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Top 10 Species: Crab

Suppliers, buyers deal with skyrocketing blue-swimming crab prices

Imports have opened the market for a variety of
    value-added products, like sliders. - Photo courtesy of Phillips Foods
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.

 

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