The race for resources

Published: by Camilla Klævold

Fish-auctions guarantee free competition and equal playing fields for all parties in the race for access to valuable fish-resources

Feature story by Paul Oma, Managing Director, Norges Sildesalgslag.

There are discussions in Norway about the fishing industry’s access to raw material and the notion is that an increasing amount of fish is sold through “closed channels”. This, of course, reduces trade through fish-auctions and it will hurt the overall value of the whole industry.

At Norges Sildesalgslags’ marketplace, around 80 % of the all pelagic fish like herring, mackerel and blue whiting is sold through the auction to the highest bidder. This amount has been stable for the last few years, and we will maintain that this is a very important condition for maximizing the value in our sector of the seafood industry.

The auction secures the most competitive buyers’ access to raw materials by paying the correct market price determined in the auction. Those who can pay the highest price are generally also those being best in business. Fish-auctions provide a strong, but fair, competition for raw material. The competition also pushes a continuous development in keeping businesses, well, exactly that…competitive.

Does the auctions of Norges Sildesalgslag contribute to this development? Our answer is yes.

Our actions enable all potential buyers, both in Norway and abroad, to obtain fish of the best quality. We see that our customers are among the most competitive companies in Europe. In some countries, authorities have put in place protection measures against fair competition. The protective steps taken at the Faroe Isles are an example. In other countries, the industry has been forced to integrate upstream to be able to subsidize production by the help of resource-fees on fisheries. We thus believe that the Norwegian pelagic value chain creates higher values than in any other part of Europe.

Fishermen from our neighbouring countries sell significant volumes through our auction and our system. The value of fish landed by non-Norwegian vessels in Norway is three times higher than the share of fish Norwegian vessels are landing abroad. Sometimes, even foreign vessels are using Norges Sildesalgslag’s auctions to sell their fish to other countries than Norway. We see this as a clear indication of having a successful marketplace with competitive customers, smart fishermen and a level playing field.

The auction is the best way of selling the catch. The competition secures higher prices to the fishermen compared to other types of trading instruments in our marketplace. At the same time, the auction promotes high quality of the fish landed, as high quality adds value to the final price. Thus, the fishermen will work continuously to improve the quality of their catch, as it will pay off at the end of the day. We like to think that good quality also gives pelagic fish an advantage in a global market.

To keep our marketplace attractive is not a matter we take for granted. Our reputation depends on trust between participants, good sales conditions, competitive terms of payment and equal conditions for everyone taking part. We believe in a transparent way of business to keep our reliability. All transactions shall be deemed “foolproof” both by the fishermen and the buyers. A high level of transparency is fundamental when our aim is to be trustworthy. The sales conditions must be competitive, and they must be adapted continuously to market conditions and changes observed in the Northeast Atlantic.

We guarantee the fishermen payment within 14 days, - at the same time as we allow 30 days of credit to buyers. This is costly, but we consider it a good investment. Norges Sildesalgslag guarantees the same terms of business for everyone taking part in our auction. We do not discriminate between small or big fishing vessels, Norwegian or foreign vessels, or it being a fisherman or a buyer. This equal playing field is a crucial part of making the auction attractive, and profitable, for all.

Norges Sildesalgslag sees it an obligation to add value into the pelagic value chain. We are convinced that keeping up an auction with free competition and equal conditions for everyone participating, is the best way to add value into pelagic business as a whole. Accordingly, Norges Sildesalgslag will keep on running and developing the auctions. That is in the pelagic business’ best interest.

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