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« July 2009 Table of Contents

The weighting game

The seafood industry addresses short-weighting with little assistance

Thomas Billy, a former chief of the National Oceanic and Atmospheric Administration's Seafood Quality and Inspection Division, once wrote a memo to Roy Martin, a former director of science and technology at the National Fisheries Institute (NFI). The letter detailed "grave concerns" Billy heard from several U.S. crab companies regarding the practice of intentionally mislabeling the net weight of frozen seafood products. Many shipping cases, he discovered, illegally included the weight of the ice glazing used to protect the seafood from dehydration and freezer burn.

Billy learned the U.S. Food and Drug Administration was aware of the unlawful practice, but lamented that the agency had neither the manpower nor the funds to address it. He wrote, "I feel very strongly that firms under our program should not be placed at an economic disadvantage, and intend to pursue this problem to a positive solution."

That letter was dated Dec. 13, 1977. More than three decades later and despite Billy's best intentions, a solution is still being sought to stamp out seafood fraud, a plague that creates an uneven playing field for competitors, causes untold losses for seafood buyers and ultimately cheats consumers. The FDA is charged with enforcing the Food, Drug and Cosmetic Act, which prohibits adulteration of seafood species names, actual weights and country of origin in an effort to inflate prices or circumvent import tariffs. Yet the agency still claims that due to a lack of resources, economic integrity violations yield to food-safety and national security concerns.

A frustrated NFI says the paucity of accurate-labeling enforcement doesn't discourage cheating.

"Cheaters cheat either because they are ignorant of the rules or they know they can get away with it," Lisa Weddig, director of regulatory and technical affairs at NFI, testified before the FDA's Science Board in February. Weddig is also secretary of the Better Seafood Board, an organization separate from NFI but created in 2007 by its members as a mechanism to report suppliers suspected of fraud. "The very nature of FDA enforcing fraudulent 
practices - even those that aren't public health related - will hinder more serious violations," Weddig concluded.

Either the FDA or the National Marine Fisheries Service would catch short-weighting crimes at ports of entry, but NMFS only provides fee-for-service inspections. While the BSB is drawing attention to fraud, industry veterans say more must be done at the federal level. Roughly half of NFI's 300 member companies are part of the seafood supply chain and were required in 2007 to sign a pledge to shun fraudulent practices - species substitution, short weighting or transshipping, which the BSB calls the three cornerstones of seafood fraud.

The challenge lay in the fringes: There are hundreds of companies and individuals brokering deals both within the United States and with foreign suppliers, many of which are either unfamiliar with U.S. laws or, as sources say, are requested by their U.S. customers to process seafood with excess preservatives like sodium tripolyphosphate or ice glazing to bump up the weight.

"It's like the sermon at church - the ones who really need to hear the message aren't there," says Travis Larkin, president of importer Seafood Exchange in Raleigh, N.C. "It's a solution in the middle of the supply chain, but the big problems are at the front and the end."

The 'cheater pack'

Some acts of fraud are difficult, if not impossible, to detect without expensive laboratory work or time dedicated to inspecting overseas shipments. The short-weighting or "cheater pack" con is simple: A 10-pound box of IQF shrimp or tilapia fillets, for example, can have 2 pounds or more of ice glaze coating the product for protection, though industry sources confirm the standard is no more than 10 percent of the product's weight. As that box changes hands, at any point in the supply chain it may be resold as 12 pounds of product.

Now consider that box as part of a 20,000-pound order.

"It's like an old Norman Rockwell [painting] of the housewife and the butcher, each of them pushing on the scale. It's cheating on the weight and it shouldn't be tolerated," says Merle Knapp, VP of sales and marketing at Glacier Fish Co. in Seattle, an at-sea processor and marketer of Alaska pollock, a commonly adulterated species.

"It's always an issue, because 
it reduces the perceived value" 
of competing products, adds Knapp. "If it's 10 percent less than ours, that immediately makes 
us less competitive."

Temptation to cheat, it seems, lurks at every turn. U.S. seafood firms receive mass e-mail offers daily from overseas suppliers 
for short-weight product - 
offers they've sent to the Better Seafood Board.

"They're not exactly hiding it," says Bill Dresser, president of Sea Port Products in Kirkland, Wash., which imports a wide range of seafood products.

Price-conscious buyers are lured in, either unknowing or unconcerned about weight discrepancies - losses that can be passed to the next link in the supply chain.

"There are guys out there just fishing, no pun intended," adds Larkin. "I do the math in my mind, and [the price] they're offering is mathematically impossible for a valid pack."

The BSB fields complaints from both NFI members and nonmembers but lacks authority to punish short-weight offenders; Knapp refers to the BSB as the "neighborhood watch." The BSB has sent cease-and-desist letters to a handful of companies, says Weddig, with responses both remorseful and recalcitrant (if one is received at all).

One company has had numerous complaints lodged against it for offering short-weight seafood. Over the past several months, the BSB shared with SeaFood Business e-mails sent to U.S. companies from Maxport International in Beijing offering an array of frozen seafood as low as 70 percent net weight right next to products listed at 100 percent net weight. One source called the company the "short-weight kings."

Weddig says the BSB notified Maxport several times and received five responses, the last one in December 2008. "They said, 'We didn't know, we'll stop.' They continued," says Weddig. "They know what they're doing. They just changed how offers were stated."

A source from Maxport named Daven told SeaFood Business via e-mail that his company "never sold short-weight products to USA." Daven had promised the BSB that Maxport would discontinue short-weight offers to U.S. buyers or that the e-mails were intended for European buyers. The FDA has not issued any import alerts against Maxport International, according to OASIS, the agency's online reporting system.

Dresser says e-mails offering short-weight seafood dwindled after Sea Port Products notified all of its suppliers that short weights wouldn't be tolerated.

"Two years ago, it was absolutely rampant," says Dresser, referring to offers for everything from squid tubes to slipper lobsters. "It was so pervasive that 
if you weren't going to be involved in short weights, you weren't getting in - the market was entrenched."

Dresser credits the BSB for helping his business and "impacting the behavior" of non-NFI member companies. "And it's not just short weights with us," he adds. "We told our suppliers that should you do short weights with anybody else and we find out about it, we'll stop buying from you."

End users lose out

Some buyers are quite aware of short weights and are holding suppliers accountable. SeaFood Business obtained a letter sent to an East Coast supplier in May by Tawa Supermarkets of Buena Park, Calif., which operates a 22-unit Asian retail food chain under the 99 Ranch Market brand. The letter insisted all the company's suppliers comply with federal law demanding true net weight declarations. In February, the FDA reissued its 1991 Guidance to Industry memo on short weighting - and the corresponding felony charges - at the urging of the BSB.

Sysco, the largest U.S. foodservice distributor, truncated its seafood supplier Rolodex for tighter control. Butch Vidrine, Sysco's director of seafood sourcing, said during the International Boston Seafood Show in March that the company cut its black tiger shrimp suppliers from 159 to three, its Pacific white shrimp suppliers from 300 to seven, its mahimahi suppliers from 60 to three and its scallop suppliers from 25 to two.

Last fall the broadline distributor was fined $200,000 by the Florida Attorney General's Office for supplying fish mislabeled as grouper to restaurants in the Tampa, Fla., area. Sysco, which regularly tests product for species identification, admitted no intentional wrongdoing. But it was a familiar tale: Undercover media stings in recent years have caught numerous restaurants in both the United States and Canada offering mislabeled seafood species, though most of them say their suppliers duped them.

"The caliber of restaurant is irrelevant," says Morton Nussbaum, chairman and CEO of International Marketing Specialists of West Newton, Mass., which markets DelicaSea-branded seafood. Companies that develop brands are less likely to risk impugning themselves with fraudulent schemes, he says.

Still, Nussbaum has witnessed raw tilapia served at sushi restaurants as red snapper sashimi, counterfeit labels placed atop originals and shrimp counts changed because larger sizes command up to $1 more per pound. Suppliers, he adds, are often "aiders and abettors."

Weddig says preventing economic fraud takes frequent spot checks, even from trusted partners. "Canada is cracking down on fraud, so there's a chance that more short-weighted product could be coming into the United States," she says. "Our borders are open, apparently."


Get it together

Patrick McGuinness, president of the Fisheries Council of Canada, says Canada's Food Inspection Agency (CFIA) randomly inspects 5 percent of seafood imports - the United States reportedly inspects less than 2 percent - for food-safety matters and net weight declarations. From April 1 to June 30, the agency "doubled its efforts" on four species - shrimp, basa, squid and Alaska pollock - by subjecting imports to intensive checks because of repeated short-weight complaints.

"Some importers have integrity and commitment to their customers, and bottom line, they were losing sales," he adds. "Strong voices were saying that if somebody gets caught they should face significant fines and their product destroyed - direct, punitive action."

McGuinness says the CFIA, "pound for pound," has more resources than the FDA. What's more, he adds, Canada's health and food inspection agencies are separate entities.

"When you have an agency with dual mandates, and one is superior, the second will always be second," McGuinness says.

Criticism of federal fraud prevention is now on the books. The FDA, NMFS and U.S. Customs and Border Protection "do not effectively collaborate" and haven't "identified a common goal, established joint strategies or agreed on responsibilities," said a March report from the Government Accountability Office on the agencies' performance in preventing seafood fraud. The agencies have different species-identification methodologies and don't share their respective laboratories' data, among other gaps, the GAO noted.

Soon after the report's release, the BSB assembled relevant government regulatory agencies to discuss short weighting and unify their response to it. Officials from FDA, NMFS, CBP, the U.S. Department of Agriculture and the National Conference on Weights and Measures attended.

"There is always room for improvements in the ways these agencies interact," says Sebastian Cianci, an FDA spokesperson. "Seafood inspection is just one small part of the seafood-safety program, and given the motivation for committing economic fraud it may be that in addition to increases in inspection capacity, other regulatory tools are needed."

To its credit, the embattled FDA has publicly denounced creative market names like "white roughy" and "bluenose grouper" for inexpensive whitefish species like Vietnamese basa (see sidebar, p. 19). And in terms of food-safety protection, the FDA scores high marks with rejected-shipment notifications on OASIS, says Nussbaum.

"When something is rejected on a Friday, it's there for all to see by Monday," Nussbaum says. "They maintain files of suspect shippers, importers. You'd have to be insane to try anything."

But an executive with a West Coast seafood processor, who spoke on the condition of anonymity, says getting the FDA to carry out all its mandates - like policing seafood fraud - will take more than just throwing money at it.

"It's going to take a complete overhaul," the source says, adding that FDA officials have informed him that if homeland security or food safety isn't the chief concern, there is no budget for it - a similar response to what Cianci provided. "If there's not enough strength to carry out labeling laws, then why have them?"

That's a question that's been asked for more than 30 years.

Associate Editor James Wright can be e-mailed at jwright@divcom.com