reLAKSation 101.
Exceeding
the limit!: Although there is no speed limit
on German autobahns, few drivers hurtle along at their maximum speed. Those that
do must overtake many vehicles travelling at a more restrained pace considered
to get the travellers safely to their destination. Equally, in those countries
which place a speed limit on their motorways, there is also a wide variation in
the speeds at which drivers travel. In the same way that the absence of speed
limits in Germany fails to induce drivers to drive to the maximum, not all
drivers restricted to a fixed speed limit feel the need to drive to the limit.
We
use motorway driving as an analogy to news of the demise of feed quotas in
Norway. The Norwegian Government has announced that from January 2005, the feed
quota system will be abolished. According to IntraFish, the Fisheries Minister
said that Norway can no longer shoulder the responsibility for production and
price development on a global scale especially as the Norwegian share has
dropped to under 50% from over 75% when quotas were introduced. Mr Ludvigsen
also repeated his earlier warning that the industry must start to take
responsibility for the way it produces salmon in response to market needs.
Mr
Ludvigsen’s proposals have not been well received in Norway nor Scotland.
Bjorn Myrseth of Marine Farms told IntraFish that rather than remove feed
quotas, they should be reduced by 10% to cut down production and boost prices.
However, we, at Callander McDowell, are not convinced. We believe that Mr
Ludvigsen has actually made the correct decision. After all, feed quotas are
currently in force, and have been for some years, yet prices at nearly the
lowest they have ever been, so much so that sections of the industry want to
physically remove fish from the market through a costly freezing programme. Feed
quotas were intended to demonstrate that the Norwegian salmon producers were
taking a responsible approach to production in response to allegations of
dumping cheap salmon into Europe. To some extent they have achieved their aim,
as Norwegian production as a percentage of global output has fallen, but they no
longer have any other purpose. They certainly have not protected the Norwegian
industry from low prices and negative margins. Like the EU salmon agreement,
feed quotas are just an artificial crutch for those who refuse to adapt to the
realities of the marketplace.
We
at Callander McDowell, would echo the Minister’s view that the industry must
start to take responsibility for its own destiny. Salmon farms are a business
and the Government does not owe any of them a living. Companies with a good
business acumen will succeed and maintain their profitability. Others lacking
real business insight will be unable to compete and will either disappear or be
absorbed into other companies. The salmon agreement, the dumping complaints, the
freezing programme and feed quotas are all simply an excuse for failing to
address the economic realities of salmon farming.
In
much the same way that drivers on motorways adjust their speed to their specific
travel requirements, the salmon industry can adjust their own feeding strategy
to meet their own production requirements and market expectations. The removal
of feed quotas is not a signal to feed all fish to the maximum. Instead it is a
signal that the industry should refocus its desire for Government protection
towards how it can best serve the needs of the market. This can equally apply to
all global producers, not just those in Norway.
Hot
under the collar!: As European temperatures
reach all time highs, plans to freeze up to 30,000 tonnes of Norwegian salmon
continue unabated. However, the first cracks in the plans are now starting to
appear and it may well be that the freezing programme may actually need to be
reconsidered. In the run up to AquaNor, Botholf Stolt-Nielsen, advisor to Rund
Fisk, the company established to instigate the programme issued an ultimatum to
the Norwegian salmon industry that at least 70% of producers must participate.
He implied that if such support could not be raised then the freezing programme
may not begin.
According
to IntraFish, Mr Stolt-Nielsen also said that whilst plans were in place to
freeze up to 30,000 tonnes of salmon, it is possible that it may not be
necessary to freeze such a large volume. He hopes that the underlying production
does not fill up the gap with fish, which will be achieved by a cut in feed
quotas. Mr Botholf Stolt-Nielsen clearly stated that he had no plans to follow
the example of FOS in 1991 by destroying smolts, but instead will rely on a
reduction in feed quotas. He said that there’s no point in freezing if this
results in production being stepped up.
However,
as we have already seen, the Fisheries Minister does not intend to further
reduce feed quotas and instead will remove them completely by January 2005.
Where does this leave the freezing programme? Tarald Sivertsen, spokesman for
the seven companies involved said that the Ministers plans have now effectively
torpedoed the programme. These proposals were effectively flawed from the outset
so it is unlikely that Mr Ludvigsen’s announcement will have made any
difference anyway.
So
is it time to drop these plans and look at more permanent ways to tackle the
issues of the market place? We, at Callander McDowell, certainly believe so.
Although, the market is not a short term solution, the longer it takes to
address the underlying market issues, the longer that the industry will be
exposed to continued market disruption. The time has come for the industry to
accept that prices will remain low rather than continue to fight for higher
prices which will never come. Until they do, they can never learn how to regain
their lost profitability under these new market conditions.
Yawn:
According to IntraFish, the Salmon Farm
Protest Group have had a small personal triumph having identified that British
supermarket Tesco have been selling smoked salmon which has been incorrectly
labelled. Along side their range of smoked salmon products, Tesco do sell packs
of Nolan’s Irish smoked salmon, which the SFPG has found does not mention
whether the salmon is wild or farmed. However, it is unlikely that any consumer
would be misled by this omission as the price of the pack is very low.
Of
course this is not any excuse, but as we, at Callander McDowell, have pointed
out previously, one or two examples of incorrectly labelled product will be
bound to slip through the otherwise rigorous checks. These will be identified
and rectified as awareness of the new legislation increases. As regular
observers of the marketplace, we would point out that the majority of complaints
posted by the SFPG relate to smoked, rather than fresh salmon, packs of which,
in our experience, are all clearly labelled. We certainly do not believe that
such transgressions are worthy of official complaint to the authorities in
Brussels as it would be sufficient to inform the store to rectify the problem.
The trouble is that the SFPG pursue their own agenda and publicise even the most
minor error to highlight their cause.
The
SFPG have also argued that packs of Nolan’s smoked salmon state ‘No
artificial colourings’ when in fact the fish have been fed feed containing
pigment. This is an issue which they will no doubt continue to pursue even
though Nolan’s are correct in their labelling. This is an issue which the Food
Standards Agency have previously raised as they would like to see packs stating
that the fish has been fed feed which contains artificial colourings, but where
do they draw the line. If it becomes necessary to tell consumers that fish have
been fed on feed containing artificial colourings, should they also be told
every other ingredient used in their feed, as well as any medications, or
vaccines. Equally, should the packs also contain information about how the wheat
in the feed was grown, which pesticides or fertilisers were used. Should the
packs state which fishmeals were used, which fish they contain, how they were
caught, where they were caught? The possibilities are endless.
The
reality is that anything contained in feed goes through a digestive process and
is changed chemically to become part of the fish. The components of the feed are
now history. In the case of Nolan’s smoked salmon, most consumers would be
happy just to learn that no additives were used in the smoking process. This
should be sufficient.
Clearly,
the SFPG are more interested in highlighting their cause than real concern for
consumers.