reLAKSation 181.
Losing
out: Britain’s
leading processor and supplier of fresh and smoked salmon has said that the
Minimum Import Price on imported salmon is not helpful to the development of the
salmon market. The company forecasts that retail prices will increase by 6-7% by
April because they say that 75% of the salmon consumed within the EU is
currently farmed outside it.
According
to IntraFish, Deputy Chief Executive of Young’s Bluecrest said that the MIP
was designed to stop excessive imports of salmon from outside the EU hence
protecting domestic producers. He continued to say that given the growth of the
market, it is currently impossible for his company to meet UK demand entirely
from domestic sources. He believes that it is inevitable retail prices will have
to rise.
We,
at Callander McDowell will certainly be watching to see whether this happens or
not. We have already seen some evidence that the consumer will have to pay a
higher price to buy salmon. This is apparent from some of the promotional deals
that are a regular feature of the British retail sector.
A
number of supermarket chains have offered promotions on fresh prepacked salmon.
These include:
Coop
– Half price on 300g packs of salmon fillets.
Marks
& Spencer - £2 off on 850g packs of salmon fillets
Sainsburys
– Buy one 380g pack of salmon fillets, get second for 99p
Somerfield
– Half price on 260g packs of salmon fillets
One
supermarket chain has also run a promotion on salmon from the fresh fish
counter:
Morrisons:
50p/kg off the price of whole fish, fillets and steaks.
Since
the imposition of safeguards, Sainsburys have changed their promotion from Bogof
– Buy one get one free to Buy one get second for 99p whilst Morrisons have
reduced the amount of discount from £1/kg to only 50p/kg. Admittedly, these are
only small changes, but they are less attractive to consumers and therefore will
not generate as many sales. Interestingly, even though the flow of imports has
not been hit so far, nearly all these promotions involve Scottish salmon, not so
called cheap dumped fish.
Mike
Parker of Young’s Bluecrest believes that salmon is a major success story in
UK seafood. He said that British consumers are just starting to appreciate the
healthy benefits linked to oily fish with salmon as the most convenient and
readily available form on the market. He therefore believes that the MIP is
anti-consumer and that it has the potential to slow down this growth. We fully
agree.
Mandy’s appeal: At a recent meeting in Stockholm, EU trade commissioner Peter Mandelson launched a fresh onslaught on protectionist forces in Europe and the rest of the world and demanded the dismantling of virtually all barriers to trade in goods and services. According to the British newspaper ‘The Guardian’, Mr Mandelson argued that opening up Europe and the global markets as a whole is the key to promoting jobs at home and fighting poverty in the third world.
Yet, this attack on protectionist forces might appear at odds with one of the first tasks Mr Mandelson undertook as EU trade commissioner. This was to approve the imposition of safeguard measures against Norwegian and other imported salmon. This appears somewhat contrary to his desire to dismantle barriers to trade since safeguards have instead put barriers in place.
Against this background, the Danes are right to submit an appeal against these safeguards measures for as their Economy & Trade Minister, Bendt Bendtsen rightly says, safeguards are harmful to a large number of companies in the EU, the customers and free global trade. IntraFish reports that he argues that these measures were introduced for political reasons in order to assist a small number of unprofitable Scottish and Irish salmon farmers.
The imposition of safeguards is supposed to give Scottish farms a breathing space in which to restructure to be able to better compete in an international marketplace, yet some Scottish farms are already reporting increased profitability and the ink on the safeguard measures has hardly had time to dry. The major shareholder in Scottish Sea Farms told IntraFish that the company is the most profitable salmon farming enterprise in Scotland with profits before tax of the equivalent of NOK 18.9 million. At the same time, Lerwick Fish Traders, the subsidiary of a Shetland salmon farming venture has announced a massive extension to its salmon processing plant. Shetland-News says that this should create between 50 and 70 new jobs next year and up to 150 by 2008. These announcements suggest that the Scottish industry is not quite as badly placed as the European Salmon Producers Group would have us and the European Commission believe.
Perhaps the real issue is that if the independent Scottish salmon producers, who sought safeguards, remain unprofitable, and then it is they that need to change rather than insist that all those around them should adapt to meet their situation. If EUSPG members feel unable to compete in the global marketplace, then it is they that should look at their own position rather than force everyone else to have to trade under safeguard protection. Interestingly, despite improved profitability throughout the group including Scottish Sea Farms, Leroy Seafood said that the seafood industry needs to become ‘significantly more market-oriented that it has historically been’ in order to prosper. If a profitable company believes that this is essential for them, then surely it will be even more so for the independent Scottish salmon farming sector?
The salmon industry has changed since its early days and will continue to change as the market evolves. Like any business, farming companies, must adapt to changing markets. Trade protection is not the answer. Other sectors in the fish industry have recognised this need for change as seen by a recent announcement that SeaFish Economics have developed a strategy workshop that can help seafood processors respond to market challenges. According to Seafoodintelligence.com, the workshop aims to help processors looking to:
· Respond to changes in the industry
· Develop a clear way forward
· Change direction.
This strategy workshop is organised by SeaFish, a Non Departmental Public Body (NDPB), sponsored by the four UK government fisheries departments. It is really unfortunate, that whilst the British Government is ready to apply for safeguards on behalf of the independent sector, they are not prepared to act as the catalyst for change as their agency SeaFish is so ready to do for processors.
Surely such a strategy workshop would be an ideal stepping-stone in the independent farmers aims for restructuring. We previously discussed that the Commission included some of the measures intended to ease the regulatory burden on Scottish fish farms in their safeguard document. One of these was to consolidate production into larger, more competitive, farms. This proposal has already come under fire with a report in the Sunday Herald that suggest that this is a last gasp attempt to bolster an unsustainable industry already in the midst of its death throes. Even the vice convenor of the Highland Council believes that the industry should take a different route. It is difficult to see how such proposals can be progressed.
We, at Callander McDowell, share Denmark’s view that the safeguards should be repealed. Instead, those farmers that need help should be assisted to meet the challenges of the marketplace. Sadly, the Commission have already threatened that the only alternative to safeguards is another antidumping suit. This too would be a mistake. Firstly, the only time that Norway could be accused of dumping was when the EU salmon agreement was withdrawn. Prices did fall very low after then but this was a response to the Commission’s previous interference in the salmon market by putting the EU salmon agreement in place. If this had never existed, salmon prices would never have dipped so low. The market had to recover from the agreement and low prices were the result. Since then, prices have not stayed within a reasonable banding. Secondly, 2003 is history and the industry have continued to evolve and finally, the EUSPG do not represent the industry majority to bring an antidumping case. The British government would argue that they listened to this minority in the case of safeguards because they were supported by other ‘interested parties’ as well!!. However, these other ‘interested parties’ do not count in the case of an antidumping suit and therefore such a case cannot be initiated.
The sooner these safeguards are withdrawn, the sooner the industry can focus on providing the consumer with a value for money and healthy meal choice. Surely, this is why the industry is producing salmon, to give the consumer what he wants. We only hope that Peter Mandelson realises that the industry cannot do this if these artificial trade barriers remain in place!!
Sushi
generation: Laksefakta.no reports that Morten
Heide, a researcher in economy and marketing at the Fiskeriforskning in Tromso
has suggested that the new sushi generation offers an major opportunity to
expand sales of salmon. He said that we have had frozen pizzas and tacos
generations and now the latest opportunity is for selling sushi. He believes
that sushi is no longer strange and exotic and more and more shops are selling
sushi in packs. He believes that the increased availability will encourage more
consumers to give sushi a try.
We,
at Callander McDowell, certainly believe that sushi offers another opportunity
to sell salmon, but it is just one of several market sectors which could be
exploited. In the UK, sushi is certainly very popular but it is has not
influenced the market in the same way as say, pizza. It would be wrong to
suggest that it will have the same sort of impact.
In
addition, sushi comes in many varieties, not just salmon and therefore it will
never be a huge consumer of fresh salmon. Interestingly, some sushi has already
appeared made from tinned Pacific salmon so manufacturers are clearly looking
for ways to increase the choice. As we already indicated, sushi is important but
it is only one of a number of market opportunities which salmon farmers could
exploit. The benefits will come to those who can recognise all the opportunities
and then take advantage of those that produce the best return.