By Anton Troianovski in Moscow and Ellen Emmerentze Jervell in Oslo
Amid the global tug of war over the future of Ukraine, 34 tons
of Ola Braanaas's salmon got caught in the middle.
"We have to sell our fish at any price now," the Norwegian
salmon exporter, whose biggest customer was Russia, said on Friday.
"The fish has to go."
The cascading impact of Moscow's ban on many Western food
imports this week may be starkest when it comes to fish.
On Friday, Norwegian fish purveyors, for whom Russia is a key
market, scrambled to find new buyers. Chile and the tiny Faroe
Islands saw an opportunity to fill the gap in feeding the Russian
appetite for salmon and other sea creatures. Shares in a Russian
fish production company that until recently was partly owned by a
U.S.-sanctioned Russian tycoon soared 19%.
"We consider the recent Russia events as a 'Black Swan' on the
demand side," a fish industry analyst, Kolbjorn Giskeodegard, said
in a research note, referring to the financial-markets term for an
unexpected and consequential event.
Russian fish consumers should gird for higher prices,
market-watchers said, while shoppers elsewhere could expect
discounts.
Russia on Thursday prohibited for one year imports of beef,
pork, poultry, fish, fruit, vegetables, cheese, milk and other
dairy products from the U.S., Canada, the European Union, Norway
and Australia. The move came in retaliation for sanctions against
Russia's oil, banking, and military sectors, which the EU and U.S.
said they enacted to pressure Russia to stop destabilizing
Ukraine.
Mr. Braanaas, who sells 70% of his salmon and trout to Russia,
had two trucks carrying 17 tons each en route to the border
Thursday when the news came that they needed to go elsewhere. He
described his scramble to find new buyers for the fresh fish as
"acute chaos." In a follow-up interview on Friday, he said he
eventually was able to find buyers for all the fish at a slight
discount.
One of Norway's largest salmon traders said he had managed to
sell off half his stock that had been bound for Russia to European
fish processors at a discount. The other half was frozen.
Russia's decision to include in its sanctions the fish industry
in Norway, which isn't part of the EU, appeared to surprise many
investors. Norway had followed suit after this year's early rounds
of European sanctions against Russia and signaled it would do the
same with the most recent, toughest EU measures last month. Russian
Customs Service data show Norway's fish trade would be among the
single hardest-hit sectors by the new sanctions, with more than $1
billion in sales to Russia last year.
In 2013, Norway on average sold 134 truckloads of trout and
salmon every week to Russia--its largest foreign market. Shares in
Norwegian company Marine Harvest ASA, the world's largest salmon
farmer, were down 11% in Friday trading on the New York Stock
Exchange compared with their Wednesday afternoon close.
"Companies need to turn quickly and find new markets," Are
Kvistad of the Norwegian Seafood Federation said. "Large volumes of
fish have to be sold."
Russia's sanctions also created some beneficiaries, including
fish producers in Chile, Iceland, and the Faroe Islands--a tiny,
non-EU country in the Atlantic Ocean between Iceland and
Scotland--which would now face less competition on the Russian
market.
But even fish producers in those countries will have to contend
with a flood of fish on the market that had been destined for
Russia.
Mr. Giskeodegard, the fish industry analyst, said shoppers
around the world---except in Russia--can expect discounts on salmon
in the supermarket, with wholesale prices already down some 10%
since last week.
"They are the winners," Mr. Giskeodegard said of global
shoppers. "The losers are the Russian consumers. They should expect
higher prices."
The ban also benefits domestic Russian fish producers. Shares in
one of the market leaders, GK Russkoe More OAO, shot up 19% on
Friday. Gennady Timchenko, a Russian tycoon who was one of the
first well-connected elites in Russia to be sanctioned by the U.S.
earlier this year, owned a 30% stake in Russkoe More until
recently. The official Itar-Tass news agency reported that he had
sold the stake to his son-on-law several weeks ago. The company
declined to comment.
Much of the Russian press hailed Moscow's economic retaliation
as a step that will move the country toward more healthy and
domestic food. "We Have Our Own," read the front-page headline in
state newspaper Rossiyskaya Gazeta on Friday, which was illustrated
with fresh-looking vegetables and meats.
But Russia will have a long way to go to fill the Norwegian
salmon void. In 2013, the country imported 130,000 tons of salmon
from Norway, compared with 50,000 tons from Chile, according to the
Russian Fish Association. Production in Russian fish farms, the
association said, amounted to only 10,000 tons.
"In the transition period, there may be problems," association
chairman Yuri Alasheyev said.