reLAKSation 93.

Trading down?: Two traders from leading British dealers had few kind words to say about the Scottish salmon industry. Interviewed by the European Fish Trader (EFT) they have accused the Scots of piling up problems for themselves due to oversupply, lax grading and poor attention to quality.

One trader told EFT that “Salmon has definitely got a problem and I can’t see any short term answer to it. There are too many fish coming out of the water and prices are very low. They cannot afford to cut back production because the industry is purely production-led. I feel that they don’t want to listen to us traders as they believe that all we are doing is shafting them.”

He went on to say that “Scotland is it’s own worst enemy. They are just over-producing. You cannot blame Norway for the low prices since the MIP has been in force and you can’t blame Norway for dumping because they are not doing it. The Scottish industry has to get its own act together.”

These comments provide a very different perspective of the Scottish industry to that usually presented, but it is a view, which we, at Callander McDowell, have heard before.

This accusation of overproducing is more usually leveled at Norwegian producers. Presumably, the Scottish industry feels that the UK market is their home market and they should not have to compete with imports for market share. It follows on that if they had sole access to their home market, then they would not be overproducing at all, as the market can absorb all they can produce. The implication is that it is only the presence of imported salmon, which has caused the market to be oversupplied. Unfortunately, salmon farmers have to compete in a global marketplace and this applies equally to the home market. This affects other food producers in exactly the same way. British pig farmers have to compete with imports from Denmark just as salmon farmers must learn to live with imports from Norway and elsewhere. As the trader said, the industry has to get its act together.

Perhaps this leads to the question as to why Scottish salmon is being directed through traders at all? Scottish salmon has always been promoted as a high quality premium product (although these traders appear to disagree). It would be expected that producers would target premium markets rather than compete directly against imported fish. The problem for the industry is that the markets have changed and that most consumers now look for value for money product rather than focus on premium quality.

These changes may be explained as follows. In the earlier days of the industry when production was around 15,000 tonnes, then 80% of production may have gone to the premium market. Whilst the market grew alongside growing production, the premium market remained static and therefore shrank as a percentage of total production. As a result, premium salmon might now only account for 10% of the market with the remainder going to the value sector. Unfortunately, the Scottish industry has been slow to adapt its strategy to account for these changes and continues to seek a premium market for most of its production. This is the reason why these traders maintain that the Scottish industry is now overproducing.

As production expanded, Scottish producers have found that they have been unable to access premium markets and have had to redirect fish into both the trading and wholesale markets. However, like the premium market, these too are becoming saturated with too much salmon. Yet, this does not mean that the salmon industry, whether in Scotland or Norway, is actually overproducing. What it does mean is that the salmon industry is failing to invest in the type of market development needed to bring about a continued expansion of the marketplace. Instead, they prefer to rely on the traditional markets in which to sell their salmon and as a result, prices have fallen.

One of the traders interviewed by EFT said “that a large part of the problem is that the ceiling on the UK salmon market was reached years ago”. Yet, if this was really the case, then the salmon industry would have been in meltdown a long time ago and despite constant whinging and whining from some sectors, it is clearly not facing such a predicament. In the early days of the industry the only market for salmon was for whole fish. Demand for whole salmon was satisfied years ago, but the market then evolved. Consumer demand changed from whole fish to steaks and fillets and as a result, the market has continued to grow. However, whilst there will be a point when the demand for fillets will reach saturation, this will evolve further so that there will be an even greater demand for value added salmon products. Changing consumer lifestyles mean that people are moving to more convenient products, of which there are many examples already. The potential diversity of these products means that the market should continue to evolve for many years to come, despite the gloomy predictions made by these traders. The challenge is whether the industry can also evolve alongside the market. We believe that it can.

Talking down!: Several commentators have warned that the removal of the Minimum Import Price would encourage many Norwegian farmers to harvest their fish for export to the European market. The immediate effect of this surge of fish on the market would be to force prices further down. The industry has waited for these lower prices with some trepidation and not unexpectedly prices have now started to fall.

The problem for the industry is that if there is sufficient talk of lower prices, prices will oblige and fall. This is not at all surprising after all any buyer hearing of the expectation of lower prices will simply hold back from making his buying decision. Why pay the higher price, when just by waiting, he can benefit from a lower price. The inevitable outcome is that prices do fall as predicted.

This also happened back in the mid 1990’s when the expectation of cheap dumped salmon forced prices down. Equally, claims that the MIP would not work also resulted in lower prices once the EU salmon agreement had been implemented.

Sadly, whilst talk of lower prices alone does seem to force the price down, the reverse does not hold true. Talking the market up has yet to produce the higher prices that the salmon industry would like to see.

Sticking down?: The Salmon Farm Protest Group continue to argue that British supermarkets are flouting labelling laws and are failing to state whether the salmon they sell is wild or farmed. Their latest press release says that supermarkets from Edinburgh to Thurso are ignoring the law. They highlight problems with labels in Asda, Lidl, Safeway and Waitrose. Yet, whilst they claim that there are many cases of mislabeling, they appear unable to cite any major transgressions.

The SFPG illustrate their statement with packs of smoked salmon from both Safeway and Waitrose but fail to identify any examples of mislabeling of fresh fish, which is really the intended target of the new legislation.

They are left to identify examples which are not really breaches of the law at all. They highlight Safeway prepacked salmon stakes (sic) saying that the information is in tiny, almost invisible print on a stick on label on the reverse of the pack. Yet, clearly the information is there. They also cite an Asda store in which they found the information on the wet fish counter to be buried amongst the fish and ice. Yet again, the information was there and whilst it may have been hidden, customers only had to ask if they were bothered. In our experience, staff on such fish counters have only been too happy to discuss their products.

They say that the only supermarket group that complies with the law is the Co-op who according to the SFPG have for years stated whether the salmon they sell is farmed or wild. Callander McDowell conduct regular and extensive surveys of the retail sector and we contest this view. Until earlier this year, many Co-op stores sold packs of salmon in line with all the other supermarket groups in that there was no information about either the origin of the salmon or whether it was farmed or not.  It is only with the introduction of this new labeling legislation that the Co-op, in common with all other supermarkets, now provides all the necessary information. However, all supermarkets do now comply with the legislation and any instances where the information is not provided can be attributed to human error rather than any deliberate attempt to mislead customers as the SFPG would imply.

The problem with this SFPG survey of supermarket labeling is that they believe that the only way that customers can be persuaded to buy supermarket salmon is if they are misled into doing so. This is simply not the case. Sadly, the SFPG have to rely on referring to farmed salmon as ‘fakes’ to promote their own view. Is this more of a case of misleading the consumer?

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