Will Chile benefit as the supply of salmon to Russia dries up?

Sales to Russia account for 6 per cent of total Chilean salmon and trout exports. 

On Thursday 24 February as Russian tank columns rolled into its neighbour Ukraine, the response in Latin America was muted. While a number of countries issued statements rejecting the use of force, almost all stopped short of calling for a Russian exit.

Among the brave few taking a firmer stance were Colombia, Argentina and Chile: “Our country calls for Russia to withdraw its troops and especially for it to respect the territorial integrity and sovereignty of Ukraine,” Chile’s Foreign Minister Carolina Valdivia said.

Chile is the second-largest salmon producer in the world after Norway. Top export destinations include the United States, Japan, Brazil and… Russia.

In the past week, SalmonBusiness has reported on the tightening of supply chains, as former loop holes such as the sale of salmon to Belarus (for transport on to Russia) have been sewn shut. While the Faroe Islands, an autonomous part of the Kingdom of Denmark which had prospered from the Russian ban on salmon imports from leading producer Norway since 2014, has also faced criticism, leading to its largest producer, Bakkafrost, to announce the cessation of all salmon sales to Russia.

Read more: Will the Faroese continue to use their loophole to access the lucrative Russian market?

The sanctions announced by the international community in response to Russian aggression have led to a massive hit to the value of the rouble, a stock exchange crisis and are expected to trigger severe inflation.

Unless Chile joins the US and the EU in this imposing sanctions, it is unlikely that Russia would take action against Chilean exporters. Nevertheless, Russian demand for salmon will almost certainly be affected by the collapse in value of the rouble, which will make imported products, such as salmon, more expensive.

Furthermore, the unplugging of the Russian economy from SWIFT (Society for World Interbank Financial Telecommunication), will prevent transactions with large Russian banks and financial institutions, and is expected to have a devastating impact on the Russian economy as well making trade difficult, if not impossible.

According to Chilean newspaper La Tercera, Chilean authorities worry that Chilean trade with Russia will be severely affected by this step, which would prevent commercial transactions, with a devastating knock on effect on the country’s salmon, wine and fresh fruit industries.

In 2021, Chile enjoyed a positive trade balance with Russia of $425 million.

According to Chilean customs data, during 2021, 50,688 tonnes of Chilean salmon were exported to Russia, at a value of $291 million. Although this represents a drop of 18 per cent in volume and 3 per cent by value on the figures recorded for the same period in 2020.

Exports to a war zone, will of course also fall, so the Ukrainian salmon market will also be affected, but it is not an important market. Total exports from Chile to Ukraine totalled US$54 million for 2021, with the most valuable items being mussels ($14 million) and horse mackerel ($2.1 million).

Importance of flexibility
Carlos Odebret, president of the Association of Salmon Growers of Magellan explained to La Tercera that “it is imprecise to talk about consequences specifically in the current scenario. Chile exports something like US$290 million in salmon to Russia. That is almost 6 per cent of total Chilean salmon exports. So, it is the fourth most relevant market and there is no doubt about that.”

Carlos Odebret. Photo: Magallanes Salmon Farmers’ Association

“In 2019, China was similarly important but in 2020, when the Covid-19 crisis arrived, it severely restricted the market. Chile was able to overcome that situation, redirecting products to other markets, maintaining competitive prices and therefore, the ability to be flexible to this type of situation is important, especially in a scenario in which there is a growing demand for seafood in all markets around the world,” he added.

A statement issued by Jorge Lira, director of Studies at the Chilean Salmon Council said, “Chilean salmon farming companies are attentive to how the situation between Russia and Ukraine evolves, because it has an impact mainly on the logistics associated with salmon shipments, with effects on, for example, increases in the price of oil and other risks associated with the conflict escalating to other markets.

Jorge Lira, director of Studies at the Chilean Salmon Council

“On a positive note, producers have managed to diversify their matrix of destination countries in recent years, which is essential to be able to react to contingencies. Until a few years ago Russia was a very relevant country for salmon exports, but Russia today represents about 6 per cent of total salmon and trout exports. Chilean industry currently exports to a number of countries with a leading role in salmon demand from the United States, Brazil and Japan, among others.

“We hope that this crisis can be solved as soon as possible and that it does not continue to escalate,” he concluded.

Arturo Clément, president SalmonChile also noted the recent diversification in Chilean producers’ customer base. “We deeply regret the drama that is being experienced in Ukraine. In such a globalized and interconnected world, these armed conflicts have an enormous human impact and certainly have harmful effects on all economic sectors.

SalmonChile’s Arturo Clement

“As an export sector, salmon farming is well diversified, from Latin American to Asian markets, which protects us. However, it is clear that there is a possibility that the supply chain will be interrupted. We are watching closely what is happening and we hope it will be resolved in the short term.”


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