reLAKSation
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Trading places: A report in the latest issue of Seafood International suggests that more and more consumers are preferring to choose to buy salmon from MSC approved sustainable Alaskan fisheries. Even the European consumer is buying into the sustainable theme with the widespread appearance of fresh Alaskan salmon in many supermarkets and the increasing use of Pacific salmon in many added value dishes. The frozen food manufacturer, Bird’s Eye, have said that they will use nothing else.
The European Salmon Producers Group hope that their ongoing quest of safeguard and dumping actions will eventually reduce the amount of farmed salmon from Norway sold in the European Community and consequently force up prices. What they fail to appreciate is that the marketplace has become extremely complex as many foods vie for the consumer’s attention. Consumers do not have to buy salmon but can choose from any fish and other meal options. Those deciding to buy salmon no longer have the simple choice of buying just salmon, but can choose between farmed salmon, MSC approved sustainable salmon and even organic. Of these just plain salmon is not necessarily the first choice any more especially as the sustainable message reaches more and more consumers.
The European Commission seems set on imposing punitive tariffs on imported Norwegian salmon but such a decision may not necessarily reduce the competition which Scottish farmers face. The supermarkets may well decide to increase the supply of Pacific salmon species to offset the shortfall of farmed Atlantics, especially as they can freely buy in as much farmed Pacific salmon as they like as these will not be controlled by any EU import restrictions. Whilst, farmed Pacific salmon cannot claim to be sustainable, consumers may prefer the taste and be just as happy to buy farmed Pacific salmon as they were farmed Atlantics.
When the volume of imported Alaskan salmon starts to affect their margins, will the EUSPG return to Brussels and submit a dumping action on Pacific species too. This may be harder to prove as the costs of catching these wild fish amounts to throwing a net into the water.
As salmon consumers also eat cod and haddock, perhaps the EU should also restrict import of these species? If this sounds crazy, it is no more so than trying to restrict the import of the one farmed fish which can alleviate the fishing pressure on stocks of traditional marine species currently caught in EU waters.
Aquaculture United: According to the magazine ‘Fish Farmer’, the announcement that all Irish aquaculture sectors are to be represented by a single umbrella body, IFA Aquaculture, has been welcomed as an example of the way forward for fish farming representative organisations in other parts of Europe. The existing representative organisations the Irish Salmon Growers Association and the Irish Shellfish Association will now be constituent members of IFA Aquaculture.
Launching the new organisation IFA Deputy President Ruadhri Deasy said that the Irish Farmers Association has had members in the fish farming section since 1991 but is now embracing the industry in all its modern diversity under this new organisational structure.
Commenting on the new structure, Courtney Hough, of the Federation of European Aquaculture Producers said that the complexity of decision making processes and the fact that many European decisions and resolutions have a profound impact on aquaculture industries means that it is essential to have such professional representation.
No-where is the need for such a rationalisation of representative bodies greater than in Scotland. The proliferation of representative bodies has meant that even a minority of producers can dictate industry strategy. The Irish model has brought together the two main aquaculture sectors within one organisation. In Scotland, even these sectors do not have single representation. Anyone trying to canvas salmon opinion in Scotland would have a plethora of organisations with which to consult. There is Scottish Quality Salmon, Scottish Salmon Producers Organisation, Shetland Salmon Farmers Association and apparently the European Salmon Producers Group.
This last organisation does not appear to have an office or telephone number but yet is afforded complete credibility by the British Government even though it represents a handful of disaffected producers.
It surely would make sense to have a single organisation representing all salmon interests in Scotland. This organisation could then have sub-groups representing the diverse interests of its members. Thus Shetland farmers could form a Shetland committee who would lobby for the interests of those farming on Shetland. This would be a much fairer and stronger system and certainly one which better reflects the democratic country in which the Scottish industry operates.
Dictating policy: Fishupdate.com reports of an ‘ambitious’ attempt to curb the power of supermarkets in the buying chain by changing the law in Scotland. James Mackie, an agricultural supplier, is hoping to petition the Scottish Parliament on behalf of salmon producers who feel that their margins are being destroyed by aggressive tactics on part of the supermarkets. Mr Mackie’s claims that British supermarkets operate on 17% profit margins whereas those in Europe and the US, the margins are less than 5%.
Not only are Scottish salmon farmers being supposedly subjected to the predatory pricing policies of their Norwegian counterparts, but they are also being ground down by the supermarkets’ aggressive buying policies. Against such a background, it’s surprising that any salmon farmers would want to remain in business in Scotland?
Mr Mackie’s blinkered vision of the supermarkets has much in common with that expounded by the EUSPG. Rather than develop a business strategy in line with the demands of the marketplace, the EUSPG and Mr Mackie would prefer to shackle those who policies do not fit in with their own.
Mr Mackie claims that 17% margin is excessive and should be more equally shared with the suppliers. However, Mr Mackie’s view is a bit simplistic. The reality is that there is a huge variation across British supermarkets, not least because they do not all target the same consumer profile. Typically, they fall into one of four groups. These are premium, such as Waitrose and Marks & Spencer; traditional like Tesco and Sainsburys; value such as Asda, Somerfield and Morrisons and the budget discounter like Kwik Save, Aldi, Netto and Lidl. They all operate differently catering to different sectors of the market. There is of course, some cross over as individual chains aspire to broaden their customer base, but by and large it can be assumed that the budget chains do not operate on a margin of 17%. Yet undoubtedly, chains like Waitrose and Marks & Spencer may do so on some of their top range products. Some products may even generate margins over 17%, but they are part of the wider mix that supermarkets aim to provide. Tesco and Sainsburys both offer value, traditional and premium ranges and the margin for each would be expected to be different. It is all to do with consumer choice.
In exactly the same way, farmers have a choice. If they believe that the return on selling to supermarkets is insufficient, then they have the choice not to do so. Some time ago, Nick Joy of Loch Duart Salmon told IntraFish that his farm avoids selling to supermarkets and instead have developed their own specialised market underwritten by the Freedom Food Label. He has made this choice to do so and other farmers are equally free to sell their fish in the same way.
The problem in Scotland is that many of the farmers who feel aggrieved by the fact that they have to compete with imported salmon or that they have to sell their fish to an increasingly dominant supermarket sector have failed to recognise that they do have choices. They don’t have to operate in the competitive market for raw salmon flesh, but can choose to sell into specialist markets instead. The Scottish industry have always argued that their fish are premium quality for which consumers are prepared to pay a premium price. However, the reason that most consumers are not is that they expect to buy salmon from the value for money sector and therefore are not prepared to pay extra for it. By comparison, consumers looking for premium products are happy to pay more for the salmon they buy and this is the market which these Scots farmers should target, leaving the value for money market for those that are happy to accept very small margins.
In the previous issue of reLAKSation we mentioned the proverb that you can lead a horse to water, but you can’t make it drink. In the same way, Mr Mackie cannot force supermarkets to cut their margins because it is their customers who have the choice.