reLAKSation 219.
Backwards
vision: According to the anti-salmon farming
Salmon Farm Monitor, the way that the Scottish salmon farming industry is
represented is currently undergoing a major overhaul. Until now, the dominant
representative organisation was Scottish Quality Salmon, an organisation that
rose from the ashes of the Scottish Salmon Growers Association. SQS claim to
represent about 65% of Scottish salmon production, but the reality is that its
membership is limited to a handful of production companies.
The
fact that the Scottish industry is not represented by one single voice has led
to the ridiculous situation where the EUSPG is supposedly perceived as being the
voice of the Scottish industry just because their members argue that they are
the only companies that are actually Scottish owned. Their views appear to carry
more weight even though the other 80% of producers employ Scottish people,
create local employment, help the local economy and produce exactly the same
Scottish salmon.
For
sometime, there has been a view that the industry should be represented by one
organisation. Many companies have refused to join SQS because it is was also
involved in marketing through the Tartan Quality Mark, the cost of which was
considered to outweigh the benefits gained. To meet the need for a truly
representative body for the whole industry, plans are underway to form a new
organisation to be called ‘The Scottish Salmon Producers Organisation’.
The
fact is that the Scottish Salmon Producers Organisation already exists. Like the
EUSPG it is a semi secret organisation and it is unclear what it does, who is in
it or why it even exists. We, at Callander McDowell believe that if it is
possible to form a new salmon industry representative organisation it should
break all connections with the past and start completely afresh. The real
problem with any organisation called a salmon producers organisation is the
association with the former Scottish strategy of forming an international
network of producer organisations aimed at controlling production growth. This
was a pointless strategy that fortunately never got off the ground. It was
always going to be much better directing the industry’s time and energy at
developing the market for salmon rather than trying to limits what farms could
produce. The time has come to ditch these old ideas and start anew. The first
matter to address is to find an acceptable name. ‘Scottish Salmon’ is one
suggestion.
Chilean
Chilled: Earlier this month, a representative
of the EUSPG told IntraFish that they were not unduly alarmed by the growth of
Chilean exports. He said that Chilean imports do not impact in our thinking for
the future. Presumably, the EUSPG will therefore not be considering bring a
dumping case against Chilean imports as they have with Norway. Chilean imports
into the EU have grown rapidly this year with 15% of Chile’s production now
destined for Europe and according to IntraFish, this share appears to be growing
as Europe’s appetite for salmon remains unsated.
It
is inevitable that buyers will turn to Chile for their salmon requirements if
Norway is prevented from meeting the demand because of the continuing trade
measures.
What
both the Commission and the EUSPG have failed to understand is that there is a
huge and growing demand for low cost, value for money salmon that Scottish
producers cannot meet. It is easy for DG Trade’s Mr Wenig to say that salmon
consumers should be prepared to pay a fair price for the salmon they but the
reality is that most won’t. If salmon prices are too high, they simply will
look for a cheaper alternative meal choice. Why shouldn’t consumers be
permitted to buy low cost salmon if it is available at low cost? The EUSPG claim
that it is because it is being sold at below the cost of production but in
Norway’s case, the official figures show that the cost of production has been
falling significantly. The Norwegian company Follalaks, now part of Mainstream,
have recorded the lowest ever production costs of only NOK 10.18/kg. Clearly,
this is not yet typical of Norwegian costs but it does demonstrate how much
scope there is for further reductions in the overall production cost. By
comparison, the EUSPG remain tight lipped as to their production costs claiming
the information is confidential. A comparison of production costs was intended
to be part of the Scottish Executives’ Aquaculture Strategy and the resulting
study was supposed to have been published by the end of 2003. The study was not
actually commissioned until earlier this year and KPMG, the consultants, were
supposed to have reported in the autumn but in common with all industry data
which should have been made available since the inception of the dumping case,
this cost data is still unpublished.
During
a recent visit to Chile, Scottish MEP Struan
Stevenson said that the European
community cannot hope to compete at the lower end of the market against low cost
salmon from Chile. Scotland’s best chance for survival is to aim for added
value at the higher end of the quality market. We, at Callander McDowell, would
certainly agree as long as the Scots can demonstrate that their salmon is worth
the extra cost. So far they have been unable to persuade consumers that it is,
which is why the EUSPG have gone running to Brussels for help. The Scottish
industry has always claimed that its salmon is of superior quality and therefore
merits a premium price. Such a premium price inherently means that Scottish
salmon is being sold at higher prices than imported salmon, such as that from
Norway. Another way of describing this price differentiation is that imported
salmon is being sold at a lower price that Scottish salmon, yet this is the
exact scenario that prompted the EUSPG to submit their dumping case i.e. that
their prices were being undercut by cheaper Norwegian imports. Surely, it is of
little concern to the Scots if Norway imports cheap salmon since this is being
supplied to a totally different market to that which is being targeted by the
Scottish producers. We return to the argument that if low cost salmon is
excluded from the EU market, will consumers change to higher priced Scottish
salmon? The answer is of course no.
By
the same token, the EUSPG have said that they are not concerned by the growth of
Chilean exports to the EU. Yet, as soon as prices start to fall, we can be sure
that Brussels will be faced with yet another dumping investigation. When will
the EUSPG begin to realise that they cannot expect unending protection from DG
Trade and they must start to face the realities of the market place and learn to
adapt to them accordingly.
Left
behind: The editor of IntraFish has
previously criticised the seafood industry asking whether it had the will and
capacity to develop new products. He based his criticism on observations made at
fish counters and at the major seafood exhibitions where the same products have
been displayed for year after year. We, at Callander McDowell arrived at a
similar conclusion after just one visit to the European Seafood Exposition since
what we saw there bore little comparison to what we could see in the wider
marketplace.
Knut
Eirik Olsen, editor of IntraFish now says that innovation is picking up speed
due to recent mergers and increased investment in the industry, but we wonder
whether this is more to do with a realisation that the seafood industry is being
left behind. Over the last fifteen years that Callander McDowell have observed
the market for seafood and especially that of salmon, there has been great
strides forward in innovative product development, but little has come from the
seafood industry itself, with the exception of a small number of British
companies working in conjunction with the most progressive supermarket chains.
Instead it is the more general food processing companies that have taken
the initiative and developed a mind-boggling range of unique products. By and
large, the wider seafood industry has been left behind. Considering some of the
examples of innovation development cited by Mr Olsen, they still have a long way
to go just to catch up.