The biannual Food Outlook report from the Food and Agriculture Organization of the United Nations, released earlier this month, is predicting that seafood will see lasting impacts from the COVID-19 pandemic, including reduced demand and pricing.
The report had a special focus this year in light of the COVID-19 pandemic, which has disrupted supply chains, forced the cancellation of industry trade events, and lead to widespread restaurant closures. This year’s report contains a special feature, analyzing whether or not the COVID-19 disruptions to supply chains will result in a global food shortage.
As a result of COVID-19, the FAO report forecast that globally seafood production will be down 1.7 percent, or three million metric tons (MT), and the trade value of seafood will decrease by USD 5.8 billion (EUR 5 billion). Of that, capture fisheries are expected to decrease production by 2 percent, or 1.9 million MT, while aquaculture production is expected to decrease by 1.4 percent, or 1.2 million MT.
Those decreases follow similar decreases in production between 2018 and 2019, from 178.5 million MT in production between wild-capture fisheries and aquaculture in 2018 to 175.9 million MT in 2019.
Prices are also predicted to decrease in 2020 compared to previous years. The FAO Fish Price Index indicates a drop of 8.3 percent between January and May compared to the same period in 2019.
According to the FAO, 2020 was initially trending positive before the COVID-19 outbreak hit.
“This year was expected to be somewhat more positive for the seafood industry relative to 2019, but the emergence of the COVID-19 pandemic and associated impacts have rendered previous forecasts largely irrelevant,” the FAO report said.
The report said the closure of restaurants has drastically impacted seafood demand, leading to the “evaporation of foodservice demand in many important markets.”
“Effects on retail sales have been more mixed, however, with demand for packaged and frozen products boosted as households look to stock up on non-perishable foods,” the report said.
The supply side, as well, has been impacted throughout the supply chain, the report pointed out. Labor shortages resulting from the pandemic have affected everything from initial production through to the end of the supply chain.
“Aquaculture harvests are being delayed and stocking targets drastically reduced, while entire fishing fleets are laying idle,” the report said. “Businesses further down the supply chain have all been affected by the lack of raw material, on top of other operational difficulties. Logistics have become costly and slow due to closed or restricted road borders, health inspection delays, and the large-scale cancellation of flights.”
The report predicts the seafood industry overall will continue to be affected negatively by the pandemic even beyond direct closures caused by COVID-19.
The report elaborates on those effects by breaking down demand for seafood items by category, predicting falls in production, demand, or both for some species.
For shrimp, the report forecasts a 30 to 40 percent drop in production of farmed shrimp in India during the 2020 farming season, and global shrimp demand is predicted to fall.
“The pandemic has also significantly impacted shrimp demand in both domestic and international markets, with worldwide demand for both fresh and frozen shrimp declining significantly,” the report stated.
Salmon, in contrast, is predicted to continue to have production growth, albeit at a much slower pace. However, demand for salmon is expected to drop.
“The impact of the COVID-19 pandemic on the global salmon market has been significant, with analysts projecting a drop in worldwide demand for salmon of at least 15 percent,” the report said. “In particular, retail sales of fresh salmon and trout have fallen greatly, and this segment will not recover for some time.”
Tuna is also predicted to see mixed impacts from COVID-19. Demand has been boosted for canned, pouched, and processed tuna thanks to consumers shifting to more shelf-stable products. However, non-canned tuna, typically destined for restaurants, has seen significant downturns.
The cephalopod market is expected to see prolonged impacts from COVID-19, mainly related to reduced tourism.
“The COVID-19 pandemic has put a severe damper on cephalopods trade. The collapse of the tourism industry and a general weakening of demand has seen a decline in imports into the two major EU27 markets – Spain and Italy – while buying interest is also slow in Japan,” the report said. “This situation is expected to last throughout the rest of the year.”
The whitefish industry – groundfish, tilapia, and pangasius – is varied. Groundfish demand is shifting toward lower-value species, a trend that the FAO predicts will continue after the pandemic is over. Pangasius continues to suffer a price collapse, and the FAO is predicting demand will take time to recover. Tilapia, as well, has seen negative market impacts, but the FAO is predicting that strong frozen retail sales and the removal of U.S. tariffs on Chinese tilapia in April may soften the impacts.
“Whatever the timeframe, prolonged market downturn can be expected even after current restrictions are lifted or relaxed,” the report said. “Luxury products and species that are primarily marketed fresh and through foodservice will be the most heavily affected. Most seafood trade events will continue to be postponed or cancelled for some time to come.