The Winding Glass

IATTC and big-eye tuna: a glass half full (editorial comment)

(this editorial appeared in Seafood.com News on Monday, June 15th)

SEAFOOD.COM NEWS by John Sackton - June 15, 2009 - The ISSF has correctly decided that the initial steps taken by the IATTC to finally begin conservation measures for big-eye tuna represent a glass half full, not a glass half empty.  The RFMO failed to adopt the conservation measures proposed by its scientific staff, but it did adopt measures that would provide conservation benefits, in terms of reduction of fishing pressure, by about 20%, rather than the 30% recommended.  The group also did not vote a binding recommendation at the meeting, but voted ad referendum, which allows the individual governments to state by July 15th whether they will abide by the resolution or not.  In a move that ISSF vice-president Bill Fox called "brilliant", the chair also followed the ad referendum vote with another vote, this time a recommendation embracing the same conservation measures. This vote passed 15-0, with every country on the commission but Colombia supporting the measure. Fox says this means that regardless of the action of Colombia by July 15th, there will be a conservation measure in place. The only question is whether Colombia will abide by it.  The ISSF and WWF (International Seafood Sustainability Foundation and World Wildlife Federation) represents the most significant conservation development in the seafood industry since the founding of the Marine Stewardship Council. In this case, purse seine tuna canners - representing about 70% of global capacity - have come together to demand effective management measures of global tuna stocks.  The group formed on the initiative of Bumble-Bee and other major canners, after spectacular failures on the part of RFMO's to manage bluefin tuna (not a species handled by canners) and Big-Eye, which is overfished in the Eastern tropical pacific, but no actions were being taken.  The tactic of the ISSF was to pledge to refuse to buy red-listed products, which can be species without effective conservation management, or which can by species from outlaw countries that refuse to abide by conservation measures adopted by the RFMO's.  What happened at the IATTC meeting was that Colombia became isolated, as the only tuna fishing country in the Eastern Pacific that is refusing to say whether it will abide by collective conservation measures or not.  The reason this glass is half full is that the outcome of the meeting, while not a 100% win for the ISSF, left them in a very strong position.  If Colombia does not abide by the conservation resolutions of the IATTC (something it has the right to do under current international law), the ISSF member companies should initiate a boycott of purchases of Colombian caught tuna.  There is no reason to allow an outlaw fishing nation to continue to profit from overfishing while other member countries take steps to control their fishing effort.  The campaign against Colombia, should the country decide to flout the will of the international community on tuna conservation, should include not simply private efforts of the major canners to boycott Colombia's fish, but should also include legal steps to prevent the import of fish from Colombia under the blacklisting and other regulations coming into force under the U.S. Magnuson Act.  The Act already gives NOAA the power to restrict imports from individual vessels that are blacklisted by the regional RFMO's as violating fishery restrictions. It seems like it would be a small step to extend that to an entire country's vessels if that country was acting in an outlaw fashion.  The stakes for Colombia are very high, and the ISSF had a key role in setting up this situation.  Finally, the advantage of this approach is it puts the onus on the real obstructionists. Instead of fighting the IATTC for being ineffective, the ISSF and WWF strategy, along with the broad support among 15 out of 16 countries of the IATTC, has created a situation where the target will become Colombia's outlaw industry if it refuses to abide by these conservation measures; not the IATTC itself.  This is not a perfect outcome, nor the end of the matter, as ISSF president Susan Jackson said. The IATTC did not adopt their scientific staff recommendations, but instead watered them down by approximately 1/3. But the meeting did set in motion a different approach to tuna conservation, one which has the potential to bring all global tuna stocks under effective conservation management in the future.  -John Sackton

Dysfunctional Fisheries Management continues in New England

The following is an editorial that appeared in our Seafood.com News newsletter last week during the New England Council meeting.  We are posting it here to make it more widely available for comment.


Dysfunctional Fisheries Management continues in New England (editorial comment)

SEAFOOD.COM NEWS - (Editorial Comment) by John Sackton - originally published April 8, 2009 - Because of working for many years in both New England and Alaska, I have long been extremely critical of the New England approach to fisheries management because it has suffered from a fatal flaw: a failure to believe in the basic goal of maintaining fish stocks at their optimum level.

This underlying rejection of the fundamental goals of fisheries management is what has led the New England council time and again to fail to adopt effective measures to rebuild stocks, which now for a generation have been in serious decline.

Now, the council is again acting like a dysfunctional spouse in a domestic abuse case - unable to stop fighting the last war despite the intervention of grownups.

Yesterday, following largely the advice of lawyers based in Gloucester, the council voted again to affirm its rejection of NMFS interpretations of the mixed stock exemption, arguing explicitly that in a situation where many stocks are harvested together, the council has the ability to refuse to rebuild those stocks most at risk if it interferes with the other stocks being harvested at their optimum yield.

NMFS says simply that Magnuson requires action be taken to halt overfishing when a stock is overfished, and it does not matter whether that stock is part of another species complex that may be healthy or not.

In fact in the rest of the country, this is not even an argument. On the West Coast, the groundfish industry accepted severe restrictions due to the depletion of some specific rockfish species. Hitting the rockfish target bycatch even shut down the far larger whiting fishery for a significant time in 2008.

In Alaska, the council just wrestled for days with how to reduce salmon bycatch by the pollock fleet, and at the end of the process, not only did the pollock industry support the lower caps, but said in effect that they would be well under them due to the right combination of incentives. Here again, a billion dollar fishery is being managed partly to protect a smaller and weaker stock.

But the New England council turns this logic on its head. They say that the fact that winter flounder in Southern New England are severely overfished and declining is not a good enough reason to continue existing restrictions on multi-species catches.

At a time when NOAA is asking them to focus on a new sector based management system that will align the interests of the fishing community with long term stock rebuilding, the council is fixated on fighting the last war, seizing the opening given them by an ill-fated intervention of the courts on a two year old ruling.

Why does such a discrepancy in attitude exist? I think it harks back to the failure of regional managers to force allocation decisions on fishing communities. When the first hard TAC's were imposed in New England in the late 1970's and early 1980's, so much illegal fish was being landed that New Bedford unloaded more pounds at night under darkness than they did during the day when inspectors were present.

Other fishermen in Gloucester and Maine openly told me personally how they evaded catch limits by moving in and out of state waters, and taking various action to make their catches untraceable.

This spring, when the Gloucester auction was cited by NMFS for selling illegally caught fish - the reaction has been widespread indignation that they would even get a citation.

The council buckled back then (1982) and abandoned the idea that they would ever shut the fishery down to conserve stocks. Since then, a series of measures involving effort reduction, days at sea, gear modifications, closed areas -- all have failed to gain wide support despite the fact that they did make some progress in stock rebuilding.

Anytime the regulations had to be tightened, various port and state representatives ran to their political allies and said their fishery was being killed.

In 1994, this was first ended by a lawsuit by the environmentalists, in which NMFS admitted it had failed to implement rebuilding measures, and settled an agreement to begin to do so. Since then, it has been a continuous fight to keep those measures on track and working.

The latest row between the council and NMFS is simply another turn in this hundred years war.

The legal memo written by the Gloucester lawyers lays out the explicit argument that some stocks must be sacrificed if they get in the way of the maximum sustainable yield of other stocks. In other words - the fishery must be free to prosecute to the maximum economic value whatever stocks are strong, even at the expense of never ending overfishing on the weaker stocks.

As anyone who has studied ecosystems in fisheries knows, this a recipe for fishing down the trophic chain until jellyfish become the most valuable fishery. It is how many unregulated fishing ecosystems actually work. Harvesters target the most abundant species in turn until nothing is abundant.

In other areas of the country, the industry interests have become strongly aligned with the scientific and regulatory case for keeping multiple stocks at their maximum sustainable yield, and accordingly, the industry supports the needed compromises and effort to make this happen, so long as they have real input and some influence over how these measures are carried out.

In New England, we have not yet even arrived at the point where the industry supports the goals of the Magnuson act. That is why this seems like a fight that will never end.

I actually feel sympathy for Jane Lubchenco, who will address the New England council today. She is going to have to start their re-education from an extremely low level. It seems absurd to me that the head of NOAA has to spend her first month on the job fighting a political fire that should have been settled decades ago.

Sins of Sensationalism

I was a little taken aback when i saw the breathless headline from one of our competitors:

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Short weight, or selling seafood products at less than 100% net weight, is a serious problem in the industry, and is also a big problem in frozen shrimp.   By saying Cosco was routinely selling short-weighted shrimp, the headline was making a hugely serious allegation - on the order of saying something like "Top Bank regulator accused of taking bribes."  it's a charge that undermines the entire credibility of a chain like Costco, or any large consumer retailer in the eyes of the trade.

So imagine my surprise when I looked into the "breaking" news, and found it wasn't true.  Instead a crack-pot lawyer had filed a class action suit because he thought the fixed weight label on a processed shrimp ring was suspect, and he might convince a jury- who knows little about packaging, that the Costco label in question was in fact a statement about net weight that was false.

The product was a store level party platter with shrimp, lemon wedges, cocktail sauce and lettuce - and yet the headline would have you believe that somehow Costco was selling short weight bags of shrimp - likely its number one selling seafood item.

This is a stupid kind of journalism - that doesn't stop to analyze  the facts before rushing out the sensational headline.  This certainly did not deserve the title "breaking news."

Our story on this is below.

SEAFOOD.COM NEWS by John Sackton - March 13, 2009 - At a time when 100% net weight is a huge issue in the frozen seafood industry, any headline that Costco was being sued for selling short-weight shrimp is bound to gather attention.

But in this case, there is a lot less here than meets the eye.

First, the product involved is not a packaged product, but a store-level party platter, packed by store employees with cooked, defrosted, 31-35 shrimp. The shrimp are placed in a ring - similar rings are sold in practically every retail chain - with a piece of garnish and a container of cocktail sauce in the center.

In this case, a New Yorker, Marc Verzani, noticed that when he weighed the amount of shrimp in his shrimp tray, it came out to be less than the net weight of 16 oz. advertised on the label. The shrimp weighed between 13 and 14 ounces. He didn't say if he weighed the other ingredients in the package he bought.

Instead of going back to the store and complaining, he went to a lawyer - who immediately smelled a payoff.

Arguing that the net weight has to refer to the shrimp only, and not the entire contents - which include cocktail sauce and lettuce, the lawyer filed a class action suit saying that nationally, Costco sells between 500 and 1000 shrimp trays per week at its 410 stores.

He is seeking damages based on a two ounce short weighting of 10,660,000 shrimp trays, or between $10.4 million and $40 million, depending on actual sales.

The suit seeks to force Costco (and presumably other retailers) to use random weight labeling for their shrimp trays.

In this case, it appears that the lawyer is trying to hold up Costco, which has a reputation it must protect, by tarnishing it with an accusation of short weight on shrimp, despite the fact that the accusation has nothing to do with the actual issue of short weights.

His case would be more convincing if he had sampled 16 oz bags of frozen shrimp. There, by law, the retailer has to sell at 100% net weight, and if it is short, should suffer enforcement and sanctions. But the fact he brought this action over a shrimp tray with multiple ingredients is simply silly. It is the type of action that gives class action lawyers a bad name.

Thoughts on the Seafood Industry at the end of the year

This editorial appeared in Seafoodnews.com on Dec. 31, 2008 -

SEAFOOD.COM NEWS [editorial comment] by John Sackton - Dec 31, 2008 -  Originally I was going to avoid writing end of year roundups of key stories.  Somehow, it just did not seem as relevant this year -- when so much that was so unexpected has happened.

But yesterday I got a call from Newfoundland, with the caller asking about next year saying “Just how bad do you think things are going to get?” with the assumption that most of the Province’s fisheries would be in for a very difficult time.

I had to say that wasn’t necessarily the case. 

And that got me to thinking about the broader seafood industry.  2009 does not have to be such a bad year.

In many ways, our thinking is stampeded by the media and news of the economic collapse of the financial sector.  And it is true, that operating credit and capital for loans is harder than ever to come by.

But it is also true that markets, particular seafood markets, go up and down, and we have been here before.  There is not a single sector in the seafood industry currently seeing lower prices that has not seen them before.  It is only in the light of the general panic that people tend to exaggerate what is happening.

Yes, there is a fall off in demand, and to some extent it is self correcting.  The hidden secret in the seafood industry is that lower catch levels often can return as much money as higher catches, if harvesters and processors are geared to take advantage of the right opportunity.

What is no longer possible in this climate is to “fish your way out of the problem.”  This means that if prices are low, simply go out and catch or buy more fish so that your overall revenue remains high, even if the per unit price falls sharply.

For years our industry was built to compete in this manner, and we had tremendous overcapacity of boats, processing plants and even brokers and distributors.

Over the past decade or more, the industry has become smaller, more concentrated, with fewer plants, more specialized producers, and in many cases, individual quota shares and buybacks that allow harvesters to either sell out or get more efficient.

The industry is far more attuned to producing a consistent quality product than dealing with boom and bust.  In this economic environment, survival means doing what you have always done, just being more efficient.

So, despite a $3.00 lobster boat price in Nova Scotia, or a 30% drop in cod prices in Alaska, the key to survival is to not compensate by glutting the market.  The structure of the industry makes this less likely.

At the same time the industry has made vast improvements in communicating with the public over conservation and sustainability, health, and food safety.

The food safety scares get the headlines.  But the infrastructure put in place in response  --such as the Trace Register system, used for aquaculture certification to track product from farm to plate; and the numerous inspections and lab processes now in place for most major buyers--, is what will eventually solve the problems.

The industry has vastly increased its control over product integrity and safety.  This bodes very well for retaining customers, and selling seafood at levels that maintain margins.   The reason is that many of the marginal operators - those who import seafood from anonymous Chinese suppliers and then undercut prices, are increasingly cut out of the market because fewer and fewer retailers can afford to buy their products.

As buyers lock in sustainability and certification requirements, they also lock in relationships with the largest and most responsible seafood producers.

The scenario for managing a decline in demand then is not to drastically cut prices, but to adjust supply to maintain market pricing within its traditional levels.  Of course this means that some prices will come down, but they don’t have to exceed previous market swings.

This is not to say there are no problems.  Overextended companies may very well go bankrupt - as happened with Poseidon Seafoods, and as is predicted for some restaurant chains.

Secondly, despite more publicity and prosecutions, there is still a lot of mislabeled and fraudulent seafood being sold as a different species, or being sold underweight.    But NFI’s campaign for economic integrity is slowly bearing fruit as more major companies abide by the NFI member requirements to not sell fraudulent product, even if competitors are doing so.

In looking ahead to 2009, it seems to me the seafood industry is as well positioned as anyone to survive whatever economic storms occur, due to changes and new practices that have been put in place over the past several years.  This coming year we will see some of that effort bear fruit.

The Economic Crisis and the Seafood Industry

The following is an editorial we published in Seafood.com News this week:

SEAFOOD.COM NEWS by John Sackton - -[Editorial Comment] The seafood business has just gotten tougher. With the collapse of global financial markets, it is natural to ask how this might impact our industry.

Here are a few thoughts:

Icelandic Banking: Glitnir and Landsbanki were the two most prominent international banks lending to the Seafood Industry. For the past few years, most deals involving expansion, acquisition, or consolidation of the industry in the U.S. and Canada have had some involvement from these banks - whether as the lead financier, or as part of a banking consortium. Their expertise in the industry helped other financial partners get on board.

Now in Iceland they are called arsonists by former Prime Minister Dav'd Oddsson. Although loans to the seafood industry played no part in the demise of these two banks, our industry will suffer because we are splashed with the mud from the collapse. Two of our major financial supporters have disappeared.

It will now be harder for seafood companies to make deals unless they have hard assets, like secure control of fishing rights. The Alaskan CDQ companies are a good example: they will be able to secure financing because they have a readily identifiable asset base in terms of their fish quotas. Others who also have quota rights will continue to be able to get financing. But if government actions threaten the stability of these quota rights, financing will dry up. So, one consequence is that financing is going to be more difficult in the seafood industry for investment, growth, and acquisitions.

Credit woes: Most companies don't do deals on a week in and week out basis. A far more down to earth problem is basic cash for operations. The economic model for a seafood producer is 1) borrow money, 2) pay fishermen for (or import) product, 3) process product, 4) hold inventory and sell product, 5)get paid, 6) repay loan. How much product a company can buy from fishermen (or import) is constrained by their credit line. If the credit line is reduced, they must buy or import less fish. This leads to less competition for raw material and lower prices to fishermen. It also can lead to product dumping if a company needs to raise money quickly due to a cut back in its credit line.

Unless things change fairly quickly, we are going to see a general contraction in the amount of credit available to the industry to purchase product, and the credit that is available will be at a higher cost.

Customer Credit Woes Even more immediate is the problem of customer credit. Restaurant chains also have to get approval for what they can buy- and some of them are finding all of a sudden that their approvals have dried up. Suddenly the seafood company is faced with a customer who cannot buy because of constrained credit. Alternatively, a seller can decide that they can no longer afford the risk of selling to a long time customer.

Shrimp Debacle: Many companies have millions of dollars of their credit lines tied up in irrevocable letters of credit to support their customs bonds to import shrimp. In some cases, Customs is refusing to liquidate shipments for negligible reasons. In this situation, having so much credit locked up is frankly dangerous -- if banks tighten lending rules or raise interest rates, it is a huge problem for those companies that cannot get their custom bonds canceled upon liquidation of an entry. This is especially acute for people importing from high duty countries, such as China. The U.S. government is falling over itself to give money to banks. One clear thing the government could do to protect the seafood industry is to order customs to release bonds when liquidations are substantially complete, and any remaining liability has no conceivable relationship to the amount of cash tied up.

Customers: Another way to secure credit is to have customer commitments in place for the seafood that will be produced. However, only the commitments from the strongest and most financially viable customers are worth anything. The competition among companies to sell to the strongest buyer leads to a big advantage to buyers: they can demand favorable terms; demand the seller hold the inventory and the risk, and use the fact that they have relatively good credit to force sales at the lowest price. So at a time when costs are going up, strong buyers have the ability to push seller margins down to the bone.

Also, there is the general problem of demand - already many seafood commodity prices are falling, particularly some of the higher priced items like lobster. It is widely known that so far, foodservice seafood demand has fallen off more quickly than retail demand. Yet foodservice sales are the bread and butter of the seafood industry. If there is a continued contraction, it will mean weaker demand and more pressure on pricing. The euphoria we all felt a few months ago as seafood demand seemed to skyrocket has evaporated. It is quite likely that seafood consumption in the U.S. will be down this year.

Economic Recession: In an interview with the New Brunswick Business Journal, Glen Cooke, of Cooke Aquaculture, the largest salmon producer in Atlantic Canada, said that the financial melt down was not his number one concern. Instead, 'The number one concern is: will consumption drop off in the U.S. markets and Canada if we slide into a recession?'

'Number two is our customers in the marketplace. Are they going to be stable enough to distribute for us?'

Falling consumption is likely to be the biggest and most immediate problem, because that will exacerbate all the other issues of cash flow, credit worthiness, and commitments that make the seafood industry viable, and marginally profitable.

Undoubtedly there are also opportunities in these times. The ones who will benefit are those who are financially strong enough to take advantage of lower prices for raw material, and maintain good customer relationships. But as the Glitnir debacle showed, what appears as strength may not be really strong, so transparency will be important also. Those companies that have deep pockets, that have strong partners, or that are open about their sources and strength of financing will prosper, while those companies whose sources of financing are opaque may seem to be higher business risks.

'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.