reLAKSation 170.
Get real: According to the Observer magazine, the British charity Oxfam, has just launched an extension of its fair trade campaign with a series of photographs. Michael Stipe is doused in milk, Jamelia swimming in poultry feathers, Thom Yorke dunked in chocolate, Chris Martin covered in rice and Colin Firth drenched in coffee, Alanis Morisette surrounded by wheat, Minnie Driver wrapped in cotton.
The explanation of these photographs is that these familiar faces have agreed to have equally familiar commodities dumped on their head for the latest phase of Oxfam’s Make Trade Fair campaign. The dumped commodities, from sugar to rice, symbolise the warped world of international trade – commodities are over-produced in the EU and the US, thanks to the developed world’s system of subsidies, and the resulting surplus is then dumped on the world’s poorest nations, devastating the domestic markets. For example Mali has 6.5 million cattle yet 9,000 tonnes of powdered milk are imported every year.
Oxfam hope to highlight that Fair Trade gives poor people the potential to send their kid’s to school, buy essential medicine, build houses that survive storms. They say that this potential can never be realised unless the poorest nations are given a chance to get off their knees and this will never happen whilst there are trade rules that deny developing countries the chance to help themselves. Oxfam hope to persuade the WTO to introduce an new agricultural agreement that would end subsidised over-production and all forms of agricultural dumping. They also want to guarantee food security and reduce overall poverty.
The Brussels based think tank ‘The Centre for New Europe’ claim that 6.600 people die every day directly as a result of EU trading and if Africa was able to increase its share of world trade by just 1% it would earn an additional £49bn a year, enough to lift 128m people out of extreme poverty.
The Oxfam campaign rather puts the question of dumping into perspective. It seems to us at Callander McDowell, that European salmon farmers have little to complain about.
What’s important?: The Scottish Executive have just announced revised priorities for the Strategic Framework for Aquaculture. In the first up-date of the framework since its launch in March last year, the key priorities have been tightened to further safeguard the industry’s future.
We, at Callander McDowell expressed concern at the launch that the framework offered little to farmers in terms of long term viability, which presumably is why the Scottish Executive felt it necessary to go outside the framework in order to secure this viability through its application to Brussels for the imposition of safeguard measures. With the safeguard case in doubt, it is therefore surprising that the Scottish Executive has chosen to prioritise increased public understanding of the importance of the aquaculture industry as a way of safeguarding the industry’s future. According to the EUSPG, continued low prices are likely to force many farms out of business which could mean that salmon farming may not survive as a significant industry. Against this background, increasing the public understanding of farming may have little impact on securing the industry’s future. After all, if there is little or no industry, what is there for the public to understand? Even if the industry survives, which it undoubtedly will, how will increased public understanding of aquaculture really help safeguard the industry’s future?
The original Strategic Framework reflected the views of a very diverse working party, but gave little consideration to the real problems experienced by the industry. Perhaps, it is time that the Scottish Executive reviewed its priorities and started to look at ways to help the industry remain competitive whilst recognising that the market has changed and what consumers want is affordable, value for money salmon and not salmon at any price.
Banking on help!: According to IntraFish, the European Salmon Producers Group have real proof that the Norwegian industry is in receipt of huge subsidies. What is this proof?, we ask, presuming that the EUSPG have must have engaged in a major investigation to uncover evidence of subsidies. The answer is that the EUSPG have simply looked at the profitability survey recently published by the Norwegian Directorate of Fisheries and used this data to support their submission to Brussels to claim that the Norwegian industry has been heavily subsidised.
The Norwegian industry has always been open about its salmon industry’s data publishing both profitability and cost data. By comparison, the Scottish industry of which most of the EUSPG are part have been extremely reluctant to release any data at all. Even when the Scottish Executive’s Strategic Framework recommended that a full survey of production costs should be undertaken, now nearly two years later, it has still not yet begun.
The EUSPG say that the latest Norwegian profitability survey shows that the average farmer lost nearly NOK 3/kg on every kilo of salmon sold. Whilst this may be very much the case, it is not necessarily an accurate picture of the Norwegian salmon industry, just as a similar pronouncement about the Scottish industry would not be true. The reality is that every nation’s salmon industry comprises of a diverse variety of farms which are each pursuing a different strategy in terms of production and markets. Some of these farms are losing money and seriously need to review their approach to both production and the market, but equally, some are clearly profitable. It is only necessary to look at the Scottish industry to see farmers such as Nick Joy of Loch Duart salmon claim to be profitable and have invested in extra production, whilst others have gone bankrupt.
It is only necessary to have read IntraFish over the last couple of years to know that one or two major companies in Norway have experienced significant difficulties, necessitating refinancing to remain in business. The banks clearly believed that further investment was worthwhile due to new management and new strategies and recent company results appear to support their faith in the industry. Clearly the EUSPG believe that such refinancing should be classed as subsidisation. Perhaps, if the EUSPG members looked at their own strategies, they may also be rewarded by support from the banking sector.
Conspiracy theory or plain paranoia?: In a press release, the EUSPG state that the results of the dumping investigation can’t come soon enough for any of us. The Norwegian Government has apparently rejected out of hand the proposed Safeguard Measures, measures which would have brought stability and a return to truly sustainable prices for all parties involved in the EU salmon industry and again once must ask why?
‘Many have thought that it has always been Norway’s intention to destroy its competition, wherever it is and once it had control of the market to seize the benefits of a near monopoly position and raise prices to super profit levels. That seems the only rational explanation…’
We have quoted the press release verbatim because it shows how much the EUSPG are out of touch with the realities of the marketplace. Even if Norway intended to destroy its competitors and create a monopoly position, the fact is that the chances of raising prices to super profit levels would be the same of introducing a MIP. European consumers are simply not prepared to pay a higher price to buy salmon, irrespective of whether it comes from Norway, Chile or Scotland. Consumers have become used to salmon being a value for money meal choice and the EUSPG need to realise that this is what consumers want.
Salmon prices are low because salmon is produced in volume. The EUSPG will say that this is because the Norwegian industry has expanded faster than the market, but this is a blinkered view. All salmon industries, including that in Scotland and Ireland, have expanded too rapidly, if the intention was to maintain salmon as a luxury food. However, the very act of farming has devalued this luxury image however, whilst the luxury market has contracted, a whole new market has been created for consumers who want an everyday meal choice. This market has expanded in line with increased salmon production. The truth of the matter is that the European industry has failed to capitalise on this new market whereas the industries in Norway and Chile have not.
If the EUSPG would open their eyes to the opportunities of the marketplace rather than focus on ridiculous conspiracy theories, then they may find that they can trade their way out of their current problems.