Sea Lice and SNP Economic Strategy

In March 2015 the SNP Government published its latest economic strategy document. This prioritised six growth sectors: food & drink (including agriculture & fisheries), creative Industries (including digital), tourism, energy, financial and business Services, and so-called life sciences. The rationale was that these were sectors where Scotland “typically has distinctive capabilities and businesses with the potential to be internationally successful”.

However, it is clear that this set of priorities reflects – and indeed reinforces – the existing, subservient role Scotland plays within the global neoliberal division of labour. Shorn of the usual jargon, this list priorities: unsustainable extractive industries (food, energy), generating intellectual capital for future foreign exploitation by US hi-tech monopolies (digital, life sciences), mass tourism (which is distorting the Edinburgh housing market, for instance), and providing a de-regulated zone for footloose international finance capital to operate in.

Note: this globalist strategy dovetails perfectly with the pro-market, ‘modern’ economic ideology outlined in the SNP leadership’s Growth Report, authored by Andrew Wilson, which aims to annual treble Scottish GDP growth rates within a decade.

This strategy is perfectly ‘rational’, since it actively collaborates with the existing supply chain needs and accumulation policy of US and European capital. But just admitting that reality exposes the inherent weaknesses in such a limited approach.

Firstly, the SNP Government strategy ignores the need to build a domestic, self-sustaining economy. Note: the latter approach is not synonymous with autarky – international trade remains vital both to generate foreign currency and provide a benchmark to stimulate local productivity. But framing Scottish economic policy rigidly within the current, fragile and externally determined international division of labour is to surrender local autonomy from day one. And to do so with spectacular mistiming, just as the world enters an era of deflation, deep economic uncertainty, trade wars, climate disruption and massive technological upheaval.

Secondly, a strategy based on extraction (food, energy and local brain power) is – by definition – unsustainable, even if relatively successful in the short-run. Once you’ve extracted, there’s nothing left. That’s how it works. The fact that the Scottish Government (or its PR machine) litter their policy statements with the adjective ‘sustainable’ does not alter this fact. Consider an example: food and drink.

From one perspective, Scottish food and drink exports have been a massive success in the past decade. Exports annually to outside the UK are running at over £6bn and climbing – the exact data is obscure because HMRC does not provide exact figures for Scottish exports via English airports and ports. The Scottish food and drink industry employs circa 45,000 people – 25 per cent of the Scottish manufacturing workforce. And around a fifth of all Scottish exports to firth of the UK are supplied by the sector, though the vast majority by value is accounted for by whisky. The food element is heavily concentrated in seafood, premium meat and animal feed.

In June 2019, the Scottish Government proudly announced the second phase of its Food and Drink Export Plan, geared to doubling turnover value in the sector to £30bn by 2030. Yes, to double sales (Scottish, UK and foreign) in an energy-intensive and greenhouse gas-emitting industry in exactly the decade when the world is struggling to curb destructive climate change.

The problem is that boosting turnover means boosting output means an energy-intensive, environment-eroding strategy that is anything but sustainable.

Take fish farming.

Farmed salmon is Scotland’s single biggest food export – worth £600m. But packing captive salmon together causes the spread of disease from parasitic sea lice – a killer infection that easily spreads to wild salmon, with catastrophic results. Environmental experts have raised concerns about the use of dangerous insecticides such as azamethiphos to treat the lice, which only compounds the environmental damage. Other industrial chemicals used include hydrogen peroxide to wash the fish, and emamectin benzoate, which is put in the salmon’s feed. Nothing is natural about farmed fish.

The result is that both farmed and wild salmon in Scotland are dying in unprecedented numbers. In 2018, the Holyrood backbench environment committee reported that fish mortality had reached “unacceptable levels” yet that there had been little progress in tackling environmental problems since 2002. It concluded that salmon farming is not being regulated sufficiently or effectively by SEPA, the government watchdog, and that any further expansion of the industry should stop until environmental issues had been resolved.

However, in September 2019, environment secretary Roseanna Cunningham declared that there was insufficient evidence to support any moratorium on the expansion of fish farming. This is insouciance bordering on the negligent. There was a day when Rosanna Cunningham was the standard bearer for the left in the SNP. But in recent years – particularly since she took over as Cabinet Secretary for Environment, Climate Change and Land Reform – Cunningham has appeared transmogrified into a defender of pro-business interests.

Just whose interests are being protected? The answer is the world’s largest salmon farmer – the giant, Norwegian-based, multi-national, conglomerate known as Mowi (which previously went by the more accurate moniker Marine Harvester). Mowi produces over 60,000 tonnes of salmon in Scotland each year, around 40 per cent of which gets exported to China [we’re doing a carbon calculation of that – Ed]. Mowi also has operations in Chile, Canada, France and Ireland. The company’s global revenues last year were circa £3.3bn, with before-tax profits of £125m.

Mowi’s creator and major shareholder is grumpy billionaire John Fredriksen, who also owns the world’s largest tanker fleet. Fredriksen, a welder’s son, made his original pile in shady Beirut in the late 1960s, trading crude oil. But he became seriously rich shipping Iranian oil during the 1980s Iran-Iraq conflict when he became – in the words of his biographer – the “Ayotallah’s lifeline”.

That episode made Fredriksen Norway’s richest capitalist. But the Norwegian authorities arrested him in 1986 over a complicated insurance fraud. The case was eventually settled out of court though Fredriksen had to pay a fine and reimburse the insurance company some $800,000. In a huff (or perhaps to avoid further trouble) Mr Fredrikson renounced his Norwegian citizenship, acquired a Cypriot passport and moved to London, where he owns a house in Chelsea reputedly worth $200m.

Along the way, Fredriksen found time to create his fish farming empire. But his main line of business is still trading petroleum. In other words, John Fredriksen is one of the key players in wrecking the global environment. And he is still up to his old tricks. In 2014, his main oil trading operation, London-based Arcadia Petroleum, was forced to agree to pay a $13m fine to the US authorities – though carefully neither admitting nor denying culpability – to settle a claim Arcadia had illegally manipulated oil futures prices. Fredrikson’s companies were busily filling, emptying and re-filling petroleum storage tanks in the US with the same oil, in order to fool the market about availability. With this insider knowledge, Arcadia and its US subsidiary were able to take profitable positions in the market.

(Note here that the organisation form taken by the Fredriksen empire has become standard for the neoliberal, globalist era. It involves the integration of production with global trading in commodities, and the use of this trading leverage to engineer financial markets in order to extract value from elsewhere in the international economy. This is a new development which I will return to in a later blog.)

Fredriksen’s Mowi fish business is no less fishy than his oil trading. In April this year, for instance, the Irish minister for marine Michael Creed discontinued a fish farm license held by Fredricksen’s Mowi company in Count Kerry, for massive over cultivation (with consequent massive, illegal effluent discharge). I mention these examples in order that you take any assurances from Mowi or its managers regarding the safety of its Scottish operations, or adherence to regulations, with the biggest pinch of salt possible. Rosa Cunningham please note.

My basic point is not the character of John Fredriksen – though anyone who made his money smuggling oil for Iran, was arrested in Norway for insurance fraud, and has paid multi-million-dollar fines to the US Justice Department for market manipulation, surely has a questionable background. No, my real argument is that the fish farm industry has already proven deeply unsustainable and deeply environmentally hazardous. An economic strategy based on actually expanding Scottish farmed fish production is neither sustainable nor credible.

We all know that grain-fed cattle are “reverse protein factories” because they require many more kilos of plant protein to produce a given kilo of beef – a definition of unsustainability if there ever was. But a similar dynamic is involved in fish farming. To process 1 kg of high-protein fishmeal – which is fed to farmed fish, along with fish oil -requires circa 4.5 kg of smaller pelagic (ocean) fish. Counterintuitive as it may seem, domestic fish farming is hoovering up ocean fish. And all in the name of Mr Fredriksen’s bank balance.

Capitalist accumulation only proceeds by investing in ever more intensive production techniques, running ever more hazards to workers and the environment, and ultimately alienating humankind from the natural order. The SNP Government has not only bought into the insidious logic of this accumulation process uncritically, it is acting as its state sponsor. Regulation of the environment in Scotland is thus increasingly regulation on behalf of the international investing class.

Comments (26)

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  1. Graeme McCormick says:

    Roseanna also appears to be backtracking on Annual Ground Rent too if her speech to the Land Commission Conference and approval of the Commission’s programme of work is anything to go by.

    1. Ron Greer says:

      She has been back tracking for years, a classic example being the acceptance of the Brundtland Report recommendations, introduced to her by Derek Pretswell and myself over 30 years ago.

  2. w.b. robertson says:

    Mr K is spot on and, predictably, is unlikely to figure in Holyrood`s Honours List. On the subject, however, I offer a personal idea…indy Scotland could export water. we have plenty of that and it is truly sustainable.

    1. Alistair Taylor says:

      A pipeline would be better than plastic bottles though.

      1. Gordon Benton says:

        … and have a bloody big meter on the Border.

        1. Graeme McCormick says:

          And a big plug we can ceremoniously pull out every National Day!

  3. james gourlay says:

    Has the SNP already been taken over by big “business”?
    When we get independence will the establishment already have moved in on the Scottish Government?
    What will independence mean then?

    What is the real purpose of Brexit?

    1. Alistair Taylor says:

      The whole bloody world has been taken over by big business, James.

      “It’s a never ending fight for a peace that’s always torn”
      Dylan
      Shelter from the Storm.

      1. Niall McKillop says:

        The whole world indeed, and the salmon farmers have captured the State of Scotland, as have Liberrty Group.

    2. james gourlay says:

      I think you are right. Brexit is a distracter. The establishment will probably move in via the Civil Service.

      1. The tory’s tory Ashcroft has done a poll – says probably more than half of Scots want independence.

      2. Ian Lang has now admitted that GERS figures were made up by him, during Thatchers time, to make Scotland look incompetent.

      3. Cameron has now admitted he asked the queen for help.

      These admissions would appear to push Scotland nearer to independence.

      Brexit is a time waster while the establishment slip into the Scottish Government.

      Probably some in the Scttish Gov already.

  4. Concerned citizen says:

    How they managed to avoid a “moratorium” in the RECC and ECCLR reports I have no idea.
    We repeatedly hear that there is insufficient evidence of disease pathways from farmed to wild fish, yet the disappearance of wild fish is disgracefully evident.
    A Norwegian fella has made the link anyway. Maybe Roseanna should investigate that.
    As for the financials, the NET value to Scotland has never been revealed. The Scottish Exchequer doesn’t know.

  5. Derek Henry says:

    WOW!

    Something I agree with.

    But why did you stop short of saying we will not get independence being at the heart of the EU. You know it is true because of their rules. Yet, cannot bring yourself to say it.

    Rather we need to reform the EU which you also know is impossible because 20 of the countries will not do it. You would need 27 left wing leaders which will never happen.

    The fallacy of exporting your way to growth will be the next crazy decision by the SNP. Sell our water just to get blips on a foreign central bank spreadsheet we will never use.

    Using up our skills and real resources things we can run out of to sell water. When we should be using our skills and real resources on something more productive like infrastructure, public housing and a million other things.

    It is as crazy as selling oil for $’s.

    The UK does the tax collection across the UK. Scotland is nothing more than a glorified county council. If you did the accounts for North Yorks County Council you would find it too has a ‘deficit’ that is filled by the block grant and whatever ‘borrowing’ HM Treasury permits.

    So the leakage out of the arbitrary line of the Scottish border within the Sterling currency zone is to anywhere else in the world (including the rest of the UK) – and the rest of the UK saves a lot of Sterling. That leakage, plus any net savings within Scotland, is what causes the Scottish government sector deficit.

    Ultimately in the same way that Greece needs to tax German savers, Scotland needs to tax UK savers. To have the power to do that you need UK savers saving in a new independent Scottish currency which the Scottish government can control and if need be tax. Otherwise Scotland will run out of money as it all drains to the rest of the UK.

    Foreigners save your currency if they want to sell you more things than they want to buy from you. The floating rate would make sure that

    export+foreign savings = imports in terms of the Scottish currency.

    You can tax it because it is the Scottish currency, and therefore to transfer it to anywhere where it is anything other than inert it would have to go through banks that are licensed by the Scottish authorities to deal in that currency. They will do as they are told if they want to retain their licence.

    Oil is a hug red herring. An enormous canard. It becomes important because although all the dealings are essentially in US dollars and most of the balance sheet is in US dollars, when it is reported in the national accounts it is declared in the reporting currency – which is the Scottish currency. So it’s an accounting trick mostly to make the figures look ‘good’ superficially. The actual Scottish effect is just the fraction of the oil income that has to be physically exchanged for the Scottish currency – to pay staff, suppliers and of course the licence fee and other taxation for the resource.

    Government Spending only comes back if you have your own currency. If you use somebody else’s then it leaks into a different banking system. Greece spending ends up under the control of the Bundesbank. Similarly Scottish spending ends up under the control of the Bank of England, which is owned and directed by the UK government. As long as that arrangement stays in place, Scotland is owned and directed by the UK government – like any other county council.

    That is the key issue with fixed exchange rates. You end up with control of the money under some other entity which you have to follow the directions of.

    If Scotland became independent then what happens depends upon whether it floats its own currency or not. That is the only way to ensure that Scottish money doesn’t leak anywhere. What the size of the government deficit is will still depend upon how many people want to net save in that new currency.

    The Scottish government deficit as they are currently constituted is in a fixed exchange rate lock with the UK.

    The Scottish government is a glorified county council. It must run a balanced budget like any other county council. So if it has a deficit it has to cut spending, raise taxes or try and persuade Westminster to up its allowance.

    That’s it – in Sterling.

    The stabilisation system that manages the excess savings in the taxation currency has to come from the currency issuer – the UK government. It can’t come from anywhere else.

    Most people think the Scottish budget deficit is around 8% of GDP so lets role with that and change the narrative to the truth.

    1. Scottish households and businesses share a surplus of 8% of GDP

    2. To Join the EU they must run a deficit of 3% of GDP

    3. Which means they have to slash Scottish households and Scottish business savings from 8% of GDP to 3% of GDP and continue that gold standard, fixed exchange rate nonsense when they are in.

    Destroying these savings worth 5% of GDP is a HUGE task and will destroy the economy. They have already started and the employment figures are the worst in 4 years.

    NOBODY is challenging them on this they are getting a free pass.Because the neoliberal globalist language and framing of the last 30 years is reducing the government deficit is a good thing. As they only look at one side of the balance sheet and ignore the corresponding surplus in the non governmental sectors.

  6. Derek Henry says:

    I am thinking about paying a world class economist who understands how currencies and the government accounts actually work in reality.

    To do an analysis in what would happen to the Scottish economy if the SNP pushed forward to meet the criteria to be at the heart of Europe and join the neoliberal hug club.

    It would be frightening.

    When they sign up to the single market rules what permanent austerity would look like for every year we are members.

    It would scare you to death.

  7. Derek Henry says:

    I am in the verge of doing it but the results would never see the light of day.

    The truth is not allowed in the current Indy at all costs strategy being used by the Indy media.

  8. Donald Urquhart says:

    Excellent post, George.

    Of course I’ll vote SNP until we’re independent, so I’m careful to minimise my criticism. However, I have been consistently critical of the SNP’s stance on fish farming.
    Salmon farming is the principal of Scotland’s environmental disasters, but it is happening off shore and underwater, hidden. If it were happening in plain sight – there would be an outcry -and you certainly wouldn’t be serving the end product for dinner.

    Imagine if half of all the adults in Scotland went to the west coast one morning and defecated straight into the sea. The next day, the other two and a half million did exactly the same, and so on and so on, day after day -2.5 million shits! That’s the tonnage of effluent that is entering the marine environment in Scotland from salmon farming. Under each cage there is a mound of rotting shit creating a death zone on the seabed, whilst the fish swim round and round only feet above this for all of their adult life.

    One problem mentioned in GK’s post is sea lice. I was brought up in Perthshire, son of an obsessive angler and can remember the frequency with which he came back with one, two or even, on one occasion, five rod caught, wild salmon. Sea lice were looked for as indicators the fish were fresh from the sea and better quality as sea lice drop off the fish in fresh water. Sea lice are like midges to us, they grab a quick snack as we pass. Trouble is keeping high densities of fish trapped, creates the perfect environment for them. Instead of a few irritating bites, the farmed salmon are literally being eaten alive, whilst the migratory wild fish have to swim through these ‘swarms’. So to kill the lice, chemicals are poured straight through the cages into the sea, not once but on a regular basis. These chemicals do not poison, as such. They work by inhibiting the growth of keratin, so the sea lice cannot grow new exoskeletons to shed their skin as they grow. Trouble is these chemicals cannot tell the difference between sea lice and all other crustaceans – such as lobsters, crabs, prawns or the zillions of zooplankton that fuel the food chain.

    Then there is Hydrogen peroxide, used not only to clean the fish but also to oxygenate the water – again poured in the sea in vast quantities. For those of you that didn’t grow up in the punk era – Hydrogen peroxide is a harmful bleach that you would use to get your hair colour like that of Andy Warhol’s.

    Salmon are farmed in incredibly high density. The volume of water per fish is roughly two ‘bags for life’ in size – not quite the North Atlantic! At the end of summer the sea temperature is at its maximum and so it has its least amount of dissolved oxygen. The fish die in high numbers simply from not being able to breathe. In August and September you’ll hardly see a Cal Mac ferry from Lewis that doesn’t have one or two takers marked Environmental Services on it, these are dead fish being taken off for incineration in England.
    This is not only an animal welfare problem but and environmental madness. As GK point out, it takes 4.5 kilos of fish to feed 1 kilo of farmed salmon. That’s mad enough before you realise we’re burning a hell of a lot of those kilos of farmed fish. I could go on about other toxins, fungicides, diseases and the fact that the fish are fed dye to colour them pink, but I won’t. It is all horrendous.

    Employment in marginal rural areas is used as an excuse for allowing salmon farming. Alternatives must and can be found, but the shame that is the salmon farming industry cannot continue, particularly as GK points out – precious few of the economic benefits stay here in the local communities.

    Scotland needs a clean environment more than John Fredriksen needs more money.

  9. Derek Henry says:

    As for an independent Scotland monetary policy you should study these George. How it actually works and get your head around it.

    Q&A Japan style – Part 1

    Q&A Japan style – Part 2

    Q&A Japan style – Part 3

    http://bilbo.economicoutlook.net/blog/

    To be nowhere near the EU and a debate to be had that should an Indy Scotland issue debt at all. Issuing debt is a left over from the gold standard.

    Why should the monopoly issuer of widgets borrow widgets it has no use for them.

  10. Derek Henry says:

    And of course what do we all have to endure ?

    This crap from the Guardian and the Telegraph that is laced with ideology and politics and does not represent the accounting realities.

    https://www.theguardian.com/business/2019/nov/07/labour-and-tories-race-to-ramp-up-spending-despite-borrowing-risks

    To make voters vote against their own interest. Sound bites of nonsense.

    Japan has destroyed their ideology and sound bites for nearly 50 years.

    If there any bonds left over the government buys them which is just a simple asset swap.Bank of Japan was clearly demonstrating its capacity to control yields at whatever level they choose. They are in control not bond vigilantes like the Eurozone. Because the Euro is a foreign currency to anyone who uses it.

    Here is the reality

    1. The Japanese government can never run out of money (yen). It is impossible. Therefore it can never become bankrupt.

    2. The Bank of Japan can maintain yields on JGBs at whatever level it chooses, at whatever maturity range it targets, and for as long as it likes. The bond market investors are incidental to that capacity and are supplicants rather than drivers.

    3. The size of the Bank of Japan’s balance sheet (monetary base) has no relationship with the inflation rate.

    4. If the Bid-to-Cover ratios at bond auctions fell to zero – that is, private bond dealers offered no bids for an auction – then the government could simply instruct the Bank of Japan to buy the issue. A simpler accounting device would be to stop issuing JGBs altogether and just instruct the Bank to credit relevant bank accounts to facilitate the spending desires of the Ministry of Finance.

    5. If private investors choose to buy other assets once the risk in international markets subsides then the Japanese government (the consolidated central bank and treasury) could just buy more of its own debt – to near infinity.The

    Voters forget that central banks meet to target any rate and term and set it to whatever they like. With no children or grandchildren or tax payers in the room.

    Both the Guardian and the Telegraph can’t explain Japan. They scratch their heads and lie about everything. Japan’s debt to GDP ratio of 250% turns their minds into paper mashe.

    They spread establishment propaganda, lies, deceit all to support the city of London. Workers and students have to take on debt in the form of loans nothing else will do. Truths do not matter.

  11. James Mills says:

    I am no economist but I always read George Kerevan’s articles and , in the main , I agree with his views . I deeply regret that George is no longer an MP and speaking out expertly for Scotland .
    Much of what he writes today is a criticism of SNP policy and many will agree .
    However , like others on here , I will continue to vote SNP until Independence is achieved . Hopefully when that happens George and other expert voices like his ( and the Cuthberts ) will rally round and point this country towards a better future .

    I may be wishing in vain but hope has kept me going through the dreadful Thatcher era , the Tory-lite years of Blair/Brown and the unashamed pursuit of riches for the 1% since 2010 .

  12. Arboreal Agenda says:

    Very interesting and pertinent piece thank you. What you write is of great importance. I wonder about the other major industry – forestry, currently suffering from terrible problems of the disease in larch. I wonder what the long term plan would be here? I went to Eskdalemuir recently, a wonderful place, but currently looking more and more like a WWI battleground, with vast acres of dead felled trees.

    This site is new to me and I don’t have any real stake in the independence cause living in England so my views on that are not relevant here, but it is good to see a pro-independence site that isn’t afraid to look at things more critically. It lends the articles much more substance and value as a result. Looking on from down south, the SNP never seem like a very attractive party tbh, like Blair’s Labour but even more controlling and with a basically neoliberal outlook.

  13. Idimalnk says:

    Smuggling oil for Iran may have been a moral anomaly for an otherwise immoral capitalist . I specifically stopped eating wild salmon years ago to avoid having to compete to eat the last one.

  14. Matthew Carse says:

    Excellent article. This year has seen even greater mortalities at MOWI farms.

    Cairidh in Skye reported 58.52% mortality in a month. The Bagh Dail nan Ceann farm in Argyll reported 47.19% in a similar period – equating to some 1400 tonnes. That notwithstanding SEPA have given approval for a 20% increase in size.

    It’s not just Scotland that is seeing massive mortalities at MOWI farms. In Newfoundland the fisheries minister recently ( October ) suspended all of MOWI’s farm licenses following a mass die off at MOWI Canada East.

    https://salmonbusiness.com/nl-fisheries-minister-suspends-all-northern-harvest-licenses-and-calls-upon-mowi-ceo-alf-helge-aarskog-to-come-to-newfoundland/

  15. Neil Upton says:

    The ecological scandal that is salmon farming has gone on for nearly 40 years. Despite irrefutable evidence of its effects on the environment government have failed to act in fact , by omission, have encouraged expansion.
    Why are Scottish executives so supportive of an industry which if land based would have been closed down years ago. It cant be tax revenues as they arent paid to Scotland and a share of “global” £125 million is not much of an incentive.
    Jobs? There are doubts about their number.

  16. G M Service says:

    terrifying facts. The net cash benefit to Scotland, apart from wages ,is never publicised. presumably this is pretty negligible. What taxes does Mowi pay in Scotland or the UK ?

    Dawnfresh is another company whose present operations are worth looking into. 33000 rainbow escapees into Loch Etive and thence one presumes to Loch Awe and the river Orchy and other spawning rivers. No apology . Historically perhaps unfair to look at the rubbish and derelict buildings left on South Georgia after there were not enough whales left to make a profit any longer.
    Good , however that there is more talk on on land production.

    1. Matthew Carse says:

      According to their latest accounts MOWI paid corporation tax of £ 11.3M in 2018, and £ 23.1M in 2017.

      The 2018 figures include deferred tax of £ 2.2M, and after other adjustments the total current tax for the year was £ 8.87M.

      Turnover was 38% lower in 2018, than in 2017.

      “Challenges faced by the Company relate to fish health … primarily affected by sea lice, Amoebic Gill Disease, Pancreatic Disease, resulting in higher mortality,lower growth, and downgraded product”

      1. Neilu says:

        £8.8 million that’s all the tax and remember that goes to Westminster and Scotland gets their share via block grant.
        Why would anyone support a damaging industry for such a paltry sum?

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