reLAKSation 68.
Worse than protest group?: According to Intrafish, the EU and Norway have agreed to a replacement for the EU salmon agreement, although this new agreement is shrouded in uncertainty.
One reason for this uncertainty is that the EU salmon agreement should have been allowed to lapse when it reached the end of its term in September. It was intended to be an alternative punishment for the alleged dumping of salmon into the EU market. EU producers demanded the imposition of high tariffs, but imported salmon was perceived as being a valuable commodity to the EU and there was a resistance to its possible exclusion.
The EU salmon agreement has now been extended until February so that a new deal can be negotiated. Norwegian producers, whilst wanting free trade with the EU are concerned that some sections of the EU industry will seek to stop free trade through the submission of further dumping charges. According to ‘unnamed’ sources of the Norwegian fisheries magazine, Fiskaren, a hardcore of locally owned EU salmon farmers want to prevent imports of Norwegian fish. This is the same ‘underground’ group of farmers, who under the meaningless name of the European Salmon Producers Group have submitted a dumping action against Chile and the Faeroes. Their agenda is clear to see. They do not want to have to compete against imported salmon, irrespective of its origin. Sadly, the European Commission’s DG Trade is giving them the credibility to pursue this aim, by agreeing to investigate these unfounded allegations.
Yet surprisingly, the renewal of the salmon agreement and the associated dumping actions have little to do with dumping at all. The reality is that this hardcore of Scottish producers blame imported fish for devaluing the market image of the salmon they produce. They have always claimed that Scottish salmon is superior to any other salmon, something which consumers recognise and are prepared to pay a premium price for. Unfortunately, this claim, which can be illustrated by this advert from the now defunct Scottish Salmon Growers Association, has failed to materialise in the marketplace.
The Grocer March 9th 1996
Consumers largely perceive no difference between Scottish and imported salmon and as such pay a similar price for both. There are exceptions with a minority of producers managing to command a price premium for their fish, but this is a small proportion of total production. Even the prestigious Label Rouge covers only about 5,000 tonnes of fish.
These misguided Scottish farmers believe that if they can exclude imported fish from the EU marketplace, or even limit the volumes imported, then prices will rise. In addition, they hope that they will be able to obtain some differentiation between their salmon and that, which is imported. Such differentiation is unlikely to happen because consumers will only pay extra if they perceive that here is some benefit. In our modern marketplace, a Scottish label is insufficient reason alone to generate a price premium, especially as there is now plenty of evidence to suggest that most consumers do not even care about the origin of the salmon they buy. Sadly, this minority of Scottish farmers remain uninterested in what the consumer wants, preferring to enforce their own view of the marketplace on the global industry.
In many ways, the European Salmon Producers Group have much in common with the salmon protest groups because they are both intent on damaging the salmon by inflicting their own views on everyone else. However, it can be said that the ESGP are actually much worse because at least the salmon protest group are prepared to identify themselves and stand up to argue their case. The ESGP remain hidden behind European trade legislators, refusing to learn the lessons of the marketplace. We can only hope that DG Trade will soon begin to recognise that the ESGP are simply using them as an excuse for not competing fairly in the global market.
Buying market share?: Although the new salmon agreement is shrouded in uncertainty, it has been suggested that Norway is willing to pay a large annual sum to the European salmon industry in return for free market access. This would be used to fund a continuation of the European generic promotional campaign as well as funding Scottish and Irish producers to market their own salmon. In addition, funds would be available for lobbying and countering adverse publicity.
This proposal is little different to that of the current agreement in which the Norwegian industry funded the generic marketing campaign, except it would be extended to permit national industries to market their own salmon.
According to Intrafish, there has been no official response to this proposal from either side, however, it is unlikely that the Scottish industry will favour this idea. The EU salmon agreement has run for over five years and European producers have not seen any real benefit. Scottish salmon has faced increased competition as Norwegian salmon continues to command a dominant position in the EU market with imports starting to arrive from both Chile and the Faeroes. Consumers have had more choice, but differentiation has decreased. At the same time, salmon prices have continued to fall, despite the protection from the minimum import price. Why should a new agreement be expected to provide any better protection?
Equally, throwing money at the problem is not the answer. The past experience of the EU generic campaigns has shown that despite the enormous spend, it has failed to stimulate the expected price rise fuelled by increased demand. This is because the generic campaign operated outside a proper market-led framework. It did not respond to consumer needs, but rather mirrored the producers’ expectation. Equally, there is plenty of evidence to illustrate that country of origin is of little interest to many consumers. Thus, it makes little sense to spend more money to simply highlight that salmon comes from different origins. This will neither increase salmon consumption nor stimulate any price differentiation.
These expensive, but ineffective, promotional campaigns are not the answer and certainly the provision of a large fund will satisfy the aspirations of the different parties to the agreement. Instead, funding from both the European Commission and individual Governments should be channeled into a defined policy on salmon production with a clear strategy for market development. It is necessary to identify what is driving salmon consumption and then to capitalise on this to diminish the competitive threat, which some producers clearly fear. This applies equally to both sides, irrespective of whether it is further dumping charges or increased imports. If these fears can be addressed, then the salmon agreement can be discarded in favour of the growing demand for ‘value for money’ meal choices.
Trade off (again): One alternative proposal to the renewal of the salmon agreement has been put forward by Norwegian Fisheries & Aquaculture director Christian Mordal. He suggests that EU fishermen could be allocated shares of the Norwegian commercial fishing quota in exchange for low tax barriers of exports of farmed salmon. According to Fishupdate.com, this suggestion has upset the Norwegian fishing industry, which is already seeing its own quotas diminish.
It maybe surprising to some that this is not a new idea. In 1996, when the dumping case against Norway was under investigation, a proposal was put to Jostein Refsnes, then Chairman of FHL that Norwegian salmon exports be linked to third party fishing agreements negotiated under the Common Fisheries Policy.
The Common Fisheries Policy document dated 1994 stated:
“With the Community’s immediate neighbours like Norway, Sweden and the Faeroes reciprocal arrangements are well established. A system operates in which EU boats may fish certain species and quantities in their waters in exchange for similar rights in its own. There is close cooperation on conservation and technical measures like mesh sizes to prevent fishermen using different nets in different waters.
Agreements with these three countries run until 1997. Of these the arrangement with Norway is an important one for the Community providing boats from half a dozen EC fleets with access to over 200,00 tonnes of cod. Hake, saithe, mackerel, shrimps and redfish annually.
Further fishing opportunities are available to Community boats with the completion of the European Economic Area. In exchange for access of fishery products to the EC’s internal market, Community fishermen enjoy extra fishing possibilities in Norwegian, Swedish and Icelandic waters”.
With the agreement with Norway up for renewal in 1997, this seemed a major opportunity for the Norwegian authorities to resolve the question of market access for salmon once and for all. Unfortunately, FHL were so convinced that the EU would accept their new responsible approach to salmon production as adequate defence of the dumping allegations that they never followed it through. This opportunity to gain free market access was therefore lost and with the fishing industry now facing a major catastrophe, it is an opportunity, which is unlikely to be repeated.