Economic Impact

SEAFOOD.COM NEWS by John Sackton — July 2, 2013 — It appears likely that Walmart’s need for MSC approved or FIP Russian pink salmon will vastly exceed the actual supply available this year.

First, in their recent letter to suppliers, Walmart acknowledged that there was only a single Fishery Improvement Project (FIP) approved by SFP, which they called a ‘very small project led by WWF for chum salmon in the Tugur River of Russia.’

They said that there were other ongoing discussions in both Russian and the US, but that at present none of these had resulted in publicly announced improvement projects.

Meanwhile, the available Russian MSC salmon is not sufficient to meet Walmart’s needs.

Industry estimates are that Walmart has ordered over 400 containers of Russian pink salmon from its Chinese suppliers.  This represents about 8,000 tons of finished product.

Chinese suppliers would need to purchase 12,000 tons of H&G or semi-dressed pink salmon, which would be equivalent to 16,000 tons live weight.

We reviewed the best information on Russian pink salmon availability in MSC fisheries, and found a mis-match.

First, the Iturup fishery, in the Kurile Islands, is expected to produce about 7,000 tons of pink salmon this year.  This was the first Russian fishery to be certified.  MSC’s website wildly overstates the size of this fishery, claiming 37,000 tons of pinks, yet in recent years the figures have been 3,000 tons (2011), 15,000 tons (2012) and 7,000 tons (2013 quota).

The other major MSC fishery is on the North east of Sakhalin, and this fishery has a 2013 quota of 38,000 metric tons.  However, even though this fishery is MSC certified, some of the largest processors are not part of the MSC client group.

As has happened in other jurisdictions, the first group of processors certified have resisted allowing other participants into the MSC process, trying to keep their competitive advantage.  Despite efforts of these additional suppliers, no NGO has been able to provide a transparent and honest way for them to join the program.  Instead, the reaction has been largely that this is up to the ‘locals’; leaving the original group in charge, but denying access to a significant amount of Sakhalin MSC certified pink salmon.

NGO's do not produce fish, and the lack of ability to force processors who are competitors to work together is another weak link in their efforts to provide certainty of supply. 

According to Walmart policy, this salmon cannot enter the distribution chain as the companies do not have chain of custody certification, or permission to join the original client group.

As a result, a significant portion of the Sakhalin fishery will not be eligible under MSC chain of custody, despite the fact it is certified.

If we estimate then 7,000 tons from Iturup, and perhaps 15,000 tons from Sakhalin, and no further tonnage from “FIP” fisheries, that means that the total MSC supply chain may have about 22,000 tons of pink salmon live weight.  That equates to 16,500 tons of H&G, and about 11,000 tons of finished fillets.

If Walmart has indeed asked for 8,000 tons of pink salmon fillets, that represents about 73% of the total available supply, by our estimates.  Such a position is untenable, because other suppliers, such as High Liner, plus many European buyers – will all be seeking the same fish.   If Walmart actually seeks to take over 70% of the available MSC pink salmon supply, this will lead to a bidding war and higher prices.   This is the opposite of Walmart's aim for the Russian fishery, which was and is to establish a low global price for pink salmon.   This is why they moved their sourcing away from Alaska in the first place.

This obviously creates an untenable situation for Walmart; for the MSC, and for suppliers.

First, the price of this fish will immediately be bid up, forcing Walmart to pay higher prices.

Secondly, the pressures to circumvent MSC chain of custody will be immense, as a significant portion of the fishery is outside the MSC chain of custody program.  As a result, it will call into question the honesty of ‘MSC’ suppliers, unless extraordinary measures are taken to audit the Russian salmon supply chain.

Finally, it does not advance sustainability.  Instead of focusing effort on the actual problems of illegal fishing, lack of knowledge about escapements for particular river systems, and the impacts on non-target species, the excessive demand for this fish creates incentives to ignore other requirements as well.

There is a famous ‘broken window’ theory of crime fighting which says paying attention to minor infractions – broken windows – helps control major infractions – serious crime like robberies and muggings.  The same is true in the Russian fishery.  If unreasonable pressures are placed on the MSC system, widespread cheating will ensue, and once such cheating is established, it is easy to cheat on other things as well – such as not reporting by-catch, illegal harvests etc.

The great irony of this problem is that none of these issues exist in Alaska, and the only reason Walmart is refusing to buy more Alaska pink salmon is because they have taken the judgments of their NGO partner over the actual track record of American fisheries management.

This policy will continue to have a negative impact – both hurting Walmart publicly with American consumers and politicians, and hurting the cause of sustainability as well.

Finally, Walmart has another problem with their largest Chinese supplier, Yihe Co.  Multiple reports from China suggest this company is not operating in the same manner as in the past, with little work being done at its five contract plants, and a skeleton crew at the one plant it actually owns.  Some have called the plant ‘closed.’

Even from the outside it can be seen that something is wrong with Yihe – not operating at the height of the season suggests a problem in either raw material, finance, or orders. Last year this company was a major supplier of pink salmon to Walmart.   It is unclear they can fulfill that role this year.

All in all, Walmart has many business reasons for sticking with Alaska pink salmon, and simple path do to so, which is to recognize that the Alaska RFM certification and its long track record of successful fisheries management are in fact ‘equivalent’ to the MSC certifications that Walmart seeks.

This story originally appeared on Seafood.com, a subscription site. It is reprinted with permission.

 

June 28, 2013 — Wal-Mart Stores Inc. has sent suppliers a letter saying it will stop selling  Alaska salmon that isn't certified by the Marine Stewardship Council. The Alaska Department of Fish and Game dropped its sponsorship of the salmon industry's MSC certification in 2010, saying it was too expensive, and processors then pulled out, also citing the program's complexity. 

Wal-Mart Inc. spokesman Chris Schrader on Thursday … confirmed that Wal-Mart is buying Alaska salmon products only from salmon sectors with specialty MSC certificates, and not from all of the state’s salmon fisheries. 

For those not MSC-certified: “At this point, they would need to have a (plan) in place to bridge that,” Schrader said.

Read the full story at the Anchorage Daily News 

 

June 26, 2013 — On Monday, June 24, Administrator John Bullard hosted public conference call to solicit feedback from fishermen and other stakeholders on the draft Working Document on Resources to Support the Northeast Groundfish Industry. This document is a compilation of some information and ideas to help this industry maintain its viability through these challenging times. It is a starting point from which industry members, government agencies, elected officials, non-governmental organizations, and others can take action to help preserve this fishery.

The objectives of this strategy are:

1. Make fishermen and support businesses aware of the various forms of assistance available to them;
2. Assemble the key agencies and entities that can provide that support;
3. With our partners, improve this document over time to address emerging issues; and
4. Undertake the actions that fall within our purview.

Click here to view the Draft Strategy.

To listen to a recording of the June 24 public conference call click here.

For more information, contact Olivia Rugo, Regional Office, at 978-675-2167 or email her at Olivia.rugo@noaa.gov.

Read the release from NOAA

 

 

June 25, 2013 — The region’s top federal fisheries regulator said Monday that whether people point to tightened fish catch limits or a scarcity of fish as reasons why the fishing industry is struggling, there’s a need for everyone involved to work together on resources to support the groundfish industry in the Northeast.

“Whatever it is, there’s no question about the fact that there’s going to be incredible hardship over the next several years,” National Oceanic and Atmospheric Administration Regional Administrator John Bullard said during a public conference call.

Bullard invited feedback on a draft 20-point plan to support the fishing industry in the wake of stricter fish catch limits imposed on May 1.

“This document attempts to find ways within the day to day business of government to provide assistance,” he said.

Bullard said “there’s been a lot of talk about Congress trying to provide disaster assistance” but said efforts by the Massachusetts Congressional delegation to deliver that aid have not been successful to date. “They’re not giving up,” said Bullard.

Read the full story at the Cape Ann Beacon

 

 

June 19, 2013 — Global fish prices rose to a record in May on rising demand for salmon and falling supplies of tuna, according to the UN’s Food & Agriculture Organization.

An index of fish prices tracked by the Rome-based United Nations agency rose to 168 points in May, advancing 6.3 percent from April and up 16 percent from a year ago, data published in the FAO’s biannual Food Outlook report last week show.

Prices for farmed fish such as salmon rose faster than those from capture fisheries in the past year, the FAO data show. Aquaculture production is predicted to climb 5.6 percent in 2013, while capture of wild fish may rise 0.9 percent.

“Strong salmon demand despite rising salmon prices implies a structural shift in consumer demand, which is positive for salmon producers,” the FAO wrote in the outlook. “Despite record high prices, demand for tuna remains strong.”

Total fish production is forecast to climb 2.9 percent to 161.2 million metric tons this year from 156.7 million tons, with aquaculture output climbing to 70.2 million tons from 66.5 million tons. The value of fish exports is predicted to climb 2 percent to $130.8 billion this year after rising 0.5 percent to $128.2 billion in 2012.

Read the full story at Bloomberg Businessweek 

 

SEAFOOD.COM NEWS [Seafoodnews.com] — June 19, 2013 — The OECD/FAO ten year food supply outlook is being published June 26th.  Summaries have shown the economists expect a strong continued growth in fisheries.  This will result both in higher supply and higher prices.

World per capita consumption (round weight) is expected to increase 8% over the decade, from 19 kg to 20.6 kg per person.  Most of this growth will be supplied by aquaculture.

For the coming few years, fish will maintain a price advantage over beef, as low levels of livestock herds and high feed costs will keep beef prices at very high levels.  In the later half of the next decade, inceases in fish prices will bring it closer on average, and the increased prices are expected to slow the rate of growth in seafood consumption.

The OECD published a chart that allows you to compare the commodity price forecasts over a range of products, including fish and various other proteins.

Other highlights from the report:

Capture fisheries’ output is projected to rise by only 5% by 2022 with aquaculture increasing by 35%, despite a slowing growth rate due to higher feed costs and more limited availability of production locations. Aquaculture is projected to surpass capture fisheries as the main source for human consumption by 2015.

Fish product prices are projected to rise strongly over the coming decade as a result of strong demand, rising production costs and slowing production growth with continuing price volatility associated with supply swings. Rising prices are also projected for fish-meal and fish oil to 2022 with continuing rapid growth in per capita consumption and slowing production trends.

When the comparison is made in real terms, only in the case of beef, pork, and fish do prices average higher in the projection period relative to the base period and the last decade.

Beef prices in real terms are projected to average 13% higher, pork  16% higher and poultry meat price 21% higher in 2013-22. Milk powder prices are expected to average 8-10% higher in real terms, while fish prices are projected to be 9% higher.

In making the comparison with the average level of prices in the base period (2010-12), real price increases over the projection period are only projected for beef (3%), pork (2%) and fish products (1%). For all other commodities, prices are projected to be lower in real terms.

World fisheries production is projected to expand over the course of the projection period, to reach 181 Million metric tons  by 2022. This represents an increase of more than 18% above the average of the base period.

Recovery of certain fish stocks due to the implementation of better management of resources as well as reduced fish discards and waste levels, as required by changes in legislation governing national fisheries, should lead to a slowdown in world capture fisheries production to just a 5% expansion over the projection period.

Aquaculture production is projected to continue to expand over the projection period, albeit at a slower pace of 2.4%  per year,  down from nearly 6% in the last decade, to reach 85 Mt in 2022, an increase of 35% from the base period.

This slower production growth will be mainly due to lower availability and less optimal production locations; the high costs of fishmeal, fish oil and other feeds; and increasing energy costs, along with the growing scarcity of suitable sites for farming. Notwithstanding the slower production growth, aquaculture will still remain one of the fastest growing sectors when compared to other food-producing systems.

The share of aquaculture in total fishery production is projected to grow from 41% on average in 2010-12 to 47% in 2022.

Consumption of fish products is expected to increase strongly over the coming decade. World per capita fish food consumption is projected to reach 20.6 kg in 2022, up from nearly 19 kg on average in 2010-12. The average annual growth rate will be lower in the second half of the Outlook when fish start to become more expensive as a protein source in comparison with meats.

Per capita fish consumption is projected to increase in all continents except Africa, with Oceania and Asia showing the highest growth rate.

Per capita fish consumption will continue to be higher in the more advanced economies.

Aquaculture’s share of human consumption of fish is projected to exceed that of capture fisheries in 2015 and to reach 53% of total human consumption by 2022. Consumption of fishmeal and fish oil is expected to be constrained by production which will continue to be dependent mostly on the highly regulated capture fisheries.

This story originally appeared on Seafood.com, a subscription site. It is reprinted with permission.

PORT CLYDE, Maine — June 17, 2013 — Linda Bean’s path to becoming one of the major players in the state’s lobster industry came late in life.“I was 67 at the time and going through a divorce,” Bean said about her decision to try a new career in the lobster industry. “This gave me a new lease on life.”

Bean, who is the granddaughter of L.L.Bean’s founder, had a home in Port Clyde and about a quarter mile away was the Port Clyde General Store, the Dip Net restaurant, and down the road, the Bay Lobster wharf where lobstermen unloaded their catch.

She knew the owners of the Bay Lobster buying station and one of them, Nancy Albano, called her and asked if she would be interested in acquiring the lobster business.

Bean wasn’t immediately sold on the idea.

“I had never been in that type of business,” she said. “I had been a licensed real estate broker and invested in some vacation properties but that was the extent of it.”

David and Nancy Albano convinced her by agreeing to stay on for a year to show her how the business operates through an entire year’s cycle.

In February 2007, she purchased the Bay Lobster buying station for $1.6 million. In May 2007, she purchased Port Clyde’s general store and restaurant, both anchor businesses in this coastal village, for $1.1 million. Those were the first of what has become many acquisitions in the Midcoast for Bean.

She said the privilege of being one of the L.L.Bean heirs has given her the opportunity to make the investment in the Maine lobster industry.

Read the full story at the Bangor Daily News 

 

June 15, 2013 — Their long fight will end, fishermen say, in consolidation, like countless other stories of American small business. A few big corporations will move in and buy up permits cheap from desperate small-boat owners. And then, if the cod ever thrive again, it will be too late for the men who long pursued them.

“Once [the fishermen] are gone, they’re gone,” Cottone says. “When they leave, they’re not ever coming back.”

It has been more than 30 years since Russell Sherman nearly died in the ocean off the coast of Maine, but the Gloucester fisherman remembers as if it were yesterday. He spent 14 hours adrift in 20-foot seas that November night in 1978 after the boat he was working on sank and two of the five people on board drowned.

He remembers standing in the engine room, knee-deep in water, before the boat went down; when the fear hit him, he started vomiting. He remembers the rescue helicopter that buzzed overhead that night as he flailed below, invisible in the black water, and he remembers looking up in the dawn light to see Cadillac Mountain. Weak and half frozen, clinging to an aluminum skiff, he started paddling toward it.

Sherman relishes telling the story, and he paces it slowly, deliberately, every well-burnished detail building the suspense. It seems safe to guess that part of his pleasure comes from knowing how it will end: with his unlikely survival, every time.

But this is not the story he has come to tell this stormy Sunday afternoon. Today’s story has no ending yet and concerns a different kind of danger, one that has been bearing down for decades on the 65-year-old captain of the Lady Jane and his fellow fishermen. When he starts to speak of that calamity — the collapse of New England groundfishing — Sherman’s manner changes, fear and anger roiling close to the surface. It is clear he feels himself flailing again in deep water.

This time, though, his rescue is uncertain. After years of watching the government cut the amount of fish they can catch and watching their incomes shrink, Sherman and his peers find themselves on the brink of extinction. On May 1, fishery managers enacted the most drastic catch limits ever seen in the history of New England fishing, slashing the amount of cod that may be caught in the Gulf of Maine by 77 percent and sharply cutting other groundfish catches like haddock and flounder.

Sherman, who is just back from some 40 miles offshore, gazes out the rain-streaked window of a Gloucester coffee shop, his worried eyes the palest blue against his windburned face.

“Scared to death,” he says, his eyes averted. “I’m scared to death.”

Read the full story at the Boston Globe Magazine

 

 

ELLSWORTH, Maine — June 17, 2013 — Similar to 2012, prices Maine lobster fishermen are getting for their catch are low for this time of year, when a low supply usually results in higher prices.

But this spring it’s not high landings of soft-shell lobster in Maine that are to blame, according to lobster industry officials. It’s high landings of hard-shell lobster in Canada.

Maine lobstermen don’t catch much in the spring and so supply is generally low. Fishermen now generally are getting prices between $3 and $4 per pound, which was the average annual range from the late 1990s through 2011.

Springtime prices paid to fishermen typically are higher than the annual average, rising as high as $10 per pound in April 2007. A year ago, springtime prices were roughly a dollar lower than what they are now.

For all of 2012, Maine lobstermen on average earned $2.63 per pound for their catch, which is the lowest annual average statewide “boat” price since 1994. Maine lobstermen caught 126 million pounds in 2012, the highest annual amount ever recorded in Maine.

Last spring, unusually warm water temperatures in the Gulf of Maine caused lobsters to shed their shells earlier than normal, which in turn resulted in abnormally high springtime landings in Maine. Canadian fishermen, who fish in 44 different zones and generally are restricted to varying season dates in the winter and spring, also caught unusually large amounts of lobster in the spring of 2012. Maine lobstermen are permitted to fish year-round but typically ramp up their efforts in May and fish heavily through summer and fall.

The glut in Maine and Canada last spring pushed prices that fishermen earned for their catch to their lowest levels in decades on both sides of the border. In Maine, many fishermen said they had to settle for prices around $2 per pound. In Canada, fishermen blockaded deliveries of Maine lobster to Canadian processors, saying they could not compete with the lower-priced imports.

Read the full story at the Bangor Daily News

 

June 12, 2013 — Just six weeks into the new fishing year, Gloucester and other New England fishermen and their federal regulators share a common belief that the very existence of the fishery is in peril, yet both sides remain entrenched in their feelings regarding how to deal with the crisis the federal Department of Commerce acknowledges is an “economic disaster.”

For Joe Orlando, who skippers the 65-foot dragger Padre Pio out of Gloucester with his son Mario as the only crew member, a recent Saturday proved a good day in a season he thinks is bound for the rocks.

Hot sun and calm waters buoyed the Padre Pio and her catch, mostly flounder, that Orlando expected would fetch $1,300 on the market Monday. But with most catch limits cut by about three quarters in the fishing year that began May 1, a few more good days and Orlando may have to hang it up by midsummer, he said.

But Orlando, who went out fishing about 100 days annually in recent years, estimates he hauled in about 10 percent of his flatfish quota in that one day, during just 13 hours at sea, a few miles off the coast of Cape Ann. And other fishermen who gathered with him at Fisherman’s Wharf Tuesday told of being caught in a similar squeeze.

The drastic catch limit cuts — cuts of 78 percent for Gulf of Maine cod, and more than 50 percent for several other stocks — were set by the National Oceanic Atmospheric Administration were a response to a crisis that could doom the once mighty cod and other fish that live near the seafloor, according to NOAA and the environmental scientists who helped draft the stock assessment for the New England fishery.

Read the full story at the Gloucester Daily Times