reLAKSation 92.
Amateur
dramatics: Angus Macmillan of West Minch
Salmon has warned that the closure of Marine Harvest’s processing factory in
Stornoway could be the start of a pull out by the multinational salmon farming
companies from Scotland. He told Intrafish that the Fjord Seafood processing
facility could also be under threat and increasing the likelihood that neither
company will be operating in the Western Isles or even Scotland in the near
future. He said that the processing facilities are just the beginning and they
could go on to shut the smaller farming sites and then even the larger ones!
Unfortunately,
Mr Macmillan may have been rather premature with his interpretation of this
closure. Alan Anderson, CEO of Fjord Seafood Scotland told Intrafish that the
company is committed to the Western Isles and that any suggestion that their
processing facility is also under threat represents ‘a remark taken out of
context and presented wrongly to make the whole situation more dramatic’.
Sadly,
the salmon industry has suffered repeatedly from similar attempts to
over-dramatise a situation, to try to turn it to someone else’s advantage,
however misplaced this might be. Mr Macmillan may rue the loss of the Marine
Harvest processing facility, but at the same time, it is possible that he, and
his colleagues in the Scottish industry, should shoulder some of the
responsibility for this impending loss.
Since
1989, when prices first collapsed, parts of the salmon industry have
consistently argued for the imposition of various measures to protect against
further price falls. These include both import and production controls. This
constant barrage of grievances has led to regular market disruption and a
never-ending cycle of diminished confidence and price uncertainty. We, at
Callander McDowell, have always suggested that rather than focus on such
controls; the industry should address the underlying market issues. This would
involve refocusing the emphasis away from the actual price of salmon and onto
the potential margin. This fundamental change is essential because salmon prices
have always been expected to fall, despite the confident view of many
commentators otherwise. We would argue that rather than fight against the
declining price, the industry should aim to capitalise on it. It is important to
remember that much of the increased production has been absorbed by new
consumers who have been tempted to try salmon because of its low, ‘value for
money’ price. There is a temptation to dismiss low priced salmon as something
which should be avoided. However, despite this view, commodity salmon is now
characterised as the foundation of the farming industry. Of course, this does
not mean that all salmon should be produced as commodity product, but when
produced profitably, commodity salmon should represent the industry’s main
income stream. It does not mean that this salmon should be of lower quality, but
rather that it be produced cost efficiently. The closure of this processing
facility is no doubt part of the wider need to streamline production costs.
Whilst
many consumers are quite happy buying low priced, value for money salmon, there
is still a market for premium product. Mr Macmillan has suggested that the
development agencies should concentrate on building up indigenous businesses,
such as his, no doubt focussing on this premium market. Mr Macmillan warns that
the Marine Harvest closure may be just the start of a larger withdrawal from
Scotland, but if these companies were to pull out, they would provide him with
exactly the type of limitation on production, which advocates of Producer
Organisations have previously sought. It would bring an end to production of
commodity salmon in Scotland and create a specialist niche market instead.
Currently, consumers can buy Scottish salmon at the same low price as comparable
imported. It will remain to be seen as to whether there are sufficient consumers
prepared to pay more for an exclusive Scottish product in favour of cheaper
imported commodity fish.
Yet,
whilst producers like Mr Macmillan would like to focus on the Scottish image,
there is no reason to believe that the large multi-national companies would not
like to do exactly the same, if they have the opportunity to do so. Any
withdrawal from either the islands or the Scottish mainland would result in the
loss of this perceived USP. This would seem to be a very extreme decision. It
would seem that the reality is that Mr Macmillan is drawing attention to a story
which is actually isn’t a story at all.
New
era, Same strategy:
Svein Berg, Managing Director of the Norwegian Seafood Export Council (NSEC)
told Intrafish that the end of the Salmon Agreement has resulted in a totally
new market situation for Norwegian salmon in the European Community. He said
that Norway is no longer obliged to promote its salmon as Atlantic salmon but
can revert back to marketing salmon as Norwegian. The big question is whether
this change will make any difference.
It
is quite understandable that Norwegian producers would want to promote their
salmon under their own national identity, as do producers in other countries.
Under the Salmon Agreement, they were denied the opportunity to do so. In fact,
many producers found it difficult to understand why Norway should help promote
Irish and Scottish salmon as a generic product.
The
long running generic promotion has been hailed a success, yet there is clearly
little enthusiasm to keep it running. Perhaps, this is because it actually
appears to have had little impact on the marketplace. Whilst econometric
analyses have supposedly shown that the promotion has had a positive effect on
the market, the reality is that it is the continuing low price, which has
boosted salmon consumption, not the generic promotion.
Country
of origin has always been a contentious issue, at least within the industry.
Scottish producers have always argued that their salmon is the salmon of choice
for most consumers, many of whom are prepared to pay a premium price. Yet when
faced with low cost alternatives, they actively select that which represents
value for money and any preference for Scottish product is put to one side. Will
those consumers, subjected to a national promotion, then choose to buy Norwegian
salmon or will they continue to buy the salmon which is best value for money?
We,
at Callander McDowell, are not convinced by the need to run promotional
campaigns for salmon. Instead, we believe that the industry would be better
served through the development of the type of products that consumers want to
buy. Over the run of the Salmon Agreement, Norway contributed NOK 250 million to
the generic campaign. This sort of money could have bought a great deal of
product and market development. Instead its
been spent on the type of TV and magazine advertising which has been long
forgotten.
Personal
Choice: How many times have you gone to a
restaurant, which someone recommended, only to be disappointed by the food on
offer? It is possible to go to the
best Michelin starred restaurant and not like the food. Equally, the local
corner restaurant may serve the best food ever. It all comes down to personal
choice. What one person thinks is marvellous can be considered to be horrid to
someone else.
The
same applies to farmed salmon. Every consumer can have a very different opinion
of the salmon they eat. Is this apparent from recent of taste tests conducted in
France? The French consumer magazine ‘Que Chosir’ published a series of
articles comparing wild and farmed fish. They found that Scottish Label Rouge
salmon was the fattiest and the least tasty when compared with both wild and
Norwegian salmon. By comparison, Intrafish reported that a study carried out by
independent laboratory for Food Certification Scotland with a panel of 60
untrained consumers showed a preference for Scottish Label Rouge salmon.
Both
surveys were conducted differently and therefore it is very difficult to draw
any real conclusion as to whether one salmon is any better than another. In the
end, it comes down to personal choice of which salmon is preferred. This
preference makes little difference as long as consumers are prepared to put
their hands in their pockets and actually pay for the salmon.