reLAKSation 370. Callander McDowell
Benefits: In the last issue of reLAKSation, we discussed the findings of the long-awaited cost comparison study, which had been first proposed back in March 2003. We, at Callander McDowell, were not in the least bit surprised by the findings that the Norwegian industry is subjected to higher user and regulatory costs than their counterparts in Scotland.
Besides calculating these costs, the study considers the various benefits and disadvantages that the current regulatory system bestows on the Scottish industry. The authors of the study say that they identified a number of indirect and direct regulatory measures which result in additional costs to the Scottish industry. They add that most producers view these costs as a disadvantage but instead, they believe that they should be viewed in the context of any resulting benefits. The researchers suggest that the main benefit can be defined by the comparative reputation of Scottish salmon and is evidenced by a clear price premium for the Scottish product.
The report states that the distinction between products bearing quality labels such as Label Rouge and those for the mass market will become increasingly marked so processors wanting to buy high quality salmon will have to get used to paying higher prices. The authors thus conclude that the price premiums associated with Scottish salmon are likely to remain if the positive market perception of Scottish salmon is retained.
Unfortunately, the authors have based their opinion on anecdotal evidence, rather than any specific research. They quote the FAO, but this view is actually expressed by unnamed French sources in a GlobeFish market report. We, at Callander McDowell are not convinced that the distinction between mass market products and those bearing quality labels will become any more marked than they are now. This reference is about the French market only and in particular, the market for Label Rouge salmon. No other market sells salmon with such a distinction.
The SSPO website refers to Label Rouge Scottish salmon sales and states that exports of Label Rouge Scottish salmon increased from 2,493 tonnes in 1997 to 5,837 tonnes in 2003. This data is now five years out of date. The 2005 Ernst & Young report of the Scottish industry estimated exports at around 7,000 tonnes. Even if we estimated a figure of 10,000 tonnes for this year, this is still only 7.5% of current Scottish production. It therefore could be questioned whether the benefits of regulation for such a small percentage of production are really justified.
Equally, in order to benefit from the regulatory cost, producers need to ensure that they receive a premium price for their fish. The question is whether consumers are willing to pay this premium. There is no doubt that in France Label Rouge salmon does sell at a higher price however, what we have noticed over the past few years is a slow decline in the availability of such premium fish in the retail stores. Clearly, more and more consumers are not so happy to pay more for premium fish and so the stores are stocking less or none at all. In fact, we only know of one store group in France that is currently selling fresh Label Rouge Scottish salmon. Thus, it seems that the premium is still present but there are less people willing to pay it. Instead, they are happy to buy mass market salmon instead. As we already mentioned, this decline is not recent but has occurred over a number of years. It is not a feature of the recent credit crunch although it is possible that we may see a further decline in demand for premium product as a result.
Of course, it will be argued that although Label Rouge salmon is a small percentage of Scottish production, there are plenty of other salmon that are sold at a premium and thus, strict regulation is still warranted to maintain the quality image. However, as this study shows that Scottish producers are not disadvantaged compared to their Norwegian counterparts, the cost of regulation is something that they may consider worth bearing?
The truth is out: Seafoodintelligence.com report that according to the Irish Farmers’ Association, the Irish salmon industry is losing 30 jobs a month due to Government inaction to develop the aquaculture sector. This is because the Irish licensing system has totally collapsed with producers waiting up to 70 months for licence applications to be processed.
An industry delegation told the Parliamentary Committee on Fisheries that not an extra cent of funding was required to make a difference in vulnerable areas but rather the Government should implement agreed policies and demonstrate its support for an industry with proven opportunities for growth and employment in rural Ireland.
We, at Callander McDowell, have every sympathy for the Irish salmon industry. Irish salmon has created its own special niche in the marketplace and clearly has every opportunity for further growth. The Irish Government should address these issues immediately.
What we find of more interest is the fact that the Irish industry blames its own Government for the lack of development and the ongoing job losses. It wasn’t so long ago that the Irish industry laid the blame for such difficulties on Norwegian exports. One of the key arguments why the ‘Minimum Import Price’ should have been retained was to provide the European industry with sufficient breathing space to allow them time to address the problems of high cost regulation and licensing. Now it seems that the Scottish industry is not as disadvantaged as was claimed and the Irish problems are due to their own Government’s inactivity. These are problems that the MIP would never resolve.
We have always maintained that the salmon dumping case was never about dumping but rather about the way that the European producers addressed their own aspirations. The Irish Government was quick to seek help from Brussels when the problems were supposedly outside their control. Yet, now it is clear that the issues are something that they can resolve themselves, they continue to drag their feet.
One or the other?: We have an acquaintance who lives in Paris’s 7th arrondissement round the corner to the Avenue de Saxe, where on every Saturday, she shops at her local Saxe-Breteuil Market. On Saturday, 11th October, ‘Le Centre des Produits de La Mer de Norvège’ set up a booth on this market to as part of the week long celebration to mark the import of salmon number 250 million from Norway to France. Unfortunately, our acquaintance didn’t manage to find this booth, even though she had been forewarned to look out for it. However, having now seen photos of the event on the website www.saumon-de-norvege.com, (and shown here) we are not entirely surprised.
The booth is very reminiscent of one that might be used by a small family business at a local farmers market, rather than something arranged by a national organisation to celebrate such a milestone event and despite the massive publicity, the attendance seems poor. Perhaps, like our acquaintance, the public couldn’t find or didn’t see the booth, or maybe they just weren’t that interested!!
The fact that Norway has exported 250 million salmon to France is certainly a milestone worth celebrating but whether it merited a public celebration is another question altogether.
The expectation for such an event might have been a celebratory dinner with guests invited from the French seafood industry, Celebrity chefs, the Norwegian diplomatic service and even the French Government with the highlight being the presentation of the 250 millionth fish during the dinner.
Instead, the event tried to be a public spectacle which unfortunately ended with something of an anticlimax. The 250 millionth salmon was tracked from its farm in mid-Norway via Oslo and Copenhagen to Rungis fish market in Paris. Photos can be seen on Norwegian salmon website. Along the way, it was applauded by Norwegian Fisheries Minister, Helga Pedersen, at the farm and by State Secretary Erik Lahnstein from the Ministry of Transport in Oslo. Finally, at Rungis it was met by Michel Roth Executive Chef at the Paris Ritz Hotel.
The website also includes video link where the public can participate in the excitement of the event by watching a reach stacker lifting the container of fish from its truck. Other videos show the celebrations at Rungis market where the main event was a short display where about 30 people ran down the market’s centre aisle carrying boards which when put together created the image of a salmon. They then spun round to reveal another image of the Norwegian flag with the wording 250 millionth Norwegian salmon. This was met by applause from invited guests and journalists standing on the gallery above the market floor. The human display then ran off.
The salmon itself left for the Ritz where it was prepared, not for any celebratory dinner, but was put on the menu for anyone attending the L’Espadon restaurant to eat. Hopefully, someone did choose the salmon otherwise it might have ended up in the bin. Fortunately, Johan Kvalheim and Maria Grimstad of NSEC got to taste part of the dish cooked for publicity shots. Seemingly, the budget didn’t extend sufficiently far for them to sit in the restaurant as photos published by IntraFish show them eating the salmon in the hotel kitchen.
The public were not totally forgotten from this celebration. Besides the booth on the market and a second one the following day at another French street market, sixty fishmongers shops around Paris (12 within the Peripherique) offered 1600 free plastic bags and 2000 pens with a winning ticket.
We just wonder whether an even higher profile could have been attained had the promotion focused more on the consumer. Rather than have cars drive aimlessly round the streets of Paris, human displays in the fish market, etc, would a consumer focused promotion showing how to cook salmon as an everyday food maybe linked with the chance to win a free holiday in Norway might have attracted more interest. Last year, Norway exported 114,000 tonnes of salmon to France resulting in 663 million meals choices. Whilst this is a great achievement, it might have been even more this year with the right consumer message. Consumers don’t care whether the salmon they eat is number 250 million, 250, or even number one. What they care about is that it tastes good and is value for money. It may make the industry feel good that their salmon ends up in the Ritz but really, what they need is that more salmon ends up in the family home.