reLAKSation 103.
Put on ice!: Ola Branaas of Firda Management told IntraFish that prices for 3-4 kilo salmon have leapt by a whopping 20% in the space of one week. He said that ‘farmers with large salmon can virtually dictate the price they want.’ He enthused that ‘this is a real shot in the arm for the salmon industry,’ as well as saying that ‘it is fantastic, just what we need.’
We, at Callander McDowell, are not surprised by this change in fortunes for the Norwegian salmon farming industry. We remain firmly convinced that this latest round of market disruption, in common with much that has gone before it, is the result of the recurring interference by a small number of farmers, who have tried to impose their specific view of salmon production onto the whole salmon farming industry.
The latest round of low prices followed the removal of the EU salmon agreement and the minimum import price. The EU salmon agreement had imposed a variety of constraints on Norwegian farmers, which in turn had affected cash flow. Once the agreement had been removed, many farmers sold off fish to relieve cash flow problems, which created an artificial price dip.
We would suggest that prices would never have fallen if there had never had been a salmon agreement, which in turn would never had been imposed had there not been any dumping complaints. Our view is that had the international industry focused on market development rather than trying to influence the market into buying their perception of what consumers want, there would have not been this price low. Many other examples of price lows can be traced back to similar market interference, which we believe would otherwise never have happened.
Given time, we, at Callander McDowell firmly believe that the market will settle down and find its own level. The industry must accept this and adapt production accordingly in order to ensure future profitability. Certainly, our view is that further interference can only damage a return to the longer-term profitability, which the industry seeks. That is why we do not support this attempt to artificially remove salmon for freezing. This is no different to manipulating the market through dumping complaints. We previously suggested that if the advocates of freezing waited, we would see a recovery in prices. This now appears to be the case. Perhaps, now is the time to put the freezing programme on ice and wait to see what happens to prices in the run up to Christmas, although we are not expecting any miracles!
Sales personnel interviewed by IntraFish all welcome the price hike, but remain undecided as to how prices will develop. This is because there is some uncertainty as to whether there is a shortage of fish or not. Prices are now on the rise because many of the fish, which were expected to meet demand for larger fish, were sold off earlier this year. This has created a shortage of larger sizes, even though they represent only a small part of usual market demand. What is clear is that it is not total volumes, which influence demand, but rather whether farmers have the specific fish that the market wants. As we have stated many times previously, the salmon industry must start to focus on what the market actually wants, not what farmers want to sell?
What the consumer wants?: The Scottish Office’s (Executive’s) Economic Research Paper number 7 (The Economic Impact of Scottish Salmon Farming, March 1999) discussed market research carried out by UK supermarket chain, Tesco. When asked to rank the factors that influenced their purchasing decision when buying salmon, their customers ranked country of origin last, with taste and quality being most important. This echoes the findings of the first market survey commissioned by the International Salmon Farmers Association which found that country of origin was the least important factor to increasing consumer demand.
It is therefore not surprising that Tesco are the only UK supermarket to use batch labelling on some of their fresh salmon products. This is where they state that the salmon is ‘Farmed in Scotland or Norway.’ According to Catherine Stihler MEP, ‘Scottish should mean Scottish.’ She said that Scottish farmed salmon is the best in world, with producers following the most stringent codes of practice , making a product of the highest possible quality. She said Scottish producers are entitled to a fairer deal. This is why she is asking the European Commission to propose new legislation to keep consumers more accurately informed in future. Currently, such batch labelling is not against the law.
Mrs Stihler told IntraFish that there should be greater clarity in the ‘country of origin’ aspect of fish labelling so that consumers can tell which country the salmon they are buying is from. However, as we have already shown, most consumers are not that interested. Certainly, our own observations in those British supermarkets, which sell salmon from more than one origin on the same shelf, suggest that most consumers simply pick up the first pack to hand. Most never both to read the label or actively select one salmon as opposed to another.
We, at Callander McDowell, believe that this is just another example in which some producers have ignored the messages from the market and are instead trying to impose their view on the market. Country of origin is simply not important to most consumers, therefore dictating the way that these consumers buy their salmon is not going to persuade consumers to buy more salmon. To do this, the industry must focus on what these consumers actually want.
IntraFish report that Brian Simpson, Chief Executive of Scottish Quality salmon supports Mrs Stihler’s stance on labelling. He said that “It is a kick in the teeth for members of Scottish Quality Salmon, who have invested hugely in quality, if other countries were to be handed trusting customers on a plate because of this confused labelling.”
However, we at Callander McDowell are surprised that SQS feel that this labelling is a kick in the teeth. According to Scottish Office Economic Paper Number 7, several large multiple retailers now use the Tartan Quality Mark on packaging, as this gives additional reassurance to consumers. With such reassurance, the fact that any supermarket might use batch labelling, should be totally irrelevant.