Taking a ride with cod - Norwegian salmon in the Brazilian seafood market: Initial stage preparations

Brazil is currently Norways largest trade partner in South-America. A large reason for the strong trade relationship between Norway and Brazil is the historic "bacalhau" trade. Because of this Norwegian seafood has a strong standing in Brazil. In this pre-project the aim has been to start investigating the prospects of Norwegian salmon in Brazil, including to what degree Norway can expand on the current seafood standing by including salmon in its trade portfolio to Brazil. The main purpose has been to lay the groundwork for a possible larger comprehensive study of the possibilities and barriers for Norwegian salmon in the Brazilian market. A secondary objective has been networking and extending cooperation between Norwegian and Brazilian aquaculture research. The project started with a statistical analysis of the position of salmon in the Brazilian seafood market. We wanted to establish to what degree salmon competes with other seafood products in Brazil. This is important in order to establish the competition facing salmon in the Brazilian seafood market. The analysis compared the pricing of salmon and nine other seafood products at the largest wholesale market for seafood in Brazil, the CEAGESP market in Sao Paulo. The findings of the analyses was presented at the Word Aquaculture Conference in Montpellier in September 2018. In addition, a master thesis about the topic was written by master student Ove Kvandal at the University of Stavanger. The findings from this work indicates that salmon is not uniquely priced in Brazil, but competes with other seafood products in the domestic seafood market. This means that salmon is not a unique "luxury" seafood product in Brazil to the same degree that it is known to be in other markets. A likely reason for this discrepancy is that salmon in Brazil is small to medium sized (~1.5kg). Salmon in Brazil is imported from Chile, and Brazil is an important market for smaller sized Chilean whole salmon. The larger and higher priced quality salmon is to larger degree exported to higher paying markets in the U.S., Europe and Asia. Chile has historically faced no tariffs with its exports of salmon to Brazil, which facilitates the trade of lower weight salmon to Brazil. With the new trade agreement between Norway (EFTA) and Brazil (Mercosur), Norwegian salmon can be exported tariff free. This means better opportunities for Norwegian salmon. However, given salmon in Brazil competes with other seafood products, the profitability of exports will depend on the general state of the seafood market in Brazil. Furthermore, success will depend on the ability of differentiating Norwegian salmon from the cheaper lower weight Chilean salmon currently in the Brazilian market. The project followed up the statistical analysis with in depth interviews of several agents in the Sao Paulo seafood value chain. This work was done in 2019. We interviewed five restaurants, one retailer, two distributors and two importers of seafood in Sao Paulo. The purpose was to gather more detailed information about the state of knowledge of salmon, including differences in sourcing (aquaculture vs. fisheries), differences between imported and domestic seafood, and the agents responses to changes in availability and price of seafood. The main species in the agents? portfolio are salmon, tilapia, pangasius, shrimp, tuna, squid, bacalhau, shark, hake, weakfish, sardines, flatfish. The majority of fish is sourced from imports and aquaculture, with occasional use of domestic species depending on the season. The reported main purchase criteria are price and quality (taste, smell, texture). Furthermore, with the exception of top restaurants, most agents in the value chain stick to fixed product portfolios throughout the year, primarily sourced from aquaculture. Seasonal variation is a problem for those agents relying more on sourcing from fisheries. However, in general the source of the fish is not a criteria the buyers focus on when buying fish. They report that information on sourcing is not much demanded by consumers. This is potentially problematic for differentiating Norwegian salmon in the Brazilian market. Substitution between fish as a result of variation in availability and price is common in the value chain. The main driver of substitution is seasonal variations in availability and variations in relative prices. Even though agents report that it is easier to substitute between similar species such as white fish, they also report substitution between salmon and other species. Substitution can also take place through higher use of frozen fish if fresh fish is less available, or more use of imports to substitute for domestic fish. The results of the in depth interviews largely support the quantitative price analysis findings that salmon is not considered a unique luxury product in the Brazilian seafood market. Salmon is demanded conditional on relative prices and the availability of other seafood.

Prosjektet har gitt nødvendig kunnskap om konkurranseforholdene for Norsk laks i Brasil. Kvantitativ og kvalitative studier har avslørt at laks ikke er priset som et unikt sjømatprodukt som i mange andre land, men konkurrerer med andre innenlandske sjømatprodukter i Brasil. Hovedmarkedet for laks i Brasil på nåværende tidspunkt er lavere vekt chilensk laks. Dette gir et nødvendig grunnlag for videre studier av strategier for lønnsom eksport av norsk laks til Brasil. Prosjektet har i tillegg etablert kontakt med EMBRAPA forskere på sjømat i Brasil, som gir et godt grunnlag for videre samarbeid om sjømatsforskning.

Norwegian salmon aquaculture has been a success story in terms of innovations in production technology (feed, vaccination, biology), marketing (expansion of fish to new markets such as sushi in Japan) and regulations (regional diversification of farms to prevent contagion of diseases, production limitations in licenses). New markets are important to secure the future value of the industry and the foundation for additional growth. Brazil is Norways closest trade partner in Latin America and a big emerging economy. Currently, Brazil buys salmon from Chile, but the long history of trade in cod between Norway and Brazil and the reputation of Norwegian fish in Brazil provides a potential entry point for Norwegian salmon in the emerging Brazilian seafood market. Norwegian seafood products have a high standing in Brazil, a value that has not currently been capitalized in other seafood products, such as salmon. As such, we believe there is strong potential for increasing the value of Norwegian seafood products in Brazil. This pre-project wants to lay the groundwork for a future comprehensive study of the possibilities and barriers facing Norwegian salmon in Brazil. The main part of the pre-project will involve initial contact and cooperation with EMBRAPA, the Brazilian government institute for seafood and aquaculture, in order to start identifying the possibilities and barriers for Norwegian Salmon in Norway. The funding will be used to go cover payroll and travel expenses for a researcher to be the main contact point between the Project administrator and EMPRAPA in Brazil.