reLAKSation 256. Callander McDowell
Realism: Seafood Intelligence report that Highlands & Islands Enterprise has told the Competition Commission that they support the proposed merger of Pan Fish and Marine Harvest even though the new company will control at least 60% of the Scottish production. Chief Executive Sandy Cumming wrote in a letter that whilst he acknowledges the importance of the salmon farming industry to remote communities he accepted that the merger would have an inevitable effect in jobs. He said that whatever the outcome of the investigation, jobs will be lost from the industry as a consequence of the globally competitive nature of the industry and its markets. He added that the industry in Scotland cannot be insulated from free and fair market forces.
Mr Cumming also pointed out that as Pan Fish was expected to control 30% of global production, it was important that they also had a presence in Scotland. He believes that a company on this scale will be able to bring a greater degree of market-led discipline to production and he is absolutely right. However where we, at Callander McDowell, diverge from Mr Cumming’s view relates to his views on the cyclical nature of salmon farming, which he believes is responsible for driving so many small and medium scale operators out of business. He believes that a business of the scale of the merged company will be able to ride out the down turns of these cycles.
Salmon farming may turn into a cyclical industry but we, at Callander McDowell, are not convinced that we have yet reached that point. It is true that anyone looking at the price developments over the years may conclude that they have taken on a cyclical nature but we believe that any cycles are the direct result of market interference by those who continue to pursue production-led strategies.
The main basis of this type of strategy is that Scottish salmon is superior to any other salmon and consumers should be willing to pay a premium price to buy it. The fact that most consumers are unable to identify any difference between Scottish and other salmon is why most are not willing to pay more for it. This divergence between what producers and consumers think and do is at the heart of the repeated dumping complaints and even of this latest Competition Commission enquiry. The investigation seeks to uncover whether those consumers who want to buy Scottish salmon will be disadvantaged by the merger. The view is that such consumers will be forced to pay a higher price for Scottish salmon, even though this has been the main ambition of the Scottish industry for as long as we can remember.
The fundamental question is therefore whether Scottish salmon are actually different to other Atlantic salmon. The last Competition Commission investigation suggested that there may be slight differences in oil content but the main difference was one of perception only.
We, at Callander McDowell, would like to suggest another difference, which may be the real issue for the Competition Commission. In France, consumers mostly have a choice between fresh salmon of either Scottish or Norwegian origin. The French consumer has no local allegiance to either salmon as both are imported. Scottish salmon tends to be more expensive, mainly because of the Label Rouge accreditation. However, if Label Rouge was taken out of the equation, then what is there to influence which salmon the consumer buys. Clearly, as most salmon sales in France are of Norwegian salmon, there does not seem to be any particular affinity to Scottish salmon.
By comparison, when asked which salmon they prefer, most British consumers will say Scottish. This is natural and not unexpected. After all, Scottish salmon is produced locally. Scottish salmon is a British product. This is the real difference. Scotland is the only salmon producing nation with its own significant home market. Consumers will also express a preference for Scottish salmon, whatever salmon is available. However, just because they express this preference does not mean that they will be prepared to pay any more to buy it. This is clear from the failure of the Tartan Quality Mark from when it was used to identify quality Scottish salmon in British supermarkets. Consumers did not dig deeper into their pockets to buy this salmon and as a result, the TQM disappeared from the supermarket stores.
The last Competition Commission inquiry concluded that some retailers only buy Scottish salmon because their customers have expressed this preference. This is their choice but all the evidence points to the fact that most consumers are happy to buy whatever salmon represents the best value for money.
The Office of Fair Trading report that a number of customers buying Scottish salmon object to the merger because they have a policy of only sourcing Scottish salmon and that smaller suppliers cannot cope with their demand. Perhaps the time has come for such buyers to accept a dose of realism. Instead of objecting to the merger perhaps it is they who should be reviewing their sourcing policy!
Fatty fish: The Seafish website asks what it is about fish and chips that make them the number one takeaway in the UK. They say that fish and chips are a wholesome food that are lower in calories than many of their fast food rivals. Seafish add that fish and chips have been recommended by doctors for pregnant women and were one of the only foods not to be rationed during the Second World War.
With such health recommendations, it is surprising that fish and chip shops and other takeaways in the Humber and Yorkshire area have been told that they will be named and shamed unless they cut down the fat and salt levels in the meals that they serve to the public. According to fishupdate.com, Trading Standards officers found that 87% of takeways in the area, including fish and chip shops had staggeringly high levels of salt and calories.
Fish is seen as a healthy food but not if it is covered with a high fat batter and chips laden with salt. The survey found that some meals contained more than 2.100 calories which is considered to be excessive. Alison Phillips from the local hospital trust said that she was extremely concerned by the results. She added that takeaway meals should be only eaten as a treat not on a regular basis.
Fish are regularly promoted as a healthy food but like many other foods, it is the raw ingredient that is the healthy part. Any health benefits can be lost by the way that the food is cooked. Unfortunately, whilst many consumers are happy to eat deep fried fish for their meal, few are prepared to even consider steamed or baked alternatives. It seems incongruous that such a healthy food can be actually harming the health of those who eat it.
Interestingly, William Lands, a scientist, now retired from the US National Institute of Health, has told the Washington Post that there is no nutritional value in fried seafood as it is often loaded with unhealthy trans-fats and saturated fats. According to IntraFish, Mr Lands said that eating fried seafood should be scorned. He said that he can’t find any nutritious merit in frying seafood. Instead it should be baked, steamed microwaved, or grilled. Perhaps, Mr Lands should now extend his message to the great British public. Fishupdate.com reports that they have just declared fish and chips to be a national icon!
Zero-toxin?: IntraFish report that HQ Sustainable Maritime Industries inc (HQ) has launched a ‘TiLoveYa’ brand of tilapia for which it hopes to achieve a premium price. This aspiration to persuade consumers to pay more for their tilapia than any of the other 300,000 tonnes sold in the USA is based on their claim that the fish are zero-toxin. HQ claims that its fish are free of heavy metals, dioxins, PCB’s, blue algae, antibiotics, hormones and are low in bacteria.
This may well be the case, but unfortunately their claim implies that other tilapia does contain such contaminants and this can be only bad for the fish industry. We, at Callander McDowell, will always be critical of this type of market strategy which is based on consumer concerns about potential contamination of foods. HQ will only draw attention to this issue, when most consumers will have absolutely no reason to be concerned at all.
According to IntraFish, HQ intends to seek organic certification for their fish in the US. This is a much more acceptable strategy for whilst it still addresses the issue of contaminants, it does so in a way that focuses on the consumers’ life style rather than highlighting potential problems with every other tilapia fillet sold in the US.