reLAKSation 221.
Finally!:
Without any obvious fanfare, the Scottish Executive has finally published the
official production data for Scottish salmon farms for both 2003 and 2004. The
2003 survey's foreward states "that publication was delayed due to an
initial comparison of the original 2003 production totals with those of another
public body (understood to be the Crown Estate) which indicated a number of
anomalies at both regional and company level. In the interests of accuracy, the
Executive identified a number of questionnaires that required an independent
audit. All the anomalies were resolved but this process has taken a number of
months to complete."
We,
at Callander McDowell, would like to believe that we have an open mind but we
know that publication of this survey was not delayed at all but rather that it
was published and then withdrawn. We know that it was published because we have
a copy, which is dated June 2004. The haste that it was withdrawn naturally
leads to a suspicion that there was more to its withdrawal than just some
anomalies.
Any
such suspicion would have to be directed to the fact that the Scottish Executive
were then supporting independent Scottish salmon producers, in the guise of the
EUSPG, with an application to Brussels for safeguards measures. Although the
Scottish Executive oversee this annual production survey and are well aware of
the audited production figures, the written application relied on production
data from the EUSPG to underline their case. We have referred to this data in
previous issues of reLAKSation but will repeat it again here for comparison.
2000
- 120,000 t
2001
- 131,000 t
2002
- 133,000 t
2003
- 138,000 t (est)
2004
- 110,000 t (est)
The
EUSPG argue that Norwegian over-production has severely damaged the Scottish
industry leading to a major contraction of production volume. We have previously
argued that the EUSPG's data is significantly flawed since it does not match the
Scottish Executive's published data for the years 2000 to 2002. When the
application submitted, the Scottish Executive could have referred to their 2002
production figures for audited data and forecasts for the year ahead. The data
given in the 2002 was:
2000
- 128,959 t
2001
- 138,519 t
2002
- 145,609 t
2003
- 176,596 t (est)
As
can be seen, the data does not match up at all. The EUSPG appear to have lost
nearly 15,000 tonnes of 2002's production but of greatest concern to them must
have been the huge divergence between their expectation and the Executive's
forecast for 2003 amounts to over 65,000 tonnes. Certainly, the official
Scottish Executive forecast did not appear to support the EUSPG's case that
Scottish production had suffered as a result of cheap Norwegian imports which is
presumably why they didn't use this data in the safeguard application.
The
safeguard case was still underway when the Scottish Executive published the
official 2003 figures in June 2004. This showed that Scotland had actually
produced 173,373 tonnes in 2003. This could not have been acceptable to the
EUSPG so the simplest option would be to make these figures disappear, which is
of course what happened. The official story was different but then it would be
expected to be so. The official line was that there were these anomalies and
they would have to be investigated.
Whilst
the Scottish Executive say that the process of auditing the figures has taken a
few months to rectify, the reality is that it has been nearly a year and a half.
The 2003 figures were finally published on Thursday 1st December, better known
as D-Day, with the 2004 following the next day.
Having
had our suspicion aroused when the 2003 survey was originally withdrawn, it has
been further roused by the publication of the revised survey on the same day
that the anti-dumping committee was due to meet in Brussels. Could it be that
there was an expectation that the case would have finally been put to bed on
that date with the imposition of permanent measures and the closure of the
investigation so that questions were unlikely to be asked. We will never know
the answer.
After
17 months of revision, we, at Callander McDowell, were expecting to see the
production data perhaps mirror the EUSPG predictions, however this was not the
case. The reality is that the 2003 production figures have been downgraded by a
mere 3,637 tonnes bringing the official 2003 production to 169,736 tonnes, much
higher than the 138,000 tonnes predicted by the EUSPG. The forecast for 2004,
despite having had 17 months to revise it, remained the same at 162,298 tonnes.
Fortunately,
with the immediate publication of the 2004 survey, it is possible to see how the
industry has fared since the application for safeguard measures was submitted.
The 2004 figures are 158,099, 4,199 tonnes lower than forecast, but some 48,000
tonnes more than predicted by the EUSPG.
The
2004 survey also includes a forecast of 136,056 tonnes for this year. This is
significantly down on previous years and perhaps the EUSPG might suggest that at
long last, here is clear proof that the Scottish industry is suffering a
downturn. However, it is not such a clear picture as the EUSPG could make out.
Undoubtedly, some production has been lost as a number of farms have gone out of
business. These were mostly companies based in Shetland and there is already a
question as to whether the operation of some of these companies may have
contributed to their own collapse rather than resulting from cheap salmon
imports. In addition, there are some companies who have not restocked with
smolts deciding to wait for a change in fortune first. Yet, we suspect that the
main reason why production may now fall is that many of the smaller farms have
opted to convert to either organic or other environmental production with much
lower stocking densities and therefore lower output. It is not that salmon
production is in decline, it is just that parts of it are changing.
What
is clear, whatever reason as to why these production surveys were not published
until now , the fact is that that the EUSPG have over-exaggerated the state of
the Scottish industry and the impact of a growing consumer demand for low cost
value for money salmon.
Postponed:
The Scottish Executive may have been a bit premature releasing the production
data on Thursday because although the anti-dumping committee met that day, they
appear to have failed to reach a decision. It appears that several countries
with processing industries want the MIP to be set lower, however one EU source
told IntraFish that the MIP cannot be negotiated as it is the result of
technical investigations, although the final decision may include a clause to
enable the MIP to be adjusted.
We,
at Callander McDowell believe that as the investigation was flawed, the final
decision regarding the MIP will be too. As the current situation stands, the
MIP, at whatever level, will not protect the independent Scottish industry. This
is because it ignores the basic fact that consumers are not prepared to pay a
higher price for their salmon. In a clear message to the Commission, most
British supermarkets have discounted the price of at least one salmon product
this week. Even the top of the range supermarkets such as Marks & Spencer
and Waitrose, whose customers are not usually so price conscious, have reduced
the price of salmon fillets by up to £3.75/kg.
There
is one common sense outcome which should emanate from the anti-dumping committee
and that is the end of the MIP and a return to free trade. Unfortunately, it is
unlikely that they will get to hear the real facts in order to reach such a
decision. However, there is always a remote chance that common sense might
prevail.
Price
gap: IntraFish reported last Tuesday that a significant price gap had
developed between Scottish and Norwegian salmon at the Rungis market in Paris.
Whilst Norwegian salmon was selling at an average Euro 4.60/kg, comparable
Scottish salmon had soared to Euro 6.20/kg, a price difference of Euro 1.60/kg.
Rungis reported that this price differential held through to this weekend.
Whether it continues after the weekend remains to be seen. However, if the
Scottish industry can persuade French consumers to pay a significantly higher
price for what is effectively the same fish as Norwegian, than all credit to
them.
Sales Chief Jon Hallvard Roaldsnes of Pan Fish said that he was unsure why such a differential had developed but IntraFish highlighted one possible explanation in that the Rungis market is no longer the main conduit for salmon in French. The supermarkets, catering companies and the large smokers all buy direct leaving the wholesale market to supply the small fishmongers and specialist outlets. Certainly, the French consumers have shown a limited willingness to pay a higher price for Scottish salmon based on the presence of the Label Rouge. Our observations of the French market have shown that whilst Label Rouge Scottish salmon is available in limited volumes, the bulk of salmon sales are of Norwegian salmon. We, at Callander McDowell, believe that this is the clue to the development of this price differential. What the Rungis figures do not show is the sales volume. We would suggest that the only reason that the price of Scottish salmon has risen is that current availability is limited. We know that Scottish output has fallen and the smaller producers that might supply Rungis may have some difficulty in meeting the demand, albeit small in comparison to that of low cost value for money Norwegian salmon. The higher price may not bring such an advantage for Scottish producers. Those consumers unable to buy Scottish salmon may turn to the cheaper Norwegian product and realise that it is just as good as the Scottish product at a much better price. When buying salmon another time, they may then just choose Norwegian. This is the main problem in trying to differentiate raw salmon flesh. One piece looks just like any other.