Sanford Warns of Mussel Price War

This was the mesage from sustainable seafood company Sanford's Managing Director Eric Barratt as he presented the annual results of the company.

He said that Sanford has commented on this issue in a number of forums.

"At the same time we have been working to find solutions; there are a number of large producers of Greenshell mussels in New Zealand, as well as quite a number of smaller producers," he said.

The three largest mussel processing plants in New Zealand are the Sanford Havelock plant, the Pacifica plant in Christchurch and the jointly owned North Island Mussel Processors (NIMPL) plant in Tauranga. Other volume producers are mainly Sealord Group (Nelson), Aotearoa Seafoods (Blenheim – owned by Wakatu Incorporation), Talley’s (Motueka) and OP Columbia (Whitianga).

There are at least five other smaller producers.

Mr Barratt said: "Although an industry body, Aquaculture New Zealand Limited, has worked closely with New Zealand Trade and Enterprise to promote aquaculture internationally it has not been able to provide nor does it have the power to provide any pricing stability in the market place.

"Sanford has worked on a number of initiatives to try and bring some order to the market. While some of these are ongoing we have recently concluded agreement among the operators of the three largest plants to form a joint company to create a single brand to exclusively market Greenshell mussels into China.

"China has previously been a market for New Zealand mussels but has not taken significant volume for a number of years. There is a green mussel that grows in China but the product has a lower meat to shell ratio and is not as flavoursome as the New Zealand Greenshell mussel. Under the New Zealand China Free Trade Agreement the tariff on New Zealand mussels drops progressively to zero in 2012."

In reporting the annual results, the company showed a fall in operating earnings (EBITDA) decreased from NZ$43.6 million last year to NZ$10.3 million this year.

Overall profit for the six months totalled NZ$5.3 million well behind the NZ$26.0 million of the previous year. Foreign exchange gains totalled NZ$7.0 million this period compared to NZ$6.5 million last year.

Of the 19 per cent decrease in sales revenue seven per cent (NZ$17million) is the effect of lower prices for some species, 10 per cent (NZ$22 million) is the effect of the higher exchange rate this year and two per cent (NZ$3 million) is the net effect of lower volumes of some species.

While sales volumes of particularly mussels, but also southern blue whiting, hake, squid and scampi increased, volumes of species such as skipjack and hoki were well down.

Price increases for species such as squid and toothfish were not able to offset substantial price reductions for mussels and skipjack tuna, the company said.