Written by Jen Finn
October 29, 2012
Buyers reluctant to store big inventory of shellfish as global supply glut rules
Northern shrimp are keeping their biological strength in the Gulf of Maine, and the region's major processor sees some hope for better economic conditions going into the 2009-10 winter season.
As the stage was set in late 2008 after the financial meltdown, "it was general market conditions and people reluctant to hold high levels of inventory," says Spencer Fuller of Cozy Harbor Seafood in Portland, Maine. "There were also huge inventories from Canada that were held over. They didn't get clear of that until the last month or so," Fuller said in late August.
"There's certainly more stability in the market... I don't know if that translates into more money for us," Fuller says. Buyers are still holding back from committing to inventory, and the overall worldwide glut in shrimp supplies continues.
That's having some effect across the Atlantic, where Maine and Canada export shrimp. "There's definitely been a shift in the United Kingdom from cold-water to warm-water shrimp," Fuller says.
"I got pretty much 45 cents all season," says Kelo Pinkham, a longtime shrimper and industry adviser from Maine's Boothbay region. But "I didn't go the last month, because we lost our market," he adds. With prices reported as low as 35 cents, some fishermen just hung up their gear.
"I didn't even go last year. They didn't have a market," says Mark Cheney of Pemaquid.
The persistent problems of limited markets and processing capacity were still there, but buyers say that was compounded by a decline in export demand to the United Kingdom, Pinkham says.
"They like our shrimp because they are bigger," he says, "but they stopped buying in the middle of the season."
There are plenty of shrimp. A big 2004 year class recovered the fishery end of the business, followed by a good 2005 year, a weaker 2006 showing and an above-average 2007 index, says Brad Spear, an Atlantic States Marine Fisheries Commission fishery plan coordinator.
"We're waiting to see what happens with the 2008 year class and we should know by this fall," Spear says. "I did see lots of little shrimp out there.
"This past season was set at 180 days, and the [ASMFC committees] felt comfortable with that. They didn't really expect the markets to open up, and the landings were well below anything that would have taken a major escalation in effort," he says.
The commission and state officials were to set the season rules in October, and 180 days seems likely again. Spear was on the fourth leg of this summer's shrimp survey. "When we were hitting them," he says, "we were hitting them good, and in a good range of sizes."
But the economics dwarf the biological issues. Processors in Newfoundland and Labrador shut down their shrimp lines; their market positions were undermined by dwindling demand and rising value of the Canadian dollar compared to other currencies. As many as 2,000 workers were idled, according to the St. John's, Newfoundland-based Association of Seafood Producers.
That steep decline in global demand offset a drop in the diesel prices that pounded fishermen through 2008. Now with fuel prices slowly rising, shrimp prices remain low. In mid-June, an Associated Press survey of Gulf of Mexico fishermen and wholesalers reported prices for large shrimp down by around 20 percent and lots of inventory unsold.
Last winter Maine fishermen and community groups worked to prime regional markets with community-supported fisheries programs, such as the Port Clyde Fresh Catch seafood subscription program, selling shrimp and finfish directly to Rockland-area customers on 14-week plans.
Other Penobscot Bay region CSF programs sold head-on shrimp for as little as $1.50 a pound in similar subscription plans. That got attention from food writers and bloggers, who champion Maine shrimp as an underappreciated Northeast resource. The high-end Whole Foods supermarkets in New England were selling headless shrimp for $4.99.
A 180-day season helps, Pinkham says, "but I hope we can do a little something in the summer." A stream of fresh shrimp during the coastal tourism season would do much for the Gulf of Maine brand with cross-promotion for restaurants, seafood retailers and fishermen, he says.
Maine fishermen took 91 percent of the 2008 catch, followed by New Hampshire with a little more than 8 percent and the rest from Massachusetts. That reflects a long-term shift northward; as much as 30 percent of the shrimp harvest came ashore in Massachusetts in the 1980s. — Kirk Moore
Gulf/South Atlantic Oysters
Ike, Gustav, recession clip prices, but good spat sets offer hope for recovery
Good spat sets, particularly in Galveston Bay, Texas' prime production area, and some continuing production and decent spat sets in Louisiana maintain hope for continued recovery of the region's oyster industry.
In the short term, however, supply shortages are likely in the coming months because of the habitat loss and other damage hurricanes Ike and Gustav inflicted in September 2008.
Curtis Duet, a private lease owner from Galliano, La., lost his entire crop last year. But he's hopeful his leases will soon be producing marketable oysters.
"They're coming back but are too small to harvest — 'bout the size of a 50-cent piece," says Duet, who subleases his oyster grounds in Terrebonne and LaFourche parishes. "Should be ready for Christmas."
Before Gustav, watermen working his leases made good harvests at good prices.
"They make 40 to 50 sacks a day... it was about $22 a sack," he says. "We did real well until Gustav."
Supply shortages may be felt in the coming months, says Patrick Banks, biologist program manager with the Louisiana Department of Wildlife and Fisheries' Marine Fisheries Division.
"Typically, by September/October the supply of oysters coming from the private leases dwindles, and harvesters and dealers start looking forward to a new supply of oysters from the public grounds," Banks says. "Unfortunately, the statewide public ground resource appears to be slim this year, so supply may be an issue."
Statewide the public grounds supply is down 46 percent from 2008, and oyster resources in St. Bernard Parish are down more than 70 percent.
"Calcasieu Lake continues to hold a nice supply of market-size oysters and this year accounts for over 50 percent of the statewide market-size oyster stock," Banks says.
In Texas, the second-largest eastern oyster producer, Hurricane Ike severely damaged the oyster resource, says Lance Robinson, regional director for the Texas Parks and Wildlife Department's Coastal Fisheries Division.
A Texas A&M and Sea Grant study estimates damages and repair costs for Galveston Bay private leases and other private infrastructure at more than $38 million.
A Parks and Wildlife survey says "about 60 percent of the oyster crop had smothered under sediments and debris deposited by the storm surge."
Texas harvesters have likewise maintained some supply, but shortages seem certain in the coming months.
"The available acres of oyster reef in Galveston Bay has been reduced by about half as a result of Hurricane Ike," Robinson says. Galveston Bay is the source of most Texas oysters, and more than 8,000 acres of oyster reef were lost.
Late in August, the Texas Parks and Wildlife Commission closed for two harvesting seasons (Sept. 1, 2009, through Sept. 1, 2011) public reefs in the hardest hit East Bay to make recovery a priority and help spat grow to market size. Private East Bay leases, already undergoing intense private restoration, will remain open, Robinson says.
"Oyster leaseholders in Galveston Bay have spent a lot of time, money and effort in cleaning their leases of debris and planting cultch" and are reporting very good spat sets, Robinson says.
In Florida, Apalachicola Bay's summer bars produced well, says Grady Leavins, president of Leavins Seafood in Apalachicola.
"We've had a very good season, an abundant amount of fresh water... it helped a lot," he says.
Apalachicola Bay oystermen, who work with 14-foot or longer hand tongs from the decks of small open skiffs, are making out okay, Leavins says.
Florida escaped major harm from the 2008 storms. Barring 2009 hurricane damage, Florida's supply should be normal.
Leavins, a 40-year-plus industry veteran and major national wholesaler, must buy from Louisiana and Texas, in addition to Apalachicola Bay. So far he's been able to maintain sufficient supply with long-established sources, he says.
"I get all I want [out of Louisiana]," he says. "Texas has been down, but we're going to have a good season."
Pricewise, the possibility of shortages isn't affecting prices, though that could change drastically with worst-case shortages, or if 2009 produces more hurricane damage. Leavins says in August, Apalachicola harvesters received $16 a bushel, a dollar more than the summer 2007 price.
The economic recession may be counteracting the market effect of supply shortages in Texas and Louisiana. The economy is clearly affecting demand, Leavins says.
"Restaurants have closed. If their business is off 25 percent, ours is off 25 percent. It's rather a snowball effect," he says. "We're having to work smaller and harder. Competition is vicious." — Hoyt Childers
North Pacific Pollock
Global markets seek cheap substitutes for more expensive Bering Sea fillets
Lower harvest quotas, fluctuating currency exchange rates and the global economy will set the tone for pollock fillets coming from the Bering Sea.
Last year's news of a quota reduction from 1 million metric tons to 815,000 metric tons sent a ripple of higher prices through the distribution chain, but only temporarily. Some buyers backed off and switched to cheaper substitutes.
Though quotas have declined steadily the past three years, initial reaction among buyers when news of the impending lower 2009 quota began circulating was to buy more — and pay more — for the pollock, particularly in last year's B season.
"The price jumped 10 to 15 percent after the news came out," says Marc Wells, president of the Seattle-based Genuine Alaska Pollock Producers' board of directors.
Prices to the fishing companies for pinbone-out fillet blocks jumped from around $3,500 per metric ton for fish caught during the 2008 A season, which runs from January to April, to $4,200 per metric ton during the B season, which runs from July to October. This year, prices started out at a high of $4,400 during the A season and ratcheted back down to around $4,000 per metric ton, as buyers determined that prices above that warrant shopping for substitute species.
"The quota went down. The price went up. Customer demand [for pollock] went down, and that increased demand for cheaper fish," Wells says. And if prices for pollock climb high enough, he adds, large-scale food distributors broaden their search to include chicken, pork or other protein sources.
"People are just looking for better value in their food dollars — especially during economic downturn," he says.
Other fishy competitors to pollock among European consumers, who've been prone to buy fish caught in sustainable fisheries, have been hoki caught off the New Zealand coast and saithe from the northeast European Atlantic. Like Alaska pollock, hoki and saithe are Marine Stewardship Council–certified fisheries. All three species are competitively priced.
For buyers caring less about sustainability and more about bargains, there's plenty of lower-quality twice-frozen Russian pollock on the market.
"MSC certification was the driving force in keeping Alaska product prices up and Russian product out," Wells says. "But as the global economy changed, the buyers went looking for cheaper product — and that came from Russia."
Wells adds the caveat that part of the pricing gyrations late last year coincided with currency exchange rates between the euro and the U.S. dollar. When it comes to marketing fillets and fillet blocks, much of the Alaska product finds its way to ports that supply Germany and France, hence the euro's significance.
Since January 2006, the euro gained strength as it traded at a monthly average of $1.21 and made steady gains toward a peak of $1.57 last July. This year, the euro has weakened some and ranged from a monthly average of $1.36 to $1.40 through much of the pollock season.
Currency exchange rates and shipping costs will determine prices for pollock exported overseas. However, the recent expansion of sales to large school districts in New York and in California bodes well for funneling more single-frozen Alaska product into domestic markets, according to Pat Shanahan, the Alaska pollock producers group's program director.
For years, nutrition experts have been recommending that schools serve more fish as part of their lunch programs. But questions of palatability have stopped some districts short of embracing the programs.
"Schools are getting smarter about buying now," says Shanahan. "In the past, they've bought cheaper fish and the kids just throw it into the garbage can."
At the same time that more schools have switched to pollock in hopes of offering healthier entrées, the health of the pollock stocks sounds like it's on the upswing.
The results from stock assessment studies for this year weren't expected until sometime in November, according to Jim Ianelli, fisheries scientist with NOAA's Alaska Fisheries Science Center in Seattle. However, the industry has been anticipating resurgence in the recruitment of 4-year-old pollock into the fishery. That could spell quota increases beginning next year.
"Our assessment based on last year's [and earlier data] indicate that good recruitment had occurred in the system," Ianelli says. "Anecdotally, I've heard similar conditions observed from survey and fishery observers this year." — Charlie Ess
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