reLAKSation 188.
Courage
of your convictions: In a change to the
advertised programme, the organisers of the Aquaculture Today conference,
persuaded Angus Morgan, General Secretary of the European Salmon Producers Group
to speak about their demands for safeguards and the antidumping case. However,
at the last minute, Mr Morgan withdrew claiming that he had to be elsewhere.
Conference organiser Malcolm Dickson made a last minute appeal for anyone from
the EUSPG to stand in for Mr Morgan but in the absence of anyone else, Dr
Dickson ran through the PowerPoint presentation himself. The overriding message
from the EUSPG was how unfair trade had damaged the independent Scottish
industry.
We,
at Callander McDowell, can sympathise with Mr Morgan’s view for we and other
delegates at the conference also thought that we had been treated unfairly. This
was because we were denied the opportunity to quiz Mr Morgan as to why the EUSPG
have yet again resorted to a trade action against Norway.
Speaking
in the discussion following the session in which Mr Morgan was due to appear,
Phil Gilmour of the Scottish Executive said that no industry pursues trade
measures unless it has no other option available to it.
We would have liked to ask Mr Morgan if this was the case, because we
certainly believe that there are other options. Unfortunately, these options
have been reduced because now that the matter is before DG Trade, it seems that
only the option available is a trade option. This is why Norway has been asked
to choose between safeguards or anti-dumping measures. Sadly, the EUSPG have
forced this issue, when in fact there are other choices.
The
EUSPG opted for the DG Trade route because the Scottish Executive, from whom
they sought support and who might have encouraged the exploration of other
options, do not see their role to become involved in commercial decisions.
This is why the Strategic Framework is so lacking in economic proposals.
Yet, safeguards are clearly just as much about commercial choices as any other
commercial strategy.
It
was unfortunate that Mr Gilmour, who believes that the EUSPG had no other option
than pursue trade measures did not pay more attention to the presentation made
by Grenville Wall of TNS. Mr Wall told delegates that the industry must make
their salmon more practical if they are going to get it into shoppers’
baskets. He said that salmon and other forms of seafood will miss out on the new
enthusiasm for healthy eating unless fish dishes are made more practical and
convenient. He said that consumers were spending only 19 minutes on preparation
and cooking meals and as many fish products took longer than this time, they
were not being put into the shoppers’ baskets, especially during the week,
when consumers were often looking for convenient and practical meal choices. Of
course, as no-one from the EUSPG was at the conference to hear Mr Wall, it is
not surprising that they are not aware of such other options for market
development and why they continue to seek trade issues as a solution to their
problems. We, at Callander McDowell would certainly have liked to ask Mr Morgan
why he has continually refused to consider such market-led solutions.
We
would also have liked to ask Mr Morgan about some of the supporting evidence
used in the EUSPG submissions, especially the production data they use. Mr
Morgan included a new breakdown of production data and future forecasts in his
conference presentation. We assume that these are supposed to support the claim
that the European industry is still in decline. These latest EUSPG figures are
repeated on seafoodintelligence.com and show European production, which makes
direct comparison with their other data more difficult. We have included
comparative data from other sources to try to understand whether the industry is
in dire straits as claimed.
The
latest European production figures as supplied by Mr Morgan are:
2002-162000
tonnes
2003-180000
tonnes
2004-149000
tonnes
2005-110000
tonnes (est)
This
compares with the data supplied in the Scottish safeguard application, which was
submitted just over a year ago and
relates just to Scottish production.
2000-120000
tonnes
2001-131000
tonnes
2002-133000
tonnes
2003-138000
tonnes (est)
2004-110000
tonnes (est)
Data
was also supplied for Ireland as follows:
2000-19000
tonnes
2001-24000
tonnes
2002-22000
tonnes
2003-19000
tonnes (est)
2004-15000
tonnes (est)
This
Irish data can be added to that from Scotland to calculate a total European
figure, which can be compared with Mr Morgan’s latest data.
2002-155000
tonnes-162000 tonnes
2003-157000
tonnes-180000 tonnes
2004-125000
tonnes-149000 tonnes
2005------------------------110000
tonnes (est)
Clearly,
the EUSPG have revised their data upwards suggesting that they over-exaggerated
the supposed decline in European production as a result of increased salmon
imports. What we, at Callander McDowell do not know is whether the new data
supplied by Mr Morgan is equally misleading and whether they really reflect the
true state of salmon production in the EU. Unfortunately, the official Scottish
data for 2003 including forecasts for future production have still not been
published. The longer that publication of this data is delayed the harder it is
to believe that the only reason for its suppression is that it does not support
the view expressed in the safeguard application. There can be no other
explanation especially when according to seafoodintelligence.com, deputy
minister Lewis MacDonald announced the publication of the 2004 shellfish farming
survey, which is usually published in tandem with that for fish. We have
previously discussed how the EUSPG’s data did not agree with the official
Scottish Executive data from earlier years. However we can see that the new data
appears to be more in line with the Scottish figures. Of course these from the
2002 Scottish fish farming survey do not include Irish production:
2000-128959
tonnes
2001-138519
tonnes
2002-145609
tonnes
2003-176596
tonnes
The
lack of the official figures can be overcome with referral to the Federation of
European Aquaculture Producers (FEAP) who publish production data on their
website. Their data is shown below. The first column is Scottish data, the
second is Irish and the third total European production. The final column is Mr
Morgan’s latest data.
2000-135000t-17800t-152800t
2001-146429t-22412t-168841t
2002-142961t-21423t-164384t-162000t
2003-161748t-17920t-179668t-180000t
2004-157000t-14000t-171000t-149000t
2005--------------------------------------110000t
Clearly,
the EUSPG have finally realised that they cannot ignore published data and their
new figures virtually match that from FEAP except in their forecast of
production for this year and next. We have already seen that their previous
forecasts have not materialised and therefore we would suggest that their latest
forecasts are equally unreliable. Certainly, their forecast for this year is
significantly lower than that predicted by FEAP by over 20000 tonnes. Why should
we believe these new forecasts and that the EUSPG are not just overstating their
data to match their claims? Unfortunately, by the time the official production
data is published, the EU will have already reached a decision.
Sadly
Mr Morgan decided that the wider industry should be denied the opportunity to
ask the relevant questions. Neither he nor his colleagues at the EUSPG had the
courage of their convictions and were willing to stand up in front of their
peers in their home industry to argue their case. We can only assume that their
case does not stand up to public scrutiny.
Scord
to the sword: Only a couple of days after the
end of the Aquaculture Today conference, Shetland-News reported that another
Shetland salmon farming business has collapsed. The EUSPG will no doubt use this
sad news as further proof that the European salmon farming industry is suffering
from the deluge of cheap Norwegian imports. Whilst we at Callander McDowell
believe that any farm closure is extremely regrettable, especially one in
Shetland, we are not persuaded that the demise of Scord Salmon is yet another
indication of the need for trade measures or production controls.
According
to the Shetland Times, the owners of Scord Salmon had withdrawn from salmon
farming last year at which time they opted to grow mussels. The administrator
said that company had previously been subjected to a series of setbacks,
including suffering from low salmon prices. The closure was the result of all
the setbacks.
Rather than providing further proof of the need for trade measures, this closure is further evidence that small salmon farming companies need to develop specialist niche markets rather than trying to compete with the large farming businesses, whether they be in Norway or Scotland. According to Shetland-News, several smaller Shetland farms are already managing to survive by developing such niche markets in organic or welfare labelled salmon. This must be the way forward for Shetland and also for other independent Scottish farms. David Sandison of the Shetland Salmon Farmers Association said that some supermarkets such as Waitrose were keen to buy salmon from Shetland because of the image of being farmed in a healthy environment. Yet, Waitrose are currently displaying notices saying that they are unable to source sufficient organic salmon and therefore must disappoint their customers.
It
is a shame that rather than focus on the needs of such customers, the EUSPG are
spending their time trying to exclude their competitors.
Ignoring
the facts: Coinciding with the first day of
the Aquaculture Today conference in Edinburgh, two key stories appeared in the
news. Firstly, IntraFish reported on the latest data from the European Community
Office of Statistics (Eurostat). Between 1995 and 2002, fisheries production
(fishing and aquaculture) fell by a dramatic 17%. This fall was despite a major
effort to boost aquaculture production to combat a significant decline in the
wild catch. Clearly, the European Community has increasingly imported more fish
and seafood to overcome this growing shortfall.
Two countries that have contributed to the EU's demand for fish and
seafood are Iceland and Norway, whose output has grown by 32 and 17%
respectively.
The
second story appeared in the Scotsman newspaper. This suggested that salmon
could replace chicken as the UK's favourite food. Falling prices and increased
awareness of the health benefits of oily fish are thought to be behind the
rising sales, as the public increasingly turns to salmon as an everyday food.
Demand for salmon is expected to keep growing by 10% year on year.
With such demand, market analysts TNS Global now predict that salmon
sales will outstrip those of chicken.
Unfortunately,
we at Callander McDowell do not agree. There
is simply no way that salmon will ever replace chicken as the most popular meal
choice, at least without a major sea change in attitude. This is not just from
the public, but also because the salmon farming industry is not united in
wanting to exploit this potential opportunity. Sadly, there seems to be a small
sector of the industry that does not want salmon to be widely consumed. Instead,
they want it to be something special, destined for a small niche market. These
producers cannot meet the existing demand for salmon, yet they have demanded
that imports be subjected to restrictions, claiming that they are damaging their
specialist market. Their problem is that consumers are unable to differentiate
between superior Scottish salmon and cheaper imports. As they cannot tell the
difference, they are just as happy buying the imported fish. This means that
without the hoped for premium, some Scottish producers are not able to balance
their books and have not achieved their expected profitability. Rather than
adapt their production to the opportunities in the marketplace, this minority of
independent farmers are hoping to force prices up across the whole of the
international industry in order to offset the loss of the 'Scottish' premium.
This makes no sense at all.
In
his presentation to the conference Willem de Munck from DG Trade told delegates
that some form of trade measure was necessary because Scottish losses amounted
to 17% of turnover and no industry, including the salmon industry can survive
such loses. Yet clearly they can, because we still have a significant Scottish
industry. Certainly, some companies are finding it difficult to adapt to current
trading conditions but others are clearly operating at a profit. For example, as
we discussed in the last reLAKSation, the Loch Duart Salmon website boasts that
they have been profitable for four out of the last five years.
If Loch Duart can be profitable, why cannot other independent Scottish
producers be profitable too?
Mr
de Munck told delegates that the EU has a cast iron case in their bid to impose
anti-dumping duties against Norway. He said that his team can prove there was a
15% increase in salmon imports that exceeded the level necessary to implement
safeguards. However, what Mr de Munck has not taken into account was the 17%
decline in EU fish supply. Clearly the rising demand for fish and seafood means
that the EU needs to import fish from elsewhere. With other wild catch fisheries
under the same fishing pressure as those in the EU, it makes sense to import
farm-raised fish rather than wild caught. It is natural that the market would
seek a farmed fish like salmon to offset the shortfall, yet DG Trade prefer to
see such imports as an indicator of trade violations rather than helping to
balance the supply of fish.
Whilst it is extremely unlikely that salmon will become more popular than chicken, there is a great deal of scope to increase demand. This will never happen unless the industry can adapt their production to what consumers want to buy. Instead, with the Commission's help, such consumer choice will become a thing of the past.
So
naive!: Speaking at the Edinburgh Aquaculture
Today conference, Irish Sea Fisheries Board Aquaculture Development Manager
Donal Maguire broke off from his scheduled presentation to address the issue of
EU salmon safeguards. According to IntraFish, Mr Maguire congratulated the
Scottish Executive and the Scottish industry for bringing sanity and some truth
into the matter. Yet the one thing
of which we at Callander McDowell are certain is that sanity and truth have had
little to do with the safeguard issue. We are surprised that someone who is
charged with the development of a national aquaculture strategy should think
they had.
Mr
Maguire was asked what sort of resolution to the safeguard issue he supported.
He replied that from a common sense point of view, any arrangement which
dealt with Norwegian and Chilean production would be attractive.
This makes little sense, let alone any of the common variety, especially
when put into the context of his scheduled presentation. Mr Maguire was supposed
to explain to the conference delegates how the expansion of offshore aquaculture
could be used to feed a burgeoning global population. If we understand Mr
Maguire correctly, he broke off from his address about
how aquaculture production should be expanded to meet a growing global
demand for fish to criticise Norway and Chile for so called over-production!
Surely, any attempt to meet a growing demand for fish will involve growing more
fish!
Mr Maguire’s original address included futuristic plans to set up offshore aquaculture farms using disused oil and gas rigs. This is not a new idea, but one which has been pursued since the early 1990's. Regular readers of reLAKSation may remember that we have discussed the subject on at least a couple of previous occasions. Clearly, any attempts to move to open sea farming, especially involving redundant oil and gas technology will require significant investment otherwise it stands no chance of getting off the drawing board. How Mr Maguire expects to generate any such investment is unclear. Yet, we can be sure of one thing and that is any investors will be looking for significant returns on their investment. Such potential investors are unlikely to respond to requests for investment by an industry that applauds the imposition of production controls. Why would anyone invest in an industry whose growth is limited by artificial controls intended to assist those who fail to recognise the potential opportunities in the marketplace? Undoubtedly they wouldn't and Mr Maguire is extremely naive to think they would. If Mr Maguire really wants to see the aquaculture industry feed the world, then it must be given a free hand to do so.