Mussel producers 'shooting themselves in foot'

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New Zealand mussel producers are undercutting each other in foreign markets and dragging down prices for the country's biggest aquaculture export, Sanford managing director Eric Barratt told analysts last night.

"It's New Zealand producers shooting themselves in the foot," he said.

Listed fishing company Sanford yesterday posted huge drop in profit, from $26 million down to $5.3m for the half year to March, hit by high exchange rates and low prices for some species.

Sanford was combating the price competition in mussels by creating a joint brand to market product in China, said Barratt. A joint venture of the three largest producers - Pure New Zealand Greenshell Mussels - would handle their combined exports. 

"We're looking at co-ordinating better in other markets," he said. For the US market, "there are 25 exporters of mussels in New Zealand. There are 60 importers in the US. That doesn't tend to a reasonably orderly market."

Sanford produces 25 per cent of all the greenshell mussels in New Zealand, an export market worth about $200m.

The other main producers are Pacifica Seafoods, Aotearoa Seafoods, Sealord and Talleys.

Speaking to analysts and media at the Auckland Seafood School on the waterfront, Barratt desribed the last six months as "tough".

"The argument in the market is that we dropped the price. But we have to meet the market or else try and make the market."

Because production costs were so fixed, he said, price changes flowed straight to the bottom line.

Despite the poor result, Barratt was upbeat about the future of aquaculture and predicted an upward price path for mussels.

"The projection is realistic and achievable and we're already ahead of that now," he said.

Aquaculture would increasingly fill the gap between supply and demand for seafood. "In three or four years there's likely to be more seafood from aquaculture than wild catch," he said.

He also cast doubt on the ability of overseas buyers to find enough wild catch certified as sustainably harvested.

The marine Stewardship Council had certified Sanford's hoki and South Georgia toothfish as sustainable, and the company was going through the process for other species.

"We're pushing as many New Zealand species as we can into this category," said Barratt.

"But there's a rush to this worldwide. There's only a limited number of bodies approved as certifiers and they're flat out now."

With growing demand the long term price trend was positive.

- © Fairfax NZ News