Last week, the Norwegian cod farming industry were informed that the Norwegian Seafood Export Council had changed their minds and had decided to supply only wild caught fish. At a time when the cod farming industry is experiencing commercial difficulties, this latest news must be a bitter blow.

It seems that the reason to supply just wild caught fish was made because they are now coming into season and that they account for the majority of exports [14,000 tonnes in 2007 as compared with 6,000 tonnes of farmed cod (NSEC data)]. This may well be the case but farmed cod exports are still more than substantial enough to warrant a place in the competition. In fact, the Bocuse D’Or competition would have been an ideal opportunity to demonstrate that farmed cod is superior to wild caught fish. This is even more important given that the Bocuse D’Or is really of interest to chefs and the hospitality industry rather than the public at large. This is one of the more important markets for farmed cod since not only should it be viewed as a restaurant quality product but restaurant prices may allow sufficient producer margin to overcome the current obstacle of high production costs.

The market strategy for farmed cod will undoubtedly change as volumes increase but for the moment, smaller volumes might suggest exclusivity as compared to the wild caught fish that are widely available.

The fact that NSEC initially intended to give competitors in the Bocuse D’Or a choice of farmed or wild fish is a clear indication of the muddled thinking behind the market strategy for farmed cod. A number of reports have previously suggested that farmed cod and wild caught fish are interchangeable. This is a mistake. There are major differences between wild and farmed cod that dictate a different approach to the market. Had stocks of wild caught fish collapsed as the environmental lobby forecasted, then it would have been a different story but the continued supply of wild caught fish means that the whole strategic plan for cod farming must change if the industry is to survive. 

Rather than position farmed cod alongside wild caught fish, the industry needs to establish a clear divide between the two. We have already discussed that when offered together on the fish counter consumers will select wild over farmed. This only changes when there is a price differential that favours farmed. Unfortunately, the high cost of production means that this is not a long term option. This is why buyers and consumers must be persuaded to pay more for farmed fish and recognise the benefits of doing so.

Without a change to the market strategy, then the cod farming industry can only hope that estimations of cod stocks are wrong and that renewed fishing activity will bring about further cuts to fishing activities. Equally, market demand for cod may increase as more processing companies consider switching back to cod from Alaskan pollock. Pollock is currently seen as the sustainable option but increased demand appears to be having an adverse effect on stocks and consequently lower fishing quotas. Increased supplies of wild caught cod may seem a more attractive alternative. Prices of cod in the retail sector remain low. Frozen fillet can be bought from the mainstream retailers for less than £6/kg and frozen blocked cod for less than £5/kg. Fresh (which may have been previously frozen) is still selling for under £9/kg. These prices are unrealistic if the fish are farmed (although the one store currently selling farmed cod in the UK is promoting farmed cod at £9/kg, a saving of £3/kg – see our website).

This is exactly why farmed cod must be positioned differently in the marketplace and why the Bocuse D’Or is a major missed opportunity.

Consuming loss:  According to IntraFish, although European salmon production is predicted to rise dramatically in 2009, the combined extra volume from Norway, Scotland and the Faroe Isles is not expected to cover the shortfall in Chilean production. The Norwegian Seafood Federation (FHL) has considerably downgraded Chilean production by 150,000 tonnes with Europe expected to produce an additional 110,000 tonnes. Norway is forecast to boost production by 90,000 tonnes, the Faroes by 13,000 tonnes and Scotland by 7,000 tonnes. FHL’s Edmund Broback suggests that European producers will now have a chance to capitalise on this shortfall, however we, at Callander McDowell, are not so sure.

Whilst there is no doubt that there is a global traffic in farmed salmon trade, most European production is sold within Europe whereas most Chilean production finds its way to North America. This means that any extra production will originate in Europe whereas the shortfall will occur in the US market. Whilst this is not an insurmountable obstacle in itself, there are other factors which may make it harder to exploit this opportunity.

The biggest obstacle may be the current price of salmon. Mr Broback says that despite the financial crisis, demand for salmon remains strong. He suggests that although people are not dining out as much, they are buying salmon to cook at home instead therefore maintaining demand. This strong demand will, he believes, keep prices high.

The problem is that high prices suppress demand.

One of the reasons why Chilean salmon has found success in the US market is that it is affordable. The economics of the Chilean supply chain makes farmed salmon an everyday meal choice. If the price of farmed salmon should increase, then US consumers may look for cheaper alternatives and there are plenty from which to choose. Higher priced European salmon, exported to the US, may not conform to the Chilean model and be too expensive for the typical US consumer.

We are already starting to see salmon prices increase in the UK market. With consumers already under pressure to cut their shopping bill due to the general recession, price rises would be an unwelcome development. Last time prices rose, many processors stopped buying farmed salmon and substituted Pink or Chum salmon in its place. More products than ever contain these cheaper Pacific species. Those suppliers wanting cheaper farmed salmon have opted to source from Chile. This salmon may now disappear from the European market altogether as Chile focuses on servicing its primary markets. Instead, producers may look to source locally instead. Just this week we have come across an example of cheap frozen salmon fillets packed from locally produced fish. Although the salmon comes from an area which is usually linked to premium pricing, it would seem that the product consists mainly of less desirable cuts, which would help justify its cheaper price. Thus European production would replace that originating from Chile in the European market. Whether the same happens in the US will depend on such factors as the exchange rate and whether consumers are tempted to buy alternative species instead of salmon. Currently, many US retailers appear to be promoting tilapia and basa products. In the current economic climate such cheaper products may attract more cash strapped consumers and thus offset the shortfall in Chilean supply.

It could be too simplistic to expect that the shortfall in Chilean production may be taken up by increased European supply. The world is now a very different place and there is no telling how consumers might behave.

The winners are: Congratulations to the Anstruther Fish Bar, winners of this year’s ‘Fish and Chip Shop of the Year’ competition. The award is well deserved and long overdue. Regular readers may remember that we tipped Anstruther Fish Bar to be winners in reLAKSation no 371.

The news of the award gained a great deal of coverage in the mainstream press most of which was based on the contents of the SeaFish press release. However, what caught our eyes was the report of the competition that appeared in fishupdate.com.   

According to this report, the ten regional finalists were judged on areas such as customer service and product quality as well as their commitment to building a sustainable future for the industry by sourcing their fish from well-managed stocks. The judges said that they were impressed with the Anstruther Fish Bar’s menu of ethically sourced fish. This includes North Sea Haddock, Pittenweem (the next village along the coast) prawns and Shetland organic cod from the world’s first sustainable solution to wild fisheries.

We are amazed that the judges were impressed by such ethical sourcing especially as the world’s first sustainable organic cod farm in Shetland went bust last April, three months before the closing date for entries for the competition.     

We have to admit that no-one from Callander McDowell has visited the Anstruther Fish Bar this year and therefore we can only comment on what we see now but whilst the Anstruther Fish Bar’s website has been updated to include news of the their award, the menu appears to be at least a year old as it includes details of their award for Scottish Fish and Chip Shop of the Year from January 2007.

The webpage link to the menu discusses sourcing and includes the entry: Organic cod –from Johnsons Seafarms in the Shetlands – the world’s first organic and sustainable source

Whilst the menu lists: Shetland Organic Cod – Delicious cod from the world’s first organic and sustainable source – a viable and natural solution to wild cod fisheries www.nocatch.co.uk

No doubt their menu will be updated shortly to highlight their new award and presumably, Shetland cod will disappear from it. What puzzles us is that the judges, who are presumably knowledgeable of the industry all remained unaware that Shetland organic cod was no longer available from Johnsons/NoCatch. It does bring in to question the judges’ ability to assess some of the judging criteria. However, this must not detract from this award as the Anstruther Fish Bar are worthy winners. 

The Fishpdate.com article also reports that SeaFish projects manager Andy Gray said that the Fife winner was unlike any other fish and chip shop. It had a picturesque harbour setting and second to none service.

We can only wonder whether Mr Gray has actually visited the Anstruther Fish Bar. It is certainly situated in a picturesque harbour setting but it is not unique. In fact a few steps down Shore Street is the Waterfront Fish and Chip Shop. In fact, the Waterfront has a better view of the harbour than the Anstruther Fish Bar which looks down the pier.

The Waterfront chippie also has excellent service, which is quick and efficient. It is possible that if Mr Gray has visited the Anstruther Fish Bar, as a member of SeaFish he may have avoided the long queues which plague the Anstruther Fish Bar especially at the height of the season. Service can be slow. However, this is the price of popularity.

What does distinguish the Anstruther Fish Bar from the Waterfront chippie is the quality of the fish and chips which are far superior not only to those at the Waterfront but from many other fish and chip shops across the country. This is what really sets the Anstruther Fish Bar apart from the rest and makes them a winner and worth the sufferance of a long queue.