reLAKSation 176.
Safeguarding
value: The ongoing debate about safeguards
has thrown up many different views and ideas from both sides of the divide.
IntraFish interviewed Donal Maguire of the Irish Sea Fisheries Board who said
that the business practices adopted by Norwegian salmon companies smack of
corporate lunacy. He suggests despite losing money, the Norwegian industry
continues to expand, driving the market further and further down. Mr Maguire
said that that this is backward market logic in which there is a crazy idea that
by continually increasing output and supposedly driving down the cost of
production then they will somehow meet their position. However, if this is a
form of backward market logic then Mr Maguire has failed to appreciate that this
is the exact same backward market logic that the whole of the salmon industry,
and not just Norway, has actively pursued for the last decade.
As
soon as the first farmed fish were put to sea, the market price of salmon was
being compromised. Salmon were perceived to have an inherent rarity value, which
is why the market price was high. However, farming ensured that supplies were
increasingly available which started to threaten prices but it was not until the
end of the 1980s that the industry began to realise that there was a serious
problem. In 1989, prices suddenly collapsed and farmers were faced with a major
decision. They could either curtail all further expansion and try to regain the
former higher prices by controlling production or they could profit from the new
lower price by reducing production costs, expanding production and growing the
market. Initial discussions between producers were not constructive as some
believed that there was still further potential in growing salmon. The lack of
agreement persuaded some farmers to capitalise on a whole new market of
potential salmon consumers, attracted to a new lower priced salmon. This
decision meant that the ‘value for money’ production became the accepted
option for the industry, even though some Scottish producers have argued for the
imposition of controls to force up the price. Mr Maguire is therefore wrong to
suggest that Norwegian producers have been alone in driving the market. This is
an industry wide strategy.
Mr
Maguire also told IntraFish that Norwegian farmers have a lot in common with
their European counterparts. He said that the value in the supply chain is
getting stuck at the processor/wholesaler end at the expense of the farmers. We
at Callander McDowell would agree. We believe that this is no different from
many other forms of farming where the producer gets little reward for the basic
foodstuff but by the time it ends up at the retailers, it has become a costly
item. Milk production is a good example with many dairy farmers now pulling out
of their industry because of the lack of any profits.
Mr
Maguire has put his finger right on the heart of the salmon industry’s
problem. We ask the question whether the perceived lack of profitability in
salmon farming is not because of Norwegian dumping but rather that the value has
been lost from raw salmon flesh. Instead of trying to force safeguards on the
international industry, the minority of complainant farmers might be better
served by trying to regain lost value from the wider supply chain.
Fast
track help: There is a lot of talk about
helping the Scottish industry, but much of this help does not seem to offer any
practical hope for beleaguered farmers. seafoodintelligence.com report that the
Soil Association, the arbitrators of the organic standard, have offered a free
fast track service for all farmers, including those growing salmon and other
fish, applying for conversion payments under the Governments Organic Aid Scheme.
The closing date is the end of March.
According
to IntraFish, sales of organic foods in the UK are growing at 10% per year,
twice the rate of conventional groceries. Sales of organic salmon have grown by
33% to over £5 million a year. This is a huge growth sector and offers a
majority market opportunity for niche production. This would especially suit all
the members of the European Salmon Producers Group and we would sincerely hope
that every single one of them will be taking advantage of this free help. Donal
Maguire of the Irish Sea Fisheries Board said that he wanted to see a level
playing field for all producers, yet here is a way for the small independent
producer to gain an upper hand. We hope that both Brussels and Edinburgh will
encourage the EUSPG to consider this offer. In case none of the EUSPG read
seafoodintelligence.com, the contacts at the Soil Association are Lyn Matherson
and David Mowat and they can be contacted on 0870 870 4959 (local rate).
Getting
chummy: Yet another storm is supposedly
brewing on the horizon for the salmon industry. Wild Pacific salmon are being
processed in China and then sold on as frozen fillets in farmed salmon’s
traditional markets. According to IntraFish, Lars Liabo of Kontali Analyse
delivered this bad news to the salmon industry at the EWOS New Year’s meeting
in Tromso.
Mr
Liabo said that US fishermen have been increasingly selling chum and pink salmon
to China. In 2004 the volume was 95,000 tonnes, whereas four years previously,
the amount was only 10,000 tonnes. Mr Liabo told the audience that these new
species were ‘dry as a wooden god’ and require a lot of sauce to make them
palatable. IntraFish said that he
had a mischievous glint in his eye as he consoled the audience with this news
suggesting that these ‘new’ species may not be such a threat. He also said
that it may be some time before the farming industry comes face to face with
this Chinese salmon, possibly not before autumn 2006.
Unfortunately for the farming industry, Mr Liabo appears to be out of touch with the reality of the marketplace. Chum and pink salmon processed in China may not be reaching Europe, but there is plenty of it coming in direct from the US. Processed pink salmon is already very popular in the UK and even the ‘wooden’ chum salmon has found a niche in the marketplace.
It
may be sold with a sauce, but consumers like salmon, including farmed salmon, in
sauces so this is not an obstacle that has to be overcome.
Mr
Liabo may put down Chum salmon but he ignores the fact that Chum salmon is still
perceived as being salmon by consumers. Many are not aware of the differences
between Atlantic and Pacific varieties and when retailers call Chum salmon as
being wild, it is contrasted against farmed, irrespective of whether one is a
wooden tasting Pacific salmon and the other is a tasty farmed Atlantic. The
reality is that even the least favoured Pacific species represent real
competition to the salmon farming industry and this should not be ignored.