London Annual Seafood Report
AGR Number: UK5075

From: U.S. Embassy, London
To: USDA/FAS Washington D.C.
Country: UK
Year: 1995
Report Code: 54 Post Report Sequence Number: 004
Report Title: Seafood
Report Type: A - Annual Report
Report Subject: Seafood
Approved By: Richard L. Barnes
Drafted By: Richard Ali
Security Classification: Unclassified, Not Official USDA Data
Date Due (MM/DD/YY): 09/15/95

Report Code: UK9554A
AGR Number: UK5075
Page: 1
Seafood

General Summary

Increased demersal and shellfish catches outweighed a fall in the pelagic catch to result in an overall increase of 1 percent in the UK sea fish catch in 1994. Farmed salmon production increased significantly during the year, registering a 31.5 percent rise. In total, the seafood harvest recorded an increase of 4.1 percent in 1994.

Although value growth was not on the same scale as in 1993, the UK market for fish and fish products was valued at an estimated BPS 2.4 billion compared with BPS 2.3 billion in 1993. Lower consumption of canned tuna was responsible for    eduction in overall UK seafood consumption in 1994, but there was a general improvement in the market for other fish and fish products during the year. Household consumption of fish (excluding canned) rose by an estimated 1.9 percent in volume terms to around 208,000 mt, while catering usage is put at 157,000 mt.

In general terms, consumer preferences shifted away from fresh and chilled fish and canned fish during 1994 toward frozen value added seafood products. This trend is likely to continue, driven by lifestyle changes and the demand for cosmopolitan flavors. Groundfish, especially cod and haddock, remain extremely important to the British consumer, but salmon, which has become more competitive and is widely available, is now the third most popular fish. Interestingly, the salmon industry has yet to exploit consumers' desire for coated, chopped, shaped and flavored seafood.

Trade in seafood products continues to be important to the UK. Imports, buoyed by strong demand from processors, increased by 3.8 percent to 458,182 mt and were valued at BPS 1,016 (USD 1,625) million in 1994. Although the export volume of fresh/frozen fish fell due to tight supplies, total export value, increased by 3.9 percent to 378,562 mt, valued at BPS 688 (USD 1,100) million.

The UK total commercial catch is expected to increase by around 4.3 percent in 1995 primarily because of good fishing conditions and a further increase in farmed salmon production. Fresh and frozen
production is therefore expected to increase in parallel with raw product availability. Imports are likely to fall slightly during 1995 in response to increased domestic production, while exports are expected to rise. The sea fish catch is then likely to fall back to more normal levels in 1996, which will reduce total landings and fresh/frozen production, and lead to higher imports and lower exports.

Report Code: UK9554A
AGR Number: UK5075
Page: 2
Seafood

General Summary

Domestic consumption is forecast to increase by around 1.6 percent during 1995. Household consumption of frozen seafood and canned fish is expected to increase but the decline in household consumption of fresh/chilled is forecast to continue. Catering usage of fish is expected to register a further increase during 1995. These trends are likely to continue in 1996, although canned consumption is expected to be relatively static.

Notes

1. According to both industry observers and the Ministry of Agriculture, Fisheries and Food (MAFF), illegal or "black" fish, are being landed by UK fishermen. These fish do not conform to policy regulations; being undersize, outside UK quota limits, or out of season. As the extent of these landings is not quantifiable and differs between species, no estimate for these undeclared landings has been made in the data in this report.

2. The rate of exchange used in this report is USD 1.6 = BPS 1.

Report Code: UK9554A
AGR Number: UK5075
Page: 3
Seafood

Total Edible Fishery Prods.

Production

General

The UK sea fish catch totaled 631,797 metric tons (landed weight) in 1994, an increase of 1 percent on the previous year. The salmon harvest is estimated at 64,924 mt, the trout harvest at 6,500 mt and the farmed shellfish harvest at 1,000 mt. This gives a total UK seafood harvest of 704,221 mt compared with 676,566 mt in 1993; an increase of 4.1 percent.

Based on current data, the UK seafood harvest is expected to total 735,000 mt in 1995. Part of this increase will be due to the fact that the Ministry of Agriculture, Fisheries and Food is no longer recording landed weights, but rather live sea fish weights. Readers are therefore advised to note this statistical change for 1995 figures onward.

Wild Catch Production Factors

The main demersal stocks harvested for human consumption in the North Sea (cod, haddock, whiting, plaice and sole) were, according to scientific the assessments carried out in 1993, subject to comparatively high fishing mortality rates. The cod stock seems to have stabilized at an extremely low level. The stock's spawning stock biomass (SSB) was only one third of the

Report Code: UK9554A
AGR Number: UK5075
Page: 4
Seafood

Total Edible Fishery Prods.

Production
level of 150,000 mt, which is considered by the International Council for the Exploration of the Sea (ICES) Advisory Committee for Fisheries Management (ACFM) to be the lowest desirable biological level. Other fish stocks remain under pressure to varying degrees.

At the end of 1993, the UK fleet, including the Channel Islands and the Isle of Man, totaled 11,692 vessels with a gross tonnage of 218,961. The following table sets out the main activities of the fleet for 1993, the latest figures available.

Report Code: UK9554A
AGR Number: UK5075
Page: 5
Seafood

Total Edible Fishery Prods.

Production
Production Mix

Cumulative Production Issues
The most pressing production issue, which will have to be addressed on national, regional and global scales, is the diminution of fish stocks caused by over-fishing and pollution. In the EU, illegal landings are alleged to be adding to the problem as fishermen attempt to maximize their own income at the expense of future resources. Across the EU, modern technology is allowing fleets to catch increased quantities of fish.

Report Code: UK9554A
AGR Number: UK5075
Page: 6
Seafood

Total Edible Fishery Prods.

Consumption
Total seafood consumption was 451,479 mt in 1994 compared with 462,865 mt in 1993. This 2.5 percent decline in consumption is due to an estimated fall of around 20 percent in canned fish consumption due primarily to increased prices for canned tuna.

Utilization Patterns
The household market for seafood (excluding canned) is estimated at 208,000 mt (worth BPS 950 million - USD 1.5 billion). Of this, 63 percent is in frozen form (BPS 535 million - USD 856 million). The majority (78 percent) of fresh fish is purchased by consumers over the age of 45, whereas 35 percent of frozen fish is purchased by consumers between the ages of 28 and 45 indicating a potentially significant shift in buying patterns in the future.

The catering market for seafood (excluding canned) is estimated at just under 157,000 mt. Of this, fish and chip shops are estimated to use around 48,700 mt, canteens 23,500 mt, educational establishments 18,800 mt, hotels and pubs 15,700 mt each, restaurants 14,100 mt and health care 12,500 mt. The remainder is split between cafes, clubs and services.

Total 1994 canned fish consumption is estimated at 86,750 mt, of which tuna has a market share of around 50 percent, red salmon 18 percent, pink salmon 9 percent, pilchards 8 percent, sardines 6 percent, mackerel 4 percent and all others 5 percent.

Cured fish consumption rose by an estimated 10 percent to around 30,500 mt in 1994. Household purchases of smoked salmon fared particularly well, increasing by 20 percent to around 630 mt.

Substitution Patterns
According to Seafish data, household purchases of fresh and chilled fish fell in Great Britain (excluding Northern Ireland) by 4 percent in volume terms in 1994, while purchases of frozen fish and fish products increased by 5 percent in volume terms. Significant increases were seen in purchases of smoked fillets (18.5 percent), battered fillets (46 percent), breaded fillets (8.9 percent) and fish main meals (21.8 percent).

Report Code: UK9554A
AGR Number: UK5075
Page: 7
Seafood

Total Edible Fishery Prods.

Trade

Trade Trends
Total UK imports for 1994 were valued at BPS 1,016 (USD 1,625) million compared to BPS 952 million in 1993. Of this total, 78 percent originated from outside EU-12. Imports of fresh/frozen seafood increased by 11.5 percent buoyed by strong demand from processors. Canned imports declined by 13.7 percent as higher tuna prices, and stock releases in the case of salmon, reduced import requirements. Imports of cured products fell by 3 percent during 1994.

UK exports, boosted by the competitive value of Sterling especially against other EU currencies, reached BPS 688 (USD 1,100) million in 1994 compared to BPS 460 million in 1993. Exports to EU-12 accounted for 90 percent of total UK exports. Despite this increase in value, the volume of fresh/frozen exports actually fell by 4.9 percent because of relatively tight supplies on the domestic market. Canned exports (mainly re-exports) increased by 56 percent, but remain a relatively minor component of the UK's export trade. Cured exports also increased, by 54 percent, but also remain minor in volume terms.

Report Code: UK9554A
AGR Number: UK5075
Page: 8
Seafood

Total Edible Fishery Prods.

Trade
Factors Affecting U.S. Trade
U.S. exports of seafood products to the UK were valued at BPS 46.8 million in 1994 compared to BPS 84,738 in 1993. This significant fall was primarily due to the 43 percent fall in the value of canned salmon to BPS 30.5 million in 1994.

Future U.S. trade is likely to be affected by the increased import requirement for canned salmon in 1995 and by currency fluctuations as the dollar is presently strengthening against Sterling.

Stocks
Total stocks of seafood products were estimated to be around 85,000 mt at the end of 1994.

Report Code: UK9554A
AGR Number: UK5075
Page: 9
Seafood

Total Edible Fishery Prods.

Policy
Resource Management Policy
UK fishing policy is determined by the operation of the Common Fisheries Policy (CFP). Within the CFP, Total Allowable Catches are set each year by the Council of Ministers following scientific advice on the levels of fishing that stocks can support. The TACs are then allocated as quotas to member states. CFP regulations also include technical conservation measures. Opportunities for the UK fleet to fish in third country waters are also secured through the CFP.

Producer Organizations (POs) established under the CFP allow groups of fishermen to manage allocations of some whitefish stocks in some areas of the North Sea and the West of Scotland.

The UK operates a number of grant and assistance measures to support acquaculture, fishery harbors, the marketing and processing of fish and the promotion of safety on fishing vessels. MAFF expenditure (excluding administration costs) for 1994/95 was: On the conservation of sea fish stocks - BPS 185,000; on decommisioning and related structural measures BPS 25.3 million; and on fish farming and shellfish production BPS 254,000.

Report Code: UK9554A
AGR Number: UK5075
Page: 10
Seafood

Total Edible Fishery Prods.

Policy
Production Policy/Price Support
The CFP gives POs the option of operating market support measures to match their member's supply with market demand. POs may adopt minimum (withdrawal) prices, and if a buyer cannot be found for their member's catch at, or above, these prices, the PO must withdraw that fish from the market. Withdrawn fish is then used for purposes other than human consumption.

If the withdrawal price adopted by the PO is within 10 percent of that set by the EU, the Intervention Board (which administers EU CAP and CFP support funds in the UK) can provide partial financial compensation for the cost of the withdrawn fish provided that no more than 14 percent of a POs annual production is withdrawn. The CFP also provides for a system of private storage aids, but these are rarely used in the UK.

There are also capital grants for processing available from the EU. These payments are budgeted at around BPS 2 million per annum between 1995 and 1998, of which approximately 80 percent is reimbursed from the EU.

Export Subsidies
The EU export refund system for fish was abolished in 1992.

Report Code: UK9554A
AGR Number: UK5075
Page: 11
Seafood

Total Edible Fishery Prods.

Policy
Tariff Policy
Tariffs relating to seafood and seafood products are set by the EU Commission. Details of the EU Uruguay Round GATT commitments for various products can be found under the separate commodity headings. (A full list of EU tariffs can be found in UK4043).

Non-Tariff Barriers
Seafood processing plants must have EU approval to be able to export to the UK. Seafood and seafood products fall under the EU Veterinary Checks Directive (90/675/EEC), which governs the border inspections to be carried out by customs authorities. Ports of entry must be approved to handle fish and fish products.

Prices
Fish lost some of its competitiveness during the year with pork, bacon and poultry meat all falling more in price as can be seen from the following table.

Report Code: UK9554A
AGR Number: UK5075
Page: 12
Seafood

Total Edible Fishery Prods.

Marketing
Seafood often faces heavy marketing competition from rival proteins in the UK food market. The Sea Fish Industry Authority's (Seafish) marketing budget for the year ended March 1994 was BPS 2.8 million compared to the Meat and Livestock Commission's total marketing expenditure of over BPS 15 million. However, Seafish believe that it can benefit from the many problems facing the meat industry by targeting its resources.

The UK seafood sector continues to develop new products to satisfy consumer demand for convenient, ready prepared foods. Recent examples of this include flavored nuggets (made from surimi) and fish coated in ethnic flavors. Many of the developments in the seafood sector are mirroring earlier innovations in the poultry sector.

Market Development Opportunities
Opportunities for U.S. seafood exist throughout the sector. However, consumers are increasingly drawn to innovative value added products. This may be an area in which U.S. seafood companies would have a competitive advantage, introducing new products to the UK market, possibly utilizing a generic "American Seafood" logo or stylization.

Marketing Facilities
With the introduction of the EU Single Market regulations in 1993, all fish entering the UK/EU must do so via a border inspection post approved to handle the product. In the UK, the major international airports of Heathrow, Gatwick and Manchester are all approved   The container ports of Harwich, Felixstowe and Liverpool are among the seaports with approval.

Marketing Channels
For an in-depth examination of the fish trade in the UK, please see UK4043.

The multiple supermarkets have continued to expand their share of the retail seafood market. It is now estimated that supermarkets account for around 78 percent of frozen seafood sales, 59 percent of fresh/chilled sales and 48 percent of wet/smoked sales. However, supermarkets still face fierce competition from other outlets. For example, freezer centers are estimated to have increased their share of the frozen market by around 1 percent to 16 percent during 1995.

Report Code: UK9554A
AGR Number: UK5075
Page: 13
Seafood

Total Edible Fishery Prods.

Marketing
Competitor Activities
Seafish's aim is to increase the total consumption of sea fish in the UK. As the organization's income derives partly from a levy on imported fish, Seafish's generic promotional activities help raise consumer awareness of all seafood products. National branding usually takes place in the higher value products, such as fresh and canned salmon, where consumers perceive a quality difference.

Report Code: UK9554A
AGR Number: UK5075
Page: 14
Seafood

Salmon, Whl/Evisceratd

Production
General
Scottish farmed salmon production totalled 64,066 metric tons in 1994 (valued at USD 320 million), an increase of 31.5 percent on 1993. When estimates for Northern Irish and wild production are included, total 1994 UK production is estimated at 64,925 mt.

Total salmon production for 1995 is presently estimated at 68,200 mt, an increase of 5 percent over 1994. A further increase of around 5.5 percent, to 72,000 mt, is expected by the industry in 1996. It is interesting to note that the Scottish industry feels that its production capacity, assuming no disease constraints, would be around 140,000 mt.

Acquaculture Harvest
The number of ova laid down for hatching in 1993 increased by 21 percent to 68.7 million compared to 1992. Increased survival rates and improved growth rates are thought to be behind the drop to 46.7 million ova laid down in 1994.

It is estimated that 23.1 million smolts were produced on 113 Scottish sites in 1994 compared to 21.0 million smolts in 1993. Marine Harvest McConnell, owned since November 1994 by Booker, accounted for around 20,000 mt of farmed salmon production.

Report Code: UK9554A
AGR Number: UK5075
Page: 15
Seafood

Salmon, Whl/Evisceratd

Production
Producers forward estimates anticipate an annual increase of 9 percent in smolt production in 1995 and 1996 (27.4 million smolts).

Production Technology
Scottish salmon farmers are increasingly using photoperiod adaptation to control smolting outside natural smolting times. Adult salmon generally spawn during the period October-December, with ova from these spawnings hatching around 12 weeks later. The smolts from these spawnings are put to sea a year later in the following Spring. (The standard terminology for smolts having spent 1 year in fresh water is S1 and those spending 2 years is S2). Natural smolting is driven by seasonal patterns of temperature and light. By light manipulation (photoperiod control) smolting may be advanced outside the natural smolting times. Using this method, smolts are available for relocation to sea water as early as 6 months after first feeding.

The advantage of using photoperiod adapted smolts in conjunction with normal smolts is that harvest schedules are made more flexible by allowing a continuous match of fish size with market demand. Although production period and feed costs in photoperiod adapted smolts may be reduced, additional costs for lighting and heating may be incurred.

In recent years furunculosis, a systemic infection, had been a major cause of mortality in salmon at sea. In 1994 a total of 20.7 million smolts were vaccinated against the disease. Sea lice are now the major disease problem facing salmon growers, but the industry expects a vaccine to be produced in the near future.

Consumption
Utilization Patterns
Consumption of fresh and frozen salmon totaled 24,148 mt in 1994 compared to 19,062 mt in 1993. Revised estimates from the smoking industry suggest that a further 24,000 mt went to salmon smokers. The final slaughter of salmon due to the MV Braer oil spill at Shetland in January 1993 accounts for the remaining 1,852 mt in the "other/loss" category.

UK household purchases of fresh/chilled salmon are estimated to be around 6,600 mt in 1994 compared with 5,500 mt in 1993. Whole salmon  accounts for around 36 percent of household purchases of fresh/chilled salmon. In the industry's opinion most of the rest of the large increase in domestic salmon

Report Code: UK9554A
AGR Number: UK5075
Page: 16
Seafood

Salmon, Whl/Evisceratd

Consumption
consumption is accounted for by the catering sector, where salmon is a favorite. Industry sources confirm that no salmon was discarded during the year.

Substitution Patterns
Salmon continues to increase in popularity in the UK because of its widespread availability, its versatility and its falling price. Salmon is now estimated to be the third most popular fish after cod and haddock and is thought to be increasing its market share at the expense of other fish and other protein-complex foods, especially, according to the industry, beef.

Trade
Trade Trends
UK salmon imports at 9,140 mt were 10.8 percent higher than in 1993. The Faroe Islands, a minor supplier in 1993, was the largest supplier in 1994 at 3,543 mt. All of the Faroese salmon was fresh/chilled. Imports from Norway fell by 36.5 percent. Imports of U.S. salmon, all except 205 kg of it frozen, fell by 11 percent during the year.

Exports of UK salmon increased significantly by 32.8 percent as a result of increased domestic production and the competitive value of Sterling. Exports to France, which is by far the UK's most important market, increased by 20 percent, to Spain by 118 percent and to Belgium-Luxemburg by 39.6 percent.

Preliminary figures indicate that imports of salmon are likely to increase slightly during 1995, while exports, driven by increased supply are expected to rise by around 10 percent. Imports are thought likely to increase in 1996 because of increased Norwegian supply throughout Europe. Exports are also expected to increase as Scottish production rises again.

Report Code: UK9554A
AGR Number: UK5075
Page: 17
Seafood

Salmon, Whl/Evisceratd

Trade
Factors Affecting U.S. Trade
Fierce competition from domestic and third country salmon are the major factors affecting U.S. penetration into the UK salmon market. U.S. frozen pacific salmon, with a customs valuation of USD 2.43 per kg, does have a price advantage over frozen Norwegian farmed salmon at USD 5.7 per kg. The customs valuation for fresh/chilled Faroese salmon in 1994 was USD 5.4 per kg. This would suggest that U.S. wild salmon is not well known in the UK market. It would also suggest that value added products should be directed at the UK market rather than expend promotional activity in a satiated sector.