The boom and bust cycle that is familiar to the Mediterranean bass and bream aquaculture sector is now firmly in the bust phase due primarily to rapid output growth led by the Turkish industry. Economic weakening and general uncertainty in important markets is adding to the challenges presented by steep price declines.

The consequences of over-optimistic juvenile stocking levels at Greek and Turkish farms over the past couple of years are now being felt on the European market for bass and bream. According to figures from Kontali, estimated total production for bass and bream in 2018 was 172?500 tonnes (+6 percent) and 200?500 tonnes (+7 percent), respectively. Solid demand in important EU28 markets and promising growth in newer markets further afield represented an apparent opportunity for expansion. However, total output has simply increased too rapidly for what is still a relatively undeveloped market, when considered in terms of geographic range and product diversity. The result has been a pronounced downward price trend that showed no signs of slowing in the second half of 2018. In Italy, the largest single market for both species, September 2018 prices for 300–450 g Greekorigin fish stood at EUR 4.20 and 4.30 per kg for bream and bass, respectively. By December, prices had fallen further to EUR 3.80 per kg for bream and EUR 3.90 per kg for bass. These price levels have not been seen for six years in the case of bream and even longer for bass. For an industry in which EUR 5 per kg is often cited as an approximate breakeven price at the farm level, the longer the current situation persists the more damage will be inflicted on producer margins.

Only relatively small increases in Greek production of bass and bream were forecasted for 2018 and the latest export volume statistics suggest that this projection was accurate. However, after years of Turkish expansion of exports of seabass and seabream to the EU28, Greek exporters now compete directly with their Turkish counterparts in all major markets and have had to drop their prices in response to increased supply of cheaper fish from Turkey. This is particularly true for bass, which have been relatively more plentiful in 2018, but the downtrend in Greek bream export prices was also accelerating later in the year as post-summer demand weakened.

Greek exports of bass were down by 7 percent in value during the first 9 months of 2018. Italy remains by far the most important market for the Greek industry, absorbing 50 percent of Greece’s bass output and around 40 percent of its bream production. The progress of the Greek sector in terms of developing alternative markets remains limited, held back in part by their pricing disadvantage. However, an emphasis on more coordinated marketing efforts and the consolidation of two of Greece’s largest aquaculture companies into a single entity both represent positive steps taken by the industry in 2018.

In Turkey, 2018 was a year of record production levels, with further export market development and turbulent financial conditions. The economic factors behind the weakening lira, which has favoured exporters in their ongoing push to expand their share in the EU28 markets, are those that have also restricted access to credit for aquaculture companies and depressed domestic market demand. From the Turkish exporters perspective, the diminishing value of the national currency has provided a buffer against falling prices in the wider market, but the high rate of domestic inflation and associated issues brings other challenges with it. Italy and the Netherlands were the only two major export markets that did not see large increases in imports of fresh whole Turkish bass (and bream to a lesser extent) in the first 9 months of the year. However, exports of fresh fillets to the Netherlands were up.

Greece stands out as the EU28 market with the most significant increase in imports of Turkish product over the same period, evidence that even Greek traders can no longer resist Turkish prices. Considering that Turkish FOB export prices for both species were around 20–25 percent lower than Greek equivalents in euro terms during 2018, it is easy to appreciate the appeal of Turkish-origin fish for EU28 buyers, despite any logistical advantages that Greek-sourced supply may offer. For growth markets in the Middle East, such as Lebanon, and in the Russian Federation, the combined advantage of more competitive pricing and established trade connections is such that Greece has not managed to gain any significant share of these markets.

Markets

Italy

According to the market research firm Kontali, Italian production of bass and bream is forecast to have expanded by around 10 percent in 2018, to around 11?000 tonnes of each species. While this is a significant increase in percentage terms, Italian production is still relatively low compared with Greek and Turkish production. Italy exports some volume marketed as high-end product to other EU28 markets such as France and Portugal, but the domestic market absorbs the majority of production. Although demand in Italy has been firm, economic forecasts are cautious and short-term price recovery here and elsewhere in the EU28 will depend on supply tightening rather than demand shifts.

Spain

With domestic production flat at around 20?000 tonnes of each species, Spain has been turning increasingly to Turkish-origin imports to meet consumer demand for bass and bream. Turkey’s share of Spanish imports of bass (volume) was 45 percent in the first three quarters of 2018, compared with 22 percent in 2017 and 17 percent in 2016. The latest available reports from wholesale markets in Barcelona show bass prices down by 27 percent yearon-year and bream prices down by 20 percent as of November.

France

Market conditions in France are similar to those in Italy and Spain, with prices down across the board, even at retail level. Bass imports were up 8 percent in the first nine months of 2018, compared with the same period in 2017, while imports of bream were approximately flat. Greece remains France’s top supplier, providing about 50 percent of its total imports of both species.

Other markets

Bass imports in the United Kingdom, mostly from Turkey, were up by about 13 percent in the first nine months of 2018, compared with the same period in 2017, while bream imports fell by 15 percent in the same period. In Germany, imports of both species fell over the same timeframe. Markets in the Middle East, such as Lebanon, United Arab Emirates and Kuwait, continue to increase their imports of Turkish bass and bream, encouraged by the low price level. According to the data from the Federal Customs Service of the Russian Federation, Russian imports of fresh bass and bream in the first three quarters of 2018 amounted to 5?100 tonnes, about 7 percent more compared with the same period in 2017. Seabream imports decreased slightly to 2?578 tonnes in 2018 from 2?613 tonnes in 2017. Seabass imports increased to 2?500 tonnes from 2?100 tonnes in 2018 and 2017 respectively. Turkey is by far the leading supplier of seabass and seabream to the Russian Federation, providing 99.8 percent of seabass and seabream volume on that market. The major proportion of Turkish supply is typically shipped to Moscow and St. Petersburg, but Turkish companies have also started to send trucks with frozen seabass and seabream products to Kaliningrad.

Outlook

Prospects for a demand-led price recovery for seabream and sea bass are very limited, given the curbing economic growth in the Eurozone, the numerous uncertainties related to Brexit and the deteriorating conditions in the Turkish economy. Emerging markets in alternative regions have shown promise, but the industry is still overwhelmingly dependent on the large EU28 markets. The current lull can be expected to continue until aggregate supply tightens significantly. Estimates of juvenile stocking for 2018 are not yet available and thus reliable forecasts for supply over the next two years are difficult to make. However, the consolidation of the Greek industry and the more restrictive business environment in Turkey are two factors that could contribute to more cautious and coordinated production planning, in addition to the strong disincentive of unprofitable price levels. On the market side, demand for fillets and other processed products, as well as the launch of the new Aquaculture Stewardship Council standard for bass and bream, provide opportunities for value addition and product diversification. At the same time, expectations for reduced wild groundfish supply may see consumers purchasing more bass and bream to meet their demand for whitefish.