« April 2005 Table of Contents
Top Story: South Asia will suffer long-term effects of tsunami
But the catastrophe's bearing on the U.S. seafood supply will be only temporary
April 01, 2005
The countries hit hardest by the Dec. 26 catastrophe — India, Indonesia, Malaysia, Sri Lanka and Thailand — last year represented 45 percent of U.S. shrimp imports and more than half of blue-swimming-crab-meat imports. Indonesia alone comprised 20 percent of frozen-grouper imports and 30 percent of frozen-snapper imports.
Shrimp, blue-swimming-crab meat and Andaman Sea finfish and cephalopods (see map on page 28) are among the species buyers may have difficulty sourcing in the next several weeks due to the tsunami.
After battering South Asia three months ago, the deadliest tsunami in recorded history is beginning to pinch the U.S. seafood supply, which relies heavily on an array of products from the ravaged region.
The series of 30-foot waves caused more than $520 million in damage to South Asia’s fishing and aquaculture industries, reports the United Nations’ Food and Agriculture Organization. As a result, prices of affected products may increase.
Importers are concerned that shrimp inventories will start dwindling by mid-year, because the tsunami leveled more than 300 hatcheries in India, Indonesia and Thailand and destroyed thousands of boats that catch the prawns used to produce broodstock.
Less broodstock was available to stock ponds during January and February, so fewer shrimp will be harvested in June and July.
As a result, Thai shrimp exports are expected to fall 30 percent this year, from 240,000 metric tons in 2004 to 168,000 metric tons, says the Thai Shrimp Association. Thailand ships nearly two-thirds of its shrimp exports to the United States.
Producers are scrambling to shift crabmeat production to countries that were beyond the tsunami’s reach. Phillips Foods’ production of blue-swimming-crab meat in countries struck by the giant waves dropped about 30 percent, because thousands of fishing boats were demolished.
Landings of grouper, snapper, squid, cuttlefish and octopus in the Andaman Sea also plunged following the disaster.
“The impact of the tsunami is just starting to manifest now,” says Bill Dresser, president of Sea Port Products Corp., a Kirkland, Wash., importer.
The devastation caused by the Indian Ocean tsunami is beyond comprehension: More than 273,000 people in 11 countries were killed, and more than 111,000 fishing vessels and 1.7 million pieces of fishing gear were wrecked.
Two-thirds of the fishermen in Banda Aceh, the capital of Indonesia’s Aceh province, lost their lives. The province is located on the northern tip of Sumatra island, only 90 miles from the epicenter of the 9.0-magnitude earthquake. The strongest in 40 years and fourth strongest on record, the quake triggered the tsunami.
Within hours of the catastrophe, numerous U.S. seafood executives were asking their employees and colleagues to contribute to relief efforts (see sidebar on page 30).
Amazingly, the destruction had no immediate effect on the U.S. seafood supply. Shrimp production was unaffected by the tsunami. Most ponds were empty, as farmers were between production cycles in late December.
Geography also afforded a degree of protection, as some ponds are situated away from the coastline, beyond the tsunami’s reach. In Sri Lanka, about 90 percent of ponds are located on the west coast, which was shielded from the tsunami’s path.
Additionally, U.S. warehouses are currently packed with shrimp, because importers, avoiding tariffs that went into effect Feb. 1, brought in a whopping 377.8 million pounds in the fourth quarter of 2004, up 44 percent from the previous quarter. (The tariffs stem from the domestic shrimp industry’s antidumping petition against six Asian and South American countries, including India and Thailand.)
The U.S. shrimp supply is just beginning to feel the tsunami’s impact, because the hatchery workers and fishermen who supply broodstock bore the brunt of the tsunami.
In Aceh province, the tsunami killed half of the fishermen and damaged at least 17 hatcheries, which produce “a large portion” of Indonesia’s black-tiger broodstock, reports the Indonesian Ministry of Fisheries and Marine Affairs.
Excluding Mexico, Indonesia is the largest contributor to the U.S. shrimp supply omitted from the antidumping petition and excluded from tariffs. Indonesia dispatched 47,000 metric tons of shrimp to the United States last year, more than double the 2003 total.
In Thailand, the tsunami killed more than 100 hatchery workers, wiped out about 30 percent of the country’s broodstock supply and caused $500 million in damage to the shrimp-farming industry, according to the Thai Shrimp Association. Hatchery operators are having trouble getting bank loans and state compensation to repair or rebuild their facilities, says the group.
In India, “broodstock availability is likely to decline due to damage to fishing vessels, further reducing the likelihood of a crop next season,” reports the Consortium of Regional Fishery Organizations.
As a result, U.S. importers expect shrimp inventories to begin thinning out by mid-year.
“We consume roughly 100 million pounds of shrimp in the United States each month,” says Ernie Wayland, executive VP of Rubicon Resources in New York, a subsidiary of the Rubicon Group, one of Thailand’s largest shrimp exporters.
“The heavy imports in November and December contributed roughly an additional month of inventory to the U.S. supply picture, hardly enough to carry us beyond the spring months.
“It’s difficult to forecast the impact of duties and bonds on shrimp importers,” adds Wayland, referring to the antidumping petition.
“But with a major portion of China’s production shut out of the market due to high tariffs, coupled with the tsunami, it’s not unreasonable to predict tighter supplies and higher prices this year.”
Hank Dentler, seafood product manager for Sysco Corp. in Houston, the nation’s largest foodservice distributor and biggest shrimp buyer, is also keeping an eye
on shrimp inventories.
“In April, May and June, we’ll see what comes out of the ponds,” says Dentler, who’s less concerned about the broodstock shortage than the tariffs and bonds shrimp importers must now pay (see cover Newsline story).
Sysco dispatched a quality-assurance team to South Asia after the tsunami. None of its vendors’ facilities were damaged, adds Dentler.
Bob Tanskey, president of Key Seafood Imports, a Perth Amboy, N.J., importer, expects the broodstock shortage to be short-lived.
“Fishermen are already back out on the water. I guarantee it,” he says. “It’s the only way for them to make money.”
Crab, tuna supplies stable
The resilience of blue-swimming-crab fishermen is what kept crabmeat production from falling considerably after the tsunami, says Mark Sneed, president of Phillips Foods in Baltimore.
“They’re such hard-working, proud folks,” he says. “They found what was left of their boats and they’re trying to rebuild them. It’s the only life they know.”
Initially, “raw material costs were through the roof” due to a perceived supply shortage, notes Sneed. “But in [early March] the market stabilized. Our production levels are returning to where we want them to be. Once product gets through the pipeline, prices will come back down. We’re very comfortable where we are. Overall, I don’t expect a supply shortfall this year.”
Phillips, which operates 16 processing plants in Asia, plans to boost its crabmeat production in China, the Philippines and Vietnam to compensate for the production drop in India, Indonesia, Malaysia and Thailand, says Sneed.
However, the company’s facilities were unscathed by the tsunami because they’re constructed a certain distance from the shoreline, as required by law in most countries.
Newport International’s processing plants were also unharmed because they’re located on Indonesia’s eastern islands and Thailand’s east coast, which was protected from the tsunami’s wrath, says Jack McGeough, president of the Tierra Verde, Fla., company.
“We haven’t seen any impact, due to the location of our processing plants,” he notes. Newport also operates facilities in China, India, Vietnam and Venezuela.
“Our shrimp suppliers happened to be among those unaffected by the tsunami, and while a few of our crab suppliers were affected, we haven’t seen any supply issues yet,” says Mike Henninger, VP of Poseidon Enterprises, a Charlotte, N.C., distributor. “I’m sure at some point our pricing will be affected in these areas, but so far we haven’t seen anything that we can [blame on] the tsunami.”
The global tuna supply also was “unaffected” by the tsunami, says John Stiker, executive VP of Bumble Bee Seafoods in San Diego.
Less than 10 percent of the world’s tuna harvest originates in the Indian Ocean, estimates Stiker. And the tsunami had no effect on offshore fisheries like tuna and other pelagic species, he adds.
The same can’t be said for inshore fisheries in the Andaman Sea, which is sandwiched between the Andaman and Nicobar islands to the west, Thailand and Myanmar to the east and Indonesia to the south. In Aceh, about 9,500 boats, or 65 to 70 percent of the small, inshore fleet, were destroyed. And in Thailand, nearly 5,400 boats, or three-quarters of the small, inshore fleet, were wrecked.
Sea Port’s Dresser says catches of grouper, snapper, squid, cuttlefish and octopus plummeted after the tsunami.
“We’re seeing a void on these items,” he says. “Less of that product is getting here, and prices are rising accordingly. Some adjustments are being made, but not enough to cover the loss.”
Ecosystem impact unclear
The tsunami’s impact on the U.S. seafood supply becomes clearer every week, but its long-term effects on South Asia’s coastal ecosystems remain vague.
“It’s anticipated that the physical disturbance caused by the tsunami may have a number of consequences for the region’s fish habitats,” says Gabriella Bianchi, a fishery resources officer with the FAO. “But there is much uncertainty as to what will be the long-term effects.
“There may be a sharp decrease in biodiversity and biomass of bottom-dwelling fish and lobster,” she adds. “The alteration of key habitats such as coral reefs, mangroves and seagrass beds will likely result in poor recruitment success over the next few years for species that depend on such habitats.”
South Asia’s ecosystem, as well as its fishing and aquaculture industries, may take years to recover from the tsunami’s destruction. But U.S. supplies of shrimp, crabmeat and Andaman Sea finfish and cephalopods are expected to recuperate in the near future.
Industry opens its heart and wallet in disaster's aftermath
About a week after the tsunami ravaged seaside villages from Southeast Asia to East Africa, Kim Suelzle and Jack Rosling of CityIce Cold Storage in Seattle asked their colleagues to donate money to World Concern, a Seattle-based humanitarian organization that provides food, water and shelter to tsunami victims.
They were pleasantly surprised to learn that about 90 percent of the 200 or so companies they contacted were already contributing money, product or services to relief efforts.
“I was amazed by the level of commitment within the seafood industry,” says Suelzle, president of CityIce. “I expected some of it, but not at the level I saw.”
The U.S. seafood community was quick and eager to reach out to tsunami victims.
CityIce, which also matched two-to-one the amount of money its 75 full-time and 25 part-time employees contributed, had donated a total of nearly $50,000 to World Concern through early March.
World Concern created a Tsunami Gift Catalog containing 29 items, including a $654 rowboat with gear and a $6,000 motorized fishing boat with gear. In addition to raising $94,000 for the American Red Cross and World Concern by matching two-to-one the amount of money its 4,000-plus employees contributed, Trident Seafoods Corp. in Seattle will match the money used to purchase all fishing-related gifts from World Concern’s catalog.
Contessa Premium Foods in San Pedro, Calif., contributed $100,000 to Habitat for Humanity during a fundraiser hosted by the National Fisheries Institute and Diversified Business Communications, publisher of SeaFood Business, during last month’s International Boston Seafood Show.
An additional $10,000 was raised at the door for Habitat for Humanity, UNICEF and Phillips Foods’ “Operation Build a Boat.”
Phillips’ program replaces and equips the boats lost during the tsunami. Donations go directly toward a $500 15- to 20-foot canoe, a $1,500 15- to 24-foot gaff rig or a $3,000 20- to-30-foot day boat. Through early March, Phillips had raised $60,000. Even North Dakota’s tiny Jamestown College gave $1,500 to the cause.
“All of us want to do something to help,” says Mark Sneed, Phillips’ president. “We’re in these communities every day. We operate closely with these fishing villages.”
Alex Thomas, head of Phillips’ India operations, used a company truck to deliver water and rice to people just hours after the tsunami hit, says Sneed. His employees also raised $10,000.
Phillips employs about 12,000 people at its 16 processing plants in seven Asian countries, including India, Indonesia, Malaysia and Thailand. Many of them lost relatives and homes during the tsunami.
Sea Port Products Corp. in Kirkland, Wash., is contributing at least 10 percent of the proceeds from its Tsunami and Ola (Spanish for wave) tilapia brands to the International Red Cross and Red Crescent Societies through June 30, says Bill Dresser, the company’s president.
“We’re not forgetting about the tsunami,” he says. “The media coverage has waned, but not the memory of it. That’s why we’re stretching out our donations.”
Bumble Bee Seafoods and Cloverleaf Seafoods, which are owned by Connors Bros. in New Brunswick, donated about 400,000 cans, or $300,000, of tuna, sardines, salmon and shrimp to Feed the Children to dispense to tsunami victims in India, Indonesia, Sri Lanka and Thailand.
“It’s a global industry, and [South Asia] is a big part of the community,” says John Stiker, Bumble Bee’s executive VP. “I was pleasantly surprised [by the U.S. seafood industry’s generosity], but not overly surprised.”
Judy Dashiell, NFI’s VP of membership and marketing, echoes Stiker’s sentiment.
“We’ve seen an outpouring of support, and it’s exactly what I expected from the industry,” she says. “The industry opened its hearts and its wallets.
“We received donations from $10 to several thousand dollars. Every dollar counts.”
Through the end of February, NFI had raised $104,000, the majority of which was donated to the International Red Cross. — S.H.