reLAKSation 105.
Parked
in the wrong garage?: Speaking at the recent Scottish Parliament debate
on the government’s aquaculture strategy, MSP Ted Brocklebank said that
‘Scottish Quality Salmon is the ‘Rolls Royce’ of the industry’ as he
lambasted the Scottish Executive’s ‘complete failure to defend the Scottish
Quality brand name’. According to IntraFish he was referring to the way that
the Norwegian industry was currently ‘flooding the EU market’ and
‘collapsing prices’.
Ever
since prices first collapsed in 1989, the Scottish industry has pushed the blame
onto the Norwegian industry claiming that over-production in Norway has resulted
in excess salmon which have subsequently been dumped onto the European market.
This has been the basis of the repeated dumping cases submitted to Brussels. It
is somewhat surprising that after twelve years, this issue has not been
resolved. Perhaps, the real problem is that like Mr Brocklebank, everyone is
looking at the issues in the wrong way.
Mr
Brocklebank says that Scottish Quality Salmon is the Rolls Royce of the
industry, but what does he mean? Rolls Royce is an expensive car, which have
come to be associated with the height of the luxury. However, by their very
nature, Rolls Royce cars are inherently rare in the marketplace so that it is
not everyday that you will see one on the road. Rolls Royce has come to be
linked to anything in the luxury bracket and clearly this is the image that Mr
Brocklebank would like to equate with Scottish salmon.
A
long time ago, it certainly was possible to link Scottish salmon with the luxury
market. In the days prior to the advent of salmon farming, Scottish salmon did
have the rarity value to make it one of the most luxurious indulgences. Wild
fish were not commonplace and therefore were expensive to buy. This limited
availability meant that they were only destined for the tables of the very rich
or to be eaten at the most special of occasions. This meant that salmon was
often the centrepiece of weddings or summer events. Salmon certainly did have
the very up market luxury image, which Mr Brocklebank appears to imply.
Unfortunately, for those who would like to promote Scottish salmon, this very
image has been devalued by the very act of farming. Even if Scottish salmon
production is viewed in isolation, the 150,000 tonnes of salmon produced in
Scotland is more than sufficient to turn a Rolls Royce product into that
comparable to a Ford Mondeo. The sad fact, which Mr Brocklebank must accept, is
that it is just not possible to produce salmon in volumes akin to a Ford Mondeo
and then expect consumers to pay a Rolls Royce type price. It just does not
happen.
At
least, Rolls Royce owners can be assured that it can be immediately identified
as such and that it is distinct from every other car on the road. The same
cannot be said of salmon since most consumers would be hard pressed to tell one
salmon from another. In fact, it is only a couple of weeks ago that MEP,
Catherine Stihler and Brian Simpson, Chief Executive of Scottish Quality Salmon
took to the streets of Edinburgh to highlight that the current labelling
legislation does not go far enough to identify Scottish salmon as coming from
Scotland. This confirms that consumers would have little idea as to the origin
of the salmon they buy just by looking at it. This is not much different from
the modern motor industry where in the mass market, one car looks very much like
any other.
The
Scottish industry has maintained that their Tartan Quality Mark provides the
necessary badge to ensure that consumers are aware of both quality and origin.
However, this is not comparable to the distinctive Rolls Royce badge, as it does
not indicate the same level of luxury as might be expected from a Rolls Royce
product but instead it is more comparable to the Ghia badge on a top of the
range Ford Mondeo. This shows that this mass-market product has extra added
value and thus merits a separate badged identity. In much the same way, the
Tartan Quality Mark identifies salmon carrying the mark as having extra
reassurance of quality, but this extra quality does not make it like a Rolls
Royce.
Whilst
Mr Brocklebank and others may want Scottish fish to be the Rolls Royce of
salmon, many consumers appear happy that it is not. Luxury products like the
Rolls Royce are extremely expensive and may be considered for only the most
special of occasions. However, as production volumes have increased, the price
of salmon has fallen, reflecting more everyday products. Instead of being a
special treat, salmon has become an everyday meal choice, whether it is lunch or
dinner. In addition, the lower price has attracted many new consumers, who
previously would have never even considered eating salmon. Do producers really
want salmon to be a Rolls Royce food item only eaten on the rare occasion or
should salmon be an affordable daily meal? Clearly, consumers want the later,
which is why they continue to buy salmon on a regular basis.
Mr
Brocklebank told MSP’s that the farmgate price of salmon is currently £2/kg
although it had fallen recently to as low as £1/kg, well below the cost of
production. He said that there must be a level playing field in the markets. Yet
if Scottish salmon is to be perceived as a Rolls Royce product then it must be
superior, not equal to the competition and therefore the playing field cannot be
level, but must be in favour of Scottish product. It is simply impossible to
believe on one hand that you have a superior product then expect it to be
treated the same as other salmon. This is a situation ripe for conflict and
clearly conflict is what has happened as witnessed by the uncertainty as to
whether Norway should be cast as the hero or villain during the Scottish
Parliament debate.
Ted
Brocklebank appeared to be in no doubt when he accused the Scottish Executive of
failing to defend the Scottish Quality brand name. However, Mr Brocklebank is
wrong to blame the Executive. Government cannot force consumers to buy one
salmon and not another. Consumer choice rules the marketplace and Mr Brocklebank
needs to look more closely at the market, rather than at the Government.
Certainly in relation to prices, consumer choice appears to be all powerful.
Rolls
Royce products have always commanded a premium price. In the case of Rolls Royce
cars, it is not just a premium, but a huge gulf between this luxury and the
average mass market car. Scottish salmon producers have always argued that their
salmon can also command such a premium. The fact that cheap salmon from other
origins is available in the marketplace should make little difference to this
premium since the Scottish industry are confident that many consumers are
willing to pay more for the extra reassurance of quality and origin. It is worth
remembering that to gain a premium means that consumers are willing to pay more
for one salmon than another. This means that one salmon must be cheaper than the
other, which in this case is the imported salmon. However, as consumers are
happy to pay more for Scottish salmon, the presence of this cheaper salmon is
irrelevant, or is it?
The
reality of the marketplace would actually suggest that many consumers cannot
perceive any difference between Scottish and imported salmon and therefore
willingly opt to buy the imported fish which they see as being better value for
money. This is market force at work.
After
all, is it likely that anyone considering buying a Rolls Royce will be
influenced by a sudden influx of cheap family saloons from the Far East? Of
course not. The root of Scotland’s problem is they are trying to place their
product in the wrong garage. Scottish salmon is not a Rolls Royce product.
Perhaps, Scottish salmon farmers should start looking instead for a parking
space at the Ford garage.