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Top Story: Never break the chain

Some retailers, restaurants say chain-of-custody sustainability certification is worth the price

By James Wright
November 05, 2011

The seafood industry deserves credit for addressing sustainability, a challenging and complex concept for even scientists to define. Through outreach and education, the many links in the intricate global seafood supply chain — producers, suppliers, distributors and retail and foodservice buyers — have altered practices and marketed messages of conscience and conservation, emphasizing a mindfulness of their businesses’ impact on the oceans. For some, a deep commitment to sustainability has been a boon; for others, meeting strict sourcing criteria remains a burden.

Any business that wishes to showcase its environmental stewardship with seafood knows it must walk the talk and provide proof; anyone can say they’re sustainable. Eco-labels, like the market-leading and influential Marine Stewardship Council’s (MSC) logo, are one avenue. All products certified sustainable by the London-based nonprofit organization come from fisheries that have passed third-party evaluations for responsible management. There are scores of other eco-labels for both wild and farmed seafood, but none has the global reach and recognition of MSC, with about a decade’s worth of growing pains and success stories to show for it.

Of course it ain’t easy, or cheap, being green. Use of the MSC logo throughout the supply chain comes at a cost that goes beyond licensing fees and royalties. Implementing a traceability system for something like seafood, which comes from all corners of the globe, takes extraordinary time and effort. An independent review of your business as a key link in the sustainable seafood supply chain costs money (paid to a third-party certifier, not MSC or, for farmed seafood, the nascent Aquaculture Stewardship Council) and can reveal other areas needing improvements.

And for any seafood marketed with the MSC eco-label, companies must pay MSC 0.5 percent of the wholesale value. The fee for seafood that arrives at stores in final, consumer-ready packaging such as cans, pouches and boxes of frozen product, is paid by the supplier or the company applying the logo.

There are risks and rewards with eco-labels, which are not one-size-fits-all. What they require, above all else, is a long-term vision and an eager market that will justify the investment.

It’s in the way you use it

In the short term, with the global economy hurtling toward what could be another crisis, some companies must decide whether supply chain certification is worth the financial outlay, knowing that price is still king when it comes to consumer seafood purchasing. The MSC supply chain solution is credible, transparent and based on sound principles. One West Coast restaurateur says the ticket to entry just isn’t for everyone.

“I think it works wonders, and it’s well worth it,” says Kristofor Lofgren, owner of Bamboo Sushi in Portland, Ore. (see NetWorking this issue here). “But I can understand why some have aversions to it.”

Bamboo Sushi is one of only a handful of U.S. restaurant companies — Mitchell’s Fish Market based in Columbus, Ohio, being another noteworthy firm — that have made the commitment to meet the MSC’s supply chain certification standards. (Most MSC partners to date are retailers; Whole Foods Market became the first U.S. retailer to earn supply chain certification in 2000. New England retailers Shaw’s Supermarkets and Big Y Foods each earned certification in recent weeks.)

The hot spot’s menu prominently displays the MSC logo next to several of its seafood dishes, like Alaska salmon yuan-zuke and West Coast albacore carpaccio. Lofgren says the MSC affiliation costs Bamboo Sushi nearly $4,000 a year.

“But when you consider how much business we get because of it, it’s not calculable. I don’t know that we’d do the same business if we didn’t have it,” he says, before estimating the positive difference at a robust 20 percent. “It’s not a panacea; it’s just a certification. If you use it properly, it’s really powerful. If you don’t know how to integrate it into your marketing it’s not going to work for you. We had to be the best sushi restaurant in town first.”

Not all businesses have the luxury of operating in an environmentally and socially conscious atmosphere like Portland, a progressive city situated near fertile MSC-certified Dungeness crab fishing grounds and lush forests of Forest Stewardship Council-certified timber. Lofgren says environmental issues are important to locals, and that folks who know and understand what MSC means are drawn to Bamboo Sushi. Others learn about it when they walk in.

How about consumers in the middle of a desert?

“I would say it’s more difficult for us. We’re not near the ocean. That’s part of it,” says Cid Backer, the owner of Cid’s Food Market in Taos, N.M., a town that’s not exactly lacking in environmental awareness or an upscale consumer base. Even so, Backer says without hesitation that most of his customers learn about MSC and sustainable seafood for the first time when entering the market.

“It ties into what we do with our store, which is provide hormone-free meats, grass-fed beef. I would say [customers] are happy with it, but it isn’t something that is a big part of our business yet. It’s a small portion of our seafood sales,” Backer adds. “We’re building it, it’s a slow process. You have to pay more. And then people want to know why they’re paying more. Once they understand that, some are willing to do it, but in this economy, most others aren’t willing to.”

With seafood prices generally high and with seafood consumption in the United States potentially suffering as a result — per-capita consumption fell below the 16-pound mark in 2010, the first time in eight years — companies must consider the possibility that certified-sustainable seafood products may already have a strike against them in many consumers’ eyes, in terms of a typically higher price.

Kerry Coughlin, MSC’s North America regional director, understands the cost constraints of business, especially during a recession. Three years ago, when the international economic crisis hit a roiling boil, she anticipated some reluctance in the marketplace. It didn’t surface.

“In fact, a Southwest supplier said getting MSC certification and marketing sustainability is what really saved him through the recession,” she says. “That’s not atypical of people who saw [MSC] as a value and a market distinction. By the numbers, we didn’t see a fall-off. And now, there’s a lot of interest in the retail sector.”

Coughlin says the supply side of MSC certification is continually growing — at press time there were 262 fisheries engaged in the MSC program, representing about 6 percent of all wild seafood harvests, with more than 11,000 products bearing the eco-label. And so are other links in the chain: The organization is looking at ways to increase involvement from companies in market segments outside of retail; i.e. distributors.

“Our chain-of-custody traceability standard and its compatibility with foodservice distributors is something we’ve been looking at. [Distributors] have very sophisticated systems and we need to get better aligned without having an entirely cumbersome process with the way they track inventory. We need to make some program modifications to make it much easier. We’re really seeing progress there,” says Coughlin. “They will not be a broken link.”

Take ‘em to school

Coughlin says many colleges and universities are looking at MSC to augment their student dining services. Educating tomorrow’s paying consumers in an academic setting is a natural fit, she adds. University of Notre Dame Foodservice in Notre Dame, Ind., has full supply chain certification.

The evolution of the MSC program since its 1997 inception as a brainchild of the World Wildlife Fund and Unilever has kept it largely within the realm of business-to-business. Coughlin says the possibility of a consumer-awareness campaign is growing more and more likely. “It’s very much time to start getting consumers engaged,” she says. “A lot of our partners are eager to do a consumer campaign.”

It won’t be easy. Diligent efforts to educate the public, both by the industry and by the environmental community, haven’t made “sustainable seafood” a household term. Consumer awareness of sustainable seafood, both in the United States and in other areas of the world, is lacking (even though, yes, there’s an app for that).

In the first-ever consumer survey conducted this summer for SeafoodSource.com, 400 consumers were asked an array of questions about their retail-seafood shopping habits and preferences, including how important it was to them that the fish they buy is certified-sustainable. Only 22 percent of respondents said certification was “very important.” The majority was far less demanding: 33 percent answered “somewhat important,” 32 percent were neutral and the remaining 13 percent answered either “not very important” or “not important at all.” (For more on the survey, click here)

Low consumer awareness about sustainability and conservation of marine resources is not limited to the United States.

At Seafood Choices’ Seafood Summit in Paris in 2010, a presentation about Japanese seafood consumption habits showed that many consumers there were unaware of the status of the world’s fisheries resources, but that eco-labels like MSC could make a difference. Japan boasts one of the world’s largest per-capita seafood consumption rates, topping 120 pounds (live weight) annually. In comparison, Americans in 2010 consumed only 15.8 pounds per capita (53.3 pounds, live weight), according to the National Oceanic and Atmospheric Administration.

Cathy Roheim, a former professor in the University of Rhode Island’s Department of Environmental and Natural Resource Economics, co-authored that study, which aimed to determine the willingness of consumers to pay more for seafood marketed with the MSC eco-label. (Roheim in October became the head of the Agricultural Economics and Rural Sociology Department at the University of Idaho.)

“Just presenting people with products with the MSC label wasn’t enough. And it was money we provided them with; if they didn’t spend it they could keep it. But as soon as we provided them with information about the status of fisheries, globally and locally to Japan, then the label had more meaning and there was a willingness to pay more,” says Roheim. “The critical component is education is really what matters.”

Roheim says sustainability is often not in the top five criteria for consumers shopping for seafood, both in the United States and abroad.

“Why would it be above price, quality, safety and freshness? It’s food; you want it to be tasty and safe,” she says. “If it meets those criteria, then you ask, ‘Does it meet the criteria of sustainable fisheries?’ Logically, it follows the other criteria.”

Price is usually concern No. 1, says Roheim, who hopes that a challenging economic climate won’t slow the momentum of sustainable seafood.

“A poor economy is a challenge to everything, not just seafood,” she says. “Is it a challenge of [consumer] awareness? Everyone is saying, ‘Don’t let it be.’ If the need is there to cut costs because of the economy, then don’t let the cost that gets cut be on the sustainability side. With respect to the consumer, I’m not so sure that the consumer thinks of sustainability as a price to be paid, that sustainability is an added price on products.”

Unique to seafood

The impact of consumer-facing eco-labels is debatable, but the MSC standard has become a prerequisite for certain markets like Europe, where many retailers require the third-party assurances promised by the logo. For some U.S. seafood exporters, use of the hard-earned MSC eco-label on a box of fresh seafood is as important as the ice used to ship it.

There was some speculation in the industry in the past year when the Alaska Seafood Marketing Institute (ASMI) launched a sustainable fishery-management certification scheme in conjunction with Ireland-based Global Trust Certification that massive amounts of Alaska seafood would soon trend away from the MSC, with the cost of certification for industry stakeholders leading the charge. The entire Alaska salmon fishery is MSC-certified, as are fisheries for halibut, pollock, Pacific cod, flatfish and sablefish; their potential departure would put a serious dent in the volume of MSC-certified seafood products traded worldwide.

Randy Rice, ASMI’s seafood technical program director, says Alaska remains committed to the MSC. The fishery management and supply chain certification program it launched in the past year with Global Trust (Alaska fisheries are certified against the United Nations Food and Agriculture Organization Code of Conduct for Responsible Fisheries) was a move to allow all stakeholders in Alaska fisheries to promote the ocean stewardship Alaska’s been cultivating for five decades. “That’s what a lot of Alaska’s major customers said they wanted,” he says.

However, Rice is not bullish on eco-labels in general.

“I don’t think the way to achieve responsible fishery management is via labels in the marketplace. It’s in good governance,” he says. “We see very little willingness [among consumers] to pay for [eco-labeled seafood]. Consumers have so many things on their minds. They don’t want to make these choices and decisions for themselves. They want their supplier to do it for them, just like they expect their supplier to put before them a safe product. That’s where the movement is headed.”

Coughlin argues that without a consumer-facing logo, which the ASMI/Global Trust program does not provide, the movement will be slowed.

“The label is a way to simplify things for buyers, they’ve told us that. They simply can’t invest the time to figure out whether every fishery is sustainable or not,” she says. “It also allows consumers to participate and have an influence.”

Like consumers, seafood buyers nationwide have a lot on their plates. Many of the challenges buyers face are unique to them, and there remains a faction of the industry that still holds doubts about the necessity of sustainability certification. One industry veteran, who requested anonymity, says, “I find it curious that the seafood industry is asked to pay for a service that no other protein group is asked to pay for and whose merit is questionable.”

Coughlin counters criticism in the industry by stressing the organization’s building momentum, overall transparency and nonprofit status.

“The bottom line really on that is how many [companies] continue to participate. Cost is a concern for everyone doing business,” she says. “But the number of products that bear the MSC label is growing, as it has every year. I appreciate the concern for everyone, but people are seeing the benefit and value.”

Email Associate Editor James Wright at jwright@divcom.com

November 2012 - SeaFood Business 

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