Why Are Seafood Prices Falling Sharply After The COVID-19 Pandemic

On December 27, 2022, under the joint prevention and control mechanism of The State Council, a press conference was held to introduce the implementation of the "Class B and B management" measures for COVID-19 infection. At the conference, it was further clarified that "preventive disinfection will not be carried out on imported goods, and sampling tests will not be carried out on imported cold chain food".

And just a few days earlier, the seafood market prices have fallen sharply. As prices have plummeted, so have sales. At Huangsha Market, the largest seafood trading center in southern China, a salmon dealer told the media that sales of fresh salmon had dropped by 80 percent. Another salmon wholesaler told the media that the money made last week was lost this week, and some have been losing money for weeks.

As we all know, market prices are determined by supply and demand. An important reason for the recent short - term plunge in seafood products is the rising supply of imports. "That week, Norway exported 665 tonnes of fresh salmon to China, 100 tonnes more than the week before," said a Beijing-based salmon dealer with close ties to Norwegian suppliers, citing data from the Norwegian Seafood Council.

The adjustment of epidemic prevention policies has also saved the cost of nucleic acid elimination and storage. More importantly, there is no need to worry about the time cost of each link, which is crucial for seafood products.

The reduction of additional costs, the elimination of many uncertainties, and the stable expectation will be conducive to the increase of market supply on the whole. Small and medium-sized dealers who could not afford the risk of loss are coming back and continuing to do business, so we are seeing an increase in supply.

On the other hand, due to the adjustment of epidemic prevention policies, the virus is spreading faster, and many people have been caught or are worried about being caught, so consumption has not completely recovered. In the short term, the decline in demand will also have a certain impact on the market, resulting in a sharp drop in prices, but in the long term, the market demand will soon recover.

This recovery mainly depends on the recovery of the consumption power of end consumers, that is, the recovery of the whole society in the face of the novel coronavirus. Local dealers don't expect the market to pick up until mid-January 2023.

To summarize, the law of demand, one of the basic principles of economics, tells us that, when other conditions remain unchanged, the quantity demanded of goods changes in the opposite direction to the price, that is, the price rises and the quantity demanded decreases. When the price goes down, the quantity demanded goes up.

The phenomenon of "quantity and price falling" in the seafood market this time is mainly due to the change of "other conditions" in the law of demand. Among them, the most important changes are the epidemic prevention policies and the control measures of cold chain food, which have changed the overall environment of the whole market, and then changed the overall supply and demand of the whole market.

The price is determined by the relationship between supply and demand. There is nothing wrong with the law of the market and the law of demand. What is important is to correctly understand and master the method of application. However, if you do not understand the market theory, it is easy to misunderstand various phenomena in the market, often mistake correlation for causation, and mistake problems brought about by regulation for problems of the market itself. The short-term sharp drop in seafood prices has taught us a vivid lesson, which can help us better understand the law of demand and the law of the market.