reLAKSation 190.
No Deal: IntraFish reports that a Euro 2.80/kg Minimum Import Price could replace anti-dumping duties as part of a compromise deal discussed during the Brussels Seafood Exposition. This MIP would apply only to salmon imports from Norway and not to those from other countries outside the European Community. However, we, at Callander McDowell, believe that any talk of such a compromise will remain just talk.
This latest proposal has already got off to a shaky start. Speaking at a reception in Brussels, Ole-Eirik Leroy said why should Norway accept a MIP now when it wasn’t prepared to do so before? He said if it worked, who wouldn’t accept a guaranteed minimum price for their salmon?
Mr
Leroy needn’t worry. Although the European Commission are keen to see a
compromise deal and have always done so, the chances that this compromise will
be acceptable to everyone is almost nil. Interviewed by Fiskaren, EUSPG member
Angus Grains said that the
EUSPG has been trying for the past three years to achieve some form of agreement
with Norway, but that the Norwegian fish producers have said thanks but no
thanks. He went onto say that "We
would like to see an agreement signed with Norway in order to keep salmon prices
at a high level. The instrument to achieve this is a punitive duty and not a
minimum import price (MIP). Is it not surprising that Norway has said no?
In
common with other EUSPG members, Mr Grains is not living in the real world. The
salmon industry cannot fix prices to keep them high. This is akin to being in a
cartel. Instead, Mr Grains must realise that competitive forces must be allowed
to operate so that consumers have a choice. What Mr Grains does not appear
willing to accept is that when faced with high prices, most consumers simply
choose not to buy.
If
the European Commission hope to pursue their compromise deal they must persuade
the EUSPG, especially the three Anguses: Morgan, Macmillan and Grains, that they
must accept the deal. Having talked the Commission into introducing anti-dumping
duties, it is extremely unlikely that they agree to anything else.
The
high cost of higher prices: Following the
introduction of anti-dumping duties, Angus Morgan of the EUSPG told
seafoodintelligence.com that the investigation showed that the injury caused to
the EU salmon industry by Norwegian dumping since September 2001 has been
between £150 million and £200 million. The confidential nature of many of the
EUSPG’s claims and of the EU’s investigation means that it is very difficult
to substantiate how Mr Morgan has arrived at this very high figure. After all,
total Scottish production is valued at only £300 million a year ex farm
according to the Scottish Quality Salmon website. With Scottish production
estimated at about 160,000 tonnes a year, this equates to an average figure of
£1.87/kg.
Commission
regulation 628/2005 imposing the provisional duty on imported Norwegian salmon
states that the domestic European industry produced 20,536 tonnes of salmon
during the investigation period. At £1.87/kg, this means that the domestic
industry is valued at about £38 million in total. If the cost of injury over 4
years is £150 million then that equates to a loss of about £37 million a year
putting an estimated cost on the price of salmon ex farm of £3.75/kg - £4.30/kg.
It is many years since salmon prices were so high and it is totally unrealistic
for the EUSPG to expect them to return to such levels. As we, at Callander
McDowell, have repeated many times, consumers are simply not prepared to pay
such a price for salmon. The current price of whole salmon in one leading
British supermarket chain is only £3.99/kg. The EUSPG’s expectations are
clearly unrealistic as are their claims of injury.
Not a dumping story: One of the recurring themes we were asked about during the Brussels Seafood Exposition concerned the various messages now being used to promote salmon. We would argue that however good the message, the majority of consumers are still driven by price.
Every year, the fisheries industry participates in the promotion of fish and seafood to consumers through its ‘Seafood Week’. Every year, the fisheries industry announces that ‘Seafood Week’ has been a great success. Regular readers may remember that every year we report that we, at Callander McDowell, have been unable to find much evidence of the promotion at the consumer interface. We therefore question how much of a success ‘Seafood Week’ really is or whether it is simply industry hype.
John Rutherford, Chief Executive of Seafish announced that ‘Seafood Week 2004’ had captured the nation’s imagination and was a great success, largely thanks to the aggressive marketing and promotion from the country’s seafood sector. Events ranged from special offers and competitions to new product launches and tastings. Clearly, such events passed us at Callander McDowell by, because other than one tasting, to which we made a special round trip of 100 miles, we saw little evidence of any promotions. We had to fight through a crowd of….. well actually of no-one, to taste a dish of fish curry. We saw little interest from consumers.
We therefore always find it interesting when Seafish claim that the week was a great success. However, this year, they have been aided by testaments from some of the leading participants in the promotion. Of these the most interesting is the response made by Jeremy Langley of supermarket chain Waitrose. This is because unlike the other named participants, Waitrose is a retail outlet selling to a cross section of the general public. Mr Langley is reported in Intrafish to have said that “At Waitrose, we saw significant increases on a number of featured lines, especially those on price promotions”. Translated, this means that those fish and seafood products on price promotion saw a big increase in sales. Those products not on price promotion, didn’t.
It doesn’t matter how good the message, although in the case of Seafood Week, we thought that the message was very deficient, it is price which is all important; something even the EUSPG should remember.