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Top Species: Tight supplies, high prices? It’s scallops

Volatility on the supply side continues to sway the market

By Joanne Friedrick
February 01, 2014

Just as January’s Polar Vortex gave Americans a new perspective on what it means to be cold, the continuing shortened supply of, and steady demand for, Atlantic sea scallops has made prices from a year or two ago seem like a bargain.

“Prices are through the roof,” says Mike DiNino, scallop buyer for Fortune Fish & Gourmet in Bensenville, Ill. Over the 12 years that DiNino has been dealing in scallops, he says current prices are the highest he’s seen because of limited supply and consistent demand.

“For 10-plus years there’s been a gradual increase in price, but also more demand as our business has grown,” he says. DiNino attributes the high prices to a trio of factors: increased use of scallops during the holiday season, reduced quotas, and the cold weather that impacted both fishermen and the transportation of product nationwide.

“Weather was a huge factor in January,” he says, because airlines weren’t flying and trucks were held up because of snow and ice-covered roads. “We were able to get product, but it wasn’t easy.”

There was a drop in the scallop catch between September and December last year, says Sean Moriarty, product manager-sea scallops for American Pride Seafood in New Bedford, Mass., that also tightened supply. “My best guess is that 70 percent of the fishing was done in the first six months and we’ll see fairly light landings for the next few months.”

Overall, he says, there has been a 33 percent reduction in the harvest this year combined with a 20 percent increase in price. The limited access scallop-sub total allowable catch (TAC) for March 2013 to Feb. 2014 is just over 42 million pounds. 

Prices in early January were around $17 a pound for U12s, he says, and $15 for 10-20s. Just two years ago, prices were in the $10 to $11 per-pound range and that was nearly 50 percent higher than historic levels at the time.

Fishery certified 

The Marine Stewardship Council (MSC) in December certified the Atlantic sea scallop fishery as sustainable and well managed. Under this certification, the 14 member companies of the American Scallop Association (ASA) are allowed to display the MSC eco-label on their catch. 

While the ASA hailed the certification as a validation of the industry’s efforts to go from “oblivion to prosperity,” not everyone supported the move.

The Maine Coast Fishermen’s Association (MCFA) and scalloper Togue Brawn of Maine Dayboat Scallops objected to the certification, citing threats to the Gulf of Maine scallop fishery under exemptions granted to limited access permit holders.

Ben Martens, executive director of MCFA, says the focus should be on preventing overfishing of the northern Gulf of Maine, which has a TAC of just 70,000 pounds of scallops.

The certification process was focused on all scallops in New England, says Martens, but didn’t take into consideration the TAC and trip limits for the Gulf of Maine.

“We want to see the Gulf of Maine resource rebuilt,” he says, and more data gathered. “We need better science to show what is out there.” 

Before granting certification, Martens says the hope was that MSC would put pressure on the New England Fishery Management Council to address inconsistencies in the management of the fishery as Brawn presented to the council in September.

On the menu 

While some customers, such as high-end restaurants, will take scallops no matter the price, Moriarty says there has been some softening in demand among casual-dining establishments. 

Scallop menuing data from Datassential, a menu research firm in Chicago, backs that up: Among U.S. chain and independent restaurants in the QSR, midscale, casual- and fine-dining segments, scallops had a 31.3 percent penetration rate in 2013, behind shrimp and crab. That was down, however, from 2009, when the figure for all restaurant segments was 34.4 percent.

Scallop utilization is most prevalent in fine-dining establishments, according to Datassential, with scallops appearing on menus 69.4 percent of the time in 2013, though this was also down from 2009, when the bivalves were on 76.3 percent of menus.

The data shows that scallops are also a regional favorite, appearing on more Northeastern restaurant menus than elsewhere (38.5 percent) and are also more likely to be used by independent restaurants than regional or chain operators.

Fortune’s DiNino says more casual-dining establishments may be opting for imported bay scallops or trading down from U10s to smaller sizes. 

Meanwhile, Jeff Duffin, VP-marketing for Clearwater Seafoods in Bedford, Nova Scotia, Canada, says Clearwater sees “large opportunities for scallops within the retail value-added seafood category.”

Based on scallops’ popularity on menus, he says, “Scallop value-added products give consumers convenient and user-friendly ways to recreate the restaurant experience at home.” 

The company’s involvement in the value-added segment includes bacon-wrapped sea scallops and three flavors of scallops and sauce. 

The appetizer and entrée-style options, he says, “provide an alternative protein option for variety-seeking, time-pressed consumers.” Clearwater regularly launches new products, he notes, working alongside both retail and foodservice partners to develop products that fit their customers’ needs.

While there is no easy substitute for scallops as there can be within the whitefish category, Moriarty says lobster, which has gone through some periods lately when prices were cheaper, may be used as a replacement.

When scallops were a “great value” 10 years ago, he says, they found a niche. “But now we’re coming to a point where the market has to figure out what it wants.

“It could be an interesting dynamic,” Moriarty says, “if customers turn away from scallops and then the quotas go back up.” 

A rebound in the harvest is possible in 2015, but until then “we have another tough year ahead,” he says.

Contributing Editor Joanne Friedrick lives in Portland, Maine

February 2014 - SeaFood Business   

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