reLAKSation 23.
Short Memories: Both the Norwegian Minister of Fisheries, Otto Gregussen and Chairman of the Norwegian Fish Farmers Association, Tarald Sivertsen, have hit out at the colossal growth of Chilean salmon production. It is surprising how quickly they have forgotten how the Norwegian industry was once the target of similar claims.
From 1990 to 1996, Norway was subjected to continuous accusations of rampant over-production resulting in massive market disruption. Yet, it is clear that the salmon industry, both then and now, has never been over-producing. This is because the increased availability of value for money salmon has stimulated continual market growth. At the same time, the cessation of the complaints and accusations brought an end to much of the on-going market disruption.
The turmoil of the early 1990's did little to help the industry's future development and a return to such whinging complaints can only bring further disruption throughout all of the international salmon industry.
Mr Gregussen calls for managed production, but then it is only the Norwegian industry, which has been subjected to managed market access. This is why the Norwegian share of the European market has fallen to the benefit of others. Perhaps, Mr Gregussen might now think that Norway was a just a bit too hasty in signing the EU salmon agreement and this is why he has hit out against Chile. After all, if the agreement should be extended, then Chilean farmers might be able to gain even greater access to the European market, which would be at Norway's expense.
Mr Gregussen and Mr Sivertsen both appear to have forgotten the experience of previous trade disputes. It is the market, which is of paramount importance, not the scale of production. Much more emphasis needs to be placed on market development, rather than trying to curtail or manage production.
Yet, Mr Sivertsen would argue that no other country invests as much as Norway in salmon marketing. This may be true, but equally, it is quite possible that the Norwegian marketing strategy is not the right one for the marketplace. The growth in the salmon market may well be due to other factors and such growth may continue in spite of this Norwegian investment in marketing. This is because low prices, and not high profile campaigns, are the main drivers of consumer growth.
Instead of fuelling future trade disputes, the salmon industry urgently needs to reconsider its longer-term strategies.
Who's Benefited? Delegates at the Christiana Bank seminar at Aqua Nor heard about a NSEC sponsored evaluation of the EU salmon agreement during its first two years. According to FIS, the main findings of the study were that the agreement has led to increased salmon consumption within the EU, primarily due to the increased level of generic marketing.
This marketing campaign was undertaken by NSEC on behalf of Norwegian, Scottish and Irish producers, but paid for with a 3% levy on Norwegian salmon exports. The campaign consisted of a series of TV and magazine adverts in three target countries, Spain, Germany and France.
That salmon consumption has increased is not in doubt, but whether this increased consumption can be attributed to the generic marketing campaign certainly is? The fundamental question is whether salmon consumption would have shown a similar increase, had there not been a generic marketing programme?
Callander McDowell have previously discussed the generic marketing programme and a report can be found in the reports section. It is important to remember that whilst France Germany and Spain are main target markets for the campaign, other EU countries are also significant salmon consumers. The UK is just one example.
The UK market is interesting because it is not just a salmon consumer, but also a salmon producer. In recent years, there has not been any advertising campaigns promoting salmon consumption, yet consumption continues to increase. Could it be that the same driver of this salmon consumption is also driving the markets in France Germany and Spain and not the generic campaign specifically?
Certainly, the main reason for increased salmon consumption in the UK is the widespread availability of low cost, value for money salmon. This has been further propelled by the leading supermarket companies who regularly offer price related deals.
The authors of this NSEC report have also suggested that the EU salmon agreement has benefited the industry because it has brought about higher prices, at least during the two years studied. Callander McDowell have also discussed previously that these higher prices may have been artificial due to extended market hype, whilst the underlying trend has been downwards. The current low price must shatter any belief that the agreement has brought higher prices. The agreement has no influence over further falls, but is only empowered to either penalise Norwegian exporters who wish to continue selling fish if the prices fall below the MIP, or to prevent Norwegian access to the EU markets.
If the EU agreement is shown to have been unsuccessful in controlling price, is it possible that it has also had little effect on the level of consumption? After-all even the authors admit that the limited scope of the study meant that their findings might not explain the current situation in the industry and the market.
A contradiction in terms: According to Intrafish, Carlos Wurman, speaking at the EAS conference, has said that to diversify successfully, the aquaculture industry needs to develop a number of high production, high value species.
This is a contradiction in terms since the experience of aquaculture industry so far has shown that any attempt to farm high value species in significant volumes has significantly undermined the price. Such high production species then become low in value. Salmon is the prime example.