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
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