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« October 2007 Table of Contents

Import alert

As China experiences growing pains, illegal vet-drug usage goes unchecked

Americans can't read a newspaper or watch TV these days without absorbing a report about China's food-safety deficiencies and manufacturing woes. The list of unsafe or counterfeit products the United States imports from China is daunting - toothpaste, toys, tires, ceramic heaters, diabetes test kits, pet food, juice. Unfortunately, farmed seafood is usually among the Chinese goods the media identifies as harmful or fake.

Is this characterization fair? Or is China being singled out?

In June the U.S. Food and Drug Administration, which is under increased pressure from the media, consumer-advocacy groups and Congress to crack down on imports of unsafe or counterfeit Chinese goods, placed an import alert on five farmed-seafood species from China - shrimp, catfish, basa, eel and dace, a carp relative - due to the increased presence of illegal antibiotics and fungicides.

Under an import alert, a shipment is detained at the port of entry until the U.S. importer provides third-party verification from an FDA-accredited U.S. laboratory that the product is free of banned veterinary drugs. Once five consecutive shipments are confirmed to be clean, the foreign exporter is removed from the list. Essentially, seafood suppliers are guilty until proven innocent.

The detention process is delaying shipments of Chinese seafood at ports of entry for days, if not weeks, while private labs test the products. The added costs are steep: Tests run from $1,500 to $4,000 per container, and cold-storage fees total thousands of dollars per month.

As if the extra costs weren't enough, some wholesale distributors, retailers and foodservice operators are shunning Chinese seafood due to the barrage of negative press, even though the FDA has repeatedly emphasized that there's no imminent public health threat.

The confusion among seafood buyers and consumers is fueled by the misinformation. The mainstream press has commonly referred to the import alert as a ban or an embargo, which are misnomers. News reports have labeled all Chinese seafood as tainted or contaminated, when only a minority of Asian farmers use banned veterinary drugs. So consumers perceive that Chinese seafood is inferior and may avoid eating it.

Antibiotics and fungicides are used to treat bacterial and viral diseases and fungal infections in farmed fish. But some antibiotics, such as fluoroquinolones, nitrofurans and chloramphenicol, and fungicides, including malachite green and gentian violet, are banned for use in aquaculture because humans can develop a resistance to them; some are potential carcinogens.

However, despite consumer perception, aquaculture experts assert that the use of illegal veterinary drugs is declining not only in China but also across Asia.

"In my opinion and experience, the use of banned antibiotics and fungicides in Asia has decreased considerably. That I will [say] without any hesitation," says Rohana Subasinghe, senior fishery resources officer for aquaculture for the United Nations' Food and Agriculture Organization. "I do not deny that [farmers] use banned antibiotics and fungicides. But the usage has reduced significantly.

"Have we singled out China?" he asks. "I believe so. Why? Because China is so big. When China shakes, we all shake."

Education gap

Small farmers produce about 80 percent of the world's farmed seafood, and most of those who use illegal veterinary drugs are unaware that they're using them, notes Subasinghe.

"These people are not necessarily very well educated," he says. "So it is our responsibility to empower them to do a better job. It is extremely important to make them aware of global food-safety requirements and international-trading standards - what's supposed to be used and what's not supposed to be used. Extension is a must. However, many governments are becoming increasingly incapable of providing good extension.

"In many countries, you can buy [fish feed containing illegal veterinary drugs] on the open market," adds Subasinghe. "When it's freely available, you're basically setting a precedence for [increased] usage."

Bill More, director and VP of the Aquaculture Certification Council in Kirkland, Wash., puts some of the responsibility on fish-feed manufacturers. Antibiotics are administered mostly through fish feed.

"Unscrupulous salesman sell [farmers feed containing illegal veterinary drugs] and don't tell them what it really is," says More. "You'll see products like 'Make Your Shrimp Grow Faster' and 'Happy Shrimp,' but they don't tell you what's in the product; [the government] doesn't always require it. Small farmers, especially, have been taken advantage of."

"Fishmeal prices have been quite high. So every feed manufacturer in the world is looking for ways to minimize the fishmeal inclusion level by utilizing alternate sources of proteins and fats," notes George Chamberlain, president of the Global Aquaculture Alliance in St. Louis. "In China, what would normally be typical alternatives, for example, rendered animal byproducts, are huge red flags because they can't be sure that they are absolutely free of all [illegal] antibiotics."

Since 2003, the ACC has audited shrimp farms and processing facilities under the Best Aquaculture Practices, a set of environmental, socioeconomic and food-safety standards developed by the GAA. So far, there are about 70,000 metric tons of farm-certified product from 40 certified farms and 315,000 metric tons of product from 66 certified plants in 15 countries, says the ACC's More.

"The whole point is to test upstream and reduce the need to test at the end of the pipeline," explains Chamberlain. "With end-of-the-pipeline testing, where millions of pounds of product are emptying into ports of entry, attempting to understand the history of a product with a few spot tests is futile. It's much more productive to test at the point of origin."

The ACC recently added fluoroquinolones, including ciprofloxacin, enrofloxacin, sarafloxacin, flumequine and oxolinic acid, to the list of antibiotics that private labs are required to test for on behalf of certified shrimp farms.

More concurs that the use of illegal veterinary drugs in Asia is falling.

"It's very rare now that we find a product that tests positive," says More. "This year, we've taken over 1,000 tests from China alone from the two plants that we certified. We're making them submit tests through third-party labs every week. And these two facilities have been completely clean for almost two years now.

"But these are two plants that sell to companies like Darden and Wal-Mart," he adds. "So you really don't expect to find [tainted] product in plants like that. It's the other plants you have to worry about. Most conscientious farms, especially those integrated with processing plants, don't use illegal antibiotics and fungicides anymore."

It's a classic example of a few bad apples spoiling the entire bunch. The Asian farmers who use banned veterinary drugs - unknowingly or intentionally - are in the minority, say aquaculture experts and seafood importers.

"It was a very small group of [catfish] growers in a very small region of China [Fuzhon] that were unsupervised," says Bill Pearce, U.S. spokesman for the China Catfish Association in Mechanicsville, Va. "It originated at one or two or maybe three feed [manufacturers]. The CIQ [China Inspection and Quarantine] inspection may have failed at those three feed [manufacturers]. The growers thought they were buying the same feed all along, and the packers thought they were buying the same catfish all along. Then it came to the United States."

China's economic explosion

China's recent food-safety deficiencies and manufacturing woes are a casualty of industrialization, hypothesizes Stephen Mihm, assistant professor of American history at the University of Georgia and author of "A Nation of Counterfeiters," published in August.

"China may be a very different country, but in many ways it is a younger version of [the United States]," wrote Mihm in an Aug. 26 Boston Globe column. "The sooner we understand this, the sooner we can realize that China's fast and loose brand of commerce is not an expression of national character, much less a conspiracy to poison us and our pets, but a phase in the country's development. Call it adolescent capitalism, if you will: bursting with energy, exuberant, dynamic. Like any teenager, China's behavior is also maddening, irresponsible and dangerous. But it is a phase, and understanding it that way gives us some much-needed perspective, as well as some tools for handling the problem."

China's economy, the world's fourth largest with a gross domestic product of $2.7 trillion in 2006, has averaged annual growth of 9.5 percent over the past three decades. Since 1978, the Chinese government has been reforming its economy from a Soviet-style, centrally planned one to a more market-oriented approach.

At the same time, farmed-seafood production in China has ballooned from just 4.6 million metric tons in 1985 to a whopping 43.3 million metric tons in 2005, according to the FAO. China represents nearly 70 percent of global aquaculture production.

The United States imported 525 million metric tons of seafood from China in 2006, representing 21 percent of total U.S. seafood imports, more than any other country, reports the National Marine Fisheries Service. More than 80 percent of the U.S. seafood supply is imported.

When the FDA issued its import alert in June, supply-shortage concerns immediately surfaced. China represented 12 percent of total U.S. shrimp imports of 590 million metric tons last year, and U.S. catfish and basa imports from China have also increased dramatically over the past two years.

But the supply-shortage concerns were short-lived.

"Fortunately, the scope of business is such that there's always something somewhere," says Randy Petersen, VP of Berdex International in Vancouver, Wash., which imports shrimp and processed-fish products from China. The import alert "is causing, in all honestly, zero impact when you're talking about what the customers see. There are a few more hoops to jump through internally, but other than that the customers aren't seeing any [supply] shortages regardless of the country of origin."

Despite the added costs tied to the import alert, Beaver Street Fisheries in Jacksonville, Fla., like most importers, has been unable to pass the increase along to its customers.

"We're in a commodity business, so pricing really depends on the commodities," says Carlos Sanchez, an import buyer for Beaver Street Fisheries, which imports breaded shrimp and some catfish from China.

"If you've got catfish on the market and there's a market price for catfish, you have to sell it at market price. If you've got breaded shrimp, there's a little bit more leeway because there are all sorts of specifications that will go into the percentage of breading and the type of breading," he explains. "But it's a commodity-driven market, so you have to be within commodity-price ranges regardless of the testing costs.

"We don't let [China] ship anything that can't pass the test over there, and they're pretty much using the same methodology we're using," adds Sanchez. "So the delays and the expenses have increased, but it's better to know in advance that the product is in compliance."

Restoring confidence

For importers, communicating to their customers that their product is tested extensively for illegal veterinary drugs before it even reaches U.S. shores is an equally important concern.

"When this became front-page news, you better believe every one of our customers and potential ones asked, 'What are you doing to ensure that our product is top-quality and free of [illegal veterinary drugs]?'" says Matt Fass, VP of Maritime Products International in Newport News, Va., which imports catfish from China.

"Of course, we try to provide a lot of that background anyway," he explains. "So in some ways, we're not doing things all that much differently now because we were already doing a lot of checking. But it took a lot of our time and energy to put more of that in a readable, transmittable form for customers. Even though we had a lot of confidence in our system, we did additional testing in domestic labs. A lot of customers, no matter what they saw being done overseas, wanted that extra level of testing here, and I can certainly understand why they would want that under the current environment."

Once clarified, most retailers and foodservice operators appreciate the extent to which product is tested at home and overseas, say importers. Explaining this to the mainstream press, which influences consumers' purchasing decisions, is a much harder task.

"I had an interesting interview with a local reporter here," says Fass. "He wanted to know on every container that comes in how many fish get tested, and he couldn't believe that it might only be 10 or 15 fish. I said, 'Well, you do understand that every fish you test gets destroyed.' He said, 'Shouldn't half of the fish be tested?' Well, you're not going to throw out half of a container. And not only that, but you're testing for antibiotic usage so you can take statistical samples from different date codes, and it's either in there or it's not, because fish don't receive antibiotics individually."

"Initially, we had a lot of consumers calling in and asking questions because they were confused," notes Sanchez of Beaver Street Fisheries. "They were asking what products were recalled, and there was no recall. The average consumer isn't familiar with import 
terminology. Newspapers [ran headlines] like 'Chinese seafood embargoed' or 'Chinese seafood banned,' and that's a misnomer. So consumers were confused."

However, few seafood importers report losing customers due to the onslaught of negative press about China's food-safety problems.

"We've had only two or three accounts that have actually said they won't buy Chinese any more," says Troy Turkin, executive VP of sales and marketing for Newport International in St. Petersburg, Fla., which imports crabmeat and tilapia from China. "But they've started buying other products of other crab that we import, so technically there hasn't been a financial impact.

"We're still concerned that some [buyers] may think that Chinese seafood is unsafe," he adds. "We do tests. We do independent audits. We have our own lab at our corporate office. We even have our own Asian-based inspectors."

FDA under fire

Amid the controversy surrounding China's food-safety deficiencies, the FDA's import-alert system and its ability to monitor the U.S. food supply, of which 13 percent is imported, have come under fire. The FDA inspects only about 1 percent of total seafood imports.

In July, David Nelson, senior investigator for the House Committee on Energy and Commerce, testified before the Subcommittee on Oversight and Investigations that the import-alert system is ripe for manipulation.

An unnamed FDA deputy lab director told Nelson's team of investigators that private lab tests of food imports are inaccurate, adding that some work is "scary." Another FDA official said private labs are "driven by financial rather than scientific concerns."

"The FDA has known for years about the widespread use of antibiotics and fungicides to treat farmed fish from China," said Nelson. "It appears, however, that only after the subcommittee and other congressional committees began to investigate the FDA's less-than-aggressive approach did the FDA issue its alert."

William Hubbard, senior advisor for the Coalition for a Stronger FDA in Chapel Hill, N.C., also testified before the subcommittee, arguing that the FDA's food program is woefully underfunded and understaffed.

In 1971, the FDA's food program comprised almost half of the agency's total budget. Today, it represents about one-quarter, says Hubbard, whose group was formed last year by the last three Health and Human Services secretaries to lobby Congress to increase the FDA's budget.

Historically, the FDA, like most agencies, has been funded by federal appropriations. But in 1992, Congress allowed the FDA to charge user fees to drug companies to hire staff, which can inspect only drugs and medical devices.

The number of user-fee employees has jumped from 204 in 1994 to 1,423 in 2005, while the number of non-user fee employees has slipped from 9,167 in 1994 to 8,181 in 2005, says Hubbard.

"Subliminally, [Congress] is saying that the FDA is getting more money, so it sends the appropriated money somewhere else. The problem with that is you're shifting resources from food to drugs and medical devices," he says. "Internally, the FDA has tried to point out to the decision makers in Washington for several years now that the food program is very poorly funded."

What's more, the FDA employs only 450 inspectors to cover more than 400 ports, notes Hubbard.

"This year, they'll see close to 20 million shipments of food, drugs and other commodities," he says. "There's no way they can look at very much of that."

Don Kelley, VP of Western Edge Seafood in Bethlehem, Pa., who visits the company's catfish suppliers in China two to three times a year, says the FDA's import-alert system is adequate given the agency's lack of resources.

"Obviously, FDA inspectors are limited as to the number of inspections they can perform," he explains. "Without addressing the [need to] increase the FDA's budget, this is probably the best system that could be in place."

In addition to FDA inspectors, private labs are also overwhelmed due to the import alert, notes the ACC's More.

"I've been trying to get a sample from Guatemala tested at [an FDA-accredited] lab in Florida, and my lead time on this sample is 45 days," he says. "I asked them, 'Why?' And they said, 'Because we're under contract to do all of these samples from China, and we're backlogged.'"

But there is a light at the end of the tunnel. As the use of illegal veterinary drugs continues to decline, Chinese exporters will be removed from the import-alert list, easing the workload on the FDA and private labs. On Sept. 18, as this issue was going to press, Zhangjiang Guolian Aquatic Products Co., a Chinese shrimp producer, became the first exporter to be removed from the list.

In the meantime, importers will continue to assure their customers, and consumers, that the seafood they source from China is safe.

"We went from being off the radar screen, which a lot of times we are as an industry," says Maritime Products' Fass, "to being the bull's eye."

Associate Editor Steven Hedlund can be e-mailed at shedlund@divcom.com