Complainant
(a)
Name and address.
According
to their submission document, the complaint has been presented by the EU Salmon
Producers Group, who claim to be an organisation representing 22 member
companies. However, there is very little evidence to suggest that this
representative organisation actually exists.
The
EU Salmon Producers Group list their address as 20 Barnton Street, Stirling, FK8
1NE. Telephone 01786 474 718, Fax 01786 451 392. However, these contact details
actually belong to a firm of Chartered Accountants called Dickson Middleton.
British Telecom directory enquiries confirm that the telephone number and
address is theirs, not that of the EUSPG.
According
to the Scottish Executive, the EUSPG is a recognised Trade Association however
their contact arrangements is ‘care of’, which confirms that the EUSPG have
neither an office or dedicated telephone lines. The Scottish Executive’s only
contact with the EUSPG appears to be through a different telephone number –
01259 743627.
Whilst
the Scottish Executive say that they recognise the EUSPG as a Trade Association,
the Executive’s website does not include any links to the EUSPG, even though
there are links to all the official salmon industry representative organisation
websites.
The
EUSPG are not listed in any of the industry trade directories. The Fish Farmer
Handbook 2004, the Fish Industry 2004 Yearbook and the Aquaculture Ireland
Yearbook 2005 do not to refer to the EUSPG.
Clearly,
if the Scottish Executive had not recognised the EUSPG and applied for
safeguards on their behalf, the EUSPG would not be considered a working
representative organisation.
According
to the submission, the Complainant represents 22 producing companies. This
statement is both erroneous and misleading. Annex 1 of the submission lists the
Complainants
1. Ardvar Salmon
2. Wester Ross Salmon
3. Loch Duart Salmon
4. Orkney Seafarms
5. Atlantic West Salmon
6. West Minch Salmon
7. Sidnish Salmon
8. Ayre Salmon Farms
9. Balta Isle Seafayre
10.Olnafirth Salmon
11.Skelda Salmon
12.Thompson Bros Salmon
13.Uyeasound Salmon
14.Foraness Fish
15.Greenholm
16.Hoove Salmon
17.Islands Salmon
18.North Atlantic Seafarms
19.Manin Bay Salmon
20.Eise Ui Flatharta Teoranta
21.Muir Gheal Teoranta
22.Muirachmhainnai Teoranta
23.Celtic
Atlantic Salmon
24.Silver King Seafoods.
This
list confirms that there are 24 producing companies, not 22 as stated. This is a
basic error. However, the list of farms is also inaccurate because at least one
farm does not exist and others are owned by the same people. This might not be
an issue except that these farms all produce very small volumes of salmon. There
appears to be little rationale for operating in this way, especially as it
incurs repeated costs.
The
submission was dated 7th September 2004, yet Ardvar Salmon was sold
at the end of the previous April and merged with the farm of another EUSPG
member. The list includes three farms all operated under the same address
belonging to EUSPG member Angus Macmillan. These are Atlantic West, West Minch
and Sidnish. These are effectively one farm. The North Fish Group lists three
separate farms, which according to the Shetland Salmon farmers Association
website are owned by EUSPG member Angus Grains. This means that the list of
EUSPG members actually contains 19 producing companies.
The
Complainants imply in their submission (Annex 13) that they represent a
Community industry, operating under their own trade association, which is
distinct from the rest of Scottish production. This is not the case. Several of
the complainant companies are members of other industry organisations whose
membership includes companies that the Complainants claim are not part of the
Community industry.
The
membership of Scottish Quality Salmon includes
Ardvar
Salmon
Ferguson
Salmon
Finfish
Lakeland
Unst
Lakeland
Marine
Loch
Duart
Marine
Harvest
Scottish
Sea Farms
West
Minch Salmon
According to their website,
Wester Ross Salmon are also members of SQS although they are not included in the
SQS list.
Although
Ardvar Salmon is now no longer operating and presumably will disappear from the
membership list, Angus Morgan, secretary of the EUSPG and chairman of Ardvar
Salmon is also a leading board member of SQS.
All
the complainant companies from Shetland are members of the Shetland Salmon
Farmers Association along with:
Scottish
Seafarms,
Lakeland
Unst,
Hjatland
Seafarms,
Johnson
Sea Farms,
Johnson
Seawell,
Unst
Salmon
Hoganess
Salmon,
Wester
Sound Salmon
There
is no published membership list of the Irish Salmon Growers Association so it is
impossible to differentiate between community and non-community producers within
this organisation.
Clearly,
the complainants cannot be distinguished as a distinct Community industry from
the rest of European producers. The Community industry includes all known salmon
producers.
(b)
Standing of the Community Complainants.
The
submission states that the estimated production of farmed salmon in the EU for
the year 2003 was 181,000 tonnes of which 162,000 tonnes was farmed in Scotland.
The use of this figure is misleading as it suggests that the state of the
Scottish industry is much worse than it really is. The submission was dated 7th
September 2004, but in June of that year, the Fisheries Research Service, part
of the Scottish Executive published production data for Scotland. This shows
that Scottish production in 2003 was actually 173,373 tonnes. This document
appeared on the FRS website but was subsequently withdrawn. It might be
suggested that the EUSPG complained to the Scottish Executive that the figures
did not support their submission. The data has yet to be republished.
The
submission suggests that 80% of total EU production is produced by companies
owned or related to exporters and importers of Norwegian salmon. The remaining
20% is produced by companies that are mainly small, medium sized enterprises
based in Scotland, or Ireland and which are independent of exporters and
importers of the product concerned. They indicate that the complainant companies
produce about 30,000 tonnes, representing about 90% of community production.
These figures are misleading.
The
complainants suggest that independent producers account for 33,000 tonnes or 20%
of production. If their estimate of 181,000 tonnes is accepted, then they
actually produce only 18% of Community production. If the Scottish Executive
figures were accepted then total EU production would be 192,373 tonnes of
salmon. This means that Community production is only 17%. Unfortunately, as the
figures provided by the Complainants have been removed from the submission, it
is impossible to verify whether the estimates of Community production are
correct or not. However, some information is available, especially relating to
Shetland.
1. Ardvar Salmon
0t
2. Wester Ross Salmon
3. Loch Duart Salmon
1800t
4. Orkney Seafarms
5. Atlantic West Salmon)
6. West Minch Salmon )
7. Sidnish Salmon )
8. Ayre Salmon Farms
1000t
9. Balta Isle Seafayre
250t
10.Olnafirth Salmon
100t
11.Skelda Salmon
100t
12.Thompson Bros Salmon 100t
13.Uyeasound Salmon 1000t
14.Foraness Fish
100t
15.Greenholm
100t
16.Hoove Salmon
1000t
17.Islands Salmon
500t
18.North Atlantic Seafarms 100t
19.Manin Bay Salmon
20.Eise Ui Flatharta Teoranta
21.Muir Gheal Teoranta
22.Muirachmhainnai Teoranta
23.Celtic Atlantic Salmon
24.Silver King Seafoods.
These
figures suggest that the Complainant companies may struggle to produce 30,000
tonnes a year, especially as they claim to produce 90% of the production of the
Community industry.
The
submission document, as well as excluding those companies that are related to
Norwegian production, also lists two other categories. The first are supporters
and this lists just one farm. The other category is other EU producers who
presumably do not support the complaint. These include the one salmon farm in
France and two farms based in Orkney. This implies that the Community salmon
industry consists of:
-
the
Complainants
-
those
with connections to Norway
-
others
However,
the companies listed in these categories may not include every salmon farming
company in the EU. The Shetland Salmon Farmers Association and Scottish Quality
Salmon produce lists of their members but there are some companies who have
chosen to belong to neither. For many years, Highlands & Islands Enterprise
produced a definitive list of Scottish salmon farms but no longer do so. This
means that there is no longer a single reference to every single salmon farming
company in Scotland or Ireland.
The
Scottish Executive included a list of every salmon farming company operating in
Scotland in their application for safeguard measures. Their complete list is as
follows: Those companies highlighted in bold are not included in the
complainants calculation.
ANNEX
2: SCOTTISH COMPANIES
ACTIVELY PRODUCING SALMON
1 A A McMillan
2
A+P Tait
3
Aquafarm Ltd
Aquascot
Ltd (now Mainstream Scotland)
Ardvar
Salmon Ltd
Atlantic
West Salmon Co Ltd
Ayre
Salmon Farm Ltd
Balta
Island Seafare Ltd
Bressay
Salmon Ltd
4 Carloway Seafoods Ltd
5 Collafirth Salmon Ltd
College
Cro Lax Ltd
6
D+J Salmon Ltd
7
Dury Salmon Ltd
8
Ferguson Salmon
9
G Duncan (Salmon) Ltd
10
Glendale Salmon Ltd
11
Gonfirth Salmon Ltd
12Harris
Fish Farming Co Ltd
13
Hebridean Fishery Partnership
14
Hebridean Salmon Co Ltd
15 Heogland Salmon Co
Hoganess
Salmon Ltd
Hoove
Salmon Ltd
16
Hunter Salmon
17
Isle of Skye Salmon Ltd
18
Isleburgh Seafarms
19 Kerrera Fisheries Ltd
Lakeland Marine Farm Ltd
20
Landcatch Ltd
21
Laxfirth Voe (Salmon) Ltd
22
Lewis Salmon Ltd
23 Lighthouse Highland Ltd
Lighthouse
of Scotland Ltd
Loch
Duart Ltd
24 Mainland Salmon
Marine Harvest (Scotland)
Ltd
25
Millburn Salmon Ltd
26
Mull Salmon Ltd
Murray Seafoods
North Atlantic Salmon Ltd
27
North Uist Fisheries Ltd
28 Ocean Reaper Ltd
Orkney Sea Farms Ltd
29 Orkney Seafoods
30 Papil Salmon Farm Ltd
31
Portree Salmon Farmers Ltd
32 Punds Voe Salmon Ltd
Rysa
salmon Farm
Scord
salmon (Shetland) Ltd
Scottish
Seafarms Ltd
33
Setterness Salmon Farms Ltd
34
Shetland Marine Salmon
35
Shetland Norse Fish Farm Ltd
Skelda
Salmon Farms Ltd
Skerries
Salmon Ltd
Stolt Seafarm Ltd
36 Sweening Salmon Ltd
Thompson
Bros Salmon Ltd
Uyeasound
Salmon Co
37
Vementry Salmon
38
Wadbister Salmon Ltd
West
Minch Salmon Ltd
Wester
Ross Salmon Ltd
Wester
Sound Salmon Ltd
Western
Isles Seafood Co Ltd
Westray
Salmon Ltd
39
Westside Salmon
40
Whalsay Seafarm Ltd
In
addition, Irish salmon farms currently operating according
to the Aquaculture Ireland 2005 Yearbook include:
41
Atlantic Seafood Producers
42 Clare Island Seafarms
43
Creevin Salmon Farms
44
Cuan Boi Seafarms
45
Cuigeal Teoranta
46
Curraun Fisheries
47
DMCI Golam Teoranta
48
Eany Fish Products
49
Northern Salmon
50
Ocean Farm
51
St Killans Harvest
52
Salmon Nova
It
is quite possible that some of these companies are no longer operational and
clearly there is at least one error; for example ‘College’ is meaningless.
However, the important point is that the Complainants appear to suggest that
their 19-24 companies produce 90% of Community production whilst these remaining
52 companies produce only 10% or 3,000 tonnes.
Under WTO rules, the application shall be considered to have been made “by or on behalf of the domestic industry” if it is supported by those domestic producers whose collective output constitutes more than 50 per cent of the total production of the like product produced by that portion of the domestic industry expressing either support for or opposition to the application. However, no investigation shall be initiated when domestic producers expressly supporting the application account for less than 25 per cent of total production of the like product produced by the domestic industry.
As
it is clearly difficult to substantiate the exact number of salmon farms
operating in the European Community, it would be almost impossible to identify
the exact tonnage contributed by each to the total. Such information does exist
and is supplied confidentially to respective government agencies. The fact that
the Scottish Executive has delayed publication of the 2003 figures demonstrates
how these figures are contested. The claim that the EUSPG represent 30,000
tonnes or 90% of Community production is questioned. The omission of 52 farms
that clearly do not support this submission brings their claims into doubt. It
would not be surprising if the EUSPG do not have the 50% of industry support
needed to pursue an ant-dumping case. In terms of number, they are very near the
25% absolute minimum requirement. If this is translated into volume, then it is
possible that the EUSPG do not have sufficient industry support to even submit
their submission.
Product
being dumped
The
definition of the product concerned as farmed salmon is very vague. According to
Taric, the European tariff database, the classification codes used in this
regulation cover a variety of different salmon species. These include: Pacific
salmon (Oncorhynchus nerka, Oncorhynchus gorbuscha, Oncorhynchus keta,
Oncorhynchus tschawytscha, Oncorhynchus kisutch, Oncorhynchus masou and
Oncorhynchus rhodurus), Atlantic salmon (Salmo salar) and Danube salmon (Hucho
hucho). Yet, under European labelling laws, it is necessary to ensure that all
fish are properly labelled to include both the correct scientific name as well
as the common name. The use of just the term ‘salmon’ is illegal and yet the
Complainants have lumped all farmed salmon together irrespective of whether they
are Atlantic salmon or one of the farmed Pacific species. The submission is
misleading by not stating that the product concerned is farmed Atlantic salmon
(Salmon salar) from Norway.
Norwegian
costs of production – constructed Normal Value.
The
Complainants have detailed the construction of the Norwegian cost of production
in Annex 7. This has limited access because the complainants claim that
disclosure would be of significant competitive advantage to a competitor and
would have a significantly adverse effect upon the person supplying the
information. It is very difficult to understand how a ‘constructed’ value
could be construed of being of any competitive advantage. The only way that it
would have an adverse effect on the person supplying the information i.e. the
Complainants, is that the construction would be open to criticism and shown to
be invalid.
The
complainants state that the average cost of production in Norway for slaughtered
whole fish equivalent during 2003 is NOK 19.52/kg. Whilst the complainants
prefer to use a constructed value, actual values are available. Every year, the
Norwegian Department of Fisheries publishes annual cost of production data. This
shows that the total cost per kilo including slaughtering costs is NOK 19.22.
This is actually very close to the Complainants figure. However, the official
cost of production data has been recalculated using a larger sample and the
actual average cost of production is NOK18.36/kg.
Norwegian
and EU producers treat fish in different ways. For example, Norway tends not to
trade in whole fish, which means that the Complainants have converted the
figures so that it can be presented in the way they would for their own fish.
However, gutting costs would normally be including in the slaughtering costs so
that by including the conversion of the fish to gutted weights means that the
Complainants have included the cost of gutting the fish twice.
The
Complainants have taken this figure and deducted NOK 4.45/kg for slaughtered to
FOB costs to arrive at a slaughtered gutted price. How the figure of NOK 4.45/kg
is calculated remains confidential so it cannot be challenged. However, best
estimates would suggest that a true figure would be nearer NOK 0.6/kg.
The
Norwegian Seafood Export Council figures for the export price for Norwegian
salmon during the first part of 2004, covering part of the period covered by the
submission, puts the average selling price for Norwegian fish FOB at NOK
23.35/kg. This compares with NOK 22.73/kg quoted by the Complainants.
The
selling price –
NOK 23.35/kg
The
cost of production – NOK 21.83/kg
(including
15% profit which the Complainants claim is the industry standard)
These
figures may be simplistic but without details of the constructed calculation, it
is impossible to compare this data with that used by the Complainants. However,
there is a major question mark over validity of their calculation. The
Complainants argue that 15% normal profit should be added to the cost of
production, however, they have actually added 17.5% - NOK 3.44/kg and not 15%
which would be NOK 2.96/kg.
They have also stated the wrong conversion factors in Annex 3. To allow
for gutting, whole fish equivalent should be divided, not multiplied by 90%.
Injury.
Imports.
The
Complainants suggest that the Community salmon industry has suffered injury as a
result of subsidisation and dumping of farmed salmon into the EU since the mid
1990’s. The Community industry has regularly blamed Norwegian imports for
their problems but this link is extremely tenuous. The Complainants say that
whilst the market has grown substantially over the last ten years, they believe
that they have gained little from that growth. They say that this is because low
priced Norwegian imports have led to poor profitability and losses. However, the
real reason that Community producers have performed so poorly is simply because
they are not producing what the growing market wants. Their focus is on the
production of superior quality fish, which they believe warrants a premium
price, when what the market really wants is a value for money, everyday meal
choice. This is the real issue at the heart of this dumping submission.
In addition, imports have increased because of a shortfall in total fish supply within the EU. Eurostat recently announced that European fish supply has fallen by 17% between 1995 and 2002. This means that the shortfall in European fish supply is greater than ever. Europe cannot meet its own requirement for fish and seafood products. Europe must therefore import more fish to meet consumer demand. Inevitably, our near neighbours must meet this demand. Norway and Iceland are the largest producers in the EEA with increases of 17% and 32% respectively, greater than their own domestic requirements. Europe has imported more and more fish from these two countries to meet the shortfall.
Whilst Norway and Iceland have managed to increase their production, the global trend is that increasing demand has placed more pressure on commercial stocks. It therefore makes sense to utilise supplies of fish from farming, rather than over-fish already threatened stocks. World aquaculture production is about 1.27 million tonnes but with European salmon producers only capable of supplying 180,000t tonnes, salmon imports from Norway make a commercially realistic alternative to wild caught marine species.
This is reflected in the retail outlets, where widely available, value for salmon has replaced traditional marine species such as cod and haddock as a number one choice. Retailers like salmon because it can be supplied in consistent quality, availability and price. As a result, Europe has attracted an increasing volume of imports of farmed salmon from Norway. This is not dumping but rather meeting consumer demand for fish.
Dumping margins
The
Complainants state that the salmon farming industry has a long and relatively
inflexible production cycle leading to harvesting. This is correct. The
production cycle is also complex because of the natural life cycle of salmon. Salmon have a capability of early maturation, usually in their first year
at sea. These early maturing fish are known as grilse. From the farmer’s point
of view, grilse are a problem. The fish start to put all their energies into
reproduction rather than growth and the longer that this is allowed to progress,
the poorer the eating quality of the fish. Fortunately, it is easy to identify
such grilse because these changes are accompanied by changes in skin colouration
that is an indication of a return to fresh water.
When salmon start to grilse, they
must be harvested even though they are still relatively small fish. In terms of
profitability, it is usually best if farmers can grow salmon as large as
possible. The sea cycle of the production process usually last two years, but
most of the real growth appears in the last few months. Harvesting fish when
they are still small is uneconomic but in the case of grilse, is essential. The
relative cost of producing grilse is high, but the returns are low. In economic
terms, the farmer would prefer to leave the fish to grow more but he has no
choice.
As a result, dumping
margins are an inevitable artifact of the combined effects of a complex life
cycle, variable growth rates and early maturation. It is for these reasons, that
dumping margins have always been found during dumping investigations.
The character of the spot
investigations conducted by the Trade Directorate enhances the likelihood of
finding these margins. In this current case, the investigation covered a period
of 10 months, but the salmon life cycle can last three years. The investigators
are only getting a snapshot of what is happening. This maybe perfectly
acceptable in other type of trade investigations such as steel, where the
production process is extremely short. In the morning, the steel works can have
a set of ingredients and by the afternoon can have changed this into the
finished steel product. This is very different from what happens in salmon
farming.
The almost certain
presence of dumping margins in farmed salmon does not mean that such dumping
margins will be found in salmon from Norway. Dumping margins will undoubtedly be
identified in every salmon farm including those in Scotland. The problem for the
Norwegian farmers trying to defend themselves against these accusations is that
whilst the investigators sample some Community producers to discover the extent
of the supposed injury, they do not look for dumping margins, but we are sure
that if they looked, they would find them.
Whilst it may be obvious that
dumping margins do exist, it is clearly not obvious that dumping has actually
occurred.
Increased volumes
The
Complainants suggest that even small increases in the volume of salmon offered
to the EU have an immediate and severe effect on prices. This is not true.
Prices are usually presented against a time line, however, when presented
against volume, it is clear that there is a direct relationship between price
and volume.
Such
a relationship exists in most industries and is extremely predictable. The real
problem is that the Community industry wants to see prices towards the left side
of the graph, whilst the market wants them at the right hand side.
Any
judgement as to whether Community producers have really suffered injury is
impossible whilst the detailed figures are provided on limited access.
Analysis
of the situation of the Community Producers.
The
Complainants state that the information they provide demonstrates that:
1. The
Complainants state that following a market collapse in September 2001,
considerable losses have been incurred and those loses have increased in Q1
2004. Whilst it is clear that prices did plunge in autumn 2001, they
subsequently recovered in spring 2002. They fell again in summer 2003 as a
result of the removal of the artificial controls put in place by the salmon
agreement, but after a short period of readjustment, the market recovered and
has been buoyant ever since. Prices during 2004 remained relatively high, which
does not support the claim that losses have increased in the period prior to the
submission. Any losses incurred by the complainants can be better subscribed to
poor management rather than the effects of dumping. This is because one of the
complainants, Loch Duart Salmon, publish an article on their website (www.lochduart.com
) from the Financial Times dated 4th May 2004. This article entitled
‘How greener methods reeled in the profits’ states ‘Even
some of the Norwegian- and Dutch-owned multinationals operating in Scottish
lochs are selling salmon below the cost of rearing them, according to industry
insiders. That makes Loch Duart's tale of expansion the more remarkable.
But two
factors make the expansion unique. One is that Loch Duart is profitable.
According to Nick Joy, managing director and one of three owner-managers, the
£4.5 million turnover company has made profits in four of the five years since
the trio bought it’.
2.
The complainants state that there was a further collapse in market prices in
June 2003. As already stated, this was due to the removal of the salmon
agreement. The withdrawal of this artificial barrier in the marketplace meant a
period of readjustment was necessary. Prices had recovered by Autumn 2003.
3.
The complainants claim that prices in Q1 2004 are at an all time low. Reference
to the price graph, taken from the Intrafish website (www.intrafish.com)
shows that this is simply untrue. Prices remained above NOK 20/kg for nearly all
of the year, dipping below the NOK 20/kg level for two or three week in the
autumn as farms harvested to meet demand from smokers for product for Christmas.
4.
The complainants state that their costs of production have reduced since 2002.
Whilst the Norwegian Department of Fisheries publish cost of production data on
an annual basis, Scottish members of the EUSPG have consistently refused to
release such information. This even predates the formation of the EUSPG. As long
ago as 1992/3, the then Scottish Salmon Growers Association of which Mr Morgan
was a dominant member commissioned the Scottish Agricultural College to produce
comparative data on the cost of production in Scotland and Norway. The intention
was to show that Scottish producers were disadvantaged. However, when the
results were released, they actually showed that Scotland had lower production
costs than Norway. Since then the Scottish industry has refused to participate
in any survey of costs. In 1995, the then UK Parliamentary Scottish Affairs
Committee told the Scottish Salmon Growers Association that before submitting
any further dumping complaints to Brussels, they should produce cost data. They
ignored this advice and did submit a further complaint in 1996 without this
supportive data.
In
2001, the Scottish Executive announced a strategic framework for Scottish
aquaculture, included in which was the intention to conduct a full survey of
Scottish cost data by 2003. Yet by 2003, the survey had not even been
commissioned and still has yet to get underway. If Scottish production costs
have been falling since 2002, then it is simply a case of ‘better late than
never’. The need for lower costs has been apparent since 1989.
5.
The complainants suggest that stock levels, employment, utilisation of capacity
and capital investment are all reducing as businesses contract. The main
intention of these claims is to show that the Scottish industry is contracting
as a result of Norwegian imports. However, the Complainants fail to demonstrate
this fact.
Stock
levels and utilisation of capacity are related. In Annex 13, the Complainants
show that capacity utilisation has decreased from 77% to 54% between 2001 and
2004 and they claim that closing stocks have similarly declined underlining the
injury in closing stocks indicating a decrease in the quantity of live fish
being on grown for harvesting. The data in Annex13 supporting this claim comes
from a representative sample of about 30% of Community producers. Whilst they
suggest this data may be representative, the source of the data is actually
critical. Three of the largest of the Complainant companies have adopted a more
‘sustainable’ approach to farming through either organic or RSPCA (Royal
Society for the Prevention of Cruelty to Animals) Freedom Foods label. Both
involve a reduction in the stocking rate. The Financial Times article report
that whilst Loch Duart have a capacity of well over 3000 tonnes, the farms ethos
is to farm well below capacity giving them a production output of between
1500-1800 tonnes. The company also farms at a ratio of 98.5% water to 1.5% fish;
about 25% below the industry average. West Minch Salmon has just converted to
organic production with a much lower stocking rate. Wester Ross Salmon are also
producing salmon under the Freedom Foods label. They also have converted some of
their capacity to cod production. It is clear that any decline in stocks or
capacity is due to a deliberate decision by these salmon companies to adopt a
strategy to do so, not because of any effect of increased imports.
The
Complainants suggest that employment has fallen but the figures provided in
Annex 13 do not support this claim. The very small decline in numbers between
2001-2003 and 2004 can be accounted for by the merger of Ardvar Salmon and Loch
Duart which would have left some duplicated positions.
The
Complainants suggest that investment in the industry has declined as a result of
increasing Norwegian imports. This claim is misleading. Investment has continued
throughout the period highlighted by the complainants, however it has been much
more selective as a result of the increased complaints from the EUSPG. No one is
going to invest in an industry against a background of increasing reports of
over-production, unfair competition and the possibility of trade sanctions. Yet,
when companies have a specific plan to take them forward, investment has been
forthcoming. This is confirmed in a statement from Shetlands Island Council
which appeared in IntraFish.
Loch
Duart Salmon received £182,400 to help in the purchase of Ardvar Salmon
Loch
Duart Salmon recieved £60,600 to help further develop its own sites
AquaFarm
received £200,000 from the Shetland Islands Council
Sunbeam
Aquaculture received £50,000 form Lochaber Enterprise to establish a new
hatchery to produce 100 tonnes of smolts
Any
reduction in investment in salmon farming has been assisted by a EU decision to
halt investment through FIFG programmes and instead divert funding to other
developing species.
6.
The Complainants suggest that increasing loses are as a direct result of reduced
market prices. This is not wholly true. Since 1989, industry commentators have
predicted a continuing fall in salmon prices in line with expanding production,
not just in Norway but also in every producing country. Any loses incurred are
the result of the refusal to adapt to changing marketing conditions.
The
complainants suggest that their analysis of Norwegian prices demonstrates the
magnitude of the fall in market prices since 2002 and details more recent price
collapse in prices since mid April 2004, which they suggest is in the region of
15%. The complainants’ analysis in Annex 8 is limited access supposedly
because its disclosure may have an adverse effect on the person supplying the
information. However there are a number of sources of price information
emanating from Norway and these do clearly show the price falls. The IntraFish
price graph shows that that whilst there have been some points when prices are
low, most of the time, prices fall within a reasonably high price banding.
Similar
data is available from FHL. This show that the highest price during 2004 was in
week 17 at NOK 24.88/kg. The lowest was in week 45 at NOK 18.29 /kg; decrease of
26%. However, this fall cannot be considered to be damaging because it is part
of the natural cycle of demand. Prices usually fall in the run up to Christmas
as more farmers try to benefit from a Christmas boost.
The
complainants state that in July 2004, the Commission published an information
document relating to the safeguard case. This contained a detailed analysis o
the situation of Community producers based on companies representing over 85,000
tonnes of production; about 47% of Community production. The complainants state
that the situation described in this information document together with their
industry specific data contained in Annex 9 accurately reflects the situation of
the Community industry.
The
data in Annex 9 is restricted but does contain data from the complainant
companies, i.e. a Community industry of 30,000 tonnes. Yet, at the same time,
the complainant refer to a Commission document relating to the Community
industry of
181,000
tonnes. It appears that the Complainants are happy to include the wider
Community industry when it suits their case but not to include them when it
doesn’t. If the Complainants argue that the Community industry is only 30,000
tonnes in size then they should not be permitted to base their case on a
Community industry of 181,000 tonnes. Equally, the safeguard case is a totally
separate case to that relating to anti-dumping and the Complainants should
restrict their comments to the anti-dumping case.
Injurious
effects of dumped imports.
The
Complainants state that farmed salmon is essentially a commodity product and
domestically produced and imported salmon compete mainly on price. If Norwegian
producers had made this statement, it would be true. However, the ‘Scottish’
industry, as in the independent producers who make up the EUSPG, have always
maintained that their salmon is superior to any other and merits a premium
price. This position can be illustrated with a statement made by Angus Morgan of
the EUSPG following the announcement of the introduction of anti-dumping duties.
He told seafoodintelligence.com that they would now be in a position to supply
consumers in the UK and Europe with what they most prize – Irish and
Scottish salmon. It is this difference in perception which actually forms the
basis of this anti-dumping case.
Scottish
producers maintain that consumers prefer Scottish salmon to any other and that
they are prepared to pay more to buy it. However, despite the repeated claim
that Scottish salmon is superior, most consumers are unable to differentiate
between supposedly superior Scottish salmon and Norwegian commodity salmon. As a
result, most consumers are happy to buy whichever salmon they perceive to give
the best value for money. Billingsgate fish market lists salmon prices on their
website without differentiating the salmon by country of origin. The independent
Scottish industry, such as the Complainants, blame the presence of Norwegian
salmon in the European market for this inability to persuade consumers to pay a
premium for Scottish fish. This is why they have brought this anti-dumping case.
The
Complainants argue that Norwegian imports are the price setters. This is a
mistake. The price of salmon is actually dictated by the total volume of salmon
available, whether it is Norwegian, Scottish, Irish, Icelandic, or Chilean. The
Complainants also argue that because of the large volume of Norwegian salmon
produced, any undercutting of Scottish prices results in price depression of the
Community producers. Yet, the Scottish view is undermined by the simple fact
that if Scottish producers expect to sell their fish at a premium, then
Norwegian prices will inevitably be lower. Is this undercutting or price
differentiation? French consumers are still willing to differentiate between
Scottish and Norwegian salmon in terms of price, although the French market is
following the example of the UK and this differential is becoming smaller.
Prices currently at Paris Rungis market are Euro 4.40 for Scottish and Euro 3.90
for Norwegian. Is the Norwegian price undercutting the Scottish or is the
Scottish in receipt of a premium? The reality is that if the Scottish can
achieve a premium, as they believe, then the price of Norwegian salmon is
actually irrelevant. Consumers will choose whichever salmon they want.
The
Complainants argue that the main form of injury resulted from the price
undercutting by Norwegian imports. The truth is that any injury is
self-inflicted because the independent Scottish producers have failed to
persuade consumers to actively select Scottish salmon and more importantly, to
pay more for it. Rather than pursue anti-dumping complaints, the Complainants
may be better served by developing more market-led strategies, producing what
the consumers actually want.
Limited
access to Annex 12 means that it is impossible to comment on the undercutting.
However, whilst the Complainants suggest that their salmon is being undercut by
39%, they ignore the fact that they also claim to be able to generate a price
premium of 25% (see appendix 5e). Certainly, the Scottish industry claim that
French consumers are prepared to pay a premium for their Label Rouge salmon.
Currently, Scottish salmon is selling at the Paris Rungis market for Euro
4.40/kg which according to the Complainants is only just above their delivered
price.
By
comparison, Norwegian salmon is selling at Rungis for Euro 3.90/kg which
according to the Complainants calculation is at least Euro 0.52/kg above
Norwegian delivered price. This makes no sense. Why would French wholesalers be
prepared to sell Norwegian salmon for up to Euro1.72/kg above delivered price
and yet only Euro 0.05/kg above delivered price above Scottish. The answer is
that the Scottish delivered price claimed by the Complainants must be inflated,
as are most aspects of their complaint.
The
Complainants make a number of statements that suggest that the Community
industry is in dire straits, however the evidence does not support this. The
industry has become loss making because it continues to focus on the production
of products that consumers do not want, or at least are not willing to pay more
for. The production of more sustainable products incurs higher costs, such as
lower stocking densities, different feed, etc, which are not recouped at sale.
This can be seen from the retail price of Loch Duart salmon. The only retail
outlet for Loch Duart salmon in the UK is the Loch Fyne restaurant chain who
also sell fish from a fresh fish counter. Their price list shows that Loch Duart
salmon fillet sells for £8.62/kg. This compares with salmon sold in the
supermarket chain Sainsbury’s which sells at £9.99/kg.
Conclusion
The
Complainants suggest that the findings of the safeguard investigation had proven
that Community producers had suffered injury. If that is the case, why have the
Complainants submitted this ant-dumping complaint at all and not allowed the
safeguard case to reach its final conclusion.
The
Complainants suggest that the magnitude of the losses is unsustainable. They
claim that the injury has manifested itself with the receivership of five
companies. However, what they do not say is that three of these companies had
owners who also operated other salmon farms, which remain in business. At least
one of these farms was bought back by its owners and continues to operate. The
Complainants also refer to two farms taken over the their feed supplier, however
as the Complainants have excluded these farms from this investigation, they are
not in a position to state whether they are being wound down or not.