reLAKSation 267. Callander McDowell
No surprise: We are reminded of a funny story we heard which we’ve adapted slightly to fit the latest news:
Q. Who’s to blame for the recent salmon price falls?
A. The Norwegians and the bicycle riders.
Q. Why the bicycle riders?
A. Why the Norwegians?
The European Salmon Producers Group (remember them – an industry representative organisation which only seems able to comment on just one recurring theme) has yet again blamed the Norwegian salmon industry for the falling price of salmon. According to IntraFish Norway is to blame for the decline in salmon prices because they have allowed production to grow by a further 14%. They also say that the structure of the Norwegian industry has also contributed to the price collapse. They have suggested that there are too many export companies all working independently of the producers whilst production has become concentrated into too few hands. Finally, they say that the price has been undermined by the ongoing problems in the Russian market.
We are surprised that the EUSPG could only come up with these three accusations to lay at the Norwegian industry’s door. It would be too much to expect that the EUSPG might consider that the price falls are due to anything other than Norwegian aspirations to produce salmon.
Rather than consider why the price of salmon is falling, it may be helpful to look at why prices rose in the first place. Although there has been a lot of discussion as to why prices increased, the simple fact is that a great deal of uncertainty developed in the market place resulting from the trade measures imposed by the European Commission in response to a dumping complaint lodged by guess who?….. the very same European Salmon Producers Group. Their view is that prices rose because of lower Scottish production resulting from Norwegian dumping. As yet, we don’t know how much salmon was produced by Scotland because official figures are still not available but in both European and Global terms, it is not significant, especially as much of the shortfall has been offset by increased demand for wild Pacific salmon and other such imports from outside Europe.
Prices have fallen simply because demand for salmon fell as prices rose. High prices could not be sustained because consumers wouldn’t pay the price. As demand fell, so has the price. It is now likely that as the retail price of salmon is adjusted downwards consumer demand will start to pick up again. Our observations suggest that the market is now responding with the reintroduction of promotional offers which stimulate sales. We have illustrated two examples of promotional offers available in UK supermarkets this week on our website. One from Sainsbury’s and the other from Somerfield offer salmon fillet at half price.
And before the EUSPG start to accuse cheap Norwegian imports for the ability to offer salmon at half price, the fish in the packs, or at least the pack illustrated, is Scottish!!!
NOK26.70?: Intrafish report that Oystein Myrland from the Norwegian Fisheries College in Tromso has developed a model to help forecast the price of salmon over the next twelve months. Using this model, Mr Myrland has predicted that the average salmon price next year will be NOK26.70/kg. The model was developed from monthly price data from January 2002 until September 2006.
We, at Callander McDowell, have said regularly that we are not in the business of forecasting prices. We believe that there are still too many unknowns which influence the way that price develops. Our only certainty is that lower prices stimulate demand and therefore are not as undesirable as some believe. However, we are also sure that sustainable higher prices are not the result of haphazard market developments but are something that must be worked for and this means investment in marketing.
Over the years, there have been many predictions of salmon price development but these are usually long forgotten by the time that the prediction is realised. Therefore, the accuracy of the prediction is never brought into question. The development of a defined model means that predictions can be continually upgraded as each month’s figures are entered. Presumably Mr Myrland will be continually updating the prediction so it will be something that can be monitored by all.
As we have suggested, many factors affect the way that prices develop. One of the most significant developments during the time period studied by Mr Myrland was the submission of both a safeguard and dumping action by the independent Scottish producers and the subsequent measures imposed by the European Commission. Presumably, this model will also forecast when we can look forward to the next EUSPG submission!
Nasty smell?: According to IntraFish, the respected Observer newspaper wrote a scathing article in its monthly food magazine. This was not entirely true as the article, ‘Why organic salmon is causing a nasty smell’ was actually penned by Joanna Blythman, a well known critic of the food industry. It was enough to see her name in the magazine’s contents page to understand the tone the article would take.
We, at Callander McDowell have previously discussed that we believe the use of organic in relation to fish can be confusing and that we would rather see ‘sustainable’ aquaculture coming under the jurisdiction of the MSC or something similar. Certainly, it would seem that if a respected Sunday newspaper has asked a well known food writer to comment on our industry then it would not expect the resulting article to present such a confused view.
Ms Blythman begins the article by comparing the ‘dingy’ pink flesh of organic salmon with that from a fillet of wild Alaskan silver (Coho) salmon. She does admit that it is not a fair comparison since it is a different breed of salmon. Its not a different breed at all, it is a different fish. It is like comparing cod with Alaskan Pollack and then saying that they are the same. She chose the Coho salmon because it reminded her of the wild Scottish salmon that she had eaten earlier in the year- firmed fleshed and toned like a prima ballerina. Clearly, she didn’t have any preconceived ideas then?
Commenting later on the colour of organic salmon, Ms Blythman writes that organic farmers do use colouring – albeit in juvenile fish only – in the form of industrially produced phaffia yeast that contains naturally high levels of astaxanthin, the colouring used by conventional salmon farmers. Yet, the award winning Craig Farms organics who sell organic salmon say on their website that ‘there are no artificial colourants used. Whilst this makes for a slightly paler colour, use is made of crushed prawn shells to give sufficient pinkness to the flesh.’ Perhaps Ms Blythman should have researched the subject a little more before writing about it?
After discussing the cons of organic salmon farming, Ms Blythman asks where this leaves consumers. She says that organic salmon (£15-18/kg) is preferential to conventionally farmed salmon (£13/kg) but she adds ‘that’s not saying much’! She recommends that a better alternative is to buy the reasonably affordable wild salmon from Alaska that is certified by the MSC (£15/kg) or go for wild Scottish fish when available (£20-£30/kg).
Interestingly, a couple of days after this article appeared, Ms Blythman authored another article in the Scotsman newspaper in which she asked whether it is really worth paying extra for organic food? She writes that demand for organic foods has meant that the retail sector has exploited various loopholes in the Soil Association’s otherwise stringent standards. She said that as a result organic beef for example is more likely to come from Argentina and lamb from New Zealand. Ms Blythman says that this contradicts organic principles as well as racking up thousands of ‘food miles’. She recommends that those wanting to buy organic food should check carefully where the food is produced before buying and provides a guide to some best buys.
This guide looks at each food sector including salmon. She is however less forthcoming in her recommendations only pointing out that the nearest thing to truly organic salmon are wild caught fish. Her price comparison is restricted to organic salmon (£13.99/kg) and conventional (£9.99/kg). Oddly, she makes no mention of the wild Alaskan salmon which she so loving drools over in her Observer article. Perhaps, having advised so strongly about buying foods which rack up so many ‘food miles’, she feels that she can no longer recommend Alaskan salmon as the more responsible alternative.
This could be why in the Observer article, Ms Blythman suggests that anyone searching for health giving oily fish that are cheap and plentiful, should turn to mackerel and herring. The reality is that perhaps the reason that mackerel and herring are so cheap and plentiful, at least in the UK, is that no-one actually wants to eat them!
Finally, it is apparent that most commentators read the Observer article on the web rather than the actual magazine. If they had, they too might have been struck by the irony that sandwiched between the second and third pages of this critique of organic fish was a full page advert from British supermarket Tesco promoting the virtues of 100% organic No Catch cod.
