Economic Overview of the Northern Economic Overview of the Northern Shrimp Industry / Shrimp Industry / Portrait économique de l’industrie de la Portrait économique de l’industrie de la crevette nordiquecrevette nordique

Economic Analysis and Statistics, Policy Sector / Analyses économiques et statistiques, Secteur des Politiques

Northern Shrimp Advisory Committee Meeting – April 14, 2010 / Réunion du Comité consultatif de la crevette nordique, 14 avril 2010

Average Landed Price of Cooked and Peeled Shrimp (Inshore)

Source: DFO

•Since 1997, the average landed price of cooked and peeled shrimp in all provinces has been declining.

•The sudden price increase in 2008 to over $1.10 per kg. was not maintained. The price in 2009 continued to fall to a level of approximately just over 90¢ per kg.0.60

0.80

1.00

1.20

1.40

1.60

1.80

1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008p 2009p

($/k

g)

NB, NS, and QC <100 ft Newfoundland and Labrador < 100 ft

2

Revenues and Landings for Frozen Shell-on (Offshore)

-

50

100

150

200

250

1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008p 2009p

$ (m

illi

on

s)

-

10

20

30

40

50

60

70

80

90

MT

('0

00)

Landings Value

Source: DFO

•Continued low landings persisted in 2009 for the offshore fleet. These landings are about 60% less than in 2007.

•This was due in part to reduced capacity in the sector and resource decline.

•The preliminary data for 2009 that landings are remaining constant, but the value continues to fall.

3

Cooked and Peeled Shrimp Market Price*

2.5

3.0

3.5

4.0

4.5

5.0

5.5

Jan-0

0

Jul-0

0

Jan-0

1

Jul-0

1

Jan-0

2

Jul-0

2

Jan-0

3

Jul-0

3

Jan-0

4

Jul-0

4

Jan-0

5

Jul-0

5

Jan-0

6

Jul-0

6

Jan-0

7

Jul-0

7

Jan-0

8

Jul-0

8

Jan-0

9

Jul-0

9

Jan-1

0

$ (

CA

D)

250/350 (CAD$/lb) 175/250 (CAN$/lb)

* Price in Canadian Source: Urner Barry

•The U.S. price for both sizes of shrimp have followed along the same trend since 2000.

•Again, a spike in prices was experienced in 2008/09, similar to the cooked and peeled shrimp in Canada during that same time period.

•However, it appears that prices have started to rebound at the beginning of 2010.

•Prices for the U.K. market have remained just below $7/kg in recent years

4

Landings and TAC by Fleet

-

20

40

60

80

100

120

140

160

180

200

1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008p 2009p

MT

('0

00)

Inshore Offshore TAC

Source: DFO

•The chart presents how the TAC has steadily increased since 1997. In recent years it has started to level off at around 175,000 MT.

•In 2008, total shrimp landings fell by 12% from the previous year. Inshore landings increased, while the offshore landings reduced significantly.

•Preliminary 2009 data is indicating a further reduction in landings with the offshore sector remaining stable but landings from the inshore sector were down by almost 30%.

5

The Canadian Exports of Cooked and Peeled Shrimp

-

50

100

150

200

250

1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009p

$ (m

illi

on

s)

-

5

10

15

20

25

30

35

MT

('0

00)

Quantity Value

Source: DFO and Statistics Canada

•The exports of Canadian cooked and peeled products has extended its downward trend from 2008.

•Both the quantity and value of exports have fallen by almost 40% since 2007.

6

The Canadian Exports of Frozen Shell-on Shrimp

Source: DFO and Statistics Canada

-

50

100

150

200

250

300

350

1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009p

$ (m

illi

on

s)

-

10

20

30

40

50

60

70

80

90

Quantity Value

•After a drop in both export value and quantity of frozen shrimp in 2008, preliminary data is indicating an increase for 2009.

7

Cooked and Peeled Shrimp Exports by Destination

Source: DFO and Statistics Canada

0

5

10

15

20

25

30

35

1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009p

MT

('0

00)

$0

$50

$100

$150

$200

$250

$ (m

illi

on

s)

UK Denmark US China/Japan Others Value

•For the past several years over 50% of Canadian cooked and peeled shrimp was destined for the UK and Denmark.

•While preliminary data indicates that this still remains true, a visible reduction of exports to Denmark and the United States has occurred in 2009, since exports to all other countries have remained the same.

8

Frozen Shell-on Shrimp Exports by Destination

Source: DFO and Statistics Canada

•Denmark has been a major market for Canadian frozen shrimp since 1998. However, this appears to be no longer the case.

•The exports of frozen product directly to Denmark fell by more than half since 2007, although some of this might reflect trans-shipments to Russia.

•The market in Russia has been increasing in recent years, Iceland and Norway have also become increasingly important buyers of Canadian frozen shrimp.

-

10

20

30

40

50

60

70

80

90

1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009p

MT

('0

00

)

$-

$50

$100

$150

$200

$250

$300

$350

$ (

mill

ion

s)

China Russia Denmark Japan Iceland/Norway Other Value

9

World Shrimp Landings

-

1,000

2,000

3,000

4,000

5,000

6,000

7,000

1998 1999 2000 2001 2002 2003 2004 2005 2006 2007

MT

('0

00)

Worldwide Aquaculture NW Atlantic

Source: FAO

•Since 1998, the world landings of all shrimp and of Northwest Atlantic Northern shrimp have remained steady at approximately 3 million MT and 300,000 MT respectively.

•However, it is important to note that the capture landings for farmed shrimp worldwide has continued upward since 2002. In 2007 it surpassed the quantity of wild capture shrimp.

10

Canadian Gross Domestic Product* by Month* Chained 2002

Source: Statistics Canada

1,150

1,160

1,170

1,180

1,190

1,200

1,210

1,220

1,230

1,240

1,250

$ (b

illi

on

s)

•Like other countries, the Canadian economy has been experiencing the effects of the global recession.

•The effects of such a contraction affects all Canadians, including the fishing industry.

•However, there are indications that domestic growth is gradually improving. As GDP has been increasing since the Fall of 2009.

11

Exchange Rates – USD, EUR, GBP & RUS

0.75

1.25

1.75

2.25

2.75

3.25

Jan-

00

Jul-0

0

Jan-

01

Jul-0

1

Jan-

02

Jul-0

2

Jan-

03

Jul-0

3

Jan-

04

Jul-0

4

Jan-

05

Jul-0

5

Jan-

06

Jul-0

6

Jan-

07

Jul-0

7

Jan-

08

Jul-0

8

Jan-

09

Jul-0

9

Jan-

10

$ (C

AD

)

USD EUR GBP RUB*50

Source: Bank of Canada

•Since both northern shrimp sectors rely heavily on exports, the exchange rates in the major markets are key top their success.

•It appears that the Canadian dollar has been either stable or increasing in value compared to other rates.

•It is unknown how long the Canadian dollar will remain high, but it is expected to persist over the short term.

12

World Price of Crude Oil

$20

$40

$60

$80

$100

$120

$140

$160

$ (

CA

D p

er

ba

rre

l)

Source: Energy Information Administration

•The price of world crude has doubled since this time last year.

•The impact of the price of fuel, in particular, concerns the shrimp industry, as it is a significant portion of fishing costs.

•Once again, making planning for the future a challenge.

13

The Outlook

• It is once again expected that the fishing industry will continue to experience many challenges for the upcoming year.

• The driver behind this uncertainty is that many factors, such as landings, exchange rates, the price of oil and the strength of the economy, determines the success of the industry and all of these remain somewhat volatile.

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