DOWN! Salmon sinks, but for how long?
Salmon prices peaked at around £5.20 per kilo in January, after failing to rise to the kind of level seen in previous holiday peaks. Prices have continued to fall in February due to surplus supply.
We are forecasting that due to low temperatures, slowing salmon growth as well as maintenance closure and cleaning works, the volume of salmon will decrease over Easter. As a result, this is expected to push up Norwegian salmon prices.
The silver lining is that low temperatures should kill off sea lice, which will ultimately result in healthier fish stock.
This comes at a time when Brent oil prices look to be moving ever higher and could push the Norwegian Krone up to levels last seen in December of last year if it materialises, pulling salmon prices up with it.
ONE TO WATCH! Currency fluctuation causes food prices to waver
In the last few months, the pound has shown promising movement towards pre-Brexit highs, surprisingly showing the best performance of the G10 currencies over the last half year. This improvement has been attributed to recent progress in Brexit negotiations, with the government clarifying likely leave scenarios, further supported by November’s interest rate rise along with another expected in coming months off the back of comments from the Bank of England.
Going forward, if the expected interest hike isn’t implemented around May, then recent gains will potentially be undone. Likewise, if there are no perceived strides towards a deal then sterling can be expected to remain flat.
Currently, the pound is slightly weaker than it was in 2017, and the depreciation has meant that the cost of importing raw goods and materials has gone up. Rising import costs will undoubtedly put a squeeze on profit margins and will be gradually passed on to the end consumer.
ONE TO WATCH! FSA investigations may mark up meat
The meat industry is once again in the headlines as the full scale of the food safety and hygiene problems comes to light. Over the last three years, more than half of the meat processing and cold storage facilities audited in England, Wales and Northern Ireland had major non-compliances with hygiene and food safety regulations.
In the weeks following the initial Russell Hume shutdown by the FSA, the company fell into administration, resulting in their customers trying to find suitable suppliers to replace them. This has not been made easy, as some suppliers have been encouraged by the FSA to withdraw their meat from the market whilst others have taken it upon themselves to voluntarily stop production to ensure they meet standards.
The FSA have acknowledged that they have not had the budget to be more vigilant with their inspections, and one suggestion for dealing with this involves passing the costs onto the industry. Any changes will undoubtedly cause short-term disruptions, for not only retail outlets but suppliers also.
Currently, suppliers are having to make changes to meet newly implemented guidelines by the FSA; the major change so far has been regarding shelf-life, which will reduce the time between receipt and dispatch. These changes mean that any loss or costs incurred will be passed onto customers. The FSA’s plan to pass on inspection costs will fuel this further.