Callander McDowell
Callander McDowell
reLAKSation no 407
Overproduction = undermarketing?: The salmon farming industry has hardly had time to draw breath since the end of the EU Norway trade dispute for the accusations of over-production to raise their ugly head. This time the finger pointing originates from Canada where the well respected Glen Cooke of Cooke Aquaculture claims that Norway was close to a complete disaster that has only been avoided by the problems in Chile. Mr Cooke told IntraFish that Norwegian over-production is the greatest untold story.
Mr Cooke said that as yet he doesn’t know the final numbers but that an industry cannot sustain growth of 15% or more. He added that you cannot take an industry that is producing 600,000 tonnes and then produce another 100,000 tonnes and expect there to be a home for these extra fish. Now Norway has issued a ‘bunch’ of new licenses which means even more fish will be produced. Mr Cooke says that Norway has found a short-term home for some of the fish in the US but he asks what will happen when Chilean production starts to increase and yet another 100,000 tonnes of salmon comes on the market. His answer is that the price of salmon will fall and would have already done so if Chilean production had not declined.
We, at Callander McDowell, find it rather disheartening that a major industry figure such as Mr Cooke is concerned about so called over-production not only because it shows that the industry still has not moved on, but also because there is still this focus on production rather than the market.
According to Greenpeace, 71-78% percent of world fisheries are ‘fully exploited’, ‘over-exploited’ or ‘significantly depleted’ with some species fished to near commercial extinction. These figures may or may not be correct but clearly many fish stocks are exposed to a significant fishing pressure. Against this background, we would again repeat comments we first made over fifteen years ago. With such pressure on fish stocks, how can any aquaculture industry be over-producing?
The problem is not over-production, it is UNDER-MARKETING and if the Norwegian salmon industry, (as well as salmon producers elsewhere), is guilty of anything it is not over-production but rather a readiness to bury their heads in the sand and ignore the need to continue developing the marketplace. This does not mean that no market development takes place as the Norwegian Seafood Export Council is very active in this area. Unfortunately, their remit means that the primary push is on the Norwegian origin rather than the salmon itself. Equally, NSEC is all about promotion and not the sort of product development that could diversify and widen the market.
The salmon industry also tends to have a rather blinkered vision of the opportunities marketplace and this is understandable because production companies are exactly that and as such focused on production so that it is easy to miss the wider picture. Mr Cooke told IntraFish that Norway was never a big concern for his company because of the duty on dressed head-on salmon coming into the US market. He points out that this duty will remain until 2011 and ‘hopefully beyond’.
The Norwegian industry had from time to time considered the problem of the duty on salmon into the US market but had not done much about it, primarily because most production found a market elsewhere. The original case was so long ago that Norway (and us) had forgotten that unlike the EU measures, only whole salmon was included. This meant that, as we have now found, salmon fillets could be freely exported from Norway to the US and it makes more sense to export fillets than whole fish. Mr Cooke’s hopes that the duties will remain are pointless because the flow of fillets to the US will remain unhampered.
In much the same way, Norwegian producers could have circumvented the EU measures by exporting under the 1540 codes rather than the usual 3020/40 codes covered by the trade measures. As it happened the blinkers remained in place and the Norwegian industry failed to exploit this opportunity.
Mr Cooke sees a fall in salmon prices as a disaster but prices will fall since whatever the various analysts claim, current price levels are not sustainable. It is easy to forget that much of the salmon sold is not sold at the touted weekly prices but rather on contract price which will be much lower. If contracts are renegotiated at the current price level, the sure certainty is that demand will fall. It is easy to forget that most consumers buy salmon because it is relatively low cost value for money meal choice. If this changes, so consumers will change to something else for their meal choice.
Even Mr Cooke has stated the obvious He says that ‘The markets have not been developed’. He adds that the markets are growing about 3-5% whilst production is growing at 15%. Production he argues should be cut to 5%. We disagree. Grow the market by 15% to match production growth rather than suggest that production growth should be reduced to match the market.
We might have had some sympathy for Mr Cooke since the Canadian industry has suffered its own problems and now that it is finally successful, he sees the Norwegians entering into his main market, but yet whilst Mr Cooke criticises Norway for its growth, he too is looking to expand his business and production. He has already widened his operation to Chile and is currently looking to buy more aquaculture businesses there. He said that he wants to be part of the Chilean consolidation and wants to end up with a chunk of Chilean production. There is nothing wrong with this for Mr Cooke is entitled to his own aspirations, just as much as Norwegian (and Scottish, Irish etc) companies are, as long as there is a clear forward plan as to what such expansion is expected to achieve.
Our view is that the whole point of farming salmon (and other species) is to bring cheap and affordable fish in plentiful supply to the global marketplace. Is this too much to hope for?
Who ate all the pies?: The answer to who ate all the pies is the good people of Stockton on Tees in the North East of England. The town has an abiding passion for them according to the Times which is why the town was named as the country’s capital of childhood obesity by the Department of Health. One in six children starting at primary school is obese and more than one in three 11-year olds are either overweight or obese.
This coincides with news from the Glasgow Herald that the Scottish Government’s flagship policy to introduce healthy school meals appears to be foundering after new figures show that uptake of school meals has slumped to an all-time low of 39% in secondary schools. In primary schools the figure is 48% no doubt helped by restrictions on such young children leaving school at lunchtime. Older children have voted with their feet looking for burger vans and local chip or kebab shops.
This news comes at a time when Fisheries Secretary Richard Lochhead’s call for Scots to eat more fish is still fresh in our minds. He is keen to see fish consumption promoted as a healthy and simple part of a balanced diet. Yet this is a message that is clearly not getting through to the younger sections of the population who still seem to prefer calorie loaded foods.
This is borne out by the latest research from SeaFish who found that only 12% of 16-24 year olds eat fish as compared with 18% of 55 year olds. We appreciate that the best spin possible has to be given to this news with headline claims that over twice as many older people eat fish but even so an 18% consumption rate is not so great for that age group either. We suspect that this data is not accurate and the figures for the older age group are actually higher. It is already well documented that fish consumption is heavily weighted in favour of older consumers.
What is still unclear, at least as far as we, at Callander McDowell, are concerned is whether older age groups eat fish because they did so when they were young and thus continue to do so or whether when they reach a certain age, they start to eat fish never having done so before. We still suspect it is the former, especially as Mr Lochhead previously reported that fish consumption has fallen but seemingly only time will tell if as older fish consumers pass on they are replaced by consumers or non-consumers.
Of course, the picture is not so clear cut. Consumers higher up the social scale are more likely to be fish consumers whilst those further down are not (except for fish suppers from the chip shop). Such consumption patterns (all-be-they not fish) are reported in the Times investigation at Stockton –on-Tees. In the world of the budget shopper at Castlegate in Stockton, the butcher says that he has only survived, whilst others closed, by selling hot, rich, juicy, precooked meat and poultry which vastly outsells raw, fresh products. Les the butcher says that ‘young un’s’ don’t want to go home and cook fresh joints. They can manage a pan of chips and that’s about it. He was advised by a health official about providing healthy foods but he said that his customers couldn’t care less about healthy eating. That is why his pies are so popular.
In the nearby fruit and vegetable shop, Brian said that most young people don’t recognise many of the vegetables he sells. It’s only older people who buy vegetables. As for the rest, they don’t know what half of them are, let alone how to cook or eat them.
The fact that there is no fishmonger represented tells its own story.
However, it is not all gloom and doom in Stockton-on-Tees. The local director of health says its time to move beyond excuses since it is not only the poor who struggle with their weight and equally, there are plenty of people in the poorest communities who manage to stay fit and healthy. The answer seems to be an integrated whole life programme covering all aspects of food and health. Just one example is a schools initiative in which school meal consumption is encouraged by a ‘Clean Your Plate’ scheme in which stickers are awarded for a clean plate at the end of the meal, which in turn has helped reduce portion size. Stickers are exchanged for prizes which reward the children.
We suspect that such integrated schemes are the answer to getting people to eat more fish and in many cases, to start to do so. The problem with isolated campaigns such as the Five a day programme for fruit and vegetables and the two a week one for fish is that to many people they are meaningless in the context of their existing lifestyles. It is not enough to change one part of their diet but rather their whole lifestyle that needs to be changed. Of course this is beyond the scope of the fish industry but it is something that does need to be encouraged otherwise there is a real possibility that as the existing fish consumers die, they will not be replaced.
Update: Our comments about the Edinburgh Taste Festival that were prompted by Mr Lochhead’s call to eat more fish led to a response from Steve in Tasmania It seems that there is also a week long Taste festival that takes place in Hobart. Like Taste Edinburgh it is a primarily a food festival but unlike Edinburgh it also hosts all sorts of other activities and events which means that it attracts a much wider range of people, including those who would not be so motivated by a food festival alone. This presents a much wider opportunity to put the food messages across to those who would not otherwise hear them. What makes the Tasmanian festival especially different from that in Edinburgh is that it is free and thus not limited to those who can afford it.
We have also heard from Brian Thomsen of Dansk Akavakulture who felt that our response to their concerns over imports were perhaps a little too simplistic. We would still argue that time spent fighting imports could be better spent on promotion. Perhaps, the difference in our views is down to what we mean by promotion and at what level it occurs. His reply follows:
Callander McDowell has quoted us for stating that we are concerned about the increasing level of import from outside the Community, and we are encouraged to stop worrying and to start focusing on promoting our fish.
We partly agree with Callander McDowell but the situation is slightly more complicated. We also believe in promotion, and it is a fact, that we need to invest more in promotion, but it is extremely difficult to secure the necessary funding on a community level. The EU aquaculture sector is still highly fragmented and we need to have economical support from the European Commission. We have actually been working on this for a number of years but we must conclude that it is easier to get funding for technical projects than for promotion and marketing. But we are encouraged by the resent communiqué from the council of ministers which clearly sates that it is essential to raise public awareness of the potential of aquaculture products to contribute to food security in a sustainable way, and the ministers encourages both the Commission and Member States to put in place without delay a strong communication strategy aimed at improving the public image of European aquaculture and its products. We trust this will make a difference.
But we also have to stress the importance of competing on a level playing field. On June 28th 2007 the Food and Drug Administration (FDA) of the USA announced an import control of farmed eel originating in China. This action was taken in order to protect American consumers from residues deemed as unsafe - primarily antifungal and antibacterial agents - which had been detected in a number of cases of imported eel. We have since witnessed a staggering growth in the import of frozen eel from China at prices well below our production costs and this effectively erodes our possibilities for investing in promoting. The Community eel market is now heavily over supplied, and we will call for trade measures in order to restore a level playing field.
We are also aware that the Turkish state is paying a direct production subsidy for aquaculture products and this is also creating unfair completion. This obviously also has to be corrected.
So yes, we have to invest more in promotion, but we first and foremost needs to restore free and fair trade.
Venlig hilsen/Best regards
Brian Thomsen
Direktør/Director, Dansk Akvakultur/The Danish Aquaculture Organisation. www.danskakvakultur.dk