« July 2008 Table of Contents 
Top 10 Species: Crab
Suppliers, buyers deal with skyrocketing blue-swimming crab prices
By Christine Blank
July 01, 2008
Some blue crab suppliers say this year is the toughest they
have seen, facing a tight supply overseas and in the United
States and prices that are spiraling out of control.
A combination of overfishing, natural disasters and
decreased yields this spring put the blue-swimming crab (
Portunus pelagicus ) in short supply.
According to the National Marine Fisheries Service, total
U.S. imports of blue-swimming crab were down 3 percent, to
about 16 million pounds, through April. Imports from Indonesia
- the largest supplier of blue-swimming crab to the U.S. market
- were down 14 percent, to roughly 6 million pounds.
Production was off around 50 percent in Indonesia for the
first five months of 2008, according to supplier reports from
overseas.
Landings in Indonesia were between 3.3 million pounds and
5.1 million pounds for January through May, compared to 7.6
million to 9.5 million pounds for the first five months of
2007.
"Crab landings [in Indonesia] were poor with an abundance of
smaller crabs," according to Byrd International in Salisbury,
Md., in its second quarter report.
In addition, there are about 18 blue crab exporters that
operate 26 processing factories in Indonesia, all vying for the
same U.S. business, according to Robert Landy, VP of purchasing
for Stavis Seafoods in Boston. As a result, the limited blue
crab supply is often sold to the highest bidder, causing
further turmoil in the market.
"The fishermen keep raising prices. Then, as soon as we
agree on a price, they go on another price," says Troy Turkin,
executive VP of sales and marketing at Newport
International
in St. Petersburg, Fla.
"We're seeing a tightening and a competition for supply. As
a U.S. company, the weak U.S. dollar has also affected our
company in a negative way," says Ed Rhodes, co-director of
aquaculture and sustainability at Phillip Foods in
Baltimore.
"I have seen it go up and down before, but not to this
extent," says Bill Pearce, owner of Crab Source LLC, a
consultant firm in Mechanicsville, Va. Pearce, a former
executive chef, sources overseas for major crab product
manufacturers.
"We're spending more to get less," says Turkin, adding that
fuel costs alone have jumped about 35 percent.
U.S. importers are selling jumbo lump blue-swimming crab for
$20.50 to $21 a pound, according to buyers, while special is
selling for around $10.50 and claw meat is going for $7.25 to
$7.50. Some buyers have seen jumbo lump as high as $25 a
pound.
"Before, you would have to give claw meat away, and now it
has doubled in price. Special has gone up about three times as
much," says Pearce.
While blue-swimming crab is also harvested in the
Philippines, Vietnam, Thailand, China and other countries,
those countries do not produce comparable volume to Indonesia.
Oil prices in Indonesia, which are set by the government,
recently rose 30 percent. Immediately following that, canned
crabmeat suppliers hiked prices to suppliers by around 30
percent.
Still, major storms throughout Southeast Asia in recent
years have also impacted supply. "There were two tsunamis, then
the Philippines got hit pretty hard by a monsoon," says
Kimberly Tilghman, Byrd International's general manager.
Fishing in Thailand was stopped due to the cyclone for a few
days, and then higher than normal temperatures pushed the crabs
to deeper waters. Gasoline prices continue to increase, causing
the smaller fishermen to stay in, according to Byrd.
While imports may be off, it pales in comparison to domestic
blue crabbers' woes. Scientists say the blue crab industry has
overfished the Chesapeake Bay, citing about 70 percent less
blue crab compared to 1990. In May a legislative oversight
committee approved tough regulations aimed at restoring the
Bay's blue crab
harvest. The new rules mean the season for
females will end Oct. 23, about two months early. Maryland Gov.
Martin O'Malley requested that the Department of Commerce
declare the Chesapeake Bay fishery a federal disaster, citing
$15 million in losses predicted over the next three years due
to blue crab harvest restrictions.
In North Carolina, the blue crab fishery is much more
stable, though it has dropped off the past three years. Between
2000 and 2004, the state's blue crab catch topped 30 million
pounds (whole weight)annually, peaking at more than 42 million
pounds in 2003. From 2005 to 2007, the harvest settled in the
low- to mid-20-million-pound range, bottoming out at 21.4
million pounds last year.
Supply problems are dovetailing with continued increased
demand for crab, particularly in the foodservice market. The
crab industry has done such a good job of promoting its
products to retailers and restaurants over the last few years
that buyers now consistently demand the product.
"It is a growing trend to have crab on the menu, and in more
mid-upscale restaurants, such as Ruby Tuesday and Cheesecake
Factory," says Honey Konicoff, Phillips Foods' VP of
marketing.
Buyers seek crab alternatives
As a result of supply problems and skyrocketing prices,
retailers and restaurants are using less crab, sourcing the
cheaper claw and special meat, and looking to other countries
and crab species.
"I am not buying live crab right now. It probably will be
expensive all summer," says Lee Chandler, retailer manager of
Quality Seafood Market, a seafood restaurant and retailer in
Austin, Texas.
While Chandler would typically be able to source blue crab
locally from the Gulf, some of that blue crab is being shipped
to Maryland, he says.
Meanwhile, some importers have switched from Indonesian
product to crab from China, Vietnam, the Philippines and other
countries.
While buyers are looking for alternative crab varieties,
suppliers say most restaurants have not pulled blue crab off
the menu - yet.
"Hopefully, it doesn't get to a price point that [chefs]
want to take it off menus," says Turkin.
"The market can sustain itself at astronomical [price]
levels, until the demand falls below supply. The high prices
open the door for menus to change and for other types of crab,"
says Landy.
Already, suppliers are bringing in more Canadian rock, king,
snow and Dungeness crab to provide alternatives.
Crab processors are also sourcing lower grade blue crab or
red crab, in some cases.
"We do carry some frozen, pasteurized Chinese Haanii [red
-swimming crab]. It is better quality now than it had been in
years past," says Landy.
In addition, restaurants are looking at mixing jumbo lump
with other crab grades for their crab cakes.
"For restaurants that had an all jumbo lump crab cake, now
they are going to have a blended jumbo lump crab cake. We are
visiting restaurants and helping them figure out how to do
blending, or to switch products," says Byrd's Tilghman.
Buyers also expect the price pressure to be slightly relaxed
over the next few months, when there's increased production
overseas.
"There is typically higher product volumes starting in May
and for some regions, June and July, overseas," says
Turkin.
At the same time, buyers do not expect much of a price drop
this summer. "We're not going to go back to the type of prices
we had a year ago," adds Turkin.
Some suppliers are surviving the current tumultuous crab
market by diversifying product lines with other fish and
shellfish.
"We've never been only a crab player. We have two new fish
lines, including a tilapia product and a line of organic
products," says Turkin. (Turkin did not want to say which of
the company's products will feature an organic line.)
Newport International is also offering frozen blue crab,
which is less expensive than fresh, Canadian rock crab and crab
from other areas of Asia as alternatives.
While around 65 percent of Phillips' product lines are based
on crab, the company is focusing on other products.
"In this market, we're diversifying our offerings so that we
are not dependent on one product. We recently introduced shrimp
steamer bags under Steamer Creations, and king crab cakes,"
says Konicoff.
In addition, the company recently began offering pasteurized
Dungeness, king and snow crab.
"If those crabs are available, they can sometimes be used
interchangeably in recipes," says Konicoff.
Because king crab has a significantly different flavor
profile than blue crab, Konicoff says Phillips is in the
process of teaching chefs and others how to use it in
recipes.
While processors are trying to get buyers and consumers to
go beyond blue crab or blue-swimming crab, many - like veteran
Maryland restaurants - will not use anything else.
"Maryland will pay any price there is for blue crab," says
Pearce of Crab Source.
"We sell more blue crab than the others. King crab is a
special in our restaurant on Monday evenings, but usually, it
moves slowly," says Chandler of Quality Seafood Market.
Christine Blank is a business writer and editor in Lake
Mary, Fla.