reLAKSation 97.
Pork scratchings!: French pig farmers are talking of fighting back against the supermarkets. Intrafish discussed whether this could be a strategy which the salmon industry could also adopt?
We, at Callander McDowell, have previously examined the similarities between salmon and pig farming and have concluded that there are still sufficient differences between the two for the salmon industry to forge its own way forward. Several commentators have already argued that the salmon industry has experienced the same boom and bust cycles as endemic in pig farming, however we are not convinced. Instead, we believe that the salmon industry is still going through its initial growth spurt and any peaks and troughs are due to either interference or a lack of market direction. Eventually, salmon farming will develop into a mature enough industry to suffer from boom and bust, but not yet.
Unlike salmon farming, the problems endured by pig farmers are worsened by the lack of market development. The consumer market is changing, but pork producers are slow to adapt to these changes. In some ways, this does mirror the salmon industry, but whilst salmon producers have not taken these changes on board, the processing industry has and a result consumers are starting to buy salmon products in the form that they want to buy them. This is an evolving market. Seemingly, the pork meat market is not.
Intrafish report that the situation for French pig producers could not be worse. Many face bankruptcy due to lowest ever prices. (Some salmon farmers might argue that this is exactly the same situation as they find themselves in, but the current problems can be traced back to the removal of the EU salmon agreement, which in turn was the result of the 1996 dumping complaint. It might be argued that if the salmon industry had invested more time and effort into the market, rather than pursuing dumping complaints, the industry would not be experiencing the current round of problems).
As a result of the current difficulties, French pork farmers are now considering uniting together to resist the demands of supermarket buyers. Even though different sections of the industry have different interests, the organisers of this revolt, believe that they can gain everyone’s cooperation. Their first step is to establish a national reference price for buyers at retail level. The hope is that with a fixed price, supermarkets would not be able to play one supplier off against another so ensuring that the whole industry can make an economic living.
Unfortunately, this plan may be flawed. Firstly, the idea of a reference price may be acceptable if it is a guide, but if it a definitive price below which no part of the French industry will sell their products, they may be accused of price fixing and acting against the consumer interest. There may also be concerns about a possible cartel type arrangement.
If setting a fixed price were such a simple solution, it is surprising that other agricultural or aquacultural enterprises have not pursued a similar strategy. After all, there are cases when some producers could even argue that consumers of their products are prepared to pay about the market price. The now defunct Scottish Salmon Board found that over 70% of consumers were willing to pay more for Scottish salmon, yet despite this clear evidence, the Scottish industry have not held out for higher prices in the face of cheaper imports. Instead, they have sold their fish to buyers at current market prices.
Consumers are fickle and what they say and what they do are not always the same thing. French consumers may prefer to buy French pork. They may also be willing to pay more to buy it. However, if the price of pork in French supermarkets should rise, consumers may not be happy when they see their food bill rise. They could well look to other proteins instead, or alternatively, supermarket buyers may turn to cheaper pork imports. Either way, the French pig industry could well find that their attempts to force prices up backfires.
There is only one answer to low prices, whether it be salmon or pork. Producers must respond to the market and produce the type of products that modern consumers now want. It is not enough to produce raw flesh. Consumers want more. The poultry industry has recognised this opportunity and adapted accordingly. Other protein producers must also follow this route if they want to secure their long term futures.
No go logo: The Canadian Aquaculture Industry Alliance has, according to Intrafish, announced a five years strategy to develop international markets for Canadian aquaculture products. The marketing strategy is to focus on the ability to provide safe, sustainable and high quality seafood products to global markets, however, we at Callander McDowell, wonder what will make this strategy stand apart as surely all consumers expect the seafood they buy to be safe and of the highest possible quality as a matter of fact. Sustainability is the new buzzword and if asked, most consumers would now expect seafood to come from sustainable sources, although we are not convinced that it would not stop them buying seafood if its source could not be guaranteed.
Marketing is not about promoting the producer’s perception of their products to consumers, but rather about producing what consumers actually want to buy, at a price they are willing to pay and most importantly, to do so profitably.
The CAIA may be able to raise the profile of Canadian aquaculture produce in their key markets through a costly promotional campaign, but this may not translate into improved sales or better profitability. Unless the products are exactly what consumers want, there is no guarantee that consumers will actually buy them. Past experience has shown that an increased market profile does not always relate to increased consumer spending. This is a relationship, which is not always understood.
As part of the campaign, the CAIA intend to develop a “Canada Brand” logo so that consumers will recognise a safe quality product. Similar logos have been used previously by other national industries. In the early 1990’s, Norwegian salmon was tagged with a brand mark, but this was soon dropped when it was found that it made no difference to consumers. A more well known logo is the Scottish Tartan Quality Mark (TQM) which has been in existence for over 10 years. Yet, despite its longevity, its market presence is in decline.
Consumers look for value for money rather than any assurance of safety or quality. This is because most consumers expect that supermarkets will monitor these issues on their behalf and that if for example, salmon, is available on the supermarket shelf, it is going to be both safe and of the highest possible quality. For most consumers, this is probably a subconscious process, rather than something to which they actively think about.
Instead, consumers are probably more concerned about what they are going to eat, whether it is of the right price, whether it is convenient and whether it fits into their lifestyles. Aquaculture producers need to think in the same way so that any marketing strategy focuses on real consumer needs rather than concentrating on how they want their products to be perceived. What the aquaculture industry needs is a strategy which is market, not production-led.