reLAKSation 94.
Shake-up
or ship out?: Managing Director of Arvid Nergard AS, Bjorn Fredriksen has told Intrafish that ‘the prospects for
farmed salmon are not good’. He said that it is a bad sign when the same
quantity of salmon is offered to the market several times. This is the result of
‘frenzied slaughtering’ aimed at keeping the banks happy. Mr Fredriksen
believes that such panicking does not help the situation.
Yet,
confidence in the industry remains low. Several large and well known companies
have recently reported losses, one of which is Austevoll Havfiske. Major
shareholder Helge Mogster told Dagens Naerlingsliv that he has lost any
confidence in the Norwegian salmon
industry. He blames low prices and the fact that many producers are flooding the
market with fish, even though they are being sold at a loss. He is increasingly
irritated by what he describes as a prime example of Norwegian stupidity. Mr
Mogster said that for a long time, he believed that Norway was the best place to
invest in aquaculture. He is now looking to invest in Chile instead because he
thinks that the industry there is more coordinated, and costs are lower.
Mr
Mogster may believe that his future in salmon farming is in Chile, but we, at
Callander McDowell, think that he is simply exporting his ‘Norwegian
stupidity’ elsewhere. He is gravely mistaken if he thinks that moving is the
answer to these problems.
Rather
than address the fundamental underlying issues, which are the root of the
industry problems, Mr Mogster is simply looking to transfer his problems
elsewhere. However, Mr Mogster is not alone. The international industry is rife
with similar ideas and has been ever since problems in the marketplace first
became apparent in 1989. Others have moved production elsewhere. Some have opted
to farm alternative species such as cod, without consideration of the fact that
as production expands, they will start to suffer similar problems. Yet, others
have opted to pursue trade legislation to ease the pain. However, none of these
is the answer to these ongoing problems.
The
salmon industry has suffered from repeated market disruption simply because it
has consistently failed to address the questions of the marketplace. Salmon
farming remains a production-led industry and until it evolves into an industry
which is much more market-led, it will never resolve the problems.
Unfortunately, time is running out. The industry cannot delay the inevitable
changes for much longer. A sustained loss of profitability and a reliance on
feed credits for survival will to lead increasing bankruptcies. The need for
change will result in many casualties, but most will be self -induced since they
have closed their eyes to the changes in the market place and will thus suffer
the inevitable consequences.
We
have suggested many times previously that the industry cannot rely on high
prices. Increased global production has forced prices down and the industry
needed to rise to this challenge. Instead, many have just waited hoping for some
eventual respite. Sadly, they have waited in vain.
The
new round of losses may be sufficient wake up call for others to recognise that
change is necessary and they may now respond. We are confident that a stronger
and more viable industry will emerge from the necessary shake-up, but there will
undoubtedly be a great deal of pain to endure first.
Old
song, old tune!: The end of the EU salmon agreement is still just in
sight, yet already there is talk of another dumping action against Norway.
Whilst, such murmurings are not in the least bit surprising, they clearly
provide graphic illustration that there are some who would prefer to fight
against market change rather than adapt with it.
Unfortunately,
any allegations of dumping only result in further disruption of the marketplace
together with further a loss of confidence in the potential for all types of
aquaculture, not just salmon farming.
We,
at Callander McDowell, have always held the view that these dumping actions have
not just been about low prices, but also have a great deal to do with
perceptions of salmon’s image in the marketplace. Low prices have made salmon
into an affordable every day meal option, but some producers would be happier if
this new image could revert back to the time when it was considered to be a high
quality, luxury product.
Producers
are making a big mistake if they think that they can force consumers to buy into
their own perception of salmon. A successful dumping action, however unlikely,
may exclude imported competition, but it will not make the majority consumers
pay a higher price for what they believe to be an everyday meal choice.
The
minority of producers who advocate a dumping action, should be looking to the
marketplace for answers, not to Brussels.
According
to Per Dag Iversen of FHL, they may have to wait twelve months before Brussels
even considers accepting another dumping case. Maybe, they should use this time
to investigate what alternative answers the marketplace can provide.
The
saga continues: The Salmon Farm Protest Group believe that by focusing on
labelling, they can bring their objections to salmon farming to a wider
audience. They told the Sunday Herald that they have uncovered the failings of
both supermarkets and the Food Standards Agency. They say that the FSA have
delayed alerting the local authorities to the changes in the law, who they say
should have been checking that the labelling conforms to the law. Yet, despite
this delay, we at Callander McDowell, as regular observers of the retail sector
are confident that all of the supermarkets companies do comply with the new
labelling legislation. Inevitably, there will always be one or two minor
transgressions, as all suppliers change packaging or labels to meet the new
legislation, but we are convinced that there is no conspiracy to hoodwink
consumers as the SFPG suggest.
They
say that supermarkets are concerned
that shoppers would stop buying salmon if they knew that 99% of salmon sold is
intensively farmed, or as they would prefer to say, that they seem intent ‘on
forcing feeding us all with artificially coloured GM farmed salmon marinaded in
dioxins and PCBs’.
The
SFPG have submitted 27 complaints to local trading standards agencies, which
they list on their website, although they do not detail individual
transgressions. Interestingly, two of the alleged offences originate in Co-op
stores, yet at the same time the SFPG have praised the Co-op for being the only
store to have for some years consistently stated whether the fish they sell is
farmed or wild. Clearly, this demonstrates that even the most conscientious
store group can make the odd error.
Simply
because all the store groups do label their fresh fish correctly, the only
complaint that the SFPG can level is that in some cases, the size of the
lettering used is very small. However, in most cases, the size of the lettering
is consistent for all the information provided on the pack and it is there for
consumers to read. There are store groups which have opted to put the wording in
large letters on the front of the pack despite the SFPG’s belief otherwise,
they have not deterred customers from buying the fish.
Because
the labelling on fresh fish is correct, the SFPG have had to resort to highlight
supposed errors on packs of smoked salmon. In particular, they have focussed on
packs of John West smoked salmon. They claim that the appearance of this pack in
many stores equates to many separate transgression, each reportable to different
local trading standards offices. In reality, this is one single transgression.
One of the reasons that this pack has caused a problem is that it is not a
standard listing in any of the supermarket concerned, but is bought in on
infrequent occasions as a special promotion. This means that the supermarkets
could have missed it in their checks and that old packaging is not used up
quickly. As it turns out, the local authority which covers the processing plant
for this product has allowed the processor to use up the old packaging before it
has to comply with the legislation.
How
long must it be before the SFPG realise that none of the supermarkets are
intentionally misleading their customers with the wrong labelling and this is
simply not an issue, either to supermarkets or their customers. Their need to
rely on the flimsiest of excuses to highlight their concerns is a clear
demonstration of the weakness of their arguments.