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« January 2011 Table of Contents

Special Feature: Oysters

BP oil spill fallout cripples Gulf oyster production, shifts demand

The Gulf oil spill had a devastating effect on the region's oyster crop, destroying between 10 and 20 percent of the 250 
million pounds of the bivalve traditionally produced by the state of Louisiana, according to John Tesvich, managing partner at Ameripure in Franklin, La., and chairman of the Louisiana Oyster Task Force.

But for oyster processors, oil contamination was never a problem. The problem, says Pat Fahey, Tesvich's partner, was the freshwater diversions initiated by the state to keep oil out of the estuaries, coupled with the closures of areas containing oyster beds and the public perception of oil-tainted 
seafood. The impact of those effects will ricochet within the industry for the next two to four years, 
Fahey predicts.

"We're dealing with a very emaciated supply of oysters right now," says Fahey, whose company halted operations from June through November due to inconsistent supply. "Throughout the period of the oil spill, certain areas were opened and closed depending on prevailing observations on where the oil might be. BP hired most of the available vessels that would otherwise have been harvesting oysters from areas that were still viable. And as the freshwater diversion projects pumped millions 
of gallons of water from the Mississippi into the Gulf, the salinity levels of our water changed, resulting in massive oyster 
mortality."

Louisiana lost 80 percent of the oysters that would have otherwise been harvested between May and October, says Mike Voisin, CEO of Motivatit Seafoods, an oyster processor in Houma, La. The company markets the Gold Band brand of high-pressure processed oysters.

"But pricing went up, which meant our sales were only down by about 25 percent," says Voisin. Oyster prices in the Gulf, because of Texas production, have gone down about 15 to 25 percent to $30 for bushel-and-a-half sacks, he says. Louisiana will produce only half of its traditional annual production over the next couple of years as a result of the oil spill, with the real shortages occurring during summer 2011 and 2012, Voisin predicts.

John Keswick, who co-owns Ameripure, has never seen the demand for Gulf coast oysters as bad as it is right now.

"I'd say sales are 30 percent of what they used to be. We can provide more oysters than the market demands," he says.

Public perception is to blame for that, and it's going to take a few years to turn that image around, Fahey predicts.

"We have access to beautiful, abundant product coming out of Texas, but when you're gone for five-and-a-half months, you don't hit the ground 
running. We were extremely busy up until the oil spill. Now, we're cautiously optimistic. We hope for the best, but we're prepared for the worst. We'll need to wait a couple of years before we can successfully work our oysters again. It's achievable, but it's a long road and it's too soon to tell if we can see this through."

The oyster harvest in Texas opened in November and it's been a good one, says Steve Hillman, VP at Hillman Shrimp & Oyster Co. in Dickinson, Texas. But demand for fresh oysters has been down.

"That's strange for this time of year," he says. "The weeks leading up to Thanksgiving are the time of highest demand for fresh oysters and it's when a lot of the fresh guys sell most of their product." Hillman attributes the decreased demand to the public's perception that seafood from the Gulf Coast 
is unsafe.

Because his company has national accounts and specializes in oysters frozen on the half-shell, the drop in demand has not hurt sales much. "We're in good shape and our sales are up for each of the past three years," he says. "Sure, the fresh market has an impact on our business, but not as much as it would if we were strictly a fresh oyster dealer."

Prices of the frozen halfshell product run about 50 percent more than fresh Gulf oysters due to the additional processing and packaging of the product, adds Hillman.

On the East Coast, the oil spill increased demand by 30 percent. "Prices have gone up at least 15 percent in the last six months," says Tom Ahearn, who heads the Rhode Island sales office for J.P.'s Shellfish, based in Eliot, Maine. The company specializes in C rassostrea virginica oysters from the Northeast, New England, New York and the Canadian Maritimes. Prices range 
between 60 cents and a $1 per oyster.

"We're fortunate in being able to draw from all those regions, but still, it's been a challenge with increasing demand," he says.

Likewise, Pemaquid Oyster Co. in Waldoboro, Maine, has struggled to meet demand. "It's a good problem to have and it's fairly true for most growers in Maine," says Chris Davis, company partner, adding that Pemaquid raised its oyster prices 7 percent in the past year.

But Davis does not believe the increase in demand for half-shell 
oysters is related to the Gulf oil spill. "The Gulf really serves the shucked market," he says. "I think our high demand for oysters on the half-shell is because people in Maine are recognizing we have a great product and more people want it."

This past year Pemaquid had a 40 percent oyster mortality rate as a result of the oyster pathogen MSX, or multinucleated sphere unknown disease. "This was an unusually warm year and it may have been environmental conditions that allowed the disease to do its dirty work," he speculates. "We'll be using a disease-resistant stock in the future."

In the Pacific Northwest, the BP oil spill did not significantly impact oyster sales at Taylor Shellfish in Shelton, Wash. "The size of oysters we had available at the time of the spill 
was too big for the market," says VP Bill Taylor. Oyster sales have been healthy and prices have 
remained stable. Wholesale prices for medium shucked oysters in the fall were $36 per gallon, small were $38 and extra small, shucked 
oysters sold for $40 per 
gallon. But the company's oyster larvae production
has been down as a 
result of adverse water 
conditions linked to ocean acidification [see Going Green].

Related articles:

http://www.seafoodbusiness.com/articledetail.aspx?id=4294994246