reLAKSation 50.
Positive Impact: It’s wonderful news that the Salmon Management Company has won the award for ‘Greatest positive impact on the supply chain’ at the Scottish Food and Drink Excellence Awards. Fishupdate.com reported that they have boosted their exports of salmon to France by 228% over the last three years.
Su Wood, Sales & Marketing manager told IntraFish that French consumers held their Label Rouge fish in high esteem, as they are a high quality, top of the range product, which has a clear point of difference generating a significant premium price and with less price fluctuation.
Our congratulatory theme must come as something as a surprise to some sections of the industry, especially in Scotland. This is because there is a perception that our commentaries, such as that in the last issue of reLAKSation, which questioned how much premium could be generated by the Scottish label, are intended to undermine the Scottish industry. Of course, nothing could be further from the truth.
The reality is that we are staunch advocates of the salmon industry and are keen to help ensure that it has a long and fruitful future. However, this does not mean that everyone has to agree with every claim made about its development. Clearly, the Salmon Management Company has done well to achieve a premium price for their exports to France. However, this has been boosted by the addition of Label Rouge. Yet, exports of Label Rouge salmon to France amounted to only 4,829 tonnes during 2001. This is such a tiny amount compared to both total Scottish and global production and therefore, whilst welcome, does not indicate a similar success for the whole industry. As we pointed out previously, the evidence from the retail sector is that consumers are not paying a premium price for the fish they buy, irrespective of its origin. Currently, the only price premium obtained in the UK marketplace is for organic fish and this price differential is yet another indication of the opportunities of the marketplace, which are continuously being ignored because of a long time persistence to retain the industry’s damaging past production-led strategies.
The market is for salmon is extremely diverse and there is a huge range of opportunities to be exploited. Just as there is a market for top of the range premium product, so there is for the mass market. One does not have to impinge on the other. The quicker that these opportunities are recognised, the quicker that the industry can address the real issues of market development.
Not worth the paper!!: The BBC TV Landward programme suggested that the organic status given to salmon farms is not worth the paper it is written on. Interviewed in the programme, environmentalist Don Staniford said that the public was being seriously misled by the ‘consumer con’ of organic salmon and that the Soil Association standards are a joke.
However, Hugh Raven of the Soil Association countered saying that the standards are transparent and are constantly evolving, a view echoed by Brian Simpson of SQS, who viewed that the standards are a compromise, which need revisiting.
In trying to establish any set of standards, it is inevitable that various criteria will have to be reassessed as continual improvements are sought. Certainly, this would be necessary with fish as the growing conditions are totally different from that of the usual organic sector. Yet, it is not just the standard for fish, which needs to be improved. The BBC TV Countryfile programme recently highlighted the growing conditions for organically farmed duck. Unlike their intensively farmed counterparts, which are given no water in which to swim, the organic farmer could only provide a child’s paddling pool!!
Critics of the organic standard for fish should however be reminded that some species would already meet the highest standards. Warm water fish, such as carp are grown in ponds, which are treated more like arable farming than a livestock system.
Ponds are primarily treated with lime and animal manures to encourage the growth of microorganisms, the main food source of the fish. This means that no manufactured food is used. As there is no running water into the pond, stocking densities are kept low so that the fish are almost free range. Disease is almost non-existent, so medicinal use is extremely rare.
It might be suggested that carp are not really a commercial species like salmon, yet there is a potential market from ethnic groups, which is not really being exploited. However, unlike salmon, it is probably not profitable to grow them in monoculture and the real opportunities for organic carp lie in the possibilities for integration into the existing agricultural environment.
Stability?: Per Dag Iversen has told Fiskaren that the Norwegian industry is now confident that the they, together with the Scots and Irish, will achieve an alternative to the current salmon agreement. He also believes that other producing nations, including Chile, should be interested in participating in an arrangement that would prevent the collapse of the salmon market. One possibility would be that the Norwegian arrangement of controlling production through feed quotas should be tested in other countries. He said that the current aim is to agree on how the salmon market can maintain the strongest possibile stability.
We, at Callander McDowell, would suggest that this idea of trying to seek a strongest possible stability is like trying to find a needle in a haystack and in our view would be totally unproductive. The only reason that the salmon market would collapse is if the industry continues to follow its production-led strategies rather than focus on those, which are more market-led.
The market will only collapse if the industry continues to produce salmon without consideration of who will buy it. This can happen irrespective of whether a new salmon agreement or industry wide feed quotas are put in place. This is because such measures only control how much salmon is produced and not when it will be harvested. It is therefore possible to restrict production, but still bring about a collapse of the market. This would happen if the majority of salmon were harvested at the same time. It is not overall production, which leads to a collapse but the local availability. Too much salmon on the market at any one time leads to a price fall in the same way that too little can lead to a price rise.
The only solution is to ensure that the salmon market is sufficiently diversified so that too much salmon cannot reach the same market at the same time. This is why it is essential that more market-led strategies are adopted, which can identify different and non- competitive potential markets.
The EU salmon agreement has never been a success. After all, prices have collapsed throughout its duration. It will be a wasted effort to seek an alternative, when time could be better spent at the development of the market place.
Mr Iversen also suggested that a new agreement would help continue to fund the EU generic promotion, yet even with this promotion, higher prices have not been sustained. This is because the promotion is a reflection of the production-led strategies. This means that the salmon the industry wants to produce is advertised; irrespective of whether this is what consumers want.
What is now needed is for the industry to recognise that the salmon market is extremely diverse presenting many yet unexploited opportunities. The simple message is focus on the market not on production. This is what will bring the ultimate stability.