April 19, 2010 / 9:04 PM / 8 years ago

UPDATE 2-Ash cloud disrupts Norwegian, Icelandic fish exports

* Flight restrictions hit salmon harvest in Norway

* Harvest volume cuts to prevent oversupply to Europe

* Norwegian fish industry lost $5 mln last week-analyst

* Iceland’s fresh fish exports put on ice

* Shares in Norwegian fish farmers slump (Adds Whole Foods statement, U.S. fishmonger comments)

By Wojciech Moskwa and Mia Shanley

OSLO/STOCKHOLM, April 19 (Reuters) - The world’s largest fish farmer, Norway’s Marine Harvest (MHG.OL), reduced its salmon harvest and Iceland put fresh fish on ice as flight restrictions due to an ash cloud from an Icelandic volcano hampered exports.

Marine Harvest said it would cut back from Monday the amount of fish it was harvesting to avoid oversupplying Europe while exports to Asia and North America were hindered by flight bans across Europe because of the extent of the cloud and the danger it presented to air traffic.

Norwegian fish farmers usually send about 10 to 15 percent of their volume by air, feeding the growing sushi industry, with the bulk going by refrigerated road and rail shipments.

Spokesman Jorgen Christiansen said the volume reduction was something Marine Harvest would have had to do regardless of the ash cloud, as high demand from European customers had led to fish farmers harvesting at a lower weight than optimal.

Last week, the company harvested salmon as light as 3.8 kg (8.6 pounds) against an optimal weight of 4.5 kg.

“Due to low seawater temperatures off Norway during the first quarter (which curbed fish growth), and high demand in Europe, we are currently selling fish that are below optimal weight,” he said. “This is the best timing to reduce volumes.”

Marine Harvest said it had flown fish out of central Europe as well as Scandinavian airports over the past few days to deliver to customers in the United States and Asia.

“Even if this situation (with flight bans) drags on, demand is still very strong and farmers will have to match the demand to their supply,” Christiansen said.

Marine Harvest has roughly a fourth of Norway’s fish farm industry, followed by Cermaq CEQ.OL, Leroy Seafood (LSG.OL) and Austevoll (AUSS.OL).

With the ash cloud impeding air traffic between Reykjavik and Europe, Iceland has been forced to put 13 percent of its foreign-bound fresh fish on ice, the country’s trade council said on Monday.

No-fly zones across Europe have kept Iceland’s fresh cod, halibut, plaice and haddock from reaching markets in Belgium, the Netherlands, Germany and France.

“This is a nuisance because we’ve been building up these markets for fresh fish,” Jon Asbergsson, Icelandic trade council general manager, told Reuters. “It’s now feeding into the frozen fish industry. It’s being diverted into frozen fish for a little less value.”

DEAL TO RESTART FLIGHTS

Most of Iceland’s fish exports, worth an annual $2 billion or about 10 percent of the country’s gross domestic product, are sent abroad on ships and have been unaffected, Asbergsson said.

Flight bans are taking an increasing toll on the industry, but on Monday, the European Union agreed to gradually lift flight restrictions imposed because of the ash cloud.

The agreement is due to go into effect from 0600 GMT on Tuesday. [ID:nLDE63I007]

Curbs last week may have cost the Norwegian salmon industry some 30 million crowns (US$5.15 million), said Klaus Hatlebrekke, an analyst at DnB NOR Markets. European salmon prices declined to 38 crowns per kg from 42 crowns.

“A week or two is not so serious but if disruptions last longer it can have major consequences for the entire sector,” Hatlebrekke said. “At some point in the summer the fish in the sea must be harvested and the inventories reduced.”

MORE EXPENSIVE SALMON?

The United States has become an increasingly important export market for Norwegian producers, taking market share from Chilean farms hit by fish disease, analysts said.

Some U.S. fishmongers and retailers are bracing for shortages of fresh salmon if shipments from Norway, Iceland and Scotland remain grounded. [ID:nLDE63F11N]

A spokeswoman for U.S. grocer Whole Foods Market WFMI.O said the company’s East Coast stores get salmon from a farm in Scotland and that the supply could be limited this week.

Restaurant goers may also see the effects on menus.

“Right now salmon is somewhat off the market. People are relying on North America for farmed salmon,” said Nick Branchina, spokesman for Browne Trading Company, which supplies fresh fish and other seafood to many of New York City’s top restaurants.

If supplies remain constrained, he said, international salmon prices could rise.

Shares in Marine Harvest, Cermaq and Austevoll fell between 0.68 and 3.14 percent on Monday, when Oslo’s benchmark index .OSEBX logged a decline of 1.28 percent.

For related stories, see [ID:nLDE63F189] ($1=5.828 Norwegian Crown) (Additional reporting by Joachim Dagenborg in Oslo and Lisa Baertlein in Los Angeles; Editing by Michael Shields, Toni Reinhold)

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