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Seafood is the new oil

If key decision makers and opinion leaders keep repeating this phrase they might start believing it. Then they can start working on actually achieving it.

“Seafood is the new oil” is a popular slogan used on festive occasions both by politicians and industry leaders. Is this really true or is it empty rhetoric? Data is also the new oil, says the Economist magazine. A whole lot of things are actually the new oil according to different people.

But “seafood is the new oil” still strikes a very strong cord in Norway. Maybe because we need it as the “old oil” is in decline. We have started occasionally dipping into the oil fund instead of steadily pouring large amounts of cash into it.

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We need “a new oil” to help pay for our large public sector. The parallel between oil and seafood is not totally farfetched. Seafood is the second largest export after the oil sector, even if the gap is large.

SINTEF believes that seafood will overtake oil in 2050, however, as seafood continues to grow while the sun slowly sets on oil.

Another parallel is that both seafood and oil have very high value-added per employee, even if oil is in a league of its own. But a nuance here is that seafood is a renewable resource while oil is not. Hence a lot of the value added in oil is really “value moving” rather than “value creation” -- it moves value stored as oil from the bottom of the sea into the national oil fund as bonds and equities.

In economic terms you can look at this as a portfolio reallocation rather than value creation. From this perspective the difference between oil and seafood in terms of value creation is much smaller.

China is a common factor for both.

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Strong demand for energy and industrial commodities as China built its economy created an extended commodity super cycle which helped propel oil prices to new highs. That cycle is now over, partially driven by China working on rebalancing its economy to being more consumption driven and less investment driven.

This is negative for Norwegian exports which are very dominated by energy, industrial commodities and equipment. But of course it is positive for consumer goods. And Norway’s dominant consumer goods export is seafood.

Another similarity is that the oil industry created a large service industry which grew out of local waters and became globally competitive. Seafood should be able to do the same thing.

Maybe the most important aspect of the “seafood is the new oil” slogan is its policy implications. The successful development of the oil industry in Norway was the result of a major national coordinated effort (“dugnad” in Norwegian) in order to maximize value creation and Norwegian content.

Policies for the seafood industry have had a very different starting point. While the oil industry started with a blank sheet of paper, the seafood industry in Norway is much older than the Norwegian state itself.

Hence there are a lot more legacy challenges for politicians to deal with. The Norwegian coordinated effort in building the oil industry is not likely to be repeated. But if the key decision makers and opinion leaders keep repeating that “seafood is the new oil” they might start believing it. Then they can start working on actually achieving it.

Dag Sletmo is a senior corporate analyst at Norway's DNB.

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