reLAKSation 54.
Narrow-minded!!!:
News that some European salmon farming companies are considering bring a dumping
action against Chilean producers can only be met with despair. How can the
salmon industry plan for the future when at every turn, there is someone looking
to blame others for their inability to compete?
In common with all the
past dumping actions, this developing case is not actually about dumping but
rather highlights a continuing reluctance for many to adopt a market-led
approach to the marketplace. Instead the focus remains on the production-led
strategies of old and then when the marketplace does not respond as expected,
yet another dumping action is initiated.
This readiness to
instigate a dumping case at the first sign of any dissatisfaction with the
marketplace might suggest that it cannot be too long before the EU Commissioner
for Trade, Pascal Lamy, will have to establish a trade unit dedicated
specifically to salmon dumping actions.
Yet, there are certain
aspects of this case, which are both different and surprising. Firstly, the
amount of Chilean salmon coming into the European market is still very small and
cannot have any real effect on prices. In addition, most of the fish are frozen
and therefore are not directly competitive against European production of fresh
salmon.
Secondly,
the spokesmen for the European salmon representative
organisations, who previously have been at the forefront of
past dumping actions, appear to have no knowledge of this action.
Instead, there is a suggestion that Norwegian owned subsidiary companies
are responsible, as they believe that they may have been the target for
discrimination as the European salmon agreement allows Chile free access to the
European market, whilst they are subjected to volume and price controls.
Perhaps, they believe that Chile should be subjected to the same restrictions as
themselves.
However, whilst we have
sympathy for Norwegian producers, we at Callander McDowell, would prefer to see
the European salmon agreement put out with the trash, where it belongs, rather
than try to subject Chilean producers to similar and unnecessary controls.
According to Intrafish,
Phillippe Barbe, Managing Director of France’s leading importer of salmon,
Ocean Direct has said that if Chile is accused of dumping then every salmon
producing nation should also be accused. He has suggested that the claims made
by the European companies pursuing this action are both “unfair and
hyprocritical” This is because the low prices mean that at one time or
another, all salmon companies must have been selling at below the cost of
production.
We, at Callander McDowell,
would take this further and say that dumping margins are a natural artifact of
farming a cold-water species over a long production cycle and as such they will
always be apparent. This is why every previous investigation of dumping, whether
it be in Europe of the US has uncovered dumping margins, but none have ever been
significant enough to demonstrate that dumping, in the true sense of the
meaning, has been proven.
It is worth remembering
that the low dumping margins found after the 1996 investigation were
insufficient to persuade the EU to implement the high tariffs demanded by the
European industry. It is also why the EU offered Norway the salmon agreement as
a compromise deal. Had Norway actually defended itself, rather than try to
demonstrate its responsible approach to salmon farming, it is possible that the
EU could have been convinced of Norway’s innocence and the EU salmon agreement
would have never have been conceived. Free trade would have been allowed to
continue.
We believe that these new
accusers would be better served by investing time and effort in developing new
market-led strategies to help improve margins, rather than try to penalise their
competitors and more importantly, the consumers.
Where we
first tread!: Graeme Dear, Managing Director of Marine Harvest told the
Coastal Futures 2002 conference that the Scottish salmon industry is well placed
to meet the environmental challenges of the future and this may include moving
far out from the coast. According to IntraFish, he painted a futuristic of a
scenario where redundant oil platforms could be the operational hub of huge
farming production.
Yet however futuristic
this idea may seem, it is certainly not new. Although regular readers of
reLAKSation may remember that we proposed such a scheme back in issue 21, we
actually first proposed the concept at a conference in Brussels in 1995.
Increasing demand, diminishing supply was intended to consider the various ways
in which farming might exploit a growing demand for fish and seafood at a time
when supplies of wild caught fish are in decline. Seven years on, this picture
has changed little and the opportunities for open sea farming are as great as
ever.
Dr Dear may suggest that
before the industry will be able to meet the challenges of such open sea
farming, technology will have to significantly advance. Yet, we believe that it
is not the technology, which is the limiting factor but the need for cross
industry co-operation. Due to the different size of the types of business
involved, such co-operation may require a catalyst to help it work and this is a
role, which Government could easily undertake, if it has the will to do so.
The benefits are clear.
The oil companies, who, according to the House of Lords Science & Technology
Committee, face a bill of over Euro 100 million a year for up to 25 years, could
alleviate this burden with incentives to encourage re-use. Farming companies
would also benefit from moving operations away from the more environmentally
fragile coastal areas. In addition, large scale, low-density farming could be
operated on an all-in, all-out basis, which would minimize welfare concerns.
Most importantly, open sea
farming would enable farming companies to contract out harvesting and other
management operations to commercial fishing vessels. At a time when many fishing
communities are threatened with the further decommissioning of fishing vessels
due to the continued decline in fish stocks, such contract opportunities could
help maintain fishermen’s income.
We, at Callander McDowell,
have found ourselves isolated when trying to promote this concept. Even the
ongoing Aquaculture enquiry appears to have ignored this opportunity. We would
hope that if Graeme Dear really believes that redundant oil platforms present an
opportunity for future development, then he will show the way forward.
Talking
prices up: Norsk Fiskerinaering reports that the leaders of Norway Royal
Salmon, Panfish, Fjord Seafood and Marine Harvest have tipped prices to rise
strongly in the third and fourth quarters of 2002. Odd Steinsbo,
Arne Nore, Paul Birger Torgnes and Marit Solberg expect prices to rise to
an average of NOK 26.14 and NOK 27.16 respectively.
We, at Callander McDowell,
would like to share their optimism, but such rises appear to be against all the
current and past trends. As this is written, prices continue to decline, falling
below NOK 20.00. During the last decade, prices have always shown a decline
during the summer but have recovered in the run up to Christmas. However, this
pre-Christmas rise has diminished and prices have consistently failed to
recover. Why should this year be any different?
There has already been a
suggestion that there may be a shortage of the larger sizes during the second
half of the year.
However, as overall production has continued to grow, it is unlikely to
have a significant effect on prices, especially as frozen salmon for smoking can
be supplied from outside Europe.
Even if we are wrong, we
cannot see that prices can recover to above NOK 26.00. During 2001, prices
reached this high on only two occasions and neither could be sustained for more
than a few days.
We will continue to
monitor prices as we hope we will be wrong.