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Law and disorder
King crab market brimming with drama, controversy and a
By James Wright
February 01, 2008
The king crab legend grows worldwide as television cameras
capture the blood, sweat and swears for each episode of the
reality-show sensation, "Deadliest Catch." The gritty cable-TV
program, set to air its fourth season this spring, has drawn
substantial consumer attention to not only the grueling Bering
Sea fishery, but also to seafood in general. In return, the
salty Alaska skippers have attained celebrity status that now
extends well beyond the United States.
During the show's rise to prime-time prominence, king crab
became a seafood spectacle - but never more so than in 2007,
when the U.S. king crab market was romanticized, politicized
and criminalized. And three controversial issues that have
plagued the seafood industry for years - fraudulent marketing,
illegal/unreported fishing and imported versus domestic seafood
- all came rushing to the fore.
Setting off a startling series of events in September,
Arkadi Gontmakher, CEO of Global Fishing in Bellevue, Wash.,
reportedly the largest U.S. king crab importer, was arrested in
Moscow on charges of money laundering and exporting poached
crabs. To some industry insiders, the news wasn't a total
surprise - of the more than 150 million pounds of king crabs
that entered U.S. ports since 2005, a large portion were
suspected to have originated from undocumented catches in
Russia's Far East.
And on the same day that Gontmakher's arrest was front-page
news in the Seattle Times, the newspaper also reported that
Alaska crab boat captain Sig Hansen, who rose to notoriety on
the hit TV show, agreed to endorse an imported king crab
product marketed by Global Fishing and featuring a picture of
the Hansen family boat, the Northwestern. Bitterness and
backbiting within the prideful Alaska seafood industry soon
followed and the show's faithful viewers took sides in various
blogs. Some accused Hansen of "selling out" and "turning his
back on" his fellow fishermen.
Within days, Alaska Rep. John Harris (R-Valdez) promptly
called for an investigation into what he called "fraudulent
marketing." Officials at Wal-Mart, which promoted the product
at select stores, replied that the box had proper
country-of-origin labeling; the retail giant also reiterated
its commitment to sourcing sustainable seafood.
Hollywood executives would surely fight over such a script,
but the real drama concerning the king crab's future in the
United States will occur behind the scenes, somewhere in the
Barents Sea or the Sea of Okhotsk, Russia's two vast and
fruitful crab grounds. Due to widespread smuggling, unreported
catches and lax law enforcement, Russia's crab stocks appear to
be in peril - and the recently expanded U.S. king crab market
is along for the ride.
"The Russians are worried about their resource and they
should be," says Dave Keene, partner of The Crab Broker in Las
Vegas, which exclusively markets Alaska crab to high-end
foodservice customers throughout the United States and competes
against imported product.
Aside from the ecological impact of depleting crab stocks,
the chief concern among suppliers of both domestic and imported
crabs is if the market expansion, fueled in recent years by
mounting imports of Russian crabs, can continue. If the steady
stream of king crab from Russia slows, Keene says, supply and
price forecasts will be cloudy.
"Monstrous amounts of crab have been landed. For so many
years [Russian] fishermen have taken everything that's come
into the pot. It's surprising that the overall resource hasn't
collapsed," says Keene. "I don't think imports of Russian crab
out of the Far East are sustainable. They're just not. But
they've taken huge strides to curtail illegal fishing and
they're working with the Japanese to contain deliveries from
boats that are fishing [illegally]."
From Russia with crabs
Russia's Fisheries Committee vowed in mid-December that
"blossoming" crab smuggling from Russia to Pacific Rim nations
(mainly Japan and Korea) would be terminated, beginning in
2008. Russia's Border Guard Service had also just completed
"Crab 2007," a two-month operation designed to eliminate
illegal fishing or at the very least send a warning to the
Additionally, Russia planned to ban king crab ( Paralithodes
camtschaticus ) fishing in certain zones of the Sea of Okhotsk
that had long supplied Japanese crab buyers. Russian news
agencies reported in late December that 9,000 metric tons of
illegally harvested live crabs entered the port of Wakkanai,
Japan, in the first 10 months of 2007. For years, millions of
pounds of undocumented crabs were unloaded in Japan and Korea,
but those crabs - many destined for the United States - earned
zero tax dollars for the Kremlin.
"There's really no traceability system in place yet [in
Russia]. I think that's what needs to be established," says
Arni Thomson, executive director of the Alaska Crab Coalition
in Seattle, which represents 40 boats in the king crab fleet.
"It's gotta be tied to lawful fishing permits."
But by the time Russia vowed to crack down on smuggling and
regain control of its fisheries, the surplus of Russian crabs
had already expanded the U.S. market from its high-end niche
status. The influx of product was sudden and staggering: From
2001 to 2004, U.S. king crab imports (more than 90 percent from
Russia) averaged 22.6 million pounds, according to the National
Marine Fisheries Service. That figure nearly doubled in 2005 to
41.5 million pounds and then vaulted
pounds in 2006. Through
October 2007, imports totaled 56 million pounds, up nearly 5
percent from the same period in 2006.
Setting the tone for Russia's crackdown on poaching was the
arrest of Gontmakher, an affluent businessman of Ukrainian
descent who, by many accounts, lived a life of luxury in a
Seattle suburb. (Global Fishing officials declined to be
interviewed for this story.) So, for Russian officials wanting
to send a clear message to its seemingly reckless industry,
Gontmakher was an easy target, says Greg White, a Seattle
crab-industry analyst and certified public accountant who
represents Bering Sea crab fishermen in price negotiations.
"[Gontmakher] was made an example. Like Stalin said, you lop
the head off the tallest poppy in the field," says White.
"There were a number of factors that made him a fall guy. He
lived large, too, and that type of conspicuousness did not play
well in Russia. [The arrest] was part of an orchestrated
campaign to cut back on illegal fishing; you could certainly
make the case that a lot of illegally landed crab ended up in
the United States."
If Russia holds its king crab production to its legal quota,
which in 2007 was approximately 55,000 metric tons, White
speculates that U.S. supplies will have nowhere to go but down,
and prices will concurrently rise. Russian officials have
estimated that poaching has pushed annual production over
150,000 metric tons.
"My strong sense is there's less crab now and it'll be even
tighter in the future," White says. "If Russia succeeds with
its [policies], you'll be looking at [high] prices for three to
four years. They've beaten the heck out of that fishery. But
there could be even better supplies in five years, if they
leave the crabs alone now."
The abundance of imports since 2005 has allowed retailers,
particularly large chains in the Pacific Northwest, to price
2-pound boxes of small king crab legs and claws for $17 to $20
each - products that once sold for close to $30. Several price
points under $10 a pound, as low as $6.99, became common in a
region that consumes a lot of crustaceans.
"There's no question, [king crab has] taken over the retail
market for crab. At the price level, it's got some bite. It's
everywhere out here: Fred Myers, QFC, Safeway. And it's driven
by price," says White.
"Grocers like dressing up the case. Many retail stores use
the seafood case as a selling point to show they are high-end
grocery stores. Lobsters and crabs, bright red products - when
you see those things it conveys that message. And [king crab
is] still a relative bargain, compared to [snow crab]."
IFQs under fire
Alaska, which is highly regarded for its fishery-management
practices, rationalized its king and snow crab fisheries in
2005, dividing the resources among the fisheries' historical
participants - fishermen, processors and coastal communities
(processors control about 85 percent of the total harvest,
known as A shares). Typically, the bulk of Alaska king crab is
exported to Japan, where it fetches the highest price; several
of the largest quota-owning processors are subsidiaries of
Japanese seafood conglomerates.
The first three seasons of rationalization accomplished at
least two major goals: increasing safety within the commercial
fishing fleet and product quality. By extending the season to
roughly a month instead of the old three-day, derby-style
fishery, fishermen could take more time and avoid the most
dangerous Bering Sea conditions and processors were given
increased time for proper handling.
But rationalization was criticized long before its inception
(the program was modeled after Alaska's halibut and sablefish
fishery management plans). Citizens and excluded fishermen
still decry the privatization of a public resource. Captains
want more shares for their crewmembers while processors say the
price-arbitration process conducted after the season typically
favors fishermen and only cuts into their profits.
"There's groaning on both sides," says The Crab Broker's
Keene. "Fishermen are the big winners. Every time they've
arbitrated post-season they've won, despite the paucity of
their case. And processors are disenchanted with the way the
system is working. None have made any money the last two
Thomson of the Alaska Crab Coalition says there's been a
growing clamor for change to rationalization from crewmen,
skippers, processors and communities. "The dynamic is
changing," he says, but the North Pacific Fishery Management
Council in December opted for the status quo, ensuring that the
quota system will remain intact for the foreseeable future.
"There's a lot of complexities to the system - it's not an
easy system to understand," Thomson says. "Legal guidance is
key to stay within antitrust guidelines."
Andy Hillstrand, who skippers the F/V Time Bandit during
snow crab season, while his brother Johnathan captains during
the king crab harvest, says the fisheries are safer, but not
because of rationalization.
"There used to be 270 boats with three days to fish. Now we
got a month, but we're still up against the gun," says
Hillstrand, a regular character on "Deadliest Catch." "There's
only 67 boats now, and they're the best boats on the water, so
safety is obviously [improved]. But it was getting safer before
IFQs, thanks to the Coast Guard, which worked on its
relationship with us."
The Deadliest phenomenon
Because The Crab Broker in Las Vegas sells only Alaska king
crabs to its high-end foodservice customers, the company
hitched its marketing wagons to the success of "Deadliest
Catch" by developing business and personal relationships with
the fishermen and launching an offshoot of the show called "Bad
Boys of the Bering Sea." Skippers such as Keith Colburn of The
Wizard and the Hillstrand brothers have attended charity
dinners around the country at Crab Broker customers such as
Barnacle Bill's in Sarasota, Fla., and Bob Chinn's Crab House
in Wheeling, Ill., to sign autographs and meet their fans.
A unique marketing opportunity the crab supplier devised was
offering individual boatloads of crabs to restaurants, which
can in turn promote the relationship with a boat featured on
the hit show. After taking three of his chefs to Dutch Harbor,
Alaska, Wade Wiestling, VP of culinary development for The
Oceanaire Seafood Room of Minneapolis, in December purchased
about 40,000 pounds of crab clusters harvested by the Time
Bandit to supply his 14-unit chain.
"It made sense from a marketing and sustainability
standpoint to 'bite off more than we can chew' with Alaska
crab, because it is an important fishery and it's a limited
harvesting season," says Wiestling. "We knew the quality and
the way it was processed would be a great story for our staff
on the floor. Seemed like the right thing to do."
Deno Roumanidakis, director of operations for Bob Chinn's
Crab House, one of the largest independent restaurants in the
United States, buys about 150,000 pounds of king crab clusters
annually, as well as 12,000 pounds of whole-cooked crab. "I
sell a lot of crab," Roumanidakis deadpans, adding that king
crab remains the No. 1 item on Bob Chinn's menu, despite the
higher cost of the Alaska product. The restaurant has also
purchased king crabs from two vessels featured on "Deadliest
Catch" and has hosted meet-and-greets with a few of the
"We educate our guests about Russian crabs," says
Roumanidakis. "Where do they get them? From the grocery store.
Not here, not unless something crazy happened. We're committed
to Alaska crab."
Supermarket freezers stocked with marked-down imported legs
and claws are indeed the current face of the king crab market.
Domestic and imported crabs tend to move in separate circles -
with suppliers competing over price, quality and politics - but
the fates of the price-sensitive commodities are linked, for
better or worse. When Sig Hansen replied to the critics of his
divisive endorsement, he claimed his objective was to build the
"By using the exposure we've been lucky enough to have, and
popularizing king crab throughout the world, hopefully we can
boost demand for the product and increase the price fishermen
receive here in Alaska!" Hansen said in a posting on his Web
The overarching question hinges on supply and whether the
king of all crustaceans can continue its transition from
white-tablecloth restaurants to big-box retailers like Costco
and Wal-Mart for the long term. If Russia's law-enforcement
efforts are as effective as promised, the market expansion
might be short-lived.
Assistant Editor James Wright can be