reLAKSation 216.
Five
years!!: The EUSPG, hiding behind their
anonymous spokesman, have told IntraFish that it will take five years to rebuild
the Scottish industry. They believe that it will take the whole five-year term
of permanent measures to provide the necessary stability to do this. However,
we, at Callander McDowell, are unsure exactly what it is they mean. Unlike other
representative organisations, the EUSPG are almost a secret society, avoiding
any opportunity to discuss and debate the issues. Back in August, an unnamed
spokesman of the independent Scottish industry issued a warning that unless they
received immediate help, the whole sector would collapse within two months. It
is now over two months since this warning and so far news of the imminent demise
of the Scottish industry has not been forthcoming. Is there any truth in this
latest forecast or is it just words like the previous prediction?
The
EUSPG have seemingly tried to give the impression that the independent Scottish
salmon is distinct from those salmon farms under foreign ownership, but it is
not. It is the same industry, employing Scottish people and producing Scottish
salmon. There is no difference other than they are local ownership. Does this
make any difference? Does a salmon produced by an EUSPG look any different to
that produced by others? Does it taste any different? And more importantly does
it guarantee a higher price. The answer to all is no. A Scottish salmon is a
Scottish salmon and the Scottish salmon industry is the Scottish salmon
industry. If proof is required then at least three EUSPG member companies are
also members of Scottish Quality Salmon. This means that they do not even see
themselves as separate but consider that they are part of the wider Scottish
industry in association with companies that are under foreign ownership.
When
they say that it will take five years to recover from the damage inflicted by
the influx of dumped and subsidised salmon, what is it that they mean.
Certainly, there seems to be some indication that the total Scottish harvest has
fallen in recent years but until the Scottish Executive are willing to publish
the annual production data for both 2003 and 2004, we don’t know by how much.
Even when this information is published, the accuracy is open to question. This
is because the 2003 data has already been published and subsequently withdrawn.
This forecasted 173,373 tonnes of salmon in 2003 falling to 162,298 in 2004.This
contrasts with the EUSPG forecast of 110,000 tonnes. Do they mean that it will
take the next 5 years to push production back up to 170,000 tonnes? Since the
EUSPG have argued that the industry has suffered from almost constant
over-production, surely they would prefer to keep production at a much lower
level?
Alternatively,
do they mean that it will take five years to return to profitability when they
refer to recovery? We, at Callander McDowell do not doubt that some salmon
farming companies have experienced difficult trading conditions in recent years,
but we would argue that this in part has been brought about by an unwillingness
to adapt production to what the consumer actually wants. Certainly, not every
farming company has found it hard to retain its profitability including some
that are members of the EUSPG. The Financial Times dated 4th May 2004
included an article entitled "How
greener methods reeled in the profits". This article relates the experience
of Loch Duart Salmon, a member of both the EUSPG and SQS. The article describes
Loch Duart's expansion as remarkable. One factor that makes the company’s
expansion unique is that Loch Duart is profitable. “According to Nick Joy,
managing director and one of three owner-managers, the £4.5 million turnover
company has made profits in four of the five years since the trio bought it.”
The last set of results dated 30th March 2004, i.e. after submission
of the safeguard application but prior to the dumping submission recorded a
profit of £134,317. According to the return, the company made a loss of £96,920
in 2003, but clearly the situation had turned round before the company supported
the dumping complaint. They certainly had sufficient funds to buy Ardvar Salmon,
a neighbouring farm. It certainly doesn’t seem that Loch Duart Salmon will
need five years to exhibit the desired recovery.
Finally,
the EUSPG could mean that it will take five years for Scottish salmon to recover
its former market image. However, this is never going to happen. Consumers are
no longer able to distinguish Scottish salmon from any other unless the
labelling says so. Consumers are not interested in paying more for a distinctive
product unless they can actually distinguish it from others. As this doesn’t
happen, they are happy to buy the salmon that represents the best value for
money. Unfortunately, the EUSPG’s actions are alienating more consumers from
what they want and it may take many more years for the salmon industry to
recover from that than the five years the EUSPG have forced on the marketplace.
Compromise:
Peter Bamberger of the Association of Danish Fish Processing Industries
and Exporters told IntraFish that the decision to impose a permanent Minimum
Import Price for the next five years was a political compromise. However, this
decision was no surprise for Fritz-Harald Wenig of the EU’s DG Trade had long
ago told Dagens Naeringsliv that the EU system is more about balancing power
through compromise than about who is right. Mr Wenig has always sought the MIP
as such a compromise and therefore it was rather unexpected that he allowed his
department to introduce dumping tariffs from the outset. This is especially so
since the EUSPG spokesman said this week that his organisation had always
favoured the MIP approach. Why the industry and market had to suffer all the
difficulties of dumping tariffs, which resulted in higher prices to the
consumer, is therefore unclear. We can only assume that someone was trying to
make a point.
If
the EU are not really interested in considering the rights and wrongs of the
case, then is this compromise a just and fair solution? We, at Callander
McDowell, have still to be convinced.
Free
Trade: Peter Bamberger also told IntraFish
that what he wants is free trade with no intervention in salmon trading.
However, he said that the impression he has gleaned is that no one wants to
engage in an all-out campaign for free trade but would rather work to reduce the
MIP to the lowest possible level. Presumably, this is because DG Trade have
already decided on the MIP and any attempt to convince them of a different
solution would fall on deaf ears. We assume that Mr Bamberger believes that
negotiation about the level of the MIP is a more attainable goal, although we,
at Callander McDowell, believe that DG Trade will not concede a lower figure. Mr
Bamberger believes that if the MIP is set too high, it will simply encourage
increased imports from Chile. He added that the Scots and the Irish have also
realised that if the MIP is too high, it will simply open the door to increasing
Chilean imports and this would be of no benefit to them.
However, it may be already too late to start wondering whether restrictions on the import of Norwegian salmon will benefit the independent Scottish industry. We know that some of our readers understood the cryptic clue that we included last week to mean that ‘fresh’ Chilean salmon is already available in the European market, however the reality is that Scottish fish farmers only need to travel to their local supermarket to buy it. It is already available not just in the EU, but in the heartlands of the independent Scottish industry.
Inevitably,
attempts to artificially regulate the salmon market will lead to unforeseen
developments which can have an even greater influence on local salmon farming
companies. It is time that the independent Scottish industry stopped worrying
about what their international competitors were doing and started to concentrate
on how they can capitalise on their own market strengths. This focus on trying
to persuade Brussels to manipulate the market to their advantage will be the
inevitable downfall of the independent Scottish industry.
It’s only a shame that they want to make sure that everyone else
suffers during their demise.