reLAKSation 329. Callander McDowell
A pawn in a wider game: EU Trade Commissioner, Peter Mandelson appears to be making strenuous efforts to keep the Minimum Import Price in place, more as a matter of principle than as a necessary trade measure. The MIP has not been called into use and is unlikely to be so. Yet, Mr Mandelson seems determined not to give in and prolong this dispute for as long as possible. The EUSPG certainly have his support. Yet another unnamed spokesman – (if these people are so driven by their convictions why are they not prepared to stand up and seen to be fighting for their cause) – this time of the Irish members of the EU Salmon Producers Group told seafoodintelligence.com that they welcomed the continuation of the MIP on imports of Norwegian salmon into the EU as recently announced by Peter Mandelson.
This spokesman said that ‘EU producers need sufficient time and market stability to recover from the dumping period and urged the Irish Government to defend free and fair trade and to provide Irish farmers with the licencing tools to effectively prepare the country’s salmon farmers for their future position in the world market’. We at Callander McDowell, think this is a very telling statement about the state of the salmon industry not just in Ireland but also in other parts of the EU. It is not the first time that we have heard this statement, as it has emanated from the Scottish industry too. Yet how much time does the independent industry need to recover from the dumping period, which after all was back in 2003/4. We are now into 2008 some three to four years later, and we would have hoped that all farmers, not just those who are independent, would have implemented more market-led strategies to equip themselves with the tools to ensure their place in an increasingly diverse salmon market. Perhaps, they are waiting for a ‘miracle’ instead so they can continue without having to adapt to the changing marketplace. This is maybe why they need more time but we certainly believe that the time should have run out by now.
We are more intrigued by the connection that this EUSPG spokesman has made between the retention of the MIP and the provision of improved support by the Irish Government. The same connection has also been made in Scotland with requests for changes to the legislation controlling the salmon farming industry.
The European salmon industry has repeatedly suggested that it wants to compete with Norway on a level playing field but it’s never been that clear which parts of the playing field actually need levelling out. The main ‘bump’ has been usually thought to have been ‘cost of production’ but various investigations have found that Scotland has a cost advantage over Norway rather than the other way round. We are still waiting for the major investigation recommended back in 2003 in the Strategic Framework document. It has been subjected to one delay after another and the suggestion is that this is because it doesn’t actually support the argument that Scottish producers are disadvantaged. We wouldn’t be that surprised if this research is buried forever and never sees the light of day.
The problem is that the in terms of actual production costs, Scotland should have an advantage, but, and there is a big but, Scottish and possibly Irish producers are subjected to a whole raft of EU and national government regulations that all contribute to both stricter controls and higher regulatory costs. These erode away at the profitability of salmon farming. According to the SSPO website, Scottish producers are scrutinised by 10 different statutory bodies including Scottish Natural Heritage! and subjected to more than 60 pieces of legislation, 43 European directives, three European regulations and 12 European Commission decisions. It is the burden of these controls which is what really weighs down Scottish producers.
It seems to us that the EUSPG have used the accessibility to DG Trade as a way of trying to improve their competitiveness against Norway in the open market rather than address the real issue which is the regulatory control now constraining the industry by other parts of the EU and national government.
Peter Mandelson has yet to realise that he and his directorate are simply being used as a pawn in this wider game since it seems that dumping is nothing but a scapegoat for the more overriding issues that still need to be resolved within the EU. Mr Mandelson should now drop the MIP and pass these issues to those who can sort them out once and for all.
Rising prices: All the newspapers have recently carried stories about the rising price of food, which is now increasing at a record rate. The wholesale food price rose by 7.4% over the past twelve months which is three times the rate of headline inflation in the UK. The reasons for these rises are complex but are linked to rising demand from China and India, changing weather patterns, higher oil prices and so on. The FAO reckons that prices could continue to rise by up to 20% over the next 10 years.
The papers have all presented some form of data to illustrate these rises. The Daily Express opted to compare a typical shopping basket of about 30 items. This increased from £62.09 in December 2006 to £66.90 twelve months later. This basket contained only one example of fish – white fish fillets at £10.04/kg rising to £10.73/kg at the end of 2007. The paper doesn’t go into any further detail but some mainstream supermarkets are selling cod (as opposed to white fish) fillets for £8.98/kg which is much cheaper than the price quoted. This does show that judicious shopping can reduce the shopping bills.
The Daily Telegraph has opted to illustrate the rising cost by showing the change over the last twelve months for specific foods rather than the basket as a whole. Thus they show that semi skilled milk has risen from £1.62 (twelve months ago) to £1.68 (six months ago) to £1.96 (now) for a family pack of 6 pints. The change for free-range eggs is £1.62, £1.75 to £2.55 now.
What is interesting is to compare these rises with the change in the retail price of salmon. This is illustrated using prices recorded at one mainstream supermarket:
Feb 06 – whole salmon £4.49/kg Fillets £6.69/kg
Feb 07 – whole salmon £5.99/kg Fillets £8.99/kg
Nov 07 – whole salmon £3.29/kg Fillets £4.99/kg (store promotion)
Jan 08 – whole salmon £5.29/kg Fillets £7.99/kg
Salmon prices have risen, but they did so at a time when other foods were not. The main price rise occurred during 2006 which was as a result of the market instability resulting from the implementation of trade measures by the EU. The measures were not directly responsible but rather caused uncertainty in the marketplace which forced prices upwards, not surprisingly suppressing demand. At the time, the excess demand was taken up by the Russian market maintaining prices at a high level.
The market finally could not sustain the higher prices and as a result they have slipped, coming down at exactly the same time that basic foodstuffs have increased in price. We will have to wait and see whether forces within the salmon market can override these wider market influences and whether they push salmon prices up or down. We are not sure whether current forecasts take these wider issues into account.
Sustained whiff: So ‘Stinky’ has been consigned to the bin where he rightly belongs. We recognise that there is a view that it is better to have Marine Stewardship Council certification than nothing but we would always argue that the only way to reduce fishing pressure on wild stocks is to source fish from another source and the only viable alternative source is from farming. Unfortunately, the MSC, and their colleagues at the WWF, have dismissed farming as a viable alternative so continue to pursue their programme of certification rather than an integrated approach to sustainability.
Another story about cod prompted a look at the Marine Stewardship Council website for fisheries seeking accreditation. We were interested specifically in cod for which there are a number of applications. We first looked at the fishery for Pacific cod in the Gulf of Alaska. The application covers a fishery of 52,264 tonnes. A second Pacific Cod fishery around the Bering Sea and the Aleutian Islands is for 170,720 tonnes including fish caught by trawling.
We then looked at the DLP NE Artic cod and haddock fishery, which unlike the applications of Pacific cod certification is made by a commercial company. The application is for 5,000 tonnes of cod out of a total Norwegian quota of 224,600 and for 2,500 tonnes of haddock out of a total Norwegian quota of 71.500 tonnes.
We, at Callander McDowell do not claim to be fisheries specialists but it is beyond us how part of a fishery can be judged to be sustainable whilst the rest is not. Are these 5,000 tonnes of cod identifiable from the rest? Of course not! What happens if the rest of the stock collapses? Do those holding the certification continue to fish claiming that their catch is sustainable?
It seems to us that the fishery is either sustainable or its not. It cannot be possible to differentiate one fish from another. This is not the way to guarantee sustainability but rather a way to promote sustainable certification. Stinky may be gone but something still stinks.