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King crab

This high-end crustacean's popularity is soaring, but there may be trouble on the horizon

By James Wright
November 01, 2006

King crab is more accessible and affordable than ever, which is good news for cost-conscious buyers who can now offer this elite seafood to customers at amazingly low prices - like under $6 a pound, wholesale.

Why? Because record amounts of Russian crabs have hit the U.S. market the past two years, and the massive volume has prompted discounts across the board. Imports are now expected to dictate market prices for the coveted crustacean.

"[King crab] has found more homes because of the price," says Dean Frank, regional sales rep for Global Fishing in Bellevue, Wash., one of the nation's top crab importers. "It's being used in places it wouldn't normally have been.

"And the price has moved some volume; it drove the market this year. When retailers [can sell it] for $9.99 a pound, it flies off the shelves."

Count importers among those who couldn't be happier with current market conditions - sky-high demand and dirt-cheap prices. Through just the first seven months of this year, the United States imported 42.4 million pounds of king crab, 2 percent more than the total imported last year, which was up 74 percent from 2004.

The vast majority - 91 percent - is from Russia, which sits adjacent to several key resources, including the Bering Sea, the Barents Sea and the Sea of Okhotsk north of Japan, another major king crab buyer.

Domestic producers will have their work cut out for them this year competing against this flood of imports, which will undoubtedly lower the market price for Alaska king crab.

While an expanded market for king crabs is indeed good in the long term, competing with imports may take a toll on the domestic industry.

But what's really got some folks in Alaska upset is that much of the imported crab is allegedly harvested illegally and then marketed with the Alaska name.

"The market is glutted with cheaply produced [imported] king crab," says Laura Fleming, communications director of the Alaska Seafood Marketing Institute in Juneau.

"Some is [poached] king crab, and some is sold as Alaska king crab, which is a shame."

The impact of illegal fishing on the domestic market is "huge," says Arni Thompson, director of the Seattle-based Alaska Crab Coalition.

"It's not a level playing field," Thompson says, adding that Russia has not published its Far East crab quotas since 2003. "We're in compliance with regulations and the restrictions of reduced harvest rates based on sustainability. We don't see that with the Russian fleets."

Thompson says there are "long-term costs" for the domestic industry, which has brought its concerns to Sen. Ted Stevens and others in the hope that the U.S. government will look into potential violations of the Lacey Act, which forbids the sale of illegally caught seafood.

Also, United Fishermen of Alaska launched an initiative to expand current country-of-origin labeling legislation (COOL) to encompass cooked crab products.

Thus far, their collective efforts are at the very least greasing the skids for future action.

"Management of fishing on the high seas is patchy at best," Sen. Stevens told the United Nations on Oct. 3. "Some areas in my state of Alaska have adopted strict and effective management measures. However, too many areas have not, and without an effective management regime, destructive fishing practices will continue to be conducted by foreign fleets."

Russia's king crab management practices, or lack thereof, says Thompson, have many U.S. suppliers concerned - and checking their calculators.

If 40 million-plus pounds of finished product have entered the United States through July of this year, that means some 60 million pounds of whole crabs were caught and processed; Russia's quota is supposedly about half that.

"The problem is, yes, there are quotas over there, but do they adhere to them? No," says Dave Keene of WOW! Crab Co., a Seattle supplier.

"Under our regulations, any crab caught in violation of the exporting country's laws cannot be sold here. But the Department of Commerce would have to get involved and levy punitive tariffs or outlaw [illegal fishing] altogether, which won't happen.

"We've called attention to it, which is good. It may discourage a lot of people from buying [Russian crab]."

The Russian resource

Russia's king crab catch has been steadily rising since Soviet scientists introduced the species into the Barents Sea in the 1960s. To say that the experiment was a success would be an understatement.

In fact, Norwegian scientists are now worried that giant red king crabs, which have migrated into Norway's waters, will threaten species like cod and native crabs. The Barents Sea king crab population is estimated to be 20 million crabs, roughly 10 times the level of just a decade ago.

Frank and other importers expect another bountiful harvest from Russia, which begins fishing this month. Frank expects that Russia will once again ramp up its efforts and that supplies will be ample.

"It'll be steady going forward, but it really depends on the timing of product coming in, if it comes in time for the holidays," Frank says.

"Prices are very promote-able right now. It's a great value for what it is."

The dollar value of this year's imports through July was about $243 million, up from $137 million through the same period last year. The average value per pound was $5.74, which is down 11 percent from last year. Expect more favorable trends for imported king crab in 2007.

Another factor that could lower the price of domestic product is the large size of the Russian crabs. King crab prices are dictated by size and appearance, and with a tremendous amount of big crabs on the market, large domestic crab legs will face tough pricing competition.

Further, more than 5 million lesser-value No. 2 reds, or "dirty" crabs - crabs that are scarred or covered with barnacles - were reportedly discarded last year. The industry has vowed to deliver dirty-shell crab to the market this year.

Price and supply outlook

Alaska's biggest king crab fishery, in Bristol Bay, opened on Oct. 15 and will run into January. This season's quota was set at 15.5 million pounds, about 15 percent below last year's catch of 18.4 million pounds, which was reached by mid-November.

The quota includes a 4.58 percent deduction based on mortality associated with discarding legal-sized dirty male red king crabs last season.

Alaska's total crab harvest accounts for more than a third of the nation's annual landings. Red king crabs ( Paralithodes camtschaticus ) typically fetch the highest prices. As of mid-October, red king crab legs and claws were selling in the low-$9 range for 6-9s; mid-$8 range for 9-12s; high-$7 range for 12-14s; mid- to high-$6 range for 14-17s; and under $6 for smaller sizes.

Blue king crabs ( P. platypus ) and golden or brown king crabs ( Lithodes aequispinus ) make up a much smaller portion of the king crab supply but are typically available by early autumn. This year's total allowable catch in the Bering Sea was set at 5.7 million pounds.

From Aug. 15, 2005, through June 30, 2006, the golden king crab catch in the eastern and western Aleutian range fell just shy of 5 million pounds.

Golden kings typically sell for about $1 less per pound at mid-season. In October, 12-14s were priced in the high-$6 range; 14-17s in the high-$5 range; 16-20s in the mid-$5 range; while smaller sizes were priced between $4.50 and $5 a pound.

A rational solution?

The Alaska Department of Fish and Game now manages Alaska's king crab fisheries via individual fishing and processing quotas, similar to its system for halibut and sablefish. The IFQ program's two-pie system, launched in 2005, allots fishing-vessel owners and processors a certain amount to harvest or process based on historical production figures.

Since the quotas can be sold or leased, most of the small boats are now tied up instead of chasing crabs. In years past, more than 250 boats would be registered in the fishery; last year only 89 boats 
entered.

But the biggest difference is the season itself. The lucrative Bristol Bay-Bering Sea season now spans three months, when before it lasted just three and a half days. The intent was to eliminate the dangerous derby-style deep-sea ventures that put product quality - and fishermen's lives - at risk.

"With a three-day season, you couldn't afford to stay in port; you were going to go out fishing regardless of the dangers," says Keene, a former partner of Royal Aleutian Seafoods, which was sold to UniSea in 2005. "Three days without sleep - it's very dangerous. Sooner or later, you'll start making mistakes, some deadly.

"Processors now have a labor force with full contracts and steady work," Keene adds. "Processors will be more efficient than before, when we got 350 people up there and then sent them right back home after two weeks."

The added time under the IFQ system is a big advantage for processors; with no time crunch, processors can add value to the product and vary their pack sizes, lowering labor costs for customers down the line.

Under the old system, processors were knee-deep in crab for just 72 hours and could only crank out bulk packs of frozen clusters that needed further processing. Con­sumers, advocates say, save money in the end.

Still, the IFQ program is not without its detractors. In Sep­tember, Washington NGO Food & Water Watch announced that IFQs have not delivered on their promise to improve management and protect the ecosystem (see Newsline page 8).

"Crab rationalization has left Alaska crabbers and coastal communities out in the cold while warming the wallets of a few individuals and corporations," said Wenonah Hauter, the group's executive director.

While ADF&G drops the harvest levels and wrestles with resource sustainability, Thompson of the ACC and others think IFQs will be sticking around.

Assistant Editor James Wright can be e-mailed at jwright@divcom.com

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