Written by Jen Finn
October 24, 2012
Industry expects council to take the bait, now exploring marketing ideas
A year after the economic meltdown, the Dow Jones uphill trudge to 10,000 points in October and optimistic talk of a pending economic recovery lit no fires in Down East Maine.
With prices still submerged around $2.50 a pound, lobster industry talk is all about the impending bait problem come 2010 and long-term marketing strategies.
The New England Fishery Management Council was under pressure in November to make sharp 2010 herring quota reductions — as much as 45 to 50 percent — as a precautionary step pending a new stock assessment.
"It will be pretty devastating. I can tell you, the last cannery in the state won't make it... I hope they will reconsider and wait until after the assessment," says Jennie Bichrest of Purse Line Bait in Phippsburg, Maine, a herring adviser to the council. "It is not overfished."
The industry has adjusted to myriad conservation measures in recent years. Bait has stabilized at around $110 a barrel, and Sen. Olympia Snowe (R-Maine) is working to fend off deeper cuts.
Some estimates reckoned harvests could be halved in Area 1A, the nearshore Gulf of Maine and the industry's usual bait locker.
"Right now bait's tight with 45,000 metric tons. Area 3 [Georges Bank] has been producing, which has saved us," says South Thomaston, Maine, lobsterman David Cousens, president of the Maine Lobstermen's Association.
Herring bait in October cost around $36 a bushel "and if you figure the simple math, it may be twice that" with the reductions, Cousens says. Pogies, the most popular substitute, are subject to hit-or-miss supply, and often a long transport chain by truck from Cape May, N.J., and even points south.
"We had a lot of pogies right here in Maine last summer, so we were able to offer guys a good price on those, and some people were going out and catching their own," Bichrest says.
But if Maine depends on southern supplies, it's also subject to over-the-road diesel costs if an economic recovery raises fuel prices. At the peak of the summer 2008 price bubble a truckload of pogies from Cape May cost $600 in fuel surcharge, Bichrest recalls.
"What we're trying to do now is put together alternative baits and supplies, whether it's pogies or redfish. Once we see the numbers in November  we will know what we have to do," Cousens says.
For the future, Cousens says lobstermen need to be "taking charge of our own product." In the association's October newsletter, he laid out some ideas:
• Alleviate product glut by slowing the delivery pace of new-shell lobsters for sale to processors.
• Grade lobsters at sea, using criteria and claw-band labels agreed on by lobstermen and dealers.
• Leave "enough lobsters on the bottom to harden up so we have a higher percentage of shippable lobsters" to send to the higher-paying markets. Lobster harvesters last summer were paid base prices of $2 to $2.40 a pound based on new-shell prices, but hard-shells bring as much as $2.50 more to harvesters, Cousens says.
"Right now, 70 to 80 percent of our product is shippable, and we're getting charged based on the lowest-value product. The middleman is doing it now. We could be doing that for ourselves," he says.
One new industry player, Linda Bean, drew more attention in 2009 as she built up her vertically integrated operation of lobster docks, retail lobster roll stores and a new midcoast processing plant. Bean is investing her personal fortune from her family's L.L. Bean outfitting and clothing business.
Lobstermen differ on how Bean's operation will affect how they do business, says Jimmy Wharton of the Friendship Lobster Cooperative.
"It could be good, but some think it could keep prices lower" with more demand for cheap product for processing, he says.
"It's helpful to have it in-state. Right now when we ship to Canadian processors, it becomes Canadian lobster," Cousens says. "I think Linda Bean has the right idea. She's created a Maine brand, and she's doing the handling and marketing to make it a quality product."
A 2009 state task force report said market forces "wring profitability from all industry constituents," as they try to sell "the same undifferentiated and commoditized product," looking to make money off volume.
Now fishermen seek direct-sales opportunities. The Maine Lobster Promotion Council organized Maine Lobster Harvest Days, tying into the autumn circuit of rural harvest festivals with events where consumers could buy $5 lobsters off the docks. — Kirk Moore
GULF/SOUTH ATLANTIC RED SNAPPER
IFQs shrink harvester profit margins as management death sentence hovers
The 2010 red snapper outlook is more convoluted and contradictory than usual.
Fishermen report abundant snapper, but the 2.55 million-pound Gulf of Mexico commercial quota continues.
Aside from the quota, the IFQ program seems to be working well for major shareholders. However, fishermen in the eastern gulf who have to rent allocation to participate are finding it harder to turn a profit.
On Florida's Atlantic coast, supply is sufficient to undercut the gulf price by nearly a dollar. At the same time, the South Atlantic Fishery Management Council is pushing an amendment that, if implemented, would close almost all snapper-grouper fishing indefinitely — a virtual death sentence for commercial, charter and recreational fishing communities.
"What NMFS and the South Atlantic council is doing to the fishermen, dealers, communities and the anglers is bigger than the Florida net ban," says Bob Jones, executive director of the Madeira Beach, Fla.-based Southern Offshore Fishing Association.
Especially troubling to fishermen is the gap between management policy and what their eyes tell them. Martin Fisher, owner of Rising Sun Fisheries, Madeira Beach, says stock-assessment data are out of date.
"We've got some serious issues with old and incomplete data being applied to current management issues," Fisher says.
Last year Fisher took a seat on NOAA's Marine Fisheries Advisory Committee, a high-profile 21-member panel that reports directly to Commerce Secretary Gary Locke. The most recent red snapper stock assessment indicates not enough older fish to support sustainability in the eastern gulf.
"They don't have any data that shows the right age fish," Fisher says. "I don't believe the data. My captain and [I] are seeing a preponderance of 18- to 20-pound fish."
Fishermen report catching red snapper in nearshore habitats that haven't been productive previously.
David Krebs, owner of Ariel Seafood in Destin, Fla., says his boats are catching red snapper locally for the first time.
"We're fishing right out of Destin right now," he said in early October. "They didn't used to be here."
Russell Underwood reports the same phenomenon in Panama City.
"If the resource was not there, you couldn't do it off Panama City," he says.
Ex-vessel price is bumping all-time highs — $4.25 to $4.75 per pound — but few vessel owners on the Florida peninsula had enough history in the fishery to do well on initial allocation. Now the eastern gulf is teeming with red snapper, and those who want to participate must rent allocation at the going price.
"Allocation has been renting for $3 a pound all year," Fisher says. If the ex-vessel price is $4.50, $3 has to be subtracted.
"The true ex-vessel value to the boat has gone from $3 a pound [prior to IFQs] to $1.50," he says. "The amount of revenue has actually been reduced by 50 percent."
For shareholders, there is a corresponding quandary, he says. Typically, the vessel owner gets 40 percent of the ex-vessel price per pound. If red snapper is $4.75, then the owner gets $1.90 when he sends the boat fishing. On the other hand, he can rent his allocation for $3 a pound.
"As an owner, somebody who actually holds an allocation, I can get more revenue renting the quota than I can by sending the boat," Fisher says.
Some vessel owners are charging captains a surcharge to make up the difference, he says.
"It's a messed up deal," Fisher says.
Meanwhile, NMFS says closing the Atlantic side's snapper and grouper grounds is justified because the red snapper breeding population is at 3 percent of sustainable levels.
Gerald Pack, owner of Safe Harbor Seafood in Atlantic Beach, finds it hard to believe a total shutdown can be the only option when fishing is good. "We've been catching all year," he says.
In early September, the Charleston (S.C.) Post and Courier published a Pew Environment Group opinion piece suggesting that under South Atlantic long-term closures red snapper stocks could rebound 25-fold by 2036 from 2006 landings of "about 78,000 pounds."
Federal numbers for 2006 do show landings of 77,639 pounds for the whole South Atlantic. But 2008, with landings of 214,564 pounds, was the best year since 1990, according to NMFS' own figures.
For 2009, through the first week in October, Pack has documented 80,077 pounds of red snapper landings at Safe Harbor Seafood alone.
The South Atlantic council's schedule calls for sending Amendment 17A to NMFS and the secretary of commerce for final approval in either March or June. — Hoyt Childers
ALASKA/PACIFIC PETRALE SOLE
Lower quota, tilapia imports paint a pessimistic picture for trawler fleet
Pessimistic winds are blowing for West Coast trawlers targeting petrale sole.
Quota reductions for the 2010 season were in store even before the Pacific Fishery Management Council met in November to decide best practices in managing the fishery.
Harvest quotas from 2001 to 2006 remained unchanged at 2,762 metric tons, then were cut to 2,499 metric tons for 2007 and 2008. The 2009 quota was originally set at 2,433 metric tons, and the 2010 quota at 2,393 metric tons. However, a summer 2009 stock assessment pointed toward halving the 2010 harvest to 1,193 metric tons.
"The quota is going to be quite a bit worse than last year," says Rod Moore, executive director of the West Coast Seafood Processors Association in Portland, Ore.
Though stock assessments in 2005 indicated a healthy petrale population, the latest assessment results and new ways of analyzing the data paint a different picture.
"Significant changes in biological and fishery data sources as well as changes to model configuration may have contributed to the more pessimistic stock status in the 2009 stock assessment," says Gretchen Arentzen, fisheries management specialist with NMFS in Seattle.
The weak summer assessment prompted NMFS and the council to begin a three-meeting process to revise rules that had set the 2009 harvest quota at 2,393 metric tons and were published in the federal register at the beginning of the year.
Additional management measures the council implemented during its third meeting in October called for much-reduced trip limits of 2,000 pounds of petrale (they had been as high as 45,000 pounds earlier in 2009) in November and December of 2009 and prescribed area restrictions that will keep the fleet away from some petrale spawning populations.
With trip limits and area restrictions set for the rest of 2009, the council was to deliberate on various options and implement final measures to the management plan for 2010 at its November meeting.
Among options federal regulators and the industry were to consider in managing the fishery under a reduced quota was whether to manage petrale as a year-round fishery or as seasonal one to target stocks during the spawning period, which stretches from November to February.
"We've got to look at options to concentrate effort in the winter or spread it out through the entire year," Moore says.
The other downer for trawlers is that the reduced flow of petrale from the ocean to market won't likely translate to commensurate gains in ex-vessel prices. Pacific Fisheries Information Network data shows average ex-vessel prices have fluctuated independently from harvest volumes, indicating price point and substitute species are prevalent factors.
In 2005, the fleet saw average offers of 91 cents per pound for the harvest of 2,741.1 metric tons; in 2006, the harvest shot up to 2,612.3 metric tons and prices jumped up by a dime to $1.01 per pound.
In 2007 the harvest declined to 2,250.5 metric tons with the price slipping slightly to $1. It returned to $1.01 in 2008, when the harvest dipped to 2,224.2 metric tons. As of October 2009, trawlers had landed 1,683.3 metric tons, according to the PacFIN data; prices declined by 11 cents to an average 90 cents per pound.
Global economics have been blamed in part for the sub-dollar ex-vessel offers in 2009. But the presence of farmed tilapia, a substitute species that competes with petrale sole at the consumer end of the market chain will likely hold ex-vessel prices in check, according to Moore.
"The volumes of tilapia have been increasing for the past several years," he says. "But it's also a price issue. People go out looking for cheaper meals, and tilapia fits right in."
According to NMFS foreign trade data, imports of whole frozen and fresh and frozen tilapia fillets into the United States from all countries totaled up to 297.6 million pounds in 2005, jumped to more than 348.3 million pounds a year later and continued to climb to 383.6 million pounds in 2007. In 2008, import volumes of tilapia to the United States — mainly from China — hit 394.6 million pounds.
At the same time that tilapia import volumes have increased, the values of those volumes have increased from $1.23 per pound in 2005 to $1.38 in '06, $1.46 in '07 and $1.86 in '08. — Charlie Ess
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