reLAKSation 298. Callander McDowell
Down but not out: Another week and another report that salmon prices continue to sink. The latest prognosis from IntraFish indicates that prices have fallen to NOK 23.28/kg (£1.95/kg) this week. It is still unclear whether this downwards movement is part of what used to be a recurring summer price dip or a permanent realignment following the artificial manipulation of price levels brought about by EU trade measures. What is clear is that this price slide will be now subjected to renewed pressure, at least in the UK market.
BBC news has reported that two of Britain’s leading supermarkets, Asda and Tesco are to engage in a new price war over the coming months. Commentators have expressed some surprise at this latest news because all the supermarkets have been channelling their energies towards green issues vying to become Britain’s greenest supermarket. They have been swayed by the affluent vocal minority who are willing to pay more to buy quality and greener products. These issues are fine for those who can afford them but the majority of the market is still influenced by price. It is very difficult to persuade those on limited incomes to pay more for organic, greener and higher quality products when they struggle to keep pace with higher prices as well as increasing costs. Not only have mortgages gone up with rising interest rates, but many basic foodstuffs such as bread are now more expensive. UK consumers are now paying 5.6% more for their trolley lead as compared with 1.9% in the rest of Europe.
Asda have now announced price cuts over 10,000 products worth £250 million whilst Tesco are to cut prices on 3000 items at a cost of £270 million. Sainsbury’s and Morrisons are also expected to reduce their prices to remain competitive. With salmon now considered a food basic, consumers should expect to see more offers on salmon in the months ahead. As a result, consumption should start to increase again as it appears to have fallen off over the last year, at least if supplies on supermarket shelves are an indication of the scale of consumption. Higher prices have deterred consumers but they have been sustained because salmon has been diverted to other geographic markets, but this cannot last. Perhaps this latest supermarket price war will herald an even greater growth in consumption?
Is it organic?: Seafoodintelligence.com report that European Union Agriculture Ministers have reached agreement on the regulation of organic production and labelling which they hope will be simpler for both farmers and consumers alike. For the first time, it will become mandatory to use the EU organic logo on all products but it can be accompanied by national or private labels. The agreement also dictates that organic food can only be called organic if at least 95% of the ingredients are organic. Finally, the agreement will include rules on organic aquaculture (even though aquaculture does not come under the remit of the agriculture ministers). It is still unclear how these new rules will apply to animal production and or how strict they will be.
Certainly any improvement in the definition of organic standards will be welcomed by one group of British consumers who took part in an investigative documentary for ITV’s ‘Tonight’ programme looking at whether organic food, particularly poultry, is really worth it. The programme looked at two organic chickens. One was grown on an independent organic farm certified by the Soil Association whilst the other was grown for a leading supermarket and certified by Organic Farmers and Growers. The consumers thought that the two chickens should be the same but were stunned by the differences. The independently produced chicken was raised from chickens which were also fully organic. They were fed food which was 100% organic. Flock size is limited to no more than 500 birds, which are kept in houses of a maximum of 150 birds. They were allowed to range freely outside from three days old. By comparison, the birds raised for the supermarket were grown from factory farmed chicks. They were kept in flocks of 4800 birds and whilst supposedly allowed to range outside were never seen to do so. Their feed was only 85% organic.
The ‘Tonight’ programme said that both farms kept to minimum EU standards but the consumer panel was dismayed that they were buying chickens which they did not believe were organic. They said that this type of organic farming was more akin to factory farming and was not the image they thought they had bought into.
The problem is that there are nine different certifiers of organic standards each with their own interpretation of what constitutes organic production above the EU standard. This means that consumers are being misled into buying chickens which they believe to be organic but are clearly not so. Perhaps if the EU standards were not a minimum but a clear statement of what organic should be, then consumers would be better reassured that what they are buying is truly organic and not some compromise.
Of course, it doesn’t stop with chicken. We know of at least one supermarket that sells organic salmon under two very different standards. Both are equally described as organic and surprisingly both are priced differently. The main differences between the two are the pigmentation regimes permitted by each certifier. Yet, when pressed to explain the two, a junior store manager suggested that one salmon is packed in an environment which is 100% organic whilst the other is packed in the presence of other non-organic fish. We’ll leave it to readers to guess which costs consumers most!
Backwards boom: According to IntraFish, Scottish salmon production is booming. The Federation of European Aquaculture Producers (FEAP) reported that Scottish farmers produced and sold 119,000 tonnes of salmon in 2006 generating a first sale value of €498 million. Whilst, the first sale value rose, total volumes declined with a fall of 3.6% compared to the previous year. FEAP forecast that production will rise to 124,000 tonnes in 2007 worth about €519 million.
But wait a minute. FEAP appears to suggest that Scottish salmon production will rise to 124,000 tonnes this year from 119,000 tonnes in 2006, which in turn was 3.6%higher than the previous year. Yet, data displayed on their own website shows 2004 production at 150,000 tonnes, 2005 at 123,000 tonnes and a forecast for 2006 of 128,000 tonnes.
By comparison, the official Scottish Executive annual production survey calculated that in 2005, production stood at 129,588 tonnes, five and a half thousand tonnes higher than the current FEAP forecast for 2007. The Scottish Executive estimate for 2006 is 137,018 tonnes, which is much higher than the 119,000 tonnes that FEAP now say was produced.
The Scottish Executive forecasts are not always one hundred percent accurate but they are not usually far out. In 2004, their prediction for 2005 was down to 136,056 tonnes which was about 7,000 tonnes too high. However, production that year was in flux with some closures, takeovers and conversions taking effect. Since then production has been more settled and thus forecasts should be more accurate. Even allowing for some inaccuracy, the FEAP figures appear extremely low, more in keeping with those predicted by the EUSPG to support their case that Norwegian imports were having a detrimental effect on Scottish production.
We can understand why future forecasts may be inaccurate but we fail to comprehend how given production data can differ so much from the official government figures? But then even the Scottish Executive ignored their own data when they submitted the application for safeguard measures.
We, at Callander McDowell, do not subscribe to any commercial production forecast data so we are unable to compare the FEAP data with current thinking. Equally, the Scottish Executive data for 2006 is unlikely to be published before October so cannot be used to judge the accuracy of the FEAP figures.
What is clear to us is that whichever figures are consulted, Scottish production is too low. Consumers are being told to buy sustainable fish and farmed salmon is the most sustainable fish it is possible to buy. This is because it does not impact on any of the important commercially fished stocks. We can only hope that the forthcoming Scottish Executive paint a much clearer picture showing production continuing to rise without any further interruptions.