reLAKSation 250. Callander McDowell
NOK50?: We, at Callander McDowell, have to admit that we were not convinced that salmon prices would rise above NOK40/kg and yet prices have continued to rise. Now IntraFish report that Samir Bendriss of ABG Sundal Collier has suggested that it might even pass the NOK50 mark. Our reticence towards higher prices relates to the fact that one of the reasons that the salmon farming industry has boomed is through the widespread availability of value for money salmon. Consumers have been attracted to salmon because it represents a value for money, everyday meal choice. If prices rise too high, then consumers will be deterred from purchasing salmon and will opt to buy other value for money options instead.
As far as we can see through our regular surveys of the retail market in both the UK and France, the main reason that there has not been a consumer backlash to these high prices is that so far, the rise has been absorbed throughout the supply chain and has not been passed onto customers. Consumers have not been aware that salmon prices have risen dramatically and have continued to buy salmon without a second thought. They have been helped by many of the supermarkets who continue to slash the price of salmon. Our website shows the latest advert from the British supermarket chain Somerfield who have just cut the price of their salmon by 25%.
However, this may all change soon. Price rises are now starting to filter through to British retailers. In the last few days, one leading supermarket has raised the prices of their standard salmon fillet by a third from £6.27/kg to £9.99/kg. This is an enormous rise for consumers to accept in one jump and it will be interesting to see whether they are willing to pay this price for a healthy meal, as some sections of the industry maintain or whether they start to look for alternative cheaper alternatives. After all, these consumers can still buy cod fillet for under £7/kg!
Wishful thinking?: Bruce Sandison of the Salmon Farm Protest Group has warned that people living in rural Scotland face an uncertain future. He told the Shetland Marine News that this was because the continuing concentration of the salmon farming industry had led to the loss of about 2,500 jobs. It is good of Mr Sandison to be so concerned about salmon farming jobs especially since his constant sniping about the industry may have contributed to this loss through his efforts to undermine consumer confidence in farmed salmon.
Mr Sandison said that the SFPG had estimated that 500 jobs have been lost since 2004 because of farm closures. He thought that another 500 jobs could go if the Pan Fish deal goes through. If this 1000 jobs is added to a further 1,500 jobs lost since 2002 then that would bring a loss of 2,500 jobs in the last four years.
According to Mr Sandison, the figure of 1,500 job losses comes directly from the Scottish Executive. In response to a request from Mr Sandison, Paul Haddon of the Scottish Executive’s Marine Group wrote that “in 2001-02, it was estimated that there were about 10,000 jobs in Scotland generated by the production and processing of salmon. He said that the latest figures currently available are for 2004 when it was estimated that the equivalent figure was about 8,500 jobs”.
We, at Callander McDowell, can only wonder whether someone has got their wires crossed. Mr Haddon’s remarks, if Mr Sandison is correct appear to be directed just about salmon farming. However, the current introduction to the fish and shellfish farming pages of the Scottish Executives Fisheries website (http://www.scotland.gov.uk/Topics/Fisheries/Fish-Shellfish) paints a totally different picture. It states that “Commercial fish farming (aquaculture) began in Scotland in the 1970s. Today it directly employs about 2,000, and between 4,000 and 5,000 in supporting sectors, with 75 per cent of the jobs in the Highlands and Islands. Either the website is out of date, which is not very encouraging or Mr Haddon has got his facts totally wrong.
For most of the 1990’s, the then Scottish Salmon Growers Association claimed that the salmon farming industry was responsible for about 6,500 direct and associated jobs in Scotland. By comparison, their successor, the Scottish Salmon Producers Organisation, seem to have opted for Mr Haddon’s figures. Their website (http://www.scottishsalmon.co.uk/economics/economics.asp ) states that “it (the salmon industry) supports employment for some 10,000 people of whom around 4,700 live and work in the remote rural communities of the Scottish Highlands and Islands.” Clearly there appears to be some major discrepancies relating to employment figures. We wonder whether any of this data can provide an accurate picture of today’s salmon industry. We doubt it.
A Scottish Economic Report dated March 2004 includes a chapter about Scottish salmon farming which discusses employment levels and is available through the SSPO website. The authors, Mr Henderson and Mr MacBean first reviewed what was known of the levels of employment associated with the industry. They drew on two sources of information. The first is the Executive’s own annual production data which for 2002 recorded 1,711 full and part-time jobs in smolt and salmon production. The second was a report from MacPherson Research for the Scottish Executive which concluded that there were 5,665 full and part-time jobs involved in salmon processing in 2001. We have not seen this research so have no idea what criteria were used to reach this figure so we cannot conclude how it fits with the production data. However, Mr Henderson and Mr MacBean have simply added the figures together to conclude that there were a total 7,376 full and part-time jobs in salmon production and processing. This figure does not include those employed in associated industries such as suppliers. To calculate this, Mr Henderson and Mr MacBean refer back to another Scottish Office Economic Research Paper, no 7. This resulted from an investigation into the economic impact of salmon farming in Scotland commissioned by the Scottish Office and carried out by PACEC (Public and Corporate Economic Consultants). PACEC used different methods to calculate employment in the processing and supply sector. With processing, they grossed up estimates gained from a number of samples companies. With suppliers, estimates are based on turnover. These two estimates enabled PACEC to develop ‘multipliers’ which then calculate the ratio of farming jobs to processing jobs etc. We only mention this because Mr Handerson and Mr MacBean used the PACEC multipliers in their own calculation and arrived at very different results.
The PACEC report, published in 1999 concluded that in 1996, the total direct and indirect jobs created from salmon farming amounted to 6,422, which seemed to agree with the industry’s own claims back in the 1990’s. These include 1,645 directly involved in production and a further 2,826 involved in processing. Five years later, Mr Henderson and Mr MacBean concluded that “the best estimate is that in 2001-2002 there were about 10,000 full and part-time jobs dependent, either directly or indirectly, on salmon growing and salmon processing in Scotland. Of these just over half (5,300) were located in the Highlands & Islands. In full-time equivalent (FTE) terms, the estimates are 8,600 jobs in Scotland and 4,800 in the Highlands & Islands”. Their full results are shown in the following table:
Interestingly, whilst employment in production grew by only 66 jobs, employment in the associated industry has grown by a staggering 3,585 jobs. Over the same period, production grew from 83,121 tonnes to 144,589 tonnes, which in part explains the need for more staff in downstream activities. However, it is worth remembering that these jobs are not confirmed real jobs but are the result of an estimated calculation. It is also worth noting that these figures relate to employment just in Scotland and do not include jobs involved in salmon processing in the rest of the UK. A large proportion of Scottish salmon appears to be now processed in England.
Mr Henderson and Mr MacBean’s figures may provide a clue to providing an explanation to why there is such a huge difference in the employment data. Whilst they suggest that there may be a total of 10,000 jobs in Scotland resulting from salmon farming, the number of full time equivalent jobs is only 8,600. This immediately accounts for 1,500 of the jobs that Mr Sandison believes have been lost in salmon farming since 2002. It doesn’t account for the lower figures that appear on the Executive website or were quoted in the Strategic Framework document published in March 2003.
Finally, we return to Mr Sandison’s original accusation that consolidation will result in continued job losses in salmon farming. Yet, the evidence suggests otherwise. The Scottish Executive’s production survey shows that although farm numbers have fallen over the last ten years, employment has remained relatively static. Over that time period, the maximum number of full time jobs has been 1,141 whilst the lowest has been 1,019. Part time jobs have fluctuated between 142 and 268. Meanwhile, operational farm numbers have fallen from 106 to 57.
If the Pan Fish deal goes through, Mr Sandison’s claim that 500 jobs will be lost appears a little bit exaggerated. Perhaps it is more a case of wishful thinking. After all, if Mr Sandison gets his way there will be no salmon farms in Scotland and therefore no salmon farming jobs at all.
Jamie’s lessons: An IntraFish editorial suggests that TV chef Jamie Oliver has fronted a campaign to encourage British school children to eat more fish. As a result, the campaign has resulted in a 40% increase in seafood consumption in Scottish schools. The editorial says that the campaign started with his TV programme ‘Jamie’s School Dinners.’
The reality is that Jamie’s campaign has had little to do with fish except as part of a healthy and nutritious diet. Jamie’s campaign was instead directed towards the deterioration in the quality and nutrition of the food provided in the British school system. Since 1944, the provision of school meals was made mandatory to ensure that all school children received at least one good meal a day. The Observer Food Monthly has looked at the Jamie effect and said that the problems really began in 1980 when Mrs Thatcher’s government removed this mandatory provision of school dinners and made it discretionary. They also removed all nutritional standards and a fixed price. The result was that at least 12 local authorities closed down their school meal service providing only packed lunches for those entitled to free school meals. The effect of this legislation and the introduction of compulsory tendering meant that those given the contracts to provide school diners had to compete for the business. The immediate result was that some local authorities spent as little as 37p per child for each meal. It doesn’t take an expert to recognise that 37p does not buy much. Compare this to recent reports claiming that the average price of fish and chips is now over £5 a portion.
What Jamie has done is raise awareness about the type of junk foods fed to school children. He has persuaded the Government to spend a minimum of 50p on each child under 11 and 60p for those over that age. This still seems very little but Jamie has shown that by bringing preparation back into the schools and with careful use of nutritious ingredients, then school children can be fed a better quality and more nutritious meal. However, there is still a long way to go. Over the past year, uptake of school diners has fallen from 49 to 44% and the average spend has risen from 47p to 51p. Some local authorities have achieved much but others not as much. In the London borough of Greenwich, where Jamie’s TV programme was filmed, all deep fried and processed foods have been banned. This means that 30 million chips, 660,000 fish fingers and 255,000 turkey drummers have not been served to children. Note that this means that fish fingers are no longer available.
It will not be until later in the year when the general public are able to gauge how much impact Jamie has had on school dinners when a new TV programme will be aired showing what happened when Jamie revisits the schools to see what they have achieved. We may even get to see whether the schools are serving any fish at all.
Meanwhile, if Scottish school children are now eating more fish and seafood, then this may be down to the efforts of Seafood Scotland rather than Jamie Oliver.