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Species Focus: Catfish

With tariffs protecting them from imports, U.S. farmers work to build consumer loyalty

Dexter Van Zile
January 01, 2005

U.S. catfish farmers, who obtained protection against cheap imports from Vietnam in 2003, are working to seal the deal by informing consumers about the benefits of eating domestically raised product.

By emphasizing that catfish produced in the United States is subject to strict environmental and public-health controls, catfish producers hope to capture consumers’ long-term loyalty to American product. To further this end, The Catfish Institute, a Mississippi-based organization founded to promote U.S. farm-raised catfish, introduced a logo to make American product easily identifiable to the consumer, says Roger Barlow, TCI president.

He believes that consumers already have a favorable impression of domestic catfish.

“I think our husbandry practices are well known and well established,” Barlow says. “Whether it’s the freshwater used to raise the fish or the scientific diet that they’re fed or the HACCP-approved processing plants, these are the things that people know our product represents. They don’t know these things about other sources.”

The catfish industry hopes promoting its product will further boost the farmers’ and processors’ bottom line, which has improved as the tariffs against imported Viet­namese basa and tra have had their de-
sired effect.

According to a National Agri­cultural Statistics Service report issued in October, imports have declined substantially from a peak in 2001, when they totaled 12 million pounds.

During the first seven months of 2004, basa and tra imports totaled only 1.7 million pounds, a decrease of more than 60 percent from the same period in 2003.

However, the government also tabulates basa and tra imports under miscellaneous fish fillets, because it’s against the law to label basa and tra as “catfish.”

Coupled with this decline in imports is a decline in the domestic supply. In October 2004, the U.S. Department of Agriculture predicted that domestic catfish sales will total between 630 million and 635 million pounds from the year before, which would result in a decline of between 4.7 and 3.9 percent from 2003.

During the first eight months of 2004, domestic catfish sales totaled 429 million pounds, a decline of 5.1 percent from the same period in 2003.

Price data compiled by the USDA indicates that consumer demand for catfish remains strong even in the face of tightening supply and rising prices. For the first eight months of 2004, farm prices for catfish averaged 70 cents a pound, an increase of 21.4 percent from the same period in 2003.

Dick Stevens, president and CEO of Country Select Catfish in Isola, Miss., is optimistic that demand for catfish will remain strong because of consumer confidence in the product’s quality and safety.

“We send them a very healthy, wholesome clean product raised in healthy environments,” he says.

The fact that the product is mostly grain fed and raised with very little fishmeal eliminates a lot of concerns, says Hugh Warren, executive vice president of the Catfish Far­mers of America, a Mississippi-based trade group.

He notes that because catfish are farmed in freshwater, land-based ponds without a lot of additives, catfish farming doesn’t raise many of the environmental issues surrounding other forms of aquaculture, such as saltwater-based farms.

“Catfish rates high in environmental and conservation-type surveys,” Warren says. “It shows up as a ‘green’ fish almost every time, and much of it is because of the grain.”

The Monterey Bay Aquarium for example, touts the catfish industry’s ability to raise its product without putting pressure on wild stocks of fish and without posing a threat to watersheds.

“Catfish can eat soybean and wheat pellets, reducing the demand on ocean fish used in fish feed. Catfish farmers raise their fish in closed freshwater ponds,” the aquarium reports.

“By carefully controlling the ponds’ water quality, these farms can put catfish in the frying pan while protecting the environment.”

Another selling point for catfish is consistent quality; it is usually processed within two to three hours of harvest, says Stevens.

“They’re alive and swimming in the tanks when we bring them to our plants,” he says.

Chefs also appreciate other qualities the fish offers. The mild, sweet-tasting flesh has a firm texture that allows catfish to be used in a variety of different preparation methods.

“The fish also lends itself to many kinds of sauces and marinating styles,” Warren says.

Because of its culinary and eco-friendly attributes, catfish is gaining a following beyond the South. Stevens says catfish’s popularity is growing throughout the rest of the country, as it gains footholds throughout the West and Midwest.

“It’s extremely popular up and down the Mississippi River from the Great Lakes down to the coast,” Stevens says. It’s in demand in Salt Lake City and Denver and is equally popular in foodservice and retail settings, he adds.

Currently, catfish is selling in retail markets at about $3.99 to $4.99 a pound for fresh and frozen fillets, Barlow reports.

Stevens says these prices are normal for the catfish industry, but higher than the $1.99 a pound seen in supermarkets at the height of the dumping.

“That was a straight giveaway,” he maintains.

A good portion of the product is sold fresh. Of the 210.4 million pounds of catfish sold in the first eight months of 2004, 83 million pounds, or 39 percent was sold as fresh product, with fresh fillets totaling 47.4 million pounds, according to NASS. For the first eight months of 2004, frozen fillets sold at $2.63 a pound.

Two factors could exert downward pressure on wholesale prices: the availability of substitutes and a decline in grain prices, says David J. Harvey, an agriculture economist with the USDA who specializes in aquaculture. While tilapia imports are the most obvious substitute, chicken and beef are also competitors in the marketplace, he adds.

“They’re not exactly perfect substitutes, but they are substitutes for catfish at a certain point, especially when you’re looking at restaurants,” he says.

It’s likely the tight supply will drive prices up, but there are limits to how far catfish consumers can be pushed, Harvey warns. Further complicating the picture is the cost of feed used by farmers. If it goes down, it could reduce production costs, Harvey says, and in turn, allow prices to decline.

“Over the last six months, we’ve seen a considerable increases in grain prices and feed costs,” he says. “For catfish farmers these make up the largest variable cost on their production. If they see a considerable drop in price for feed that will put them in a much better position.”

Supply is going to be relatively tight in the next year, Barlow says, primarily because a fair number of farmers left the industry due to the low prices caused by imports from Vietnam. Those imports were the subject of an antidumping ruling issued in July 2003 by the Interna-tional Trade Commission and Department of Commerce, which imposed steep tariffs on imports.

Statistics compiled by the U.S. Department of Agriculture show a decline in the number of acres devoted to catfish product. In a reported issued in October 2004 by the NASS, growers estimated that a total of 165,310 acres were in production between July 1 and Dec. 31, 2004, a decline of more than 5,000 acres from the previous year.

The same report indicates that the number of market-sized fish in the inventories of growers in Mississippi, Alabama, Arkansas and Louisiana (where 90 percent of all U.S. catfish are raised) was approximately 317 million, a reduction of almost 30 million from the year before. According to the USDA, the result will be a tighter market for processors into 2005.

At the time of the October report, the USDA projected that average prices to farmers would range between 68 and 71 cents a pound in 2004, 10 to 13 cents higher from the year before and get even higher in 2005. In December, Barlow reported prices ranging from 55 to 75 cents a pound.

“This year they’ve seen considerable increase in prices,” Harvey says. “What we’re going to continue to see is somewhat of a tightening situation.”

Prices to processors are strong as well. During the first eight months of 2004, processors were getting on average $2.25 a pound for their product, an increase of 9.6 percent from the previous year, but still below the average price of $2.37 farmers were getting during the first eight months of 1994.

In all sectors of the industry, there is a seasonal pattern, with prices higher toward the end of first quarter as a result of Lenten demand. Prices spike again in the fall as well in anticipation of the holidays, Harvey reports.

Discrepancies in data
Currently there is concern within the industry that the numbers reported by NASS may not be accurate, says Stevens. Discrepancies were seen between estimates on the amount of feed used by the industry and the amount of feed farmers reported using when applying for disaster relief under a federal program designed to protect farmers from high wheat prices resulting from a drought in 2003.

Claims made against this disaster relief were substantially higher than previous estimates, raising concern about the accuracy of feed conversion rates used to estimate future production.

“We don’t know what the standing crop is,” Stevens says, emphasizing that this uncertainty does not extend to the frozen product. In an effort to resolve the discrepancy, the USDA is planning to conduct a feed survey of the industry in 2005.

Despite steadier prices resulting from the tariffs on imports, the acreage devoted to catfish farming isn't likely to increase, Harvey says, at least for the short term. Farmers will likely increase the concentration of fish in the existing ponds before building new ponds, he says.

"It will take a little time of higher prices and better profitability before they start adding acreage," he says. "There are ways you can increase the productivity of acres without putting in new ponds. You can maybe stock at a little bit higher density and do more aeration work."

It's also unlikely the industry will expand beyond Alabama, Arkansas, Mississippi and Louisiana, he reports. Right now most of the ponds are close to processors and vice versa. The cost of trucking live catfish over long distances along with the volumes of water necessary to keep them alive make it unlikely that anyone will try to expand the infrastructure, he says.

January 2005 - SeaFood Business
 

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