MPs are calling for action, but so far the Government has refused to ask Brussels for permission to impose quotas, despite what the Scots say is incontrovertible proof of unfair competition.
'If this had happened to the French, there would have been rioting on the streets,' an EC official said.
Since it was developed in the 1970s, salmon farming has become an economic mainstay of the west coast and islands of Scotland. As the price of the fish dropped, the industry expanded rapidly, absorbing jobs lost by traditional fishermen: it now employs about 6,000 people and turns over pounds 200m a year. It grew even faster in Norway, where it now gives work to 15,000 people. But according to the Scottish Salmon Growers Association, the Norwegians over-invested and started exporting fish in 1989 at a price the Scots believed was below cost.
The SSGA successfully brought an anti-dumping case before the European Commission, but not before the Norwegian production had doubled to 160,000 tonnes a year. As a salmon takes three years to grow, an earlier excess of smolts, or baby salmon, came to the market in 1991.
As a result, there was another crisis that year. Prices tumbled, 300 Norwegian fish farms went out of business, and the FOS, the national salmon sales organisation, bought 90,000 tonnes of fish to put into cold store. This not only bankrupted the FOS, it also helped push the four biggest Norwegian banks into receivership.
Nevertheless, Norwegian production has continued to expand. The Oslo government rescued the banks and wrote off 50 per cent of the farmers' debts, allowing many of them to restart.
Last year, the result of this new expansion hit the market.
A year ago, the Norwegians estimated their annual production at 120,000 tonnes. By mid- year, it was clear this was a serious underestimate: actual production was 170,000 tonnes.
In the four months to October, the wholesale price halved. At its lowest, it reached pounds 1 a pound, well below Scottish and, the SSGA believes, Norwegian production costs. 'The sheer volume knocked us for six,' said William Crowe, the SSGA's chief executive.
In November, the EC introduced a minimum import price of pounds 1.20 a pound, and after Christmas a 'reference price' of pounds 1.38 was introduced.
Theoretically, a countervailing tariff would be triggered if the price fell below that. But under the rules of the General Agreement on Tariffs and Trade and the European Union, this can happen only if the Scots growers are organised into self-policing producer organisations (POs).
Mr Crowe said that while POs would eventually be set up, the immediate crisis could be resolved only by import quotas. 'We're not calling for protection, but given Norway's alleged crimes, volumes should be limited,' he said. He said quotas could only be authorised by Brussels, but 'unless a member state demands action, the EC won't act.
'We've had a lot of sympathy from the Ministry of Agriculture and the Scottish Office,' Mr Crowe said, 'but we suspect there are problems with the Treasury and the Foreign Office.' He believes the Treasury's ideology is playing a part, as is the FO's desire to keep good relations with Oslo, which wants to join the EU. 'It's got to a stage where my members are accusing the Government of dereliction of duty,' he said. Scottish MPs called for help in the Commons earlier this month, but only 15 members attended the late-night debate.
The Norwegians have said that production this year will rise a further 50,000 tonnes to 220,000. As the Europeans bought 230,000 tonnes of salmon in total last year, the market will inevitably be out of balance unless quotas are introduced. 'There will be another round of collapses,' Mr Crowe said. 'It wouldn't take a lot to shut down a processing plant, and 250 job losses in the Western Isles would be a local disaster.'
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