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« November 2010 Table of Contents

Top Story: Eco-label lowdown

Demand grows for certified-responsible farmed seafood, ratcheting up the competition among standard setters

Pangasius' rise to prominence - the catfish farmed in Vietnam and China was the 10th most popular seafood species among U.S. consumers in 2009 - has been nothing short of remarkable. Despite negative press and punitive antidumping tariffs, part of extensive efforts on behalf of the U.S. catfish industry to keep the product out of the country, pangasius has managed to thrive.

In addition to the murky waters of international trade politics, the imported fish is a focal point for another intriguing debate centering on the use of eco-labels on farmed seafood. If pangasius (swai, tra) were to be certified against stringent environmental, social and safety standards, would such autonomous assurances be enough to sway federal policy or public opinion about the integrity of the product? Would pangasius producers and importers then have sufficient proof for critics that their fish is safe and its production hasn't caused ecological harm?

Efforts to improve the practices of Vietnamese pangasius producers, as well as farmers of other seafood species around the world, have been a mission for two leading international organizations dedicated to setting performance standards for sustainability. In August, both the Global Aquaculture Alliance (GAA) and the World Wildlife Fund's (WWF) Aquaculture Dialogues released standards for pangasius production. (WWF says the Aquaculture Stewardship Council, or ASC, will assume oversight 
of the Aquaculture Dialogues when it becomes fully operational sometime in 2011.)

Both GAA and ASC representatives say their programs set acceptable tolerance limits for environmental impacts while conserving biodiversity and controlling chemical use. The two highly competitive groups are jockeying for position in the global seafood marketplace, hoping to convince the world's largest seafood buyers to adopt their methodology and stock their shelves with farmed seafood products brandishing their particular seals of approval. Some of the nation's largest food companies - trendsetters like Walmart and Target, for example - already require some form of certification for the farmed seafood they source, so the demand for certified-sustainable farmed seafood is big and growing, particularly in the retail sector.

The hope among the environmental community is that the most intensively farmed seafood products craved by consumers in developed nations - shrimp, catfish, tilapia and salmon - are cultured carefully and in line with aquaculture standards shaped by an international, multi-stakeholder collaboration of producers, academics and environmental scientists. What buyers want is validation of said responsible practices in a form that can be easily conveyed in the marketplace.

That could be easier said than done. The evolution of multiple sets of standards is pushing sustainability forward but it also has raised many questions: Are two - or more - sets of standards good for the seafood industry, with the notion that competition begets innovation and diligence? Are the standards really that different? Or is it simply overkill and unnecessarily confusing for an industry that's already astonishingly complex?

One thing is clear: Eco-labeling seafood has become nearly as competitive as the seafood industry itself.

On the market

According to Ecolabel Index, there are 349 eco-labels in 212 countries serving 37 different industry sectors. Increasingly, B2B customers and consumers are demanding proof regarding the origins and environmental and social impacts of their purchases, whether it's Forest Stewardship Council-certified timber for hardwood flooring or frozen wild seafood certified sustainable by standards set by the Marine Stewardship Council (MSC).

The Ecolabel Index shows 17 listings for fish/fisheries, but only a handful of those resonate globally, including Dolphin Safe, which appears on many tuna cans, MSC's oval blue logo and the GAA's Best Aquaculture Practices (BAP) seal. Created by GAA and administered by the Aquaculture Certification Council based in Crystal River, Fla., the BAP program offers a "process certification" that denotes responsible practices in one or more of the four main production sectors: hatcheries, feed mills, farms and processing plants.

Peter Redmond, VP of development for GAA, says the BAP program is maturing, 
evidenced by the annual market presence of approximately 1.4 billion pounds of product - currently shrimp, catfish and tilapia - bearing certification in one or more sectors; about 500,000 pounds of that total is from certified farms, the remainder from other sectors. GAA is growing at a 79 percent annual clip, he adds, and is steadily adding new species into the fold.

Still, Redmond is often on the defensive, fending off assertions from opponents that BAP certification is industry-driven and not stringent enough. He says the Seafood Choices Alliance Seafood Summit, which took place in late January, was a "strange experience." Held in Paris, it was an international gathering of industry representatives, non-governmental organizations (NGOs), academics and media. Aquaculture was one of the hottest topics at the seminars.

"We don't regard ourselves as an NGO, but maybe by definition we would be. That meeting was very much an NGO-dominated meeting, and you got the perception talking to people that, 'It's great that the ASC has arrived; it's the solution,'" says Redmond. "I kept thinking, 'By the way, BAP is already in place.' It was out-of-hand dismissal."

Redmond stoked the competitive flames at the conference when he inferred that BAP standards don't merely "exist on paper" and that progressive buyers can find certified-responsible farmed seafood now.

"I would say that part of this [competitiveness] is business, so the need to have standards is as much a 
business driver as anything else," the former Walmart 
executive says. "I'm an old retailer, and we deal in facts. This is a world where you need real substantive answers and with ASC there weren't any."

While the ASC and its yet-to-be-seen eco-label remains on the horizon, BAP standards have gained a solid foothold in the global seafood market over the past several years. Redmond notes that BAP has 26 endorsements from retailers, including his former employer, as well as numerous suppliers, primarily throughout North America. BAP is a "solution to their needs," says Redmond, who adds that some NGOs would simply rather endorse standards created by NGOs.

"The biggest concern I have is the ASC is perceived as the gold standard but certainly the one that we have is not that much different," he says. "At the end of the day, there's not a light-year of difference between the two.

"Secondly, if you look at GlobalGAP and ASC, they concentrate on the farm as the be-all and end-all of aquaculture. We also look at the production facility, which is the point of departure for us versus an NGO. We understand that a lot happens on a farm. But [that performance] could be a direct result of what happens at a feed mill or at a hatchery. And all the good you did on a farm can be mitigated by the damage at a production facility."

Randy Rhodes, president of Harvest Select Catfish in Uniontown, Ala., agrees. Harvest Select-owned and operated catfish farms in Alabama, Arkansas and Mississippi earned BAP certification in 2009, and the company may seek certification for its feed mill and hatchery in the future. Rhodes says certification is becoming a necessity for many seafood buyers.

"Our management has allowed certification/standards to be part of our everyday lives," he says. "There were some changes made [to reach certification] but prior to the audits we had already raised ourselves up to a level that was capable of being certified. [We've learned that] there's always things you can do better."

Harvest Select also recently earned ISO-65 certification from the International Organization for Standardization, which Rhodes says gives the company and BAP standards further credibility. "That's what the ISO standard was supposed to eliminate, [the idea] that the BAP standard wasn't tough enough."

As an industry, domestic catfish producers view BAP as a more viable alternative to the Aquaculture Dialogues. Industry leaders gathered in Alabama four or five years ago and embraced the BAP approach, which essentially comprises one audit (and consequently one fee) for animal welfare, food safety and environmental impacts. "We shouldn't have to meet every standard or certification program. It's too costly for audits and fees; retailers can't ask us to," Rhodes says.

The cost of eco-labels, which varies from producer to producer, is a big concern. The BAP process comprises one audit or inspection ($3,000 to $5,000 each) and an adjustable fee based on volume - GAA's current rate is $1.25 per metric ton, not to exceed $6,000 a year. ASC certification, according to CEO Philip Smith, will be based on volume and value, but its cost structure is not yet developed.

Whatever the price tag reads for either program, it seems, is the cost of credibility.

"The credibility and rigor of the standards and certification are paramount, but these need to be balanced by the practicality and market acceptance," says Paul Holthus, executive director of the Honolulu-based World Ocean Council and coordinator of the Seriola and Cobia Aquaculture Dialogues, which should be finalized by May 2011. "The goal of certification is to actually affect environmental and social conditions. However, as certification is a market mechanism, ultimately the market will decide which of the certifications gain the most business and consumer interest."

While certification has become the cost of doing business, Rhodes admits that the different schemes are causing confusion. "It's not easy for everyone to navigate."

On the way

In the wake of the collapse of the Grand Banks cod fishery in the 1990s, the World Wildlife Fund and Unilever launched an independent organization to recognize and reward environmentally responsible and sustainable fishing practices, while empowering consumers to make more informed choices. That organization is the MSC, which became fully operational in 1999; more than 2,500 MSC-labeled products are available in 52 countries.

Jose Villalon, WWF's U.S. managing director-aquaculture, says the forthcoming ASC will follow a similar model, operating independently from its creators, the WWF and the Dutch Sustainable Trade Initiative in the Netherlands. But in many ways, he says, it will be easier to certify farmed products than wild fisheries that often spread across wide geographical areas and can prove difficult to quantify.

The ASC's success, he adds, depends on transparent stakeholder involvement, which has been the hallmark of the Aquaculture Dialogues. The Pangasius Aquaculture 
Dialogue Standards, a dense 55-page document, was drafted with the input of close to 480 stakeholders. (Pangasius was unique, Villalon says, because the vast majority of producers are in close proximity with one another and meeting attendance was high.)

"That way, clearly, the relevant issues are addressed; it's not superficial. Eventually, someone scratches below the surface to see the real impact. It's where WWF sees the real beauty in this process," says Villalon. "To be transparent and to reach decisions by consensus is something that for many years we were criticized would never happen. 'It's a noble academic exercise,' they said."

ASC standards, he adds, will not be merely suggestive or based on "vague language." Conversely, because BAP standards are not the product of a multi-stakeholder process, they only serve the entry level, Villalon says.

"It's a lower bar; not as robust. It's not ISEAL (International Social and Environmental Accreditation and Labeling Alliance) compliant. ASC will service a more demanding market when it comes to environmental and social issues. But competition is good; there's room for both."

Smith, of the ASC, which will be based in Utrecht, the Netherlands, says only elite producers should be able to achieve certification.

"One of the aims of the standard-setting process was to have a target of 20 percent of producers capable of meeting the standards," Smith says. "The aim is to encourage certification of volumes considered mainstream, not niche."

GAA's Redmond says there's "plenty of elasticity" in the market for multiple aquaculture standards, perhaps in a tiered approach with one serving as a "gold standard" and another serving producers with entry-level or mid-level aspirations. But he bristles at implications that BAP certifications are rubber-stamped. A technical committee comprising four NGOs, four academics and four industry representatives draft BAP standards for any given species. A standards oversight committee, charged with finalizing standards, is constructed similarly, often with individuals who have also participated in the Aquaculture Dialogues. Such crossover, he says, is "common to a very large degree."

"Nowhere in the process is GAA making any decisions," Redmond says. "We require 10 out of 12 votes to pass. So if 10 vote to pass [a standard], that means at least two NGOs have had to turn around and say, 'It's such a good standard, I had to approve it.' It eliminates greenwashing."

Unlike BAP, ASC certification does not cover food safety, so producers would have to seek such certification from GlobalGAP, or another similar program, if necessary. To reduce costs for participants, Smith says audits by certification bodies accredited by ASC and GlobalGAP could be carried out simultaneously.

Wading in the sea

Bellevue, Wash.-based QVD Seafood is one of the United States' biggest Vietnamese pangasius importers and, as a vertically integrated company, it oversees product from seed to processing plant. The company holds an approximate 20 percent U.S. market share, says President Chris December, and holds numerous certifications, including those from the U.S. Department of Commerce's Seafood Inspection Program and the British Retail Consortium. When asked which certification is most requested by his customers, he replies, "it depends."

"Different markets and different customers need specific assurances," he says. Market demand is driving certification forward, but the market, he adds, is overwhelmed with all the options. To illustrate December's point: The United Nations' Food and Agricultural Organization is also close to finalizing non-binding guidelines for certified-responsible aquaculture.

"Research shows that consumers do not understand the differences, but savvy buyers do," says December. "Until the industry can come to agreement on what constitutes 'best,' the reality is that we will all continue to wade through a sea of certifications."

QVD, which undertook a full evaluation of both the BAP and ASC programs, has still not officially decided which certification is best suited for its business (a decision is expected by year's end). The process, December says, has revealed differences between the two programs that are both subtle and significant, particularly regarding allowable fish density, antibiotic use, feed label verification and traceability.

"Both [schemes] are right in many indications. It's up to the industry to look at it and make sure that it's one, approachable, and two, allows for only a few committed companies to achieve," December says. "If everyone achieves the standards then we really don't have much."

Eco-labels like the MSC's have raised awareness of sustainability and have created market pull for products that can verify good practices. 
Perhaps no other species could benefit more from eco-labels than pangasius.

QVD has no tariff on its Vietnamese pangasius imports, unlike some companies that pay duties exceeding 100 percent and potentially face retroactive fees (see News Recap, p. 10). All the uncertainty has "caused panic in the marketplace," December says, and only harms consumers. "All it does is shift the price tag to them. We're dipping into the consumers' pockets as a result of the political pressure from a very small group."

But what may be worse than higher prices due to tariffs, December says, is how priorities on the production side could shift as a result of a potential trade war with Vietnam over pangasius.

"It takes things that are real important, like sustainability, and shifts them to the back burner for a lot of companies."