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« November 2006 Table of Contents

Halibut

Prices have hit new highs, but cost hasn't yet put a major dent in demand

In early September at Tom Doug­las' Dahlia Lounge in Seattle, the halibut entrée was served in a bamboo steamer over bok choy, sprinkled with grated fresh ginger and thinly sliced scallions and finished with a toasted-garlic oil. It was a beautiful presentation, and, at $26, it cost a pretty penny, too.

Prices for fresh halibut, the second-best-selling fish behind salmon at Douglas' four Seattle restaurants, soared to their highest ever this season. Fresh halibut, f.o.b. Seattle, opened for the season in mid-March at $5 to $5.30 per pound and stayed mostly in the $4-to-$5 range through mid-September, when it reached nearly $6 per pound, according to Urner Barry.

Some distributors say retail and foodservice buyers are starting to back off due to high prices, but Douglas hasn't shied away from halibut.

"I don't think it will top out," he says. "Just look at what [consumers] will pay for Copper River salmon [more than $20 per pound] or filet mignon [$18 to $22 per pound].

"As long as it's caught beautifully, packed properly and delivered to market quickly, [halibut] has a lot of flexibility in price," says Douglas.

The halibut fishery boasts abundant supply, an eight-month season and solid resource management; the U.S. North Pacific fishery is certified sustainable by the Marine Stew­ardship Council. These factors, along with Alaska's branding muscle, have helped the mild-flavored, white and flaky-fleshed flatfish become a darling of white-tablecloth chefs and a popular species among chain restaurants and grocery stores.

This fall, some felt the halibut market was nearing its ceiling and feared that high prices will cut into halibut's hard-fought market share. But not everyone is worried.

Halibut's share on the menu isn't going anywhere, says Laura Fleming, communications director for the Alaska Seafood Marketing Institute.

"[Halibut] has established a permanent place on the menu," she says, "and consumers expect a lot of fine-dining establishments to have it, just as they expect them to have steak."

Chip Mezin, general manager at American Fish and Seafood, a Los Angeles distributor, agrees. Despite the highest halibut prices he's seen in his 20 years buying and selling seafood, Mezin says demand is still quite strong.

"There are a lot of complaints out there because of high prices," he says. "But there is not a decline in sales as a result. It's still the best-managed fish, the finest fish and a sought-after fish for foodservice and retailers alike."

But Bob Sullivan, president at Plitt Seafood, a Chicago distributor, is seeing buyers back off. Sullivan estimates his halibut sales volume is down 15 to 20 percent this year.

One supermarket buyer who typically purchases 50,000 pounds of halibut fillets for the winter has dropped his order to 32,000 pounds due to the high price.

Sullivan has also seen a drop in his foodservice orders for halibut.

"You're seeing menu erosion," says Sullivan. "People who used to have halibut on the menu don't have it anymore. It's gotten a little pricey for them."

One West Coast distributor says two major retailers have told him they will soon stop carrying fresh halibut and shrink their winter order for frozen. Since late July, retail halibut promotions stopped. Retailers have seen high shrink as consumers balked at the price.

"Anytime you break $10 at retail, a product prices itself out."

So, how did prices get so high?

For one thing, demand for halibut has been quite strong across the board, among chain restaurants and grocery stores.

At Marie Callender's Restaurant and Bakery, halibut is often a top seller among the half-dozen dishes on the summer menu, says Nick Saba, director of food and beverage for the family-style chain, which has 140 outlets in the West and Mexico.

The chain's halibut dishes include pecan-crusted halibut or halibut topped with a scampi mix of shrimp sautéed in garlic and lemon sauce, both for $16.99. For $15.99, diners can choose from three grilled-halibut preparations: with a lemon-pepper seasoning, with Cajun seasoning or topped with an artichoke-and-mushroom cream sauce.

Saba likes halibut because it holds up to many different preparations. Wholesale prices have been "astronomical," but he expects no changes to the chain's halibut-purchasing plans.

A dip in supply

On the supply side, there was a slight drop in the total catch limit set by the International Pacific Halibut Commission for the Alaska, Pacific Northwest and British Columbia halibut fisheries.

This year's limit is 66.9 million pounds, compared to 73.8 million pounds for 2005. As of Sept. 19, the halibut fisheries had harvested a total of 55.6 million pounds.

Traditionally, the fishery was derby style, with high landings spikes that resulted in a glut of fish and the freezing of much of the harvest. In the early 1990s, that all changed.

In 1991, the Canadian fishery went to an indivi­dual vessel quota system; in 1995, the Alaska fishery went to an individual fishing quota system.

The season now runs from mid-March to mid-November, and the more consistent supply has resulted in most fish being sold fresh.

Yet the frozen market is still substantial. Frozen, battered halibut is found in the retail frozen-food case, says ASMI's Fleming. In both retail and foodservice channels, frozen boneless, skinless halibut portions are increasingly popular, she says.

What really helped drive up the market this year, says Sullivan, was last year's shortage of frozen halibut.

Processors found themselves without enough halibut in last year's off-season, between mid-November 2005 and mid-March 2006, so processors who sell frozen halibut bought loads of it this season to make sure their freezers would be well-stocked, says Sullivan.

It happens every four years or so, he explains. "People get short the winter before, so the frozen market is hot the next summer, and it jumps up prices on you a little bit," he says.

Chalky fish a concern

Adding to concerns about market erosion, another effect of high prices has been buyers' frustration over a "chalky" condition that can ruin the appearance of the halibut flesh. The fish is safe to eat, but unattractive.

Steve Kaimmer, biologist with the IPHC, explains that the fish releases lactic acid into the flesh, changing its acidity level and altering the texture.

Chalky fish is hard for buyers to detect. The pH changes from 12 to 20 hours after death, and the chalky flesh occurs later. Thus a chalky fish can seem perfectly fine the day after harvest.

Overall, less than 2 percent of the halibut harvest is estimated to be chalky, but about 5 percent of the catch off Washington and Oregon can be affected, says Kaimmer.

"It's small, but noticeable. If you bought chalky fish, you lost money on it," he notes.

Jon Speltz, VP and buyer at Wild Salmon Seafood Market in Seattle, is well aware of how a chalky fish bites into his bottom line. A normal halibut with firm, translucent flesh, sells for $13.99 in his retail case. A chalky fish sells for about $4.99 a pound. "Chal­kers," as Speltz calls them, cause greater frustration now because the loss is greater.

"When you're paying $6 a pound for fish instead of $2 or $3 a pound like we used to, then it's a huge issue all of a sudden," says Speltz.

He's tempted to drop halibut altogether, due to the high prices. It's a nice fish, but not so nice that it's worth $16 to $17 a pound, he says.

But Speltz's customers expect to find halibut at his fresh fish market on Seattle's Fishermen's Terminal. His customers also expect to find wild fish, given the term "wild" in the store's name, so Speltz isn't likely to turn to farmed halibut, even when it becomes more available. He suspects other buyers, will, though.

"There are enough unhappy [halibut] buyers out there that the marketplace is poised to welcome farmed halibut," he says.

Limited farmed supply

Since the 1990s, Marine Harvest, part of the world's largest fish-farming company, has raised halibut in Hjel­meland in southwest Norway.

The company produces about 1,200 metric tons of the total 1,800 metric tons of farmed halibut produced globally each year, says Mag­nus Skretting, managing director of coldwater species for Marine Har­vest, with headquarters in Am­sterdam. About 250 metric tons of that production is going to the United States, he says.

Marine Harvest markets farmed halibut heavily during the wild fishery's off-season as a small (2.2 to 22 pounds), luxury fish. It sells to high-end chefs and retailers in Norway, the United Kingdom, Sweden and the United States.

"This will never be a [farmed] salmon story," says Skretting. "[Hali­but] will be a story with a limited production. You will never reach the [same] volumes [as] salmon due to the fact that [halibut is] very expensive to produce. That's why it will stay at 3,000 to 5,000 metric tons.

"Maybe in 10 years' time, [the industry] can produce 5,000 metric tons, but not more than that. It will not be a salmon."

Next year's farmed-halibut production is projected to reach 2,000 metric tons, industry-wide, with Marine Harvest accounting for 1,300 metric tons.

Farmed halibut can reach annual production of 20,000 metric tons without disturbing the market for wild Pacific or Atlantic halibut, according to a Marine Harvest market analysis, says Skretting.

For now, wild halibut is the dominant supply source, though future landings are expected to drop a bit.

Catches have been about 73 million pounds annually, while long-term, sustainable yield is estimated to be about 65 million pounds, says Bruce Lea­man, executive director of the IPHC, which will make a recommendation for next year's catch limit at its annual meeting Jan. 19.

Large year classes from the 1970s and 1980s are starting to pass out of the fishery, so the stock is declining, says Leaman. Recruitment between the 1980s and mid-1990s was below average.

Since then, biologists have tracked strong recruitment years, but that productivity has not yet shown up in the fishery. Fish appear in the catch at about eight years.

"Generally, the trajectory of the stock is down somewhat," says Leaman. "We expect that to stabilize as these new recruits come onto the fishery over the next several years."

So don't expect any bargains in 2007 for halibut, just a fine, palate-pleasing fish that will be in good supply for a long time to come.

Contributing Editor Lisa Duchene lives in Bellefonte, Pa.