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One Man's Opinion: How bad will it get?
By Peter Redmayne
December 01, 2008
The global seafood industry is sailing in uncharted waters.
Like the price of oil, seafood prices are plummeting as the
global economy contracts.
Take Maine lobster, for example. Boat prices tanked to less
than $2.50 a pound in late October, about half the normal
level. While a fall off in restaurant sales was widely blamed
for the collapse, the situation was made more dire when
Canadian producers had to dump inventory when they lost their
credit lines, including those from Icelandic bankers like
Prices of snow crab sections also took a hit, losing almost
10 percent of their value in a few weeks in October. Again, the
combination of weakening demand and a lack of financing, which
forced some companies to dump inventory, were the culprits.
Adding to the mess was a dramatic shift in currency values,
which has seen the dollar and yen soar at the expense of almost
every other currency in the world. Currency shifts that
normally take a year or more were taking place over the span of
a few short weeks. That has caused some countries to place
extraordinary conditions on currency outflows. Companies
selling seafood to Russia, for example, have seen their markets
evaporate because their customers can't make payments. One West
Coast processor, for example, was desperately looking for a new
home for almost 200 containers of hake that were already on the
water to Russia in early November.
With demand plummeting and prices falling, buyers know
there's plenty of blood in the water and they're calling the
"Buyers are buying hand-to-mouth because they think prices
are going to fall more and they want to wait until there's a
bottom," says one Los Angeles importer. "That only makes things
worse because it forces the weakest sellers to drop prices even
more because they need to sell inventory to raise cash. It's
the worst mess I've seen in more than 30 years in the
A lot of people in the fish business are looking to China,
hoping that booming demand for imported seafood there will
continue. And there are some encouraging signs. Even though
China's GDP is expected to decline 30 percent next year, it
will still be about 8 percent and Beijing is pulling out all
the stops to keep its economy running at a rate other countries
can only dream about. At the recent China Fisheries &
Seafood Expo in Qingdao, Canadian snow crab producers reported
that for the first time they are seeing significant sales of
snow crab for consumption in the Chinese market.
But consumption of some popular local seafood delicacies are
slipping in China, too, a sign that no country is immune to the
economic downturn. This November, sales of hairy crab, a
seasonal delicacy because the crabs are full of sweet, buttery
roe at this time of year, are off at least 10 percent, say Hong
Kong seafood dealers.
The bad news is that there will be a shakeout in the seafood
industry and it will get worse before it gets better. But the
good news is that lower seafood prices will encourage
consumption. The trick is to not be caught holding the bag when
prices are on their way down.
Contributing Editor Peter Redmayne lives in Seattle