reLAKSation 6.
Salmon sales: According to Intrafish, Terra Seafoods reported that salmon exporters are currently experiencing a small trough in sales. Yet only two days beforehand, the Norwegian Seafood Export Council had announced an eighteen percent rise in salmon exports to the EU for January.
How can exports be at almost a record level one week and then in the doldrums in the next? Some of the blame has been levelled at the Scottish industry who have been reportedly off-loading unwanted large fish at low prices. This has discouraged Norwegian exports due to concern about selling below the minimum price. However, perhaps the real explanation for the discrepancy between the two reports is the way in which the statistics have been presented
Statistics are a useful tool but equally they can be manipulated to give the most positive spin. In this case, the 18% exports growth can be attributed to the fact that the increase is year on year; that is the data from January 2001 is compared to that of January 2000. What this does not take into account is what has happened in between. More importantly, it misrepresents what has happened to exports from one month to the next, i.e. from December 2000 to January 2001.
As the salmon industry is continuing to expand, year on year statistics will always be more impressive than month to month and thus they distort what is perceived to be happening in the marketplace.
One example of how it is possible to use such statistics to give a positive spin would be the recent EU generic salmon campaign. This was run in three phases in France, Germany and Spain.
The first phase ran in December 1998. NSEC found 45% of French consumer surveyed said that they had seen the advertisements and 60% of these said it made them want to buy salmon. In Germany, these figures were 22% and 11% respectively. However, NSEC also said that they had experienced difficulty in collecting actual results. Finally, they said that sales of salmon in Barcelona increased by 51.6%, whilst those in Madrid rose by 17.5%.
The problem with these results is that they are year on year and therefore it is impossible to gauge whether these significant increases were due to the campaign or not. It is quite possible that sales were the same or even higher the previous month and that the campaign had absolutely no effect. No results at all were released for the French or German markets.
The second phase ran over Easter 1999. 39% of German women recalled seeing the campaign, a marked increase on the 22% from the first round. Consumption of salmon increased by 10% amongst those who had actually seen the advertisements, equating to a 2% increase for the whole of Germany. No information about the Spanish or French markets were released.
The third phase of the campaign took place during the autumn of 1999 but no results were ever forthcoming.
Professor Oystein Myrland of the University of Tromso was commissioned by NSEC to analysis the impact of the promotional campaign in the three target countries, Germany, France and Spain and to assess whether the NOK 50 million a year spent on the promotion has produced an acceptable return on investment.
Professor Myrland has said that sales of Atlantic salmon in the German market have increased by 2% a year in a total market of 90,000 tonnes. He said that this increase was a significant improvement and also suggests that there are signs of progress in the French and Spanish markets as well, although he does say that the figures currently available were not detailed enough to allow sound judgement to be made.
However, if the German market is investigated further it might suggest that the market for salmon in Germany had been over-stated. (FIS - 16.9.99) Import and export figures released by the German Federal Office of Statistics in Wiesbaden record that in 1998, salmon imports from Norway decreased by 15% from 62,798 tonnes to 58, 328 tonnes. At the same time, imports from the US increased to 6,112 tonnes, from Scotland to 4,881 tonnes in addition to 302 tonnes of Chilean salmon and 190 tonnes of Canadian salmon. This makes a total import of 71,890 tonnes, as compared to a figure of 82,000 tonnes produced by NSEC. However, of more interest is the fact that out of the 71,890 tonnes of salmon imported into Germany, 42,847 tonnes was re-exported to France and Italy. This means that German consumption in 1998 was only 29,000 tonnes, far short of the 82,000 tonnes quoted by NSEC and the 90,000 tonnes suggested by Professor Myrland for 1999. The reality of the statistics is that there is no clear understanding as to whether the EU generic campaign has had any effect at all. No data has been released for Spain or France and that for Germany is extremely suspect.
This is further complicated by examination of export figures available on the FHL (Norwegian Federation of Fish and Aquaculture Industries) website. This shows that in the period Jan-Aug 1998 Germany imported 19,221 tonnes of Norwegian salmon. This dropped to 17,915 tonnes over the same period in 1999, down 7%, but in 2000, it rose back to 19,155 tonnes, up 7%. This is not that encouraging in terms of promotional spend, since over the three years, there has been no apparent growth. It is possible that extra growth could be attributed to imports of salmon from other countries, but this is unlikely.
A similar pattern of sales is also apparent from data of exports to France. The equivalent figures were 35,664, 34,105 and 35,939 tonnes for the three years. This translates into a decline of 4% followed by an increase of 5%.
The data for Spain does however show a different pattern, although this is just as discouraging. The data for Spain was 9,436, 12,660 and 10,260 tonnes. A change of +34% followed by a 19% decline.
Is it possible that consumers in these three countries are simply just not getting the message? Perhaps the generic campaign, if it is to continue needs to change its focus. Could it be that the marketeers are just to confused by their own statistics?
Cartels - a lack of vision?: Professor Terje Vassdal of the Norwegian College of Fisheries has called for Norway and Chile to form a Cartel to protect their interests once the EU salmon agreement ends.
Professor Vassdal said to Fiskaren that if Chile doubles production, there will be a drop in prices, which could spread to Europe. A cartel would help regulate production, ensuring that prices fall slower than production costs. Unfortunately, this suggestion is simply an extension of the idea of Producer Organisations. POs will never work and neither will a cartel. This would be a massive bureaucratic nightmare, which would be impossible to manage. More importantly, it is totally unnecessary.
The concept of either the introduction of Producer Organisations or a Cartel is one which is promoted by those who are still governed by outdated production led philosophies. It is only perceived that production should be regulated by those who lack the vision of a market driven industry. This can be seen by Professor Vassdals final comment. He said that in relation to the EU agreement, Norway carries the cost, whilst others share the benefits. A market driven strategy would be one in which the salmon industry would not just carry the cost but also share the benefits. In fact, in a truly market driven scenario, the benefits would not even be shared.
Against a background of forthcoming North Sea closures, which prohibit all fishing activity by European vessels, it is clear that supplies of fish from farming are increasingly important. Why would the farming industry want to tie an enormous millstone round its neck, when it should be further expanding to fulfil an insatiable market for fish.