« October 2006 Table of Contents
America's dependence on foreign seafood grows
Chain seafood buyers set up shop overseas to cut costs,
By Steven Hedlund
October 01, 2006
U.S. seafood buyers have a
difficult job compared to
center-of-plate protein buyers: There are hundreds of seafood
species caught and farmed in dozens of countries worldwide.
Sourcing seafood in today's global economy
requires a vast
knowledge of trade politics, foreign relations, environmental
and social issues, currency, geography and even biology. The
task is complicated because the United States can't produce as
much as seafood as it consumes. Nearly 90 percent of the U.S.
edible-seafood supply is imported. Both wild- and
farmed-seafood production have leveled off in this country,
where fishing restrictions are tight and land and labor is
To better control supply, quality and costs, seafood buyers
and suppliers alike are opening production facilities overseas
or are forming exclusive relationships with foreign producers,
This SeaFood Business special feature examines how U.S.
seafood buyers and suppliers are embracing globalization and
how innovation and policy have shaped the global seafood
S ourcing seafood wasn't nearly as complicated in 1968 when
Bill Darden and Joe Lee opened the first Red Lobster restaurant
in Lakeland, Fla. The task entailed a handful of local
suppliers and a handful of local species.
Today, the company Darden and Lee co-founded is the world's
largest casual-dining company, operating more than 1,400 Red
Lobster, Olive Garden, Smokey Bones Barbeque & Grill,
Bahama Breeze and Seasons 52 restaurants throughout North
America and serving 300 million meals a year.
To get this big, Darden Restaurants started years ago
working directly with a network of seafood suppliers worldwide
to manage production costs and control supply and quality.
"Joe Lee began this process in the late '60s," says Bill
Herzig, senior VP of purchasing for the Orlando, Fla., company.
"This has been a long and proud tradition of Darden to work
directly with our overseas suppliers to find the best in the
world to work with.
"Our core purpose is to nourish and delight everyone we
serve, so value and quality are two important components of our
business philosophy," declares Herzig.
"We work with our suppliers to ensure we get great quality
but also manage [production] costs wisely. This helps us to
effectively manage our menu prices. We control the supply and
quality of our seafood to ensure that our guests are served
only the best.
"Quality assurance is an overarching challenge in the
restaurant industry," he says. "To address this challenge, our
quality-assurance team monitors and inspects the wild-harvest
and aquaculture facilities we buy from to ensure compliance
with Darden's food-safety and quality requirements."
Joey's Only Seafood Restaurants has sourced most of its
seafood directly from Asia for 10 years and China for five
years "to get better quality and save money," says Elgin Hanes,
the Calgary, Alberta, company's VP of purchasing.
"You have to go directly to the source," explains Hanes, who
travels to Asia regularly to visit Joey's Only's seafood
vendors. "We spec all our products. By doing that, we know what
Joey's Only sister company, TJ Distribution, imports seafood
in large quantities and sells it to Sysco Corp. to be
distributed to its 155 restaurants throughout Canada and the
United States. This way, Joey's Only has greater control over
supply and quality and, at the same time, saves money, says
Also to save money, Joey's Only ships Alaska pollock to
China to be processed. The difference between once-frozen
Alaska pollock and twice-frozen Chinese pollock is 50 to 60
cents a pound, he says. The chain uses pollock for fish and
chips, its signature menu item. The chain also uses cod,
haddock and halibut in separate fish-and-chips menu items.
Unlike Darden and Joey's Only, McCormick & Schmick's
Seafood Restaurants doesn't employ its own quality-assurance
team overseas but rather relies on its network of about 50
suppliers worldwide to control the quality of the
the menus at its 64 upscale restaurants
"We're reliant on our suppliers," says Bill King, VP of
culinary development for the Portland, Ore., company.
"Communication is constant."
King says that without the tight relationships it maintains
with its suppliers, McCormick & Schmick's wouldn't be able
to menu more than 150 species of seafood from dozens of
Each restaurant menus 65 to 80 species daily, 30 to 38 of
which are fresh.
"We're all about diversity. It's how we started, having the
most-diversified and freshest seafood in the marketplace," says
King. "And when we want to broaden our offerings, we look to
our suppliers for support, because they're directly involved"
with production overseas.
"You just can't import seafood these days without employing
people overseas," says Troy Turkin, executive VP of sales and
marketing for Newport International, which imports shrimp,
blue-swimming-crab meat, tilapia, mahimahi and grouper from
Asia and Latin America.
The St. Petersburg, Fla., com-
pany's head biologist is in
Asia, and, at press time, its quality-assurance team was
auditing processing facilities in China, Vietnam and Indonesia.
Newport's overseas employees are also responsible for ensuring
the seafood the company purchases is accurately labeled.
"It's 'buyer beware,'" says Andy Walton, Newport's
president. "You better know who you're dealing with [and that]
you're selling 100 percent of what the label says it is."
Matt Fass, VP of Maritime Products International, agrees.
The Newport News, Va., company has employed a person in Asia
since the early 1990s.
That agent works directly with the producers from which
Maritime Products imports crawfish, scallops, flounder, basa
and channel catfish. The firm also imports whiting and croaker
from Latin America.
"You need to form partnerships, and you can't be
adversarial," says Fass. "The relationships need to be
"We realized that with catfish, whether it's [channel
catfish] or pangasius, we needed to be experts, not just
suppliers," he explains.
Phil Walsh, director of business development for The Alfa
Gamma Group, says a rising number of his retail customers are
demanding traceability information, including how, when and
where the fish is caught.
They're also requiring third-party audits to ensure the fish
they buy is from a sustainable source and processed by workers
who are of age (i.e. no child labor) and receive a living wage
and medical benefits.
Walsh says it'd be difficult to meet retailers' demands if
the Miami fishing company didn't directly control production.
Alfa Gamma owns more than 100 longliners, three tuna seiners
and three processing plants in Ecuador, Costa Rica and Panama.
The company imports tuna, mahimahi, grouper, snapper, kingklip
Retailers "don't want the 6 o'clock news on their doorstep,"
says Walsh, "and they want to do the right thing"
environmentally and socially.
Retailers are also concerned about the bottom line,
especially in the face of increased competition from big-box
retailers such as Wal-Mart and Costco.
For example, one large Southeastern supermarket chain is
"deconstructing its procurement practices" in 2007 and buying
seafood directly from producers, whether foreign or domestic,
to boost profit margins, notes Walsh.
The only way for them to boost profit margins, he says, "is
to take links out of the supply chain."
Innovation vs. policy
The more links that are removed from the supply chain, the
more involved U.S. restaurateurs and retailers become with
"There's no reason this trend should change," says Audun
Lem, fishery-industry officer for the United Nations' Food and
Agriculture Organization in Rome.
"In a sense, the fisheries trade has always been globalized,
and it's becoming more globalized."
Today's global seafood trade is the result of innovation and
policy, says Jim Anderson, chairman of the University of Rhode
Island's Department of Environment and Resource Economics and
author of the book "The International Seafood Trade,"
published in 2003.
For centuries, innovation has fueled the growth of the
global seafood trade, beginning with advances in preservation
methods, such as fermentation, salting and drying.
In the 19th and 20th centuries, canning, refrigeration and
flash-freezing extended seafood's shelf life, making
long-distance travel practical and inexpensive (see
preservation timeline at left).
But no innovation has had a greater effect on the global
seafood trade in the past few decades than aquaculture, which
represented 43 percent of the global seafood supply in 2004,
compared to just 9 percent in 1980, according to an FAO report
released in September. About 100 billion pounds of farmed
seafood worth $63 billion were consumed worldwide in 2004.
Rohana Subasinghe, a senior fishery-resources officer for
the FAO in Rome, expects humans will be eating more farmed
seafood than wild seafood by 2012.
The pressure on aquaculture continues to rise because
wild-seafood production has leveled off, probably for good,
says Subasinghe. And the world's dependency on Asia continues
to rise because the continent grew 92 percent of the world's
farmed seafood in 2004; China alone raised 70 percent.
Much of what's farmed in Asia is processed there, too.
"It just makes sense," says Lem of the FAO. "It's just plain
stupid to ship fish heads and guts overseas."
What's more, it's cheaper to process seafood in Asia,
because land and labor are cheaper there than in North America
and Europe, adds Lem.
Fisheries-management policy has fueled the growth of the
global seafood trade as much as, if not more than, innovation
since the mid-20th century (see policy timeline at right).
It all started with the domestication of fisheries in the
1950s, which forced countries to import seafood that they were
no longer allowed to harvest off foreign shores, says Anderson
of the University of Rhode Island.
In 1952, Ecuador, Peru and Chile claimed exclusive rights to
waters within 200 nautical miles of their coastlines to keep
foreign fishing fleets out.
By the mid-70s, exclusive economic zones encompassed only
about 30 percent of the globe's seas but yielded more than 90
percent of the world's 150-billion-pound seafood catch, notes
Barbara Kwiatowska in her 1989 book "The 200-Mile Exclusive
Economic Zone in the New Law of the Sea."
The United States became the 38th nation to implement an EEZ
when it adopted the Magnuson-Stevens Fishery Conservation and
Management Act in 1976. EEZs were recognized internationally
Congress continued to encourage the development of domestic
fisheries by enacting the Processor Preference Act in 1978 and
the American Fisheries Promotion Act in 1980 and forming the
National Fish and Seafood Promotion Council in 1986.
As a result, U.S. landings of edible-seafood products jumped
from 3.7 billion pounds in 1980 to 7 billion pounds by 1990.
Then they leveled off, exceeding 8 billion pounds only once, in
U.S. aquaculture production has also been flat at less than
1 billion pounds, about 75 percent of which is catfish.
Meanwhile, America's appetite for seafood continues to
mushroom. U.S. per capita seafood consumption increased from
12.5 pounds in 1980 to 15 pounds by 1990 and reached a record
16.6 pounds in 2004, the latest figures available from the
National Marine Fisheries Service.
To quench the burgeoning demand for seafood, U.S. suppliers
turned to foreign product. From 1980 to 1990, U.S. imports of
edible-seafood products increased 35 percent, to 2.9 billion
pounds. By 2004, they neared 5 billion pounds, up 72 percent
The introduction of EEZs and the domestication of fisheries
wasn't the only policy to alter the landscape for U.S. seafood
The General Agreement on Tariffs and Trade was adopted by 20
countries in 1947 to reduce or eliminate tariffs in an effort
to promote international trade. The World Trade Organization
was formed in 1995 to pick up where GATT left off. Today, the
WTO has 150 member nations.
This year, Congress revoked the Byrd Amendment, which allows
domestic companies to collect tariffs, and the U.S. Department
of Commerce stopped using a controversial practice called
zeroing to calculate tariffs, after the WTO deemed both
"The worm has turned," says Greg Rushford, editor of The
Rushford Report, a monthly newsletter on the politics of
international trade, in Washington, Va. "The U.S. used to get
away with preaching free trade and practicing the opposite. The
U.S. has gotten away with a lot over the years. But that's
Sometimes, policy unintentionally promotes the growth of the
global seafood trade by dictating who buys what from where.
For example, Congress enacted the Jones Act, part of the
Merchant Marine Act, in 1920 to domesticate the merchant-marine
industry. According to the law, only U.S. built, owned and
crewed ships can transport goods between U.S. ports.
By shutting out foreign competition, the Jones Act raises
the cost of shipping goods between U.S. ports. Often, it's
cheaper to ship seafood from a foreign country to the United
States than it is to do
so between U.S. ports, explains
The Jones Act "creates the incentive to go abroad," he says.
"It's not just people trying to make a buck. It's people
reacting to policy."
The same can be said for the tariffs the USDC slapped on
shrimp from six Asian and Latin American countries in 2005, the
outcome of an antidumping petition the domestic shrimp industry
brought in 2003.
The tariffs didn't cover breaded shrimp. So, to avoid the
tariffs, U.S. companies either moved their breading operations
imported breaded shrimp instead
As a result, U.S. breaded-shrimp imports nearly tripled, to
98.3 million pounds, from 2004 to 2005. Meanwhile, total U.S.
shrimp imports increased 2 percent, to 1.17 billion pounds,
despite the tariffs.
"I don't see U.S. seafood imports slowing," says Anderson,
"unless there's some major shift in political agenda."
It's clear that America's appetite for seafood will only
grow. The country's Hispanic and aging Baby Boomer populations,
who eat more seafood than the average American, are
skyrocketing. And seafood is an ideal source of lean protein
and heart-protective omega-3 fatty acids, which appeals to
It's also apparent that demand for seafood is growing at a
faster rate than U.S. wild- and farmed-seafood production.
The only way buyers like Darden, Joey's Only, McCormick
& Schmick's and suppliers like Newport International,
Maritime Products and Alfa Gamma can satisfy their customers
is to go overseas, where opportunities abound for buyers with a
Associate Editor Steven Hedlund can be e-mailed at