reLAKSation 24.
Market Access: Speaking at AquaNor, Lars Liabo of Kontali suggests that, based on current rates of growth, the market can absorb 2 million tonnes of salmon in the years to come. Reported by IntraFish, he also stated that market access will be the only limitation to further industry growth.
We at Callander McDowell are not convinced. Whilst we readily agree that the market for salmon can continue to grow, even surpassing the 2 million tonnes forecasted by Mr Liabo, we believe that the main limiting factor will be future constraints on production.
Growth of the international salmon industry may appear to have been rather haphazard with production established in several diverse countries. However, anyone who refers to a world atlas can instantly see that salmon production only occurs between certain lines of latitude. In the Northern Hemisphere, these encompass British Columbia, Maine, Washington, Iceland, Scotland, Ireland, and Norway. In the south, they only cover Chile and Tasmania. Other countries also fall within these lines, but other constraints also come into play and these diminish the opportunities for new production.
Despite recent reports in IntraFish that new production methods will mean that it is possible to grow salmon in countries like Israel, it is probable that any significant production growth will be restricted to the existing industries. With more and more concern about environmental issues, it is unlikely that large-scale growth will be allowed to continue unabated. The question is therefore whether the existing industry will ever be able to produce the 2 million tonnes of salmon, which Mr Liabo forecasts? The answer will depend on whether the industry will embrace the concept of open sea farming and move production to outside the protection of national boundaries.
Get Out? Norwegian Prime Minister candidate Jan Petersen argues for a termination of the EU Norway salmon agreement saying that it is a hindrance to the potential of the aquaculture industry.
Clearly, the recent problems experienced with the minimum price emphasise the need for such change. One investment analyst told Intrafish that the MIP is ruining everything for fish farmers and needs to be renegotiated. This is nothing new. The minimum price was an arbitrary price set at a time when prices reflected the scale of production. As global growth has now forced down the underlying price, the MIP has become increasingly irrelevant. The relevance of the MIP has always been in question, since as it never applied to any other producing nation, salmon from elsewhere could be sold at under the minimum price with total impunity. This puts Norway at a disadvantage.
However, it is not just the MIP, which is being questioned. Under the terms of the EU Norway agreement, the Norwegian industry was required to pay for a European wide generic marketing campaign. This has been the cause of some resentment since any growth in consumer demand for salmon will benefit all producers at Norway's expense. Under the worse case scenario, the Norwegian industry might end up paying for a campaign, promoting salmon at prices below the MIP to which Norwegian salmon would be excluded.
Norwegian producers may feel now aggrieved by the constraints of the EU Norwegian salmon agreement, but it was not so long ago that they hailed the agreement as a major success. It should not be forgotten that the agreement was intended to penalise the Norwegian industry for alleged dumping infringements. Perhaps, if they had actively defended the action rather than acquiesce to the agreement then Norwegian producers could have continued to benefit from unhindered access to the European market.
Organic conundrum: Writing in his column in Fish Trader, Chris Leftwich, senior inspector of the Fishmongers Company poses an interesting conundrum. He asks how is it that wild fish swimming in the sea in its own natural environment cannot be classified as organic, whereas a farmed fish, albeit one fed on feed containing only natural ingredients, can?
As Chris's work involves him across the whole fisheries sector, he appears unconvinced. However at a time when salmon prices continue to decline, any section of the industry able to improve margins, must be congratulated. Yet, the question remains as to whether organic salmon can really take off or remain as a small niche market?
Observations of the retail sector suggest that producers will have a real battle on their hands if they want to convince the mainstream consumer to buy organic salmon. The main obstacle may be the colour, which in organic fish is very pale, bordering on off-white. Recently, one retailer displayed some non-organic salmon, which was very poorly pigmented. This looked just like organic fish, but although it was very cheap, consumers chose not to buy it. After a few days, every pack was marked down to an even cheaper price and still remained unsold.
Organic salmon is sold predominately through upper range supermarkets in selected areas. Their customers may be willing to accept that organic products may look different, but if organic salmon is to make any impact with the wider consumer market, then it will need to take on more of the appearance of the traditional fish.