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Top Story: Wanted: Sales Boost

National Seafood Marketing Coalition gains support in wake of Gulf oil spill

By Stuart Hirsch
October 01, 2010

The latest crisis that has overtaken the Gulf seafood industry - the Deepwater Horizon oil spill - could be the catalyst that's needed to help a dedicated national seafood-marketing program become reality. That's the hope of many in the industry, including Ewell Smith, executive director of the Louisiana Seafood Promotion and Marketing Board (LSPMB), who SSRq's on the front lines to preserve the region's fishing industry from this catastrophe.

In a recent letter to Sen. Mary Landrieu, (D-La.), supporting the creation of a national marketing fund, Smith painted a dire picture of the regional seafood industry's future because of the oil that gushed into the Gulf for nearly three months.

"Seventh- and eighth-generation seafood harvesters and processors are going out of business on a daily basis. Consumers and seafood buyers across America are specifically requesting not to be served Louisiana seafood," Smith wrote.

"A recent national survey revealed that over 26 percent of the respondents feel that Louisiana seafood is unsafe."

Smith adds that an expensive and sustained marketing campaign is needed to restore the public's confidence that Gulf seafood is safe to eat, and a national marketing fund could support that effort.

Led by the United Fishermen of Alaska, the National Seafood Marketing Coalition since early this year has been working to create just such a program to promote the domestic seafood industry by boosting consumer awareness and consumption of American seafood.

The coalition strives to increase demand for seafood products and expand and improve the marketing, product development, promotion and utilization of domestic seafood products. Another goal would be to assist areas like the Gulf region recover from disasters, says Julie Decker, one of the group's promoters. Decker, with her husband, Gig, is a gillnet salmon fisherman in Wrangell, Alaska.

Julie Decker and other industry experts say the fund is needed to help American seafood producers compete with imports and other protein sources, such as beef and pork, both of which have national marketing funds and advertising campaigns.

According to the National Marine Fisheries Service, in 2009 U.S. consumers spent an estimated $75.5 billion on fishery products, including sales at restaurants and retail stores, with imports making up 84 percent of the seafood consumed.

Decker and others say the domestic fishing industry is in crisis because of those imports. Fishing jobs are being lost to cheap labor overseas and communities that depend on fishing are struggling to survive, they say.

The National Seafood Marketing Coalition isn't interested in picking a fight with imports, says Decker, but aims to promote what's best about American seafood products.

"I think the importers in general are standing by, however, we believe that they will see that [a national marketing effort] can benefit them as well," she says. "We think over time, the value of seafood products will grow as well as the demand for seafood in general. We think the importers will see this as something that's good for them."

 

Call for duties

The Saltonstall-Kennedy Act of 1956 and the Fish and Seafood Promotion Act of 1986 were originally intended to promote and develop seafood projects, but have fallen short of their original intent, the coalition says. Now, the group seeks federal legislation to dedicate $100 million annually to a seafood marketing fund from duties already collected on imported seafood products, and from anti-dumping and countervailing duties on those products.

Imported products that currently have tariffs include Vietnamese pangasius, Chilean farmed salmon, Norwegian farmed salmon, Chinese crawfish and farmed shrimp from Vietnam, Thailand, China, India, Ecuador and Brazil. To administer the fund, the coalition proposes creating regional seafood-marketing boards. In one scenario, the country would be divided into eight regions in which the boundaries would follow those of the fishery management councils. The marketing activities of each board would be directed toward seafood caught or produced in that region.

Currently, import duties are deposited into the U.S. Treasury. A permanent appropriation provides 30 percent of these funds to the National Oceanic and Atmospheric Administration (NOAA). The remaining 70 percent of import duties on seafood projects remain in the U.S. Treasury and are not dedicated to a specific purpose.

"We are not seeking any new fees or taxes. This is money that's already being collected," says Dane Somers, executive director of the Maine Lobster Promotion Council, one of the organizations that support the coalition's efforts. "We are not looking for any new taxes or a government bailout."

Fish populations in the Gulf of Maine were decimated by years of overfishing by foreign-flagged fishing boats, while American fishermen must adhere to some of the strictest conservation laws in the world, notes Somers. In addition, the sheer volume of imports, including imports from Canada, has driven down prices and cut profits for Maine lobstermen.

"I'm not normally a person who squawks about free trade because that's how it should be, but we are competing on an unfair playing field," Somers says.

"Maine coastal communities are in jeopardy," he adds. Profit margins in the industry are barely enough for fishermen to sustain a 
business because of costs for such things as equipment, repairs and fuel," he adds.

Yet, the seafood industry remains vital to the state's overall economic health. Maine's seafood industry is valued at about $300 million annually, resulting in a rollover impact of about $1 billion. "That's a lot of benefit to a state with only 1.3 million residents," Somers says.

Members of United Fishermen of Alaska, which represents many Pacific Northwest fishermen and seafood processors, know firsthand the precarious economic conditions faced by coastal communities. Alaskans also know the positive impact that a well-conceived and funded marketing program can have on those communities. The state's salmon fishery is a good example. In 2002, after a decade of plunging demand and falling prices caused by pressure from farmed salmon imports, the Alaska salmon industry hit the lowest point of profitability in history, according to the UFA.

That same year, then-Gov. Frank Murkowski implemented the Alaska Salmon Revitalization Plan, funding the program with $40 million and matching funds from private industry.

Over the next five years, approximately $100 million was invested in the marketing of Alaska salmon. Marketing projects included quality improvements, product development and advertising. The value of the Alaska salmon fishery immediately began to rise, says Decker. Ex-vessel values rose by 177 percent, and wholesale values rose 83 percent, and those increases have been sustained over time.

"We saw higher prices to fisherman and higher prices to wholesalers. We saw many more products available on the shelves," Decker says.

In addition, money was available for R&D, which helped lower the cost of developing new products.

"It really paid off. At certain times, there was a requirement for matching funds so people had to put skin in the game," she adds.

That dramatic success story caught the attention of many in the seafood industry. Decker says more than 30 organizations have drafted letters supporting the National Seafood Marketing Coalition.

"It's very hard for anybody in the seafood business to oppose marketing efforts. It certainly works for Coke and Pepsi," says Peter Leipzig, executive director of Fisherman's Marketing Association, an organization that represents commercial groundfish and shrimp trawl fishermen in California, Oregon and Washington. One of the keys to the growing popularity for the proposal, says Leipzig, is that its proponents have identified a source of funds.

 

Reap what you sow

A decade ago, a similar effort proposed within the National Fisheries Institute called Resource Enhancement and Access Program, or REAP, foundered when members couldn't agree on a mandatory one-quarter of 1 percent tax on all first handlers of seafood. The group's members also could not agree whether money should be allocated for marketing at all. At the time, members seemed more interested in increasing the supply of seafood than marketing it.

Rod Moore, executive director of the West Coast Seafood Processors Association, generally supports the National Seafood Marketing Coalition, but wants more information about how the money would be allocated.

"Yeah, in concept this is a good idea," he says. "If there is a way that we can increase the market for seafood, that would be good for everybody in the industry. It's the details that still have to be worked out."

States don't have money for marketing, "and the seafood industry needs all the help it can get," says Bill Sieling, executive director of the Chesapeake Bay Seafood Industries Association. "If this could provide some real money for us to use in marketing, it could make a real difference."

But effective marketing these days isn't something that can be done cheaply or at a distance. "The key to the whole thing is that you have to put the money back into the hands of the local people," Sieling adds.

Decker says the coalition began its work hoping for quick agreement, congressional approval and implementation, but they now realize it could be a couple of years before the group identifies sponsors in Congress and moves into the political realm.

"We're doing our homework first," she says. "That's what we know has to be done to have the strongest possibility for succeeding."

Marketing funds can't come soon enough along the Gulf Coast, where fishermen, processors and retailers and restaurants are struggling to hang on, Smith of the LSPMB says.

NOAA in early August reopened more than 5,000 square miles of the Gulf previously closed because of the spill. The agency says observers had not seen oil in the region for the previous 30 days and computer modeling showed the area was at low risk for future exposure to oil. Moreover, experts say, fish caught and tested from those areas showed no signs of contamination.

"We know how important it is to the culture and economy of this region to get back out on the water and be able to once again harvest the seafood that the Gulf is famous for," says Dr. Margaret A. Hamburg, commissioner of the Food and Drug Administration.

She says the government's top priority is making sure Gulf seafood is safe. "We are confident that the proper processes have been followed, and that consumers can feel good once again serving their families seafood from these waters."

That message isn't falling so much on deaf ears as disbelieving ears. Images of oil gushing from the 5,000-foot-deep well have been burned into the public's consciousness by the media, which dubbed the oil spill as the worst in U.S. history. The only way to counteract that image and public fear about eating Gulf seafood is a sustained marketing campaign, Smith says.

Oil giant BP contributed $2 million to the organization to assist with crisis communications and there have been meetings in the White House with high-ranking members of the Obama administration, Smith says. He estimates a marketing campaign in the range of $30 to $40 million per year is needed for the next several years to restore confidence in Gulf seafood.

Certainly the Gulf oil spill brings more attention and urgency to the need for a national marketing fund, Smith says, because such disasters can happen anywhere in the country. Having a national group organized and ready to respond with education, marketing and outreach support can help the entire seafood industry.

"Having a national group that's focused on domestic seafood with a targeted vision would help in the response to situations like this where the biggest issue is the perception and challenge that the seafood is not safe," Smith says.

Yet, he also knows that the seafood industry along the Gulf Coast is resilient. The region has endured five disasters in as many years, he says.

"We know from hurricanes Katrina, Rita, Gustav and Ike that we have a challenging road ahead of us," Smith says. "But we know we will come out stronger on the other side."

 

Contributing editor Stuart Hirsch lives
in Indianapolis

 

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