« December 2008 Table of Contents 
Top 10 Species: Cod
Iceland's problems shake cod industry, but demand remains strong
By Christine Blank
December 01, 2008
When it comes to cod processing, Iceland rules. And anyone
looking for signs of financial troubles in Iceland would have
been wise to look at the cod market, where signs of financial
troubles were seen way before Glitnir and other Icelandic banks
were seized by the government early last month due to the
global credit crunch.
While Iceland's financial situation, tight supply and high
demand has rocked the cod market this year, the 2009 catch is
expected to yield strong demand and consistent supply. Cod
ranks No. 8 on the U.S. per-capita consumption list, according
to the National Fisheries Institute, and is also favored by
European and Scandinavian buyers.
Iceland officials have not indicated that they will increase
the cod quota for 2009, which is expected to put more pressure
on haddock supplies. Already, the tight Iceland supply and
financial collapse has affected fishermen, processors and all
businesses related to Icelandic cod.
"When the financial collapse hit in September and the
Icelandic banks failed, the effects rippled through the cod
markets rather dramatically," says Cathy DuPuis, marketing
product manager for American Seafoods Group in Seattle.
"Buyers, in some instances, found an unhealthy combination of
their credit lines being pulled back or that foreign buyers had
less purchasing power, at our historically high prices, as the
dollar strengthened over 20 percent from its summer exchange
rates with the Euro," she adds.
As a result, suppliers say that one of the biggest
challenges for the cod industry in 2008 - and likely into 2009
- is Iceland's financial collapse.
However, the 20 percent increase in cod quota for Norway and
Russia to 525,000 tons for the 2009 season is meant to boost
the industry.
"The quota increases will stimulate greater activity, and
can secure jobs and ensure profitability in a situation of
great economic uncertainty," Helga Pedersen, minister of
Fisheries and Coastal Affairs, Norway, said in a prepared
statement on Oct. 17.
On a brighter note, the Pacific cod supply remained steady
to higher this year. The Alaska Department of Fish & Game's
total allowable catch (TAC) this year was set at 489.8 million
pounds, slightly lower than last year's catch of 498.6 million
pounds. While the 2009 TAC won't be approved until this month,
it may end up fairly even with last year, says Laura Fleming,
communications director at the Alaska Seafood Marketing
Institute (ASMI).
Demand remains strong
Despite problems with supply and financing this year, the
cod industry is expected to remain strong in 2009 due to
foodservice demand.
"There was, and still is, core demand for cod as the
traditional whitefish, even against the backdrop of
attractively priced alternatives like saithe or haddock," says
American Seafoods' DuPuis.
In addition, consumers who are eating out less may buy more
cod to prepare at home, say DuPuis and other suppliers.
"Cod is the ultimate whitefish. There is a tremendous
interest because it is white, mild and flakes. The challenge
has been to deliver this incredibly popular species to the
marketplace at a price point where it will compete against
other seafood and proteins," says Keith Moores, president of
F.W. Bryce in Gloucester, Mass.
"As cod prices become more palatable, we will see better
demand from the retail sector and the
foodservice sector,"
says Moores. Already, multi-unit restaurant chains continue to
use cod for their fish 'n chips and other entrées.
That business may grow throughout 2009, according to Moores.
"We do see some growth possibilities for cod in the U.S.
market. As a result of the increased supply, we anticipate
there being better price points for the market," he says.
The 34-unit Legal Sea Foods restaurant chain in Boston is
just one foodservice operator that plans to continue using cod
as both a center-of-the-plate item and as an ingredient in
2009.
"We have it in a number of forms: it is in our fish chowder,
our fish 'n chips, our Italian-style fishermen's stew, and is
featured in our baked cod with crumbs and tomatoes, a
traditional New England dish," says Jeffrey Tenner, executive
director of culinary operations and corporate chef for
Legal.
While the chain's chefs continually try new preparations
with cod, the more traditional uses in fish 'n chips and a
crispy fish sandwich are still the most popular takes on cod
for Legal's customers.
Tenner anticipates continued strong demand for the fish in
the near future, as a mild, flaky, less expensive alternative
to other fish.
"It has a mild flavor, and, from a price standpoint, you are
able to put it on your menu for $19.95 or just over $20.
Particularly in these economic times, people are making choices
with their pocketbooks," says Tenner.
Because Legal buys more than 10,000 pounds of cod a week,
pricing from the restaurant chain's suppliers has remained
steady.
"So much of what we focus on is North Atlantic waters, and
you're able to get it most of the year. It is such a staple
fish, that we don't fluctuate much on pricing," says
Tenner.
Aria Restaurant in The Fairmont Chicago hotel plans to use
cod in the coming year, utilizing it more as a
center-of-the-plate fish in its banquets.
"I will be doing something different in banquets, and
experimenting more with cod," says Brad Parsons, executive chef
of aria.
Overseas demand for cod is also expected to increase in
2009. "You will see better demand in Europe, which seems to
have a higher tolerance for the higher prices than the United
States and is loyal to the species," says Moores.
Frozen cod processors may have more global opportunities as
Norway increases production of farmed cod. "As that becomes
more viable, that goes into the European market fresh and
should create more frozen opportunities for cod in the global
markets," says Moores.
Norway's production of farmed cod has increased steadily
over the last few years to reach nearly 10,000 tons in 2007,
according to the Marine Research Institute in Reykjavik,
Iceland.
However, the progression of the farmed cod industry is slow,
based on current financial markets. "Large capital is required
to build up biomass in cod farming, and the banks hesitate to
grant loans while the world market is down. It is likely that
the cod farming industry will grow slowly for the next few
years," writes the institute's Bjorn Bjornsson in "Cod Farming
in the Nordic Countries 2008."
Meanwhile, ASMI is putting more emphasis on cod promotion
than in past years.
"A lot of people are aware of Alaskan salmon. It is
important to us to elevate our whitefish varieties to universal
appreciation," says Fleming of ASMI.
To that end, ASMI is publicizing the various uses of cod as
well as the "sustainable nature of our fisheries," says
Fleming.
To further the sustainability image, Alaska Pacific cod is
expected to achieve Marine Stewardship Council certification
for all longliner and trawl fleet sectors in early 2009.
"This should be a nice inducement to promote the
sustainable, traceable aspects of our fishery, and a key point
of differentiation," says DuPuis of American Seafoods.
Prices may impact demand
On the flip side, stronger prices for both Atlantic and
Pacific cod in recent years may keep some buyers away.
"Cod is a healthy protein, but has become a more premium or
behind-the-counter choice in the last several years due to
price," says DuPuis.
"We see cod in 2009 adjusting to global supply trends. Cod
will have to re-position itself in the U.S. market in terms of
the value it provides its end user,' says Moores.
U.S. foodservice demand for cod is flat to down slightly
overall, depending on the region of the country and type of
restaurant chain, says DuPuis.
"For example, Southern California and Las Vegas were more
negatively affected by real estate problems, so you can see
that reflected in cod demand at the restaurant and foodservice
levels [in that region]," says DuPuis.
Cod prices are expected to stay strong in 2009, even with
the increased Barents Sea quota.
"Individual firms will chase the best product form to put
the cod into, given less scarcity of supply and stable demand,"
says DuPuis.
Christine Blank is a business writer and editor from Lake
Mary, Fla.