Chile’s weeklong protests taking toll on salmon exports

Social unrest and violence in Chile that has taken place over the past week has begun to affect key parts of the economy, including salmon production and exports.

Protests originally began over increased fares in capital Santiago’s metro system. However, protests quickly ignited nationwide, ballooning over issues as wide as social inequality, Chile’s overall cost of living, low minimum salaries, disappointing retirement system returns, politicians seen as out of touch with reality, and justice perceived as unfairly favoring the country’s elite.

Most of the protests throughout have been peaceful, however, there have been incidents of violence, including the burning of metro stations, the looting and burning of supermarkets and vandalizing of other buildings such as hotels and those owned by the country’s electric company. The social unrest has led many businesses – including banks, supermarkets, gas stations, and ports – to close shop altogether or to curtail operations in order to protect workers and infrastructure.

The turmoil led Chile President Sebastián Piñera to declare a state of emergency and implement a curfew, deploying militarized police and the armed forces to protect infrastructure and try to ensure peace. The move marks the first time since the 1990 return to democracy from the dictatorship that armed forces have been deployed in the country and a curfew declared. 

The president also presented a package of social reforms that look to address the issues brought up during the demonstrations. However, protesters have overall deemed the measures as insufficient and have continued taking to the streets.

Last Wednesday, Chile’s Central Bank lowered its benchmark interest rate by 25 bps to 1.75 percent and warned that the unrest would affect the country’s economic outlook.

“The complex events that have occurred in our country during the last few days will have effects on the evolution of the economy,” it said. “In the short-term, activity will be affected by the partial paralysis of the country and damage to infrastructure. In the medium-term, the magnitude and speed of the reconstruction, the impact on expectations, and the effects of the measures announced by the government will be important.”

Chile’s open economy is highly dependent on international trade, which represented 57.5 percent of the country's GDP in 2018, according to data from the World Bank.

In the salmon sector, logistics have been affected by the demonstrations, with blocked roads and interrupted transportation meaning employees cannot get to their places of work, and product cannot be shipped. Work at the airports has been severely limited, with a number of flights having been canceled and Chile’s customs workers declaring a strike. Many ports have closed in the south of the country, where the salmon farms are located, while some farmers have limited harvesting and production to avoid theft.

Some salmon sector workers have joined in the protests themselves, including workers at Salmones Austral and Yadran, according to DiarioUChile.

Carolina Delgado, the leader of Conatrasal, a union representing workers in the salmon and mussel sectors, said the employees were protesting "unworthy working and salary conditions in Chiloé, an island with a large presence of salmon-farming firms.

"They are also affected by the constant increases in basic services, which are [already] much higher on the island of Chiloé than in other cities in the country," Delgado said.

Salmon is Chile’s second-largest export product, after copper, with exports exceeding USD 4.6 billion (EUR 4.1 billion), according to industry association SalmonChile. The country is the second-largest salmon exporter worldwide after Norway.

The NASDAQ Salmon Index – the weighted average of weekly reported sales prices and corresponding volumes in fresh Atlantic superior salmon, head on gutted, reported to Nasdaq Commodities by a panel of Norwegian salmon exporters and salmon producers – was up 12.04 percent on the week to 51.20 NOK (USD 5.55, EUR 5) per kilogram.

Executives from SalmonChile nor the Chilean Salmon Marketing Council were not immediately available for comment when contacted by SeafoodSource.

Photo courtesy of Erlucho/Shutterstock