China coronavirus outbreak represents a heavy blow for the Arctic seafood industry

CANADA
Tuesday, February 18, 2020, 19:30 (GMT + 9)

As dozens of Chinese cities remain quarantined and commerce has slowed, it’s unclear what the global repercussions on trade will be.

While China battles a rapidly spreading new coronavirus, now known as COVID-19, it’s also facing an economic slowdown as many businesses remain closed or at limited capacity.

The economic ripple effects are being felt as far away as Nunavut. Those in the Arctic fisheries industry are watching the developments closely to see whether seafood markets will tumble — or perhaps rise.

Annual quotas are sub-divided into 7 traditional areas plus a new set of 4 quota areas in Ungava bay (Source: newfoundresources.com)

The Lunar New Year is usually a time of celebration, with millions of participants attending massive festivals. And Arctic seafood is often on the menu.

“China is our biggest market,” Mark Quinlan, president and CEO of Newfound Resources, which sells Canadian coldwater shrimp to international markets, told ArcticToday. “And business really depends on consumption during Chinese New Year.”

But when the coronavirus began spreading across China, authorities quickly instituted travel bans and lockdowns for millions of people. Many Spring Festival celebrations were canceled, and the new year was ushered in quietly, often in the privacy of homes.

The virus has also been reported in 25 other countries, but most of the cases have been in China, where more than 1,300 people have died.

Chinese businesses and banks have been closed for two weeks, and the markets that do open are heavily restricted, Quinlan said, in terms of how many people are allowed in and how many trucks are permitted to distribute food.

The country’s seafood consumption may have dropped by as much as two-thirds, industry analysts say.

Fisheries in the Canadian North have risen steadily over the past decade. The Nunavut Fisheries Association, which represents four fishery operators across Nunavut, estimates that fisheries have an economic impact of $ 112 million on GDP. In 2011, turbot alone had a “landed value” of about $70 million in Nunavut.

Three major product forms for the traditional Pandalus Borealis shrimp are 3.5 kg raw blocks for Japan, 5kg whole cooked and 16 kilo industrial sacks .(Source: newfoundresources.com)

Northern Canadian fisheries supply Chinese markets with frozen turbot, shrimp, and Arctic cod. They work in the eastern Davis Strait, between Baffin Island and Greenland, ranging as far north as Devon Island all the way down to Newfoundland and Labrador.

Because Nunavut produces frozen seafood, they delivered much of their product in December, in preparation for the new year.

Yet much is unknown about sales since then.

“I know what we’ve sold, but I don’t know what the consumption in the market has [been],” Quinlan said. His company works primarily with distributors, and it’s unclear how much product those distributors have in turn sold at grocery stores and local markets, and how much was consumed during New Year celebrations.

Newfound Resources Ltd.  'M.V. NEWFOUNDLAND VICTOR' (Source: newfoundresources.com)

Quinlan’s company usually ships to China every three to four weeks. Their next shipment is due to arrive in two weeks — but he still doesn’t know yet whether banks will be processing international wire transfers and whether cold storage facilities will be reopened.

Marius Linstead, general manager of Sirena Canada Inc, which helps market North Atlantic seafood globally, told ArcticToday that the China market is basically shut down.

“People aren’t working; they’ve been told to stay home,” he said. One of their clients has seafood stored there, and customers in China have asked to buy it, but they can’t access the product because the cold storage facilities are closed, he said.

Brian Burke, executive director of the Nunavut Fisheries Association, told ArcticToday that the virus has “huge” implications on the seafood trade with China, particularly because the Arctic seafood industry has been heavily dependent on China.

“The whole global economy has been so dependent on China,” Burke said. For the past couple of years, Chinese trade “has really been the engine that’s kind of kept things going” — not only with sales, but also longer-term investments in infrastructure like ports.

For now, seafood from Nunavut is being stored in Canada, awaiting shipment either to China or to other markets in Europe, North America, or elsewhere in Asia.

“But taking out that much of the market, it’s not going to be easy to find places,” Burke said. “It wouldn’t surprise me to see some declines in the price — some significant declines in prices.”

The big question, he said, is how long this slowdown will last.

Author: Melody Schreiber / ArcticToday (Read the whole article here)

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