Callander McDowell
Callander McDowell
reLAKSation no 400
Cod is dead. Long live cod: Steinar Olaisen, founder of Nova Sea, North Norway’s biggest aquaculture company, angered Norway’s cod farming industry this week with a declaration that cod farming is dead. Mr Olaisen told IntraFish that millions upon millions of krona have been poured down the drain in pursuit of what he describes as the commercialisation of an incomplete species. He said that the industry has been over-optimistic and thought that the biological challenges would sort themselves out but he admits that they have been very, very wrong. He claims that the industry was just not ready to face the challenges, however he did think that if the biological issues could be resolved, then there may be opportunities for cod farming to be resurrected within the next five to ten years.
One of the first to respond to Mr Olaisen’s conclusion was Sveinung Sandvik of the Norwegian Seafood Federation. He argues that Mr Olaisen’s analysis of cod farming is flawed. He suggests that the current difficulties are not due to biological issues but are simply the result of a collapse in cod prices. This view is echoed by Harald Dahl, chairman of Cod Farmers, who told IntraFish that the nosedive of cod prices has nothing to do with cod farming.
However, Mr Olaisen has garnered some support for his view. Aslak Berge, analyst with First Securities, said that it is important to listen to Mr Olaisen because he has invested heavily in cod farming and now wants out. Mr Berge asks why anyone would want to continue investing in an industry that loses NOK 15 for every kilo of cod produced.
We, at Callander McDowell, can understand both points of view. We have concluded that whilst both sides are right in their conviction, we also believe that both sides are just as wrong.
Cod are not salmon and thus the economics of what is possible with salmon should not be applied to what might be possible for cod. For example, Mr Sandvick argues that in the 1980’s the cost of production for salmon was very high, now it has been reduced and the same will happen for cod. We are not so sure especially as the hatchery costs for marine fish such as cod will always prove to be a cost obstacle. The biological and financial aspirations for cod farming were thus always going to be challenging but not impossible.
At the same time, the original model for cod farming assumed that wild cod availability in the marketplace would decline reducing the differential between the market price and the cost of production. Mr Olaisen says that salmon does not have a direct competitor from wild fish. This may be true for Atlantic salmon but the increasing flow of Pacific species to the European market is placing increased competitive pressure on the farmed salmon market. The difference between salmon and cod is that the Pacific salmon seem to command a premium price whilst cod do not.
We have previously argued that the current low price of cod is due to the resurgence of supplies whilst demand has stagnated because consumers have been deterred from buying the fish by the messages of gloom and doom emanating from the environmental lobby. However, we’re not so sure that stimulating demand will be enough to help cod farming. This is because prices are never going to rise sufficiently to overcome the high production costs. Instead, we agree with Mr Oliasen in that the industry must define what it wants from cod farming. He says that possibly it must be a supplement to wild catch fisheries rather than a competitor. He is right. We firmly believe that for the time being, cod farmers must create a separate market niche which is clearly differentiated from the wild cod.
Of course, this was never going to be easy. To most sections of the market, cod is cod, irrespective of its origin or method of production. The industry has already gone through the debate as to the merits of promoting wild or farmed cod only to find that the market tends to price both the same. Attempts to generate a premium for farmed cod have failed because the farmed tag is just not enough of an incentive to persuade the market to pay more.
We have previously referred to the cod farming conference held last year in Reykjavik in which Whitefish Marketing Manager for NSEC, Karin Olsen, defined the various types of Norwegian fresh cod that comes to market. These include wild, farmed, ranched and Skrei. Ms Olsen described Skrei as cod from the Barents Sea that comes to the coast of Norway and becomes the ‘Miracle’ fish.
The NSEC website furthers describes Skrei as ‘the diamond of the cods’, ‘well known and loved fish with long traditions – a cultural fish’ and ‘has a good story with lots of drama’. Being a diamond with such a tradition, consumers must be willing to pay a large premium for this ‘Miracle’ fish, especially as it has such a relatively short season. We, at Callander McDowell have only seen Skrei for sale once in London and the price was higher than comparative cod. However, the other fish sold by this one retailer were also priced higher than elsewhere in the market suggesting that the high price was more indicative of the customer base rather than the worth of the fish.
One champion of Skrei in London is the chef Pascal Proyart. He told Caterer and Hotelkeeper magazine last year that Skrei ‘are barely more expensive than standard cod.’ We have therefore asked a number of contacts in Norway to help ascertain what the price differential is between Skrei and standard cod in Norwegian fishmongers. It is not something that seems to be known but one respondent, whose help was much appreciated, has suggested that outside Oslo there is no difference in price. So much of a miracle!
The seeming absence of any premium for Skrei cod just reinforces the challenge ahead for the cod farming industry. The only way forward is to differentiate their fish from the rest of the market in the hope of a premium price. Without this premium, Mr Oliasens prediction may eventually come true. The only other hope is that the resurgence of wild caught cod stocks is just a short-lived phenomenon and hence cod will again be in short supply.
To buy or not to buy: In the last issue of reLAKSation, we discussed the decision by Compass Group North America to supply only fish that meets the sustainable credentials set out by the Monterey Bay Aquarium Seafood Watch programme. We argued that we were not that impressed with the criteria that Seafood Watch used to decide whether a fish species is sustainable or not.
One story that has caught our eye was the news that Andrew Mallison, the marine technologist at UK retailer, Marks & Spencer, is to leave to join the Marine Stewardship Council as standards licensing director. Mr Mallison told IntraFish that he has supported the MSC from the outset and was instrumental in putting forward M&S’s Plan A commitment to support MSC fisheries. Since 1996, Mr Mallison has managed the standards and quality of a range of over 25 species of seafood, both farmed and wild sourced from 20 different countries.
Mr Mallison’s departure coincided with the appearance in store of a new cook book entitled ‘Essential Fish & Seafood – From the Ocean to the Table’. This is available for sale at £5 or is free with purchases of three packs of fish or seafood. The cookbook comes with an introduction by the Marine Conservation Society (MCS - not be confused with the MSC). The MCS is dedicated to the protection of the seas, shores and wildlife that depends on them. Amongst other issues, the MCS campaigns for sustainable fisheries and to that end, it produces a ‘Good Fish Guide’ which is also included in the recipe book. The Good Fish Guide is based on a traffic light system – green for good, yellow for caution and red for danger, except to complicate the choice, there are two greens and two yellows with the darker green and lighter yellow representing the better choice.
There are two aspects of this guide that are a puzzle. The first is that whilst M&S label all their fish as ‘sustainably sourced’ and due to the hard work put in by Mr Mallison, we have absolutely no doubt that they are exactly what they say. However, any consumer picking up a copy of the cook book and then following the recommendations of the Good Fish Guide would find it difficult to find fish in M&S that they should buy. In part, this is because the guide has huge gaps in its recommendations. For example, the only swordfish listed are to be avoided. These are fish that are caught in the Mediterranean, the Indian Ocean and the Central & Western Pacific. Swordfish sold by M&S are sustainably sourced from the North West and South West Atlantic but the MCS make no mention of this fishery so consumers might be confused as to whether the fish are sustainable or not, especially as the cook book includes a recipe for swordfish. It’s omission from the guide does not mean that they are not sustainable. However, the cookbook does state that the views expressed are those of the author and that readers are urged to consult a relevant and qualified specialist for individual advice. M&S also exclude themselves of any liability for any errors. Despite this, one can only wonder why M&S are giving away a cookbook that recommends consumers to avoid the exact fish that M&S sells.
Interestingly, the Monterey Bay Aquariums Seafood Watch Guide lists five swordfish fisheries, two of which are given a Best choice green listing, two others, a yellow good alternative whilst only one is listed as best avoided. The four preferred choices are all from US fisheries whilst the one that is to be avoided is simply anything that is imported!!!
Yet, what is even more interesting is that the Good Fish Guide lists 13 fisheries that are MSC certified. Of these only six are given the best choice rating by the MCS and three more are given the next best choice. The remaining 4 fisheries are listed as producing fish that should be eaten with caution because they are at risk of becoming unsustainable due to environmental, management or stock issues. The MCS recommends that fish from these stocks should be eaten only occasionally.
These four MSC certified fisheries are Cape hake, Pacific halibut, Herring and Mackerel.
We can only imagine what sort of message this is giving to consumers. The MSC have certified these stocks as sustainable, yet the MCS says that they should be eaten with caution because they are at risk. Either they are sustainable or not. If these two organisations cannot agree, then how are consumers supposed to know what to eat and what not to eat? Judging by their cookbook, it seems that even M&S are not sure!