reLAKSation 82.
Salmon
– the scapegoat!: Representatives of cod
producers Lofilab and Havlandet Marin Yngel have both expressed surprise by the
problems in Cod Culture Norway. Arne Kolbeinshavn of Lofilab told Intrafish that
had the salmon industry earned money, then the situation would have been
different for cod farming. He said that no one has faith in salmon farming
anymore and this has impacted on cod producers. He said that ‘if salmon
companies had made money, then the demand for cod would also improve. However,
when the salmon industry is struggling, so is the cod industry.’
This
view is rather surprising since it would be expected that the market for cod and
for salmon should be totally separate and what happens to one should not
necessarily impact on the other. Yet, at the same time it is possible to see how
the two are inextricably linked.
Clearly,
at a time when stocks of wild cod are under threat of over-fishing, there would
be expected to be a significant potential for farmed cod, irrespective of what
is happening in the salmon market. Yet, one of the main reasons that some salmon
farming companies have diversified into cod and other marine fish is exactly
because of the problems of the salmon farming industry. They were hoping to
reproduce the early days of the salmon industry, when small production volumes
meant high profitability. Unfortunately, cod farming is not an exact mirror of
salmon farming and thus the same level of profitability cannot be guaranteed.
This is for two reasons. The first is that whilst cod stocks are threatened,
there are still significant supplies available. Secondly, as we have discussed
in a previous reLAKSation, the size of the cod egg means that the cost of
production, especially at the juvenile stage, cannot be reduced so easily.
Lofilab
have highlighted that there is so little demand for juveniles and this may
better reflect that cod farming arose not because there was shown to be a clear
market demand for farmed cod, but rather because it was promoted as a form of
industry diversification with the potential for regaining lost margin.
With
the potential to produce fish of a specific quality, farmed cod were perceived
as being a premium product. Only a year ago,
two tonnes of farmed cod were sold to the European market at Euro 5.75/kg
as compared to wild fish, which were being sold at Euro 3.15/kg. Such prices
probably gave a false expectation of the market for cod, which have subsequently
not been realised.
In
the UK market, farmed cod is actually cheaper than wild. Marks & Spencer is
currently selling wild cod at £13.17/kg, whereas farmed cod is priced at only
£11.96/kg. This shows that there is clearly no premium for farmed fish.
Mr
Kolbeinshavn of Lofilab expressed hope that financiers would step in and provide
the cod farming industry with aid during this start-up stage so the problems of
CCN would not be repeated. However, if cod farming is to attract further
funding, the industry needs to demonstrate that it has a sound market strategy,
rather than simply a hope that it can succeed. Cod farmers may blame farmed
salmon for their current problems, but they also must learn from salmon farming
to avoid such limiting and potentially damaging production-led strategies.
N.O.
to P.O.: The Shetland News reports that local
salmon farmers have revived the Shetland Aquaculture Producers Organisation (SAPO)
to fight depressed process, over-production and the lack of protection from
cheap imports. The new General Secretary, David Sandison, the General Manager of
the Shetland Salmon Farmers Association said that ‘the PO has existed for
10-11 years but members have shied away from using what is available to them in
terms of a legislative device within Europe.’ He went on to say that ‘This
will allow them to share information about production in a way that they can
plan how to put their fish collectively to market.’
Whilst
Mr Sandison says that the PO is not the total answer, we, at Callander McDowell,
are not yet persuaded that it provides any answer at all. Producer Organisations
were conceived as a way of fairly allocating fishing quotas, a finite resource,
under the Common Fisheries Policy. Professor Chris Ritson suggested that they
might be a way of controlling salmon production by setting a fixed production
output and then dividing this between members. However, farming differs
significantly from wild catch fishing in that production does not have to be
finite and producers are able to set their own production limits depending on
what they think that they can sell. Producer Organisations would effectively
penalise those producers who work hard to develop their own markets to protect
those who do not.
The
international salmon industry has been through a great deal of turmoil in recent
years with several dumping cases and recurring market disruption. If Producer
Organisations are the answer to such problems, why has it taken 11 years for
these producers to opt for this strategy? Perhaps, it is because it is now the
only response still available to those who perceive that the problems are
related to production, rather than the market.
It
would seem that the industry has learnt little over the last decade as it
continues to argue about protection from cheap imports, depressed prices and
over-production. Are these really the problems or should the industry be instead
looking at the problems as opportunities for ‘value for money’ production,
access to the global marketplace and focussed marketing.
The
Scottish industry has always argued that they generate a premium price for their
salmon, but this is not generally supported by evidence from the marketplace. Of
course, there are a handful of producers who do manage to attain this premium,
but they do so because they can claim to have some uniqueness. Shetland
producers, by their very location, also have a unique aspect to their
production. Instead of looking for protection from imports, they should
capitalise on their uniqueness. It is not a Producer Organisation that they
need, but rather one devoted to marketing.
Changing
habits: The annual survey of shopping habits
shows that consumer lifestyle continues to change. The retail price index,
produced by the Office of National Statistics, monitors a shopping basket of 650
goods and services that a typical household buys over a 12-month period. Each
year the basket is adapted to reflect changing habits.
This
year, the shopping basket shows that the public are spending more money on
convenience foods and takeaway meals and less time on cooking at home. For
example, expenditure on potted snacks has risen by 40% in five years and as a
result, these feature in the shopping basket for the first time along with
burgers and kebabs.
These
join vegetarian and low calorie meals, which made their first appearance in the
basket last year.
Interestingly,
the move to convenience eating extends to pets as single serve cat food is
included in the basket to the detriment of dry cat foods and mixers.
In
addition to these changing eating habits, consumers now spend more on fees to
slimming clubs, no doubt to counter the effects of all the takeaway meals. This,
together with the past appearance of low calorie meals would suggest that many
consumers are now concerned about their weight and health. This should indicate
a clear opportunity for fish producers to develop an appropriate range of
products. However, such products need to reflect this changing consumer demand.
Surprisingly, frozen ‘fish in sauce’ products have been removed from the
basket suggesting that the more traditional foods have become less appealing to
consumers now looking for a more ‘modern’ lifestyle.