reLAKSation 342. Callander McDowell
Brussels: It was real pleasure to have an opportunity to say hello to old friends and new at this year's European Seafood Exposition. There was much to talk about, in fact, so much that there was little time to get around all the stands. We will discuss some of our general observations in coming weeks.
It was very nice to hear some positive responses to the reLAKSations viewsletters as well as one or two that were not so positive. One subscriber said that he was nearly prompted to respond but didn’t think that we would share his view with all our subscribers. This would certainly not be the case. If anyone would like to respond to any of our comments and would like for their response to be included in the mailing, then we would be more that happy to oblige.
New economics?: The Irish Fisheries Minister, John Browne TD, used the European Fish Exposition to support the Irish fishing and aquaculture industries. This included an appeal to the European Commission to retain the Minimum Import Price on farmed Norwegian salmon imports. Seafoodintelligence reports that Mr Brownes' case had been explained by the 'Irish Examiner' which claimed that the MIP had been responsible for a 33% rise in prices for Irish salmon. This enabled producers to boost their incomes and production. Volumes of Irish salmon are expected to reach 16,000 tonnes this year from a low of just 12,000 tonnes.
We, at Callander McDowell are puzzled as to what is effectively a safety net, can be directly responsible for forcing prices upwards and especially by so much? The simple answer is that it isn't. The MIP is protection against falling prices and has no effect until prices decrease to the level at which the MIP is set. At that point, and that point only, does the MIP kick in and the Norwegian exporters, at which the MIP is aimed, have to pay the penalty. Otherwise the MIP is purely a safeguard and nothing else.
If the action of the MIP had forced prices upwards, then its continued presence should have effectively kept prices at this higher level but this has not been the case. Prices have both risen and fallen since the imposition of the MIP and currently seem to be in a downward trend. This is what prices do without a managed market led strategy because both supply and demand vary from time to time.
What then caused the meteoric price rise after the MIP was introduced? The answer is uncertainty in the market place. The market didn't really know what was going to happen to the salmon supplies, especially whether there might have been shortages. This uncertainty led to an increase in demand and pressure on prices. This destabilised the market in exactly the same way as falling prices. This was not the first time that such uncertainty has led to price movements. These have occurred in parallel with previous dumping cases and can be correlated with them. What some observers describe as boom bust cycles have actually been market disruption caused by the imposition and subsequent removal of trade measures. Far from helping promote rising prices, the MIP has undermined the marketplace and this is why its removal is so crucial to opening up the market place to new opportunities.
Mr Browne also attributes the resurgence of the Irish industry to the presence of this trade measure however, in an earlier reLAKSation; we described how the claims of unfair trade by Norway occurred at the same time as a major disease outbreak in Ireland which significantly reduced the harvest. Now the Irish industry has overcome this disease problem, it is not unexpected to see harvests return to levels previously seen before the disease set in.
Mr Browne is right to support the Irish industry but in a positive way promoting the quality and origin of the fish and seafood as this is what might interest the consumer, not whether it is protected by some ineffectual trade mechanism. After all, the Irish industry, like those elsewhere in Europe will eventually have to learn to live without such protection, if EU Trade Commissioner Peter Mandelson’s drive to reach a deal at the WTO to abolish all import tariffs and export subsidies.
Mr Browne’s colleagues in the Irish Government have been placed under pressure to oppose Mr Mandelson’s efforts because the Irish agricultural industry is concerned that the removal of trade barriers will decimate Irish beef and milk production. Currently, Ireland produces nine times more beef and milk that its population consumes.
The Scotsman reported that 10,000 Irish farmers recently demonstrated against these reforms in Dublin claiming that over 100,000 jobs are at risk. They are part of a wider concern that Europe should put a brake on agricultural reforms in the face of rising food prices. With a commitment to implement these reforms, Mr Mandelson will be dismayed by any Irish attempts to undermine them. Maybe, he could even show this dismay by an unwillingness to meet Irish demands on the MIP???
Another supporter of the MIP, Scottish Aquaculture Minister Michael Russell was much in evident at the Brussels Seafood Exposition. We will discuss his machinations in the next issue of reLAKSation.
Shopping basket: The Daily Express has highlighted that soaring food costs are adding £15 a week to supermarket shopping bills according to new research. A basket of 24 staple food items is now around 15 per cent more expensive than a year ago adding £780 to the annual food bill.
This research is carried out by the website Mysupermarket which looked at a basket of 24 popular food items sold by Asda, Sainsburys and Tesco. They found that bread; butter, cheese and pasta have shown some of the most consistently high price rises. This is because of a global surge in wheat and meat products from China and India which is putting extra pressure on worldwide supplies. Mysupermarket has concluded that the supermarkets are now passing on a sizeable amount of these higher costs.
We have reproduced the findings above but these are not what we found to be of most interest. Instead, it is the products that are included in the Mysupermarket shopping basket that merit a closer look. These are:
Thick sliced white loaf, Kids sized bananas, Golden delicious apples, Mixed peppers, Cucumber portion, Iceberg lettuce, Tomatoes, Maris Piper potatoes, Six pints semi-skimmed milk, 12 medium free range eggs, English salted butter, English mild Cheddar, British beef mince, Branded wafer thin turkey ham, Garden peas, Baked beans, Branded Bolognese sauce, Strawberry jam, Granulated sugar, Cornflakes, Fusilli pasta, Indian Basmati rice, Premium tea bags, Smooth orange juice.
What jumps out to us when we looked at this list was the total absence of any fish or seafood. We wonder whether this is indicative of a typical British shopping basket? Twenty four items is actually not many to put in a sample basket although the specialist magazine the Grocer includes only nine more but the Express decided against quoting their figures because some non food items are included too. However, like the MySupermarket shopping basket, the Grocer also doesn’t include any fish or seafood products in their list. MySupermarket monitors prices across the whole range of supermarket products and we can only assume that the items included in their basket reflect the basic items bought by a typical shopper.
The only conclusion that can be drawn from these shopping baskets is the typical shopper doesn't buy fish or seafood despite claims otherwise from the authorities. Certainly, fish, even something like tinned tuna, doesn’t seem to be considered to be a staple food item. This is probably to the delight of those suppliers that consider fish and seafood to be more of a premium product. Yet, at the same time, high prices and a premium image will deter many consumers from buying fish and obtaining the health benefits that it offers. However, such a premium image may be more of a perception than a reality. The Daily Express quotes recent figures from the Office of National Statistics which seem to indicate that in real terms, whilst the price of many foods are rising, (6% in the year to March) the price of fish is down on last year, although this figure covers the whole retail sector and not just supermarkets. Although the price of fish seems to be coming down, it is clearly still too expensive to be considered a staple food item, or that Britons are simply not eating enough for it to register as part of the national shopping basket. Whichever way, the picture is not encouraging and despite claims that fish consumption is on the increase, there is clearly still a huge opportunity to expand consumption even further. We have previously suggested that the biggest obstacle to expansion is that the fish and seafood industry prefer to promote their products in a way which does not resonate with the majority of UK shoppers. No matter how attractive we can make fish counters appear to the consumer all our efforts are wasted if the consumer never considers actually visiting the counter. This is just one of the challenges that the fish and seafood industry must overcome. Until then, the likelihood is that the typical shopping basket will remain totally devoid of fish.