Last year, a somewhat ominous production forecast pointed to the possibility of oversupply once again depressing farmed bass and bream prices to unsustainable levels. However, it now seems that the industry's efforts in developing new markets and products, combined with an improved economic outlook in the EU28, is generating some much-needed demand.

The total increase in bass and bream production in 2017 is expected to be some 8 to 12 percent this year, with relatively higher growth projected for bream. These additional volumes have also been reflected in the export statistics of both Greece and Turkey, the two largest producers, with figures for the first half of 2017 showing significant gains over the equivalent period in 2016 in terms of both quantity and value. However, higher export revenues are only sustainable if production costs are covered by the prevailing price, and this is why concerns over possible price impact had been expressed by multiple industry participants when it became apparent that both Turkey and Greece were looking to boost production volumes over this year and the next. Indeed, throughout the majority of the first half of 2017, average export prices in euro terms languished well below their equivalents in year-on-year terms, particularly for bream which has been suffering relatively more than bass from the effects of excess supply. However, the general mood improved somewhat over the course of the third quarter as indications pointed to a more balanced market driven firstly by increased demand across a more diverse range of markets and product categories, and secondly by a slight tightening in supply amongst the large Mediterranean producers.

In Turkey, the approximately 2oC lower mean water temperatures observed in the Aegean and Mediterranean seas this year, as well as late warming and early cooling of seawater, has led to relatively lower fish growth rates and availability of 400–600 g and larger fish in the third quarter of 2017. As a result, supply has been restricted for 400–600 g and larger bass and average ex-farm prices (ice-packed) of 400–600 and 600–800 g bass were up to €4.75 and €5.20 per kg respectively. Bream prices have also been relatively stronger compared with the same period in 2016, reaching €3.5 per kg for 400–600 g fish and €4.84 per kg for 600¬–800 g fish.

The Turkish industry continues to develop more efficient production technologies, and industry sources recently reported positive results of (pre) on-growing of fry in earthen ponds in land-based sites before transferring to off-shore cages. This new practice by some major producers enables vaccination operations to be done on land and transfer of vaccinated 5–10 g bream and 15–20 g bass to off-shore on-growing sites with relatively low mortality/loss (about 2 percent). It also helps to lower labor costs for vaccination operations (compared to vaccination on off-shore sites). Opening and licensing of new production sites (e.g. Mersin/Eastern Mediterranean coast) is also seen by the Turkish industry as a positive development for the expansion of bass/bream production. It is likely that production from new sites will further boost Turkish supply of bass and bream in the coming years.

In Greece, prices for bream and bass diverged further over the course of the third quarter. Prices for 350¬¬–400 g bream had fallen to €4.30 per kg by October, their lowest point since early 2014. For bass, however, October prices were at €5.00 per kg, some 20 cents higher than the same period in 2016. As harvest volumes rise, Greece continues to focus primarily on supplying core EU28 markets, with Italy still firmly cemented as the number one export destination. Another notable trend in 2017 is a significant increase in Spanish imports of Greek fish as demand amongst Spanish consumers continues to outstrip domestic supply growth.

Overall, Greek exporters have slightly increased the share of volumes directed towards their four major markets – Italy, Spain, France and Portugal. This rising degree of concentration contrasts markedly with the Turkish strategy of actively seeking to develop consumer bases in new regions, particularly the Middle East, and thereby decreasing dependence on traditional markets. However, it should be recognized that in this respect, Greece is at somewhat of a disadvantage due to its higher-priced product, which is more of an issue for less mature markets in which the ability of consumers to differentiate between product origins is not so developed. That said, there has still been some headway made in less developed EU28 markets such as Romania and Bulgaria. At the same time, value addition through product innovation and quality certification seems to be a viable avenue for Greek marketers to generate new demand in more established markets.

On the production side, there is still some debate as to whether increased consolidation of the industry should be actively pursued in Greece, and this discussion has been thrown into sharper focus as the sale process of Nireus and Selonda, two of the largest Greek aquaculture companies, approaches its conclusion.

Italy

The development of Europe's major bass and bream market, Italy, has been more or less in line with expectations so far in 2017. Import volumes of both species have increased from Greece and Turkey, as buyers take advantage of the lower price level. The share of Turkish fish in total supply to Italy continues to grow, a trend accelerated by the depreciation of the Turkish lira. Supply of domestically produced bass and bream has also increased, typically marketed as a quality product at a higher-price point. Private consumption growth, driven by broader economic recovery, will ensure the strength of underlying demand on the Italian market for the foreseeable future, but as a mature market, its capacity to absorb excess volumes without a significant price impact is limited.

France

The French market for bass and bream has largely followed the wider trend, with importers purchasing the majority of supply from Greece and replacing falling Spanish volumes with cheaper fish from Turkey. However, France remains a very origin-sensitive market, and despite a significant increase in supply share this year, Turkish fish still represent a small proportion of the total. Prices for both species have been low at French wholesale markets for most of 2017, but a spike in prices was observed in September.

Spain

Price trends at the large Spanish wholesale markets, Mercamadrid and Mercabarna, provide a good reflection of how the situation is developing across the core European markets. Bream prices remain well below last year's levels on an aggregate level, but there has been a notable post-summer spike in larger-size fish prices as a supply shortage begins to bite. Due to a tighter market balance, bass prices are only marginally below 2016 levels, with the same upward trend observed for larger sizes. With improving economic fundamentals, demand remains firm in Spain.

Other markets

Of the larger European markets, Portugal is the standout growth market in 2017, with imports up 22 percent in the first half of 2017. Lower prices have stimulated buying activity amongst importers, sourcing from Spain, Greece and Turkey. The Netherlands has also been increasing its imports of bass and bream, although a significant proportion of this is re-exported to other European markets. The rebound of the Russian Federation from deep recession is also important for the Turkish sector as an additional source of demand to absorb growing production.

Outlook

Total farmed bass and bream production is expected to grow a further 5 to 7 percent in 2018 and although there is evidence that aggregate market demand has increased, all industry participants will be mindful of the potential impact that this continued growth will have on price levels. That said, it must be recognized that there are a number of positive developments in production, processing, logistics and marketing that will help to boost company margins through demand generation and cost savings. Product ranges for bass and bream are becoming significantly more modernized and diverse, with more emphasis on preparation, portioning and packaging. Ecolabelling and organic certification is also increasingly prevalent.
Industry stakeholders, particularly in Turkey, are focusing on developing multiple new markets and producing regions, as well as new production and logistical technologies. In addition, there have been improvements in the economic outlook for a number of key markets, and a sustained increase in prices for some competing seafood items such as salmon, which is now in relatively short supply. Together, these developments represent an improved long-term outlook for the bass and bream sector. However, for 2018, it is still not clear that the positive effects will outweigh the downward pressure on prices resulting from continued supply growth.