Covid-19 impacts on supply and primary production

Review of the impacts of Covid-19 on supply and primary production of seafood, from January to June 2020.

Key points

  • Reduced demand and processor capacity had a direct impact on raw material supply and price.
  • UK landings and imports were considerably lower than in the same period last year.
  • Aquaculture businesses faced short-term difficulties with changing demand.
  • Concerns have been raised around the long-term impact on multi-year aquaculture production cycles.

Imports

The supply of imported seafood slowed. This was largely as a result of closures in other countries and limited transport capabilities. Import value and volume have generally been down each month compared to 2019. The only exception was an increase in frozen whitefish imports to meet retail demand in March.

Bar chart showing % change in value 2019 vs 2020 by month for demersal, pelagic and shellfish exports as per table below.
UK seafood import value 2019 vs 2020 by month
  Demersal Pelagic Shellfish
Jan -9% -26% -5%
Feb -20% -5% -11%
Mar -15% -4% -8%
Apr -28% 26% -6%
May -25% -22% -27%


Seafood sectors in other countries faced similar conditions to the UK. With their production, processing and distribution capacities reduced, the availability of raw material for UK markets was limited. Increased transport costs and limited logistics services have also reduced the movement of goods across borders. This happened despite seafood’s classification as an essential good.

Landings

Fishing businesses faced operational uncertainties and new social distancing requirements as well as sharp drops in demand and increasingly volatile markets. The supply of wild caught fish landed into the UK was much reduced.

 

Bar chart showing % change in value 2019 vs 2020 by month for demersal, pelagic and shellfish exports as per table below.
UK vessel landings first sale value 2019 vs 2020 by month
  Demersal Pelagic Shellfish
Jan -13% -11% -24%
Feb -20% 214% -45%
Mar -23% 12% -35%
Apr -39% -32% -58%
May -34% 3632% -54%
Jun -8% 19% -42%

Landings value and volume for demersal and shellfish species were down each month in 2020 compared to 2019. 

Shellfish was hit the hardest. Fishing activity stopped overnight in many parts of the UK due to the abrupt loss of markets.

Pelagic landings were largely insulated from adverse market shocks. Their fishing season had already finished before lockdown measures came into effect.

Demersal value -23% Volume -14%, Pelagic value +27% volume +15%, Shellfish value -43% volume -27%, Overall value-20%, volume -3%
UK landings 2020 compared to 2019

Despite the reduction in landings there was still a general oversupply. This drove raw material prices down to unsustainable levels. In response:

  • Efforts were made to reduce the volume of supply to levels more consistent with market demand. For example, industry organised vessel tie-up schemes.
  • There was local co-ordination between vessels – particularly demersal whitefish vessels – fish markets and merchants. This saw vessels staggering trips and landings.
  • Many vessel owners turned to direct sales at the quayside and home deliveries to keep their businesses operating.

Aquaculture

Some aquaculture businesses saw financial impacts from Covid-19 as early as January. Their cash flow was affected by Chinese and other Asian markets reducing and eventually closing.

Scottish farmed salmon continued to see strong demand, particularly in retail. However, farmed shellfish suffered a considerable drop in demand as foodservice outlets closed.

Aquaculture businesses also face unique and ongoing financial challenges as a result of fixed minimum crewing costs. Minimum crewing is required for basic stock management at farm sites. This put additional financial pressure on aquaculture businesses during lockdown.

Major concerns have been raised around the effects of lockdown on future supply. Aquaculture production cycles take several years to complete, and the pandemic has broken the cycle of reproduction and restocking.

Concerns have been raised that this crisis will lead to:

  • An undersupply of smaller, younger fish and seed to restock.
  • An overabundance of fish and shellfish of a sellable size and weight in the coming years.

Read more about Covid-19 impacts

Contacts

For further information contact:

Ana Witteveen
Economist
t:
0131 524 8659
m:
07815 428 554