The Winding Glass

'If you think the SSA is so crooked, what is your plan for improving the domestic shrimp industry?'

This article is our response to the letter from Paige Morrison, below.

SEAFOOD.COM NEWS by John Sackton [Editorial Comment] May 20, 2008-- This was the question posed in a letter from an American shrimpers wife that we published today. She asked a very fair question.

She said ''You slam the SSA repeatedly, yet they are the only ones who have attempted to help the domestic shrimpers. If you think they are so crooked, suggest another alternative plan to level out the domestic Shrimpers.''

I wanted to take the opportunity to reply to that question. It is a fair one.

First let me make clear that we do not 'rejoice' in the problems of the domestic shrimp industry. The combination of low prices and high fuel costs is devastating to many fishing families who have struggled to stay in the business, and I would like to see nothing better than a healthy and prosperous Gulf shrimp industry. We do not like reporting on the hard times in the Gulf any more than the struggles of fishermen in New England with no quotas, or the shut down of West Coast salmon fishing.

But Paige is right that in our editorials, I have been firmly against the actions of the SSA. I felt that shrimp tariffs were harmful to the shrimp industry, and to the domestic shrimpers and that the effort spent on getting tariffs and on Byrd money was a diversion that delayed addressing the real problems in the industry. Four years after the tariffs were imposed, the domestic shrimp industry is in an even worse position trying to get prices for shrimp that cover operating costs.

The fight provoked by the SSA with tariffs prevented other industry-wide solutions that could have had more long lasting results. For example, shrimp importers at one time were willing to make voluntary payments to the domestic industry. Many of these companies would love to buy more domestic shrimp, if that shrimp could meet quality and size specifications. In some cases, these purchases would have required more investment in processing and harvesting operations.

What would have happened if instead paying the tariffs, the shrimp importers and the domestic industry had agreed to fund a $100 million dollar industry renewal fund based on a 0.5 to 1% payment on all imported shrimp. This fund would have made loans for investments in upgrading processing plants and vessels to produce a better quality domestic shrimp. This was an offer that was put on the table by the importers association.

Now, with many tariffs reduced, the Byrd program eliminated, and shrimp prices as low as ever, most of the monies received by the SSA through payments from foreign processors have gone to lawyers and lobbyists, and payments through the Byrd program from tariffs have gone to a small group of major shrimp processors/boat owners, and have not helped the majority of shrimpers, nor have they by and large been invested back in the industry.

So what can be done? First let's take an honest look at the domestic shrimp industry.

Many shrimpers have older boats; they have not had the money to upgrade them or invest in handling technology like freezing on board or refrigerated sea water or other systems that allow shrimpers to bring in a higher quality shrimp.

Secondly, on top of the lack of money for investment in better vessels, fuel costs have become horrendous, increasing much faster than food prices or shrimp prices. Because of fuel, it now costs more to trawl for wild shrimp than it does to produce farmed shrimp in contained ponds.

So, the domestic industry has to deal with the fact they have high costs for their shrimp.

Third, the industry is subject to the variable conditions of the shrimp harvest - the seasons, size and abundance, for example. If the market demands a particular size, often the most profitable size - the size where demand from restaurants and retailers is strongest in relation to supply, domestic harvesters cannot adjust to meet this demand. They catch the size distribution nature provides.

So last year, prices went up dramatically on large size shrimp, but this year they are down again -- following the trends of the black tiger import market.

Finally, domestic harvesters have to face the same problem in the shrimp industry as they have in every other fishery: what to do about overcapacity.

If there are too many boats landing shrimp to make a living, then by reducing the number of boats, those remaining will become more profitable. Normally, the fairest way to do this is through either a buyout, where those who stay in the industry pay the ones who leave, or through an allocation system of harvesting rights, which enables those with marginal operations to sell their rights to those with more efficient operations.

This would result in fewer shrimpers; but life would be better economically and could be sustained into subsequent generations for the ones who remained, because each remaining boat would have higher catches.

The domestic shrimp industry needs to get a premium price for its product. Wild American Shrimp (WASI) is a start in this direction, but a feeble one. WASI does not release its certification standards, and has designed standards so that most domestically produced shrimp qualifies, so long as they pay for the label.

This is helpful to identify wild caught American shrimp, but it does nothing to change US shrimp back into the premium product it once was.

To succeed, some in the shrimp industry will have to adopt higher standards. They have to stop using shrimp powder which pumps up the size of shrimp. They may have to reduce the length of trawling time. They have to be willing to freeze on board, and to sell the true weight of their catch. This not easy, because the market is already trained to think of American shrimp as lower quality. Size grades are not as rigorous as farmed shrimp. Most of the domestic shrimp is treated with chemicals, that while they increase the weight and eliminate things like black spot, they also make the shrimp a poor choice for customers who demand the highest and purest products.

Given the reality that Wild American Shrimp is going to be 10% or less of the total shrimp market, the only choice for shrimpers is to make their catch the best 10% of the market, and to get a price premium accordingly.

This is best accomplished by improving your own products and promoting them, not by running down your competitor's products -- especially when your competitors, i.e. farmed shrimp, have some serious advantages of consistent size, and better quality control.

It is a total myth that farmed shrimp is produced in unhygienic and dirty conditions. The cleanliness of many overseas shrimp processing factories make many domestic processors look like they are living in a prior century. The myth that farmed shrimp is full of chemicals and bad quality does not help domestic shrimpers confront their shortcomings. The most deadly sin you can make in business is to totally misunderstand your competitor. Yet that is what the SSA and WASI do.

I do not think the domestic industry is dying. There is a bright future for American shrimp as the best tasting, freshest, and most locally produced shrimp. But this future must make business sense. It requires investment, partners, and a willingness to change practices. This is what I see as a positive vision for the Gulf shrimp industry, and I wish it was a vision that was more widely promoted by the SSA and WASI.

Some major buyers of domestic shrimp are working with environmental groups like the Fisheries Partnership, to design programs that will improve the quality of the shrimp landed, and will result in longer term contracts from major buyers. These efforts deserve to be supported, but they are not an answer by themselves.

In short, the domestic shrimp industry needs to improve its practices, and find partners willing to finance the necessary changes. That is a better path to a more prosperous future than stigmatizing imported shrimp, which makes up 90% of the total market.

--John Sackton

John Sackton, Editor And Publisher
Seafood.com News 1-781-861-1441

Letters: 'You rejoice in reporting the troubles of the domestic shrimp industry'

The following letter and response are from SEAFOOD.COM NEWS of May 20, 2008. We are publishing them on the blog so they can be read by our non-paying subscribers.

To: Seafood.com News

I have been receiving your free email newsletter for over a year now and read it daily. Throughout the year I have come to a conclusion. You are a processor that benefits from cheap overseas shrimp. You prefer it and resent the domestic shrimp industry.

You seem to rejoice in reporting that it is dead in certain states. (see yesterday's stories on the shrimp industry in Louisiana and Texas)

If I am wrong forgive me. You slam the SSA repeatedly, yet they are the only ones who have attempted to help the domestic shrimpers. If you think they are so crooked, suggest another alternative plan to level out the domestic Shrimpers.

You are against tariffs, yet they are they only thing that level the market prices.

Our domestic shrimp prices have done the exact opposite of everything else in America.

Our cost has risen and the prices have fallen. Outrageously.

Prices today for landed shrimp are 1/3 to 1/4 of what they were 7 years ago. And the cost of fuel has quadrupled.

This is a direct result of price dumping by foreign companies. It has nothing to do with fair trade. Most of these countries don't allow our products into their market and if they do they charge such high tariffs that it is not profitable to sell to them. These are the bare facts.

Our processors' greed has caused this also. They do not care where the shrimp come from or what damage to the environment, what chemicals are poured onto them or what the shrimp were fed (farm raised shrimp are fed chicken feces in Indonesia and Thailand, and Vietnam traditionally). Greed and a willingness to forfeit our own domestic industry for cheap substandard products that are repeatedly found to be dangerous.

Shame on you for supporting industries like that.

Paige Morrison
Shrimper's Wife

Consumer research shows that sustainability is great, Seafood Industry ethics matter even more

SEAFOOD.COM NEWS [EDITORIAL COMMENT from Seafood.com News]  by John Sackton - May 12, 2008 -  New research on how consumers reward sustainability and ethical behavior has some very interesting implications for the seafood industry.

The Wall St. Journal set out to determine whether consumers will pay a premium for products produced in a sustainable, environmentally responsible manner.  The premise that consumers will reward this behavior underlies the entire sustainable seafood movement from the Marine Stewardship Council to the Monterey Bay Aquarium and many others. 

The research shows some surprising results -- that tend to strongly support the seafood industry's approach to sustainability, rather than the all or nothing approach of many NGO's.

More importantly, the research shows that while consumers will reward sustainability, they will punish unethical behavior even more.

First, the positive news for the seafood industry.

The Wall St. Journal story Does Being Ethical Pay? set up several social science experiments to estimate how much of a premium, if any, consumers would pay for products that were produced sustainably.  The researchers used coffee and T-shirts as their test products.

They recruited a group of random adult coffee drinkers, and gave them information about a brand not sold in the U.S.  'After reading about the company and its coffee, the people told us the price they were willing to pay on an 11-point scale, from $5 to $15. The results? The mean price for the ethical group ($9.71 per pound) was significantly higher than that of the control group ($8.31) or the unethical group ($5.89).

Translated into percent, the mean price for those who understood the coffee was sustainably produced was 17% higher than a control group who had no information.  For those who were told negative things about the brand, in terms of ethics, the mean price was 29% lower than the control.

The Journal than designed a follow up test.  The recruited a group of subjects to purchase T-shirts, made with 100% organic, 50% organic, and 25% organic cotton, or with no organic cotton.   

The results were

100% organic cotton . . . . . . . $21.21
50% organic cotton . . . . . . . . 20.44
25% organic cotton . . . . . . . . 20.72
Unethical behavior* . . . . . . . 17.33
Control (no information) . . . . 20.04

The researchers concluded that the premium consumers were willing to pay for a sustainable product was a matter of degree, not a simple yes or no.  This suggests that for the seafood industry, there is a real benefit in the industry's approach of moving towards sustainability across a wide range of seafood products.  It means that as the number of seafood products responsibly harvested grows, the industry as a whole can reap the benefits of being sustainable in the consumers mind.

What the research also suggests is that attacks on the industry, such as the Greenpeace effort to force supermarkets to remove certain fish from their stores based on sustainability criteria, does not resonate with consumers, since they are concerned about the overall direction of movement - not whether all products  in a store meet 100% of one group's criteria or not.

The other part of this experiment provides a clear warning sign for seafood.

Although the industry has made great strides on increasing the amount of sustainably sourced seafood, both wild and farmed, the integrity of many seafood products has been slipping.

Although NFI began a campaign against illegal activities such as short weights, mis-labeling, and illegal product substitution, such practices continue to be rampant in our industry.

Some of the NFI members who have committed to 100% net weight have lost substantial business to less scrupulous operators.

Many consumers do not know how seafood is treated to keep it moist and fresh looking - whether through added brine or protein from drip loss or from treatment with carbon monoxide. 

The same consumers who reward the seafood industry for moving towards more sustainable products would punish it severely if the industry was seen to be unethical, by cheating on product additives, treatments, weights and species substitution.

The Wall St. Journal test shows that when unethical behavior is publicized and known to consumers, they react very negatively and the value they are willing to pay for products in these circumstances drops drastically.

At the moment, the industry is on the positive side of the ledger.  But there is a line not too far from present industry practices where consumers would punish the industry severely by turning away and devaluing products.

The recent attempt to tie illegal labor practices to the shrimp industry in Thailand and Bangladesh largely flopped, since there was no public evidence to back up the claims except for a Thai government raid on a single factory, and as a result, the story lacked legs.  Furthermore, the shrimp exporting factories in
Thailand do meet national labor standards and are reviewed on their compliance.

In a different circumstance - such as the melamine in pet food scandal -- a story of unethical behavior could severely damage the industry.

To see the extent of the damage being risked, simply look at the value of the made in China brand for seafood products since the melamine scandal broke.  In this case, unethical behavior on the part of a Chinese manufacturer was amplified by domestic critics opposed to the Chinese industry.

If the seafood industry had a similar lapse that exposed real harm, and its NGO critics took up the fight, the entire industry in the U.S could suffer the same fate as Chinese origin products.

Every company with a brand in the industry, or a large volume producer, should  be terrified that unethical behavior by a competitor, supplier or co-packer could  blow up the reputation of the entire industry.

Seafood is by and large riding a wave of popularity, and the effort of the NGO's to promote sustainable fishing and the industry's response have  increased this popularity, not hurt it.   But the Journal study has a timely warning:  the same consumers that have driven the growth in seafood popularity could turn on the industry in a heart beat if they felt widespread unethical practices were rampant.   

Today, can we honestly tell them they are not?

-John Sackton

The coming war on aquaculture

Some recent items in our news show that there is a gathering movement within the environmental community to paint aquaculture as irresponsible, in the same way that wild fisheries were declared depleted in the 1990's.

Now that the public has accepted that many wild fisheries are totally sustainable it seems that less attention is being paid to wild fisheries by environmental campaigns, with the exception of some glaring examples of overfishing, such as tuna.

The basic developments in our news recently that make me think a new war on aquaculture is developing are:

1) Greenpeace's recent report on aquaculture, which is receiving a lot of media coverage.

2) the upcoming release of a pew funded study showing that the presence of fish farms cuts the population of wild salmon in rivers where they exist,

3) WWF's refusal to participate in the aquaculture certification programs developed by the GAA, and supported by major buyers. By staying outside of this framework, the WWF appears to be positioning itself to argue that non-WWF approved aquaculture is not sustainable.

What is significant here is that for many years there have been concerted and well funded campaigns against certain types of aquaculture -- with farmed salmon being the most visible. This fight was partly due to the fact that some in the seafood industry in Alaska are all to happy to demonize farmed salmon for competitive market reasons -- so they have given the anti-farmed salmon campaign legitimacy it would not have otherwise.

Shrimp farmers have faced criticism over mangroves, even though environmental practices for shrimp farming have improved dramatically in the past 25 years. Similar to salmon, it is the campaign of the domestic US shrimp producers that is giving attacks on farmed shrimp more legitimacy than they would otherwise have.

Now aquaculture opponents are looking at the use of fish meal, despite the fact that some of the reduction fisheries are among the best managed and most sustainable fisheries in the world.

So, we will write more about this in the coming weeks -- but there is a concerted attack on all aquaculture that is coming together and will begin to reverberate in the media. If consumers become fearful of aquaculture fish, it will hurt the trend towards increased seafood consumption, which so far has been driven by aquaculture species.

New demand for seafood is reshaping global markets

Japan’s seafood imports are at a 15 year low. Meanwhile, for many species, from herring and mackerel to coldwater shrimp, Russian and Eastern European countries are emerging as major centers of consumption.

And of course, China is in a class by itself.

Seafood trading and consumption patterns, which previously had been stable, are being upended by the growth of new centers of demand. In some cases, this is pushing traditional buyers out of the market.

A good example is herring and salmon roe. This used to be a product that primarily went to Japan. Prices were set based on negotiations between Japanese importers and producers in Norway, Alaska, and Canada. No More. Now there are multiple centers of demand, and the question of price, and where supplies will flow, is much more volatile, depending on which market will pay the most for the limited wild supply. We will have a story Monday on how Russian buyers of Ikura (salmon roe) will be flooding the Boston Seafood Show this month.

Same thing is happening with other wild caught fish, from cod to coldwater shrimp.

What this means is that we have reached a new stage in the sale and trading of wild caught seafood. With a limited supply, and demand greater than supply for many species, sellers have been willing to abandon traditional markets in favor of new customers.

IN the short term, this means higher prices. IN the long term, it means more volatility. The reason is that shifting economic fortunes, consumer tastes, or supply shortages can create drastic swings in demand.

A case in point in China. A few years ago, a shortage of shrimp in China sparked a huge demand for shell on northern shrimp -- and imports shot up over 50,000 tons, and prices rose. Then came the trade barriers to vannamei, which suddenly was cheaper across China, and where 80% of the consumption was already based on domestic white shrimp. The result: two years later, demand drops to about 15,000 tons, and producers are left scrambling for new markets.

This type of whipsaw demand for wild caught species is likely to become the norm, and is a function of the growing demand for seafood meeting the limits of wild caught production.

Blatant double standard hits the seafood industry

(this editorial ran in our Seafood.com News today)

The headline of one of the New York Times stories today is “Industry Money Fans Debate on Fish”. The story goes on to document how NFI paid travel and expenses for a conference of the Maternal Nutrition Group, made up of scientists, dietitians, and doctors to review the latest findings on the health effects of omega 3 on fetal development. Based on the recommendation of this group, the Healthy Mothers Healthy Babies coalition then publicized their recommendations that women need to eat more fish during pregnancy to improve their baby’s health.

A number of national groups are using the fact that NFI paid some expenses in relation to this study to try and discredit the scientific findings. The fact the Times ran this headline shows what a blatant double standard now exists for issues involving the seafood industry.

When do you see the headline “Environmental Money fans arguments against farmed fish”. The answer is never, because there is a double standard.

Environmental groups and organizations, such as the Pew and Packard Foundations, can spend literally millions of dollars in campaigns to promote wild salmon and disparage farmed salmon, and nowhere in the public debate do you ever see the linkage made between the funding sources and the arguments against farmed fish.

We ran a story last month (link) from BC showing somewhere between $5 and $10 million had been spent by environmental foundations specifically to discredit farmed salmon and promote wild salmon.

Yet because the money was not spent by “industry” it is not considered newsworthy-- it is just a fact of life.

But the environmental organizations themselves, from the Sierra Club to the Marine Stewardship Council, operate very much like businesses, even though they don’t have shareholders to which they distribute profits.

Instead, these companies have entrenched management whose goals are to perpetuate the continued growth or survival of the organization while working towards its policy goals. In this sense, they operate like any other management group -- weighing decisions about funding and operations through the lens of what will best perpetuate and enhance their organization. This is based on the implicit belief that maintaining their organization is the first and perhaps most important step towards the policy goal. The only difference is that for seafood business, and for NFI, the goal is to have a profitable business while operating in a sustainable manner, while for an NGO, it is to have a successful non-profit while gaining power and influence through membership, financial clout, and influence with government.

Neither side has a monopoly on the definition of “public good”. In our system, we think that an open and entrepreneurial environment brings the greatest public good because the opportunity for profit and reallocation of resources creates new products, opportunities, and organizations in a way that is more robust and creative than any other type of incentive.

In the case of mercury and fish consumption, there is a strong body of science that suggests that eating more fish means healthier babies. This is the message the industry, and the Healthy Mothers, Healthy Babies coalition is trying to get across.

Such a message contradicts the toxicity message from some of the environmental groups, who focus on mercury in seafood to the exclusion of mercury from other food and environmental sources. They focus on seafood because they also want to limit fish consumption for other reasons-- i.e. they think it will help eliminate overfishing. But in our case, the fact NFI spends money to have a conference merits a headline in the NY Times, while the fact that Foundations spend millions to discredit farmed salmon merits nary a peep. Yet farmed salmon is one of the healthiest sources of Omega 3 for most of the population. This is the double standard we live with today.

Higher seafood prices here to stay

I have normally been a sceptic when people say prices have nowhere to go but up. My view from many years of watching seafood markets is that markets always go in two directions, and you can make money either way -up or down- if you know what you are doing.

Consequently in a rising market, I pay attention to signs of change: are inventories building, are buyers showing resistance, has a given product moved outside its normal trading band?

But looking for the thing that will break the trend may not be useful if something larger is afoot.

That is what I am now thinking: seafood prices are rising to a new value equilibrium. We are witnessing a transition to a new playing field where seafood is going to be more expensive, and higher priced, than in the past.

Almost across the board prices for major seafood commodities are above where they were in 2004. Whether it is swordfish, halibut, farmed salmon, pollock, lobster, crab or cod -- by far the great majority of seafood items are more expensive than they were 2-3 years ago.

Sure there have been individual price drops - a dramatic drop in snow crab and king crab prices, for example resulted in a burst of buying and a quick reversal.

But long term, two things have change which make me think we are entering into a new pricing regime for seafood- at least in North America.

First is the weakness of the U.S. dollar. Americans import about 80% of the seafood they consume; and therefore American buyers compete with Europeans, Chinese, Japanese, Russians and Latin Americans for many types of seafood. Notice that every single one of these markets, with the possible exception of Japan, has been getting stronger, and richer, in relation to the U.S.

Last year, China provided a greater percentage of the growth of global domestic product than did the U.S., and this trend is likely to continue.

IN both China and Russia, an emerging middle class is demanding seafood items, and more and more U.S. buyers find themselves competing with other markets to secure product.

Vietnam has so strongly turned to the European market for its catfish that prices are now set there - in Euro, if U.S. buyers want to compete.

The expression of the growing weakness of the U.S. is in its currency. Since we buy fish in dollars, and other countries are seeing their currencies grow stronger, we have to pay more in dollars just to keep up. This is not something that will reverse soon, as it comes from the long term problem failing to live within our means, and the belief that the dollar would somehow be bailed out by others.

Coupled with the currency weakness is the growth in demand. In China and Russia, it is largely the growth of a middle class demanding high quality seafood that is driving demand. Same in many parts of Latin America.

In Europe, the benefits of seafood are well established, and the strength of the Euro has allowed buyers to keep prices relatively steady, despite the rising costs elsewhere.

Japan is the only exception here, since with an aging population it is consuming less seafood with every passing year. We recently wrote how Japanese seafood purchases at retail have continued their month to month decline for the past 12 months, and I believe this trend is almost unbroken for nearly five years.

Nevertheless, when supplies are tight the smaller Japanese market can have a big influence.

So, this brings me back to the original question: has there been a fundamental shift in the value of seafood.

I think the answer seems to be yes. More people in the developed world (including Chinese cities) can afford and want seafood, and the supply from wild sources is finite. We have seen in Chile with disease issues, and with the price increases in fishmeal, some of the limitations on growth in aquaculture. So, we may very well see a long term shift in the value of seafood as a commodity. That means some prices may never be coming down in the foreseeable future. That is really unexpected, certainly to a market analyst.

But if you increase the wealthy portion of the world population who demands expensive seafood, and the supply remains finite on the wild harvest side, and slow growing on the aquaculture side, you have a recipe for a permanent shift in value, so long as this relationship continues to exist. That means that high seafood prices are here to stay, at least until or unless something economically drastic happens - and that does not seem to be in the cards.

This has many implications - on sustainability issues, on IFQ values, on the trend towards consolidation in the industry, and the flow of banking money into the seafood industry to capitalize on the value shift. I will try and comment on each of these issues over the next few weeks.

Who's ocean is it, anyway

Fishermen who have spent their lives learning and working on the water become irate when people who know far less then they do presume to tell them what to do.

Environmentalists who feel the ocean is a common property resource feel perfectly justified is saying it should be left as wilderness - no trawling, no harvesting, no dredging, no economic activity.

These ideas have come together in the environmental embrace of small scale fisheries; the idea being that if fishermen are picturesque, don't use dirty industrial gear like trawls, or manage to subsist on small harvests of a few hundred or a few thousand pounds of a particular species per boat, then all will be right with the world.

In this regard, one of the goals of the Pew foundation is to hold up small scale fisheries as models that show environmental and commercial interests can work together. In some cases they fund and staff these small local organizations at a level that would never be possible from the earnings of the fishing group alone.

There are certainly times when the broad commercial interests of the fishing industry and the interests of the ocean preservationists coincide. One example was the push for a moratorium on oil drilling on Georges Bank. A second, a more relevant example is the opposition to the Pebble Mine site in the headwaters of Bristol Bay.

But overall, in asking whether various public interest groups have interests in common with harvesters and processors, one overarching question is: do you support the use of the ocean for food production? If not, there is little to talk about.

Many of the major environmental issues around seafood, from sustainably managed fisheries, to the regulation and prohibition of illegal fishing, to the protection of marine reserves and use of closed areas, and the growth of aquaculture, are all issues where the industry can be improved and can make common cause with some in the environmental community, so long as the basic understanding is that using the oceans for food is a sustainable and honorable activity.

That means that what is suitable as a small scale fishery in one location may be suitable as a large scale industrial fishery in another location. Demanding that all fisheries be small, boutique, and under capitalized is simply a means to deny the food productivity of the oceans.

The Fear, the Fear

Seafood.com and myself often are quoted in various news articles about the Seafood industry. I get many calls from reporters working on Seafood stories, and sometimes end up being quoted in their articles.

I have always been amused to see that our competitor Intrafish is afraid to include any of these quotes or references. Like in Harry Potter, they cannot publish the name of "you know who", even when it is part of one of their stories.

I came across an example this morning in the Canadian Press story on the seafood industry dismissing the impact of the Humane Society Seal Boycott. It ran both in Intrafish and Seafood.com.

Take a look for yourself, comparing the two highlighted areas. Click on the image to read larger text.

First: Intrafish

Now the full story from Seafood.com:

See the difference in the highlighted areas. Apparently even my name, much less that of Seafood.com, is too much for our competition. My message is don't worry. I am not Voldemort. I am happy to include references to Intrafish in our wire service stories, if they will include the references to me and seafood.com. All our readers are better served by getting the whole story.

News fun on a slow summer day.

If its From Alaska, It's Good!

[This is an editorial we ran in our news section today]

Seafood needs branding. One of the reasons that our products are so whipsawed in the market place by environmentalists, by food safety advocates, and by massive consumer confusion over wild vs. farmed, organic vs. local, certified vs. uncertified is because our industry has few recognized brand names. That gives any critic a platform on which to stand, because no one is trusted to fight back.

Brand names are a capitalist invention, but they give consumers enormous power and leverage over companies, because once a brand name is established and trusted, companies want to go to great lengths to protect it from assault, from whatever cause.

Remember the Tylenol scare a few years ago, when someone put poison in Tylenol capsules on drug store shelves. This was the mother of all food safety issues. Could consumers ever trust that brand again. Well, the company, acting on its own and not due to the FDA, recalled every single product; changed the packaging to make it tamper proof, and changed the capsule product to a caplet, which cannot be tampered with in the same manner. Tylenol and its brand survived. The reason was that consumers saw the lengths a particular company would go to ensure its product was safe and wholesome.

A brand is a shorthand way of establishing trust. In the seafood industry, there are virtually no producer brands. The brands that are recognized at the consumer level are retail products, like Gorton’s or High Liner, or foodservice brands like Red Lobster.

The one exception in the U.S. market is Alaska. By marketing the Alaska brand of seafood, for salmon, cod, crab and other species, and spending money consistently year after year to promote the qualities of Alaska seafood, ASMI has built a brand; and that brand is stronger than an ecolabel, or a food safety inspection report, or any of the other tests and certifications used to try and impart the trust that a good brand embodies.

ASMI deserves a lot of credit for the public recognition of Alaska seafood as wild, wholesome, and romantic. And in one of our stories today, Ray Riutta, executive director of ASMI, is exactly right when he says “if its from Alaska, its good”. That is exactly the message a consumer needs to hear, and it is a message to few seafood producers can offer.

Other examples of this branding are Norwegian Seafood, which has replicated ASMI’s success on an international scale, but is now invisible in the U.S. due to the weak dollar making this country an unattractive market.

Wild American Shrimp is another brand with potential; but to succeed it has to stand on its own merits; it cannot succeed by attacking other products. No one buys a coke because they don’t like Dr. Pepper. They buy a coke because they want the positive attribute. In the same way, selling domestic shrimp needs to be based on quality, freshness, taste, local production, etc., and those products that are soaked, that are not chilled or frozen properly, or that are too old – all are products of domestic shrimp producers, but they are not the products that make a brand. WASI is making the right move with inspection and certification. But they are failing to let the public know what their standards and requirements are, fueling suspicion that the standard is a marketing gimmick, not a statement of trust.

The seafood industry has been tied up in knots over certification and sustainability issues, and as a result has been defined by its critics. A brand allows you to define yourself. In the past, when seafood was more of a commodity item, it was harder to justify the expense of creating a brand. But now, as more production comes under the control of vertically integrated producers, or of quota holders who collectively represent the supply, a new opportunity to define your own brand and quality is available.

What would be a better investment for the Alaska crab industry, for example? Paying for MSC certification; or building up the Alaska Brand. When you buy a Mercedes, do you buy it because of the JD Power’s survey results, or because it is a Mercedes! For the seafood industry, either choice will cost several hundred thousands of dollars. And it sounds like ASMI is inching towards a decision.