Salmon farmers facing ruin as prices plummet: Six thousand jobs in Scotland under threat, reports John Arlidge

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IAIN SOMERVILLE gave up accountancy four years ago to farm salmon on the shores of Loch Fyne. He said: 'I was forever bailing out company directors and shareholders or helping to set up small businesses. I wanted to create something for myself.'

Now, however, accountants are examining the books at his firm, Lighthouse of Scotland, in an effort to stave off bankruptcy. Prices for farmed salmon have almost halved in the past three months, dropping below production costs, and farmers throughout the west coast of Scotland face ruin.

Six thousand jobs in the pounds 200m-a-year industry, hailed as the employment saviour of the Highlands, are threatened.

'The position is disastrous,' Mr Somerville said. 'We have had good years - three years ago we made pounds 400,000 profit - but we, like most other producers, have been trading at a loss for the past few months and, as a small business employing around 50 people, that simply cannot go on much longer.

'The industry as a whole is losing pounds 1m a week, and several farms have gone bust in the last few weeks alone.'

Scottish fish farmers blame their Norwegian counterparts for the price collapse. Norway is Europe's largest salmon producer, harvesting 141,000 tonnes last year, compared with Scotland's 38,000 tonnes. Norway predicted a 120,000-tonne yield this year, but in September its farmers revised the figure to 180,000 tonnes, rising to 220,000 tonnes in 1994, and prices began to fall.

Mr Somerville said: 'Fish that we had been selling to wholesalers in June for more than pounds 4 a kilo are now fetching around pounds 2.50. Christmas should be the busiest time of the year for us, but we are not making any money at all.' The Scottish Salmon Growers' Association met European Union (EU) officials in Brussels on Wednesday in an effort to resolve the crisis.

The association argued that the minimum import price of pounds 2.65 per kilo, which the EU introduced last month, was too low. William Crowe, the association's chief executive, said the Norwegians were 'cushioned by government subsidies'.

European commissioners, who are investigating allegations that Norway is dumping subsidised fish, meet British government ministers today to set a reference price for salmon. If prices fall below a benchmark, the EU could introduce quotas or duties to curb overproduction and 'restore fair trading'.

The result will be anxiously awaited in the Highlands. Mr Somerville said: 'If the EU does not impose a realistic price, many communities, which have for decades produced one of the world's finest foods, will disappear.'