reLAKSation 127.
Safeguarding what?:
Back in 1995, a representative from Callander McDowell was asked to speak at a
conference in Brussels entitled ‘Increasing Demand, Diminishing Supplies’.
The basic premise of the conference was that whilst demand for fish was
continuing to increase, supplies of wild caught fish were in decline through
over-fishing. Those attending the meeting were split into two distinct camps;
they came from either from a fisheries or an aquaculture background and as the
conference progressed, the divide appeared to grow, not come together. The
farmers put their case for farming, whilst those from fisheries argued the need
for help to improve wild catch fisheries. Not one speaker appeared willing to
address the fundamental problem as to how to meet an increasing need for fish
from a diminishing supply of marine fish. There
was little attempt to connect the decline in wild catch fisheries with a rise in
aquaculture, even though this was clearly intended to be the underlying message
of the conference. The simple fact
is that whilst many of the measures adopted by the authorities are intended to
minimise the effect of declining stocks, such as decommissioning etc, there has
been little attempt to address the problem
of supply. The European Community has to rely on third party fishing
agreements and increased imports to meet consumer demand. Yet, increased supply
from outside European waters only increases the fishing pressure on these
stocks, compounding the global problem. Yet,
little consideration has been given to the possibility of replacing lost fish
stocks with supplies from aquaculture. This is because the great divide between
fisheries and aquaculture, which was evident at the Brussels conference, still
exists. Clearly, if supplies of fish can be met from aquaculture, the fishing
pressure on wild fisheries stocks can be reduced, allowing much needed time for
recovery.
However,
whilst the authorities have difficulty in reconciling the idea of using
aquaculture as a management tool for wild fisheries, the consumer has taken the
concept on board, albeit rather unknowningly. The reduced and unpredictable
availability of more expensive supplies of popular marine species such as cod
and haddock has meant that consumers have favoured alternative, more available
and cheaper species. The one single fish to benefit from increased demand has
been salmon. This is because it is widely available, low cost and represents
value for money. As a result,
salmon has become the most popular fish in the UK and consumption is likely to
continue increasing as it becomes even more widely available.
Processors have recognised that salmon offers enormous potential for
adding value, to transform it into a whole range of products which consumers
want to buy.
It
is therefore unexplainable why, against this background, the British government
has applied to the European Commission for safeguards to protect the Scottish
and Irish industries in the face of
Norwegian over-production. How can any fish farming industry be over-producing
when supplies of wild catch fisheries are so rapidly diminishing?
We,
at Callander McDowell certainly believe that this application for safeguards is
misguided. The EU may be importing more salmon from other countries, but it is
clearly because consumers, who are unable to afford more expensive marine
species, have created a growing demand that neither the Scottish or Irish
industries can meet, either individually or together.
According
to IntraFish, the British application argues that salmon imports to the EU rose
during the first nine months of 2003 compared to the previous year. Yet, the EU
should welcome this rise because it means that consumers are able to buy value
for money fish and at the same time, pressure on fish stocks is being reduced as
demand is being met from farming. Even
Scottish producers have recognised the need for increased supplies as Scottish
production rose despite the awareness that the Norwegians were supposedly
over-producing. Why continue to
expand production if there wasn't confidence that the fish could be sold?
The
British government also argue that safeguards should be introduced because of
'unforeseen developments'. It is difficult to comprehend why international
salmon producers should be penalised because of 'unforeseen developments'.
Common sense would suggest that businesses should try to consider all possible
eventualities, after all, nothing is certain, and then plan accordingly. These
unforeseen developments include Norwegian over-production, yet as we have
already discussed, how can any farming industry be over-producing when supplies
of wild caught fish are under threat. Equally, claims of over-production are now
starting to wear a bit thin. The
Norwegians were first accused of over-production over a decade ago when Scottish
production was only about 28,000 tonnes. These accusations have continued over
the ensuing years whilst Scottish production has continued to expand, although
this expansion has not been fast enough to meet demand.
The
issue is not about over-production, but rather it should be about
under-marketing; about the ability to produce what the consumer wants. In this
case it is low cost, value for money fish.
The
other unforeseen developments include a strong euro, but global business has
always had to contend with variable exchange rates and this is not sufficient
reason to penalise other producers.
The
final unforeseen development was the removal of the European salmon agreement.
We would argue that this was both foreseen and expected. The EU salmon agreement should never have been imposed since
it was just a compromise solution to bring yet another dumping case to an end.
The dumping case in question was
yet another attempt aimed at excluding Norwegian salmon from the European
market.
This
application for safeguards and its
suggestion that if they are not imposed, many Scottish and Irish farms will
fail, is really about helping European farms avoid having to address the real
issues of the marketplace. We
repeat that the fundamental problem is that many Scottish producers aim to
produce a high quality product for which they expect to receive a premium price.
Consumers, however, are more interested in value for money salmon, which
they can eat as an everyday meal choice. These two expectations do not match up.
The question is should the EU accede to British Governments demand for
safeguards and let Scottish farmers produce what they want or should they
recognise what the consumer wants and continue to allow a free flow of imports.
We, at Callander McDowell certainly
believe that imports should remain unimpeded and farmers, from where-ever they
come should adapt their production accordingly. This should not mean that the
Scottish industry should automatically be expected to compete in the market for
low cost raw salmon flesh. Instead, they should exploit the opportunities to
develop high value extra processed product, which should bring a better return
and should be less competitive. The
government is clearly concerned about the industry's ability to survive, but
rather than opt for this sticking plaster solution, it may find the long term
viablity of the industry can be better secured by looking at ways to help
producers adapt to an evolving consumer demand.
Finally,
IntraFish have highlighted four specific examples of what they call
'price-undercutting'.
We
have highlighted previously that the declared industry strategy is to produce a
high quality product for which they can command a premium price.
This clearly implies that if they receive a premium price, others must
receive a non-premium price, hence a lower price.
Thus by it's very nature, imported salmon must be sold cheaper that
Scottish salmon so any claims of price under-cutting are nonsensical.
In
addition, one of the four examples cited is for Chilean salmon, which is usually
imported as frozen. Representatives from the Scottish industry have previously
said that imported frozen salmon is not competitive with fresh Scottish salmon
and therefore this example is meaningless.
The other examples are all of Norwegian salmon, but there is no mention
of whether the fish are Norwegian superior or ordinary, which have different
price structures, but then they would always be cheaper than Scottish product.
However, the aspect of these examples which we find of most interest is that the British governments application document suggests that these examples of price-undercutting have meant that EU producers have had no choice but to lower their prices as well. Surely, as Scottish fish are being targeted at a specific market for premium priced fish, they are not in direct competition with the fish from these examples which are being bought by processors and are not necessarily destined for the fresh fish counter or high value restaurant trade. Why would EU producers have to lower their prices to compete for this different market need? Does the Scottish industry not have sufficient confidence in its premium product that they cannot hold out to meet their expectations? Perhaps, this is just another indication of the mismatch between what producers want to produce and what consumer want to buy!