reLAKSation 30.
Salmon Survey: The November issue of 'Fish Farming Today' reported from the recent British Trout Farming Conference at Sparsholt college. Amongst the diverse selection of speakers, David Nickell of Roche Products presented an overview of the International Salmon Farmers Association European Market survey, which Roche sponsored, but was undertaken by the market research company GIRA.
When the report of this survey was originally published, this views-letter had not yet been launched. This latest report presents the first opportunity to consider the findings of the market survey. However, these are far too detailed to discuss within the confines of this medium. Therefore for a more comprehensive discussion of the survey, please visit the Reports pages, where our initial response to the survey is published.
As it is now well over a year since the findings were first released, perhaps it is time to reassess whether the survey has made any significant impact on the industry.
The ISFA's decision to investigate the European market for their second market survey was a strange one, since it focused on just three national markets in what is now a global marketplace. Of these three countries, one, the UK, even has its own producing industry. Yet, what makes this choice even more difficult to comprehend is that the European salmon industry was already involved in a marketing exercise. This was the EU joint promotional campaign as laid down in the EU salmon agreement. Two of the three countries, France and Germany, were selected for both initiatives, suggesting some form of overlap.
The intention of the EU joint market programme is to promote salmon as a generic product in its three target markets. Yet, such promotional activity is usually preceded by some form of market investigation. This would identify any specific consumer needs so that the promotion can be tailored to meet them. The EU campaign has not really adopted this approach, preferring instead to promote the existing industry perceptions of salmon direct to the consumer.
By comparison, the ISFA market survey has identified different consumer perceptions in each market, but these are extremely confused, primarily because the marketplace is undergoing such rapid change.
In addition to these specific national perceptions, the ISFA survey has distinguished two different 'mythologies' neutral and valorised. David Nickell describes these as 'pile them high and sell them cheap' and exclusive. This is both simplistic and misleading.
Initially, salmon was farmed because it was perceived as a high value fish in a luxury market place. The luxury image was acquired from the wild fish, which was limited in its availability and therefore had a rarity value. This gave salmon an exclusivity, as identified by the ISFA's valorised mythology.
As production increased, the rarity value of salmon was undermined. Increased production forced down prices making salmon more widely available and created a new market for salmon as a low cost, value for money, fish.
As prices have fallen, salmon could increasingly be described as approaching a commodity image, although despite the current low price, we do not believe that it has yet reached this stage. This could well be the 'pile them high, sell them cheap', neutral mythology, which was highlighted by Dr Nickell. This concept of a two layer market is however nothing new and is simply an old idea dressed up with a lavish new description.
In 1989, when the price of salmon fell for the first time the industry described the problem as over-production. However, we at Callander McDowell preferred to explain the price fall as the metamorphosis of a low volume, high margin industry to one of lower margins and higher volumes. This hypothesis led to the development of a twin, or multi-stream, market-led, marketing strategy.
Unfortunately, this strategy proved unacceptable to the industry because it identified the existence of another market for farmed salmon outside the traditional luxury marketplace. This 'other' market was perceived by many as undermining the traditional markets and thus further 'encouraging' the continuing decline in prices.
The problem for the industry is that it is impossible to produce salmon in huge volumes and for it all to be considered to be exclusive. Equally, the development of a 'commodity' market does not mean that the exclusivity of all salmon must be undermined. Instead, there is a whole spectrum of non-competing 'markets' into which salmon can be directed. It is only a matter of producing salmon as the products the consumer wants to buy.
Our original question asked whether the ISFA market survey had made the necessary impact on the salmon farming industry. A year on, the current state of the industry would suggest not. Prices are at their lowest ever level and many farms have seen margins disappear.
Yet, low prices should not necessarily mean low margins. The whole point of marketing is to ensure that salmon can be sold profitably.
The fact that prices continue to fall and we have seen only minimal diversification of the marketplace would suggest that there is still enormous potential to further develop marketing within the industry.
The real issue is whether the international or national industries should even try to develop the marketing of salmon at all, or whether it would be better if marketing was left to the individual companies on whose future it depends.
The ISFA market survey shows that it is not marketing on which the salmon farming organisations should focus. This would be much better left to individual companies to address. Instead, the ISFA would be much better served if they started to develop the market-led strategies necessary to ensure that the international industry will have a long and prosperous future, without the need for either salmon agreements, trade actions or production controls.
Renew or renounce: Intrafish have reported the opinions of an industry expert, who wishes to remain anonymous. This nameless authority on industry matters has said that 'it is absolutely essential to keep some form of agreement, as without it, prices in the EU would be even lower'.
Unfortunately, this view is mistaken. The salmon agreement has had little effect on prices since all it does is place a minimum import price on Norwegian salmon. Yet, salmon from elsewhere can be sold at well below this price with total impunity. Even this expert acknowledges this, suggesting that imported Chilean salmon is also pulling down prices.
He also suggests that if the agreement is not renewed, then European producers must go down a route of market led growth at responsible levels. This view illustrates the clear lack of understanding of what market-led strategies should achieve.
Market-led strategies are concerned with the production of exactly what the market wants. It is therefore difficult to comprehend how these are supposed to be implemented in a responsible way. The two ideas are simply incompatible.
Responsible production is a production-led, not a market-led concept. The fact that this idea continues to be promoted demonstrates that the industry still has some way to go to develop new market-led strategies. This need has been confirmed in a second Intrafish report as yet another unnamed industry source states that 'we need production growth at a responsible level, but it has to be market-led.' He goes on to say 'that this is the only accusation, which you can point at the Scottish industry: perhaps we have not been sufficiently focused on what the market requires.'
Maybe this acceptance will herald the start of this refocusing, rather than seeking any renewal of the salmon agreement.