2007.