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Top Story: Pondering future supply

Buyers should expect product shortfalls through the winter, as cold storages will be empty

By Steve Coomes
February 05, 2011

Chris Lusk is so pleased with the quality of Gulf seafood he’s bought recently for Café Adelaide in the Loews Hotel in New Orleans, the executive chef sounds borderline giddy. The oysters are briny, the shrimp coming in are good sized, and terrific snapper, drum and grouper are available in abundance, he says.

“The shrimp I’m getting are so fresh they have a blue tint to them, and the oysters are very high quality,” says Lusk. “Even just after the spill, I didn’t have a shortage of much of anything other than oysters. And those are fine now.”

Carlos Perez was happy with his December fish finds, too. The executive chef at AJ’s On The Lake in Ridgeland, Miss., struggled all summer to find good shellfish, especially oysters.

“Everything is back to normal and prices are getting better, which is perfect for the holidays,” says Perez, adding that now that the broken BP well has been plugged, guests are eating more seafood than ever. “It’s like they appreciate it more and understand how much they’d miss it if it couldn’t be here.”

The revenue brought in by commercial fishing in the five Gulf states would be missed as well. According to the National Oceanic and Atmospheric Administration, Gulf commercial fishermen landed 1.41 billion pounds of seafood worth $614 million in 2009. And, say multiple sources interviewed, a reduction in that number is likely in 2011 with shrimp and oyster shortages occurring by late winter and spring, respectively. True, finfish appear to have initially escaped the black wrath of the now-infamous spill, but no one knows whether the spread of its inky cloud affected those fishes’ breeding grounds.

Still, even if the whole oily nightmare really has blended into the blue depths, as the U.S. government claims, and the Gulf’s scaly bounty flourishes anew, at least two serious questions remain: Will there be enough fishermen to harvest it? And will there be enough processing capacity to handle their catch?

Multiple sources say the number of fishing boats working the Gulf is down significantly because their captains and crews have received payments from BP — amounts often well above what they’d make hauling fish. And without fish coming to shore, processors have had little need for workers, many of whom are foreigners in the Gulf region on temporary work visas.

“There are a lot of fishermen out there who got paid a lot to work as a vessel of opportunity after the spill,” says Ralph Atkins, owner of Southern Fish & Oyster Co., a processor in Mobile, Ala. “I call them ‘spillionaires’ because they made more money looking for oil in the water than they do fishing. Who can blame them?”

Aggravating the situation, Atkins says, is the inscrutable pattern of payouts from the $20 billion compensation fund the U.S. government ordered BP to establish to help businesses harmed by the spill. Atkins says fund administrator Ken Feinberg ordered the first payments be made to small businesses, while many larger businesses have yet to receive anything.

“You have these processors that are 10 times the size of my business, guys who have huge overhead, and they’ve not received a dime so far,” says Atkins, who counts himself fortunate to have received compensation. To trim costs, processors have furloughed workers and drastically decreased production capacity. “So some of these shrimpers who got their money, but aren’t going out now, will want to go fishing next year. But where are they going to process their catch if processors go out of business?

“That’s the big concern for the industry next year, much more than whether or not we can find fish.”

A middleman’s nightmare

When business plummeted at Pontchartrain Blue Crab after the April 20 disaster on the Deepwater Horizon drilling rig, the damage came from two directions, says owner Gary Bauer. Closures of fishing grounds choked supplies on one end, while customers of the Slidell, La., processor cancelled orders on the other.

“One big customer was scared off because of the perception that our seafood might be tainted, and the other just thought we couldn’t get their order filled,” says Bauer. And while supplies of blue crab and shrimp are at about 60 percent of normal now, he’s paying more for those products, further crushing his margins. “I can’t just raise my prices 30 percent and go back to customers and say, ‘You need to help me out!’ They’ll look at me like I’m crazy. We have to do everything we can to keep the customers we have.”

Worsening Bauer’s plight is the fact that he and many other processors haven’t received help from the BP fund, despite filing applications for help months ago. Some processors believe the government is considering paying them damages over an extended period, which he says will be too little, too late.

“My business and many like mine won’t be able to withstand something like payments over 36 months,” Bauer says. “You can imagine how that will affect supplies.”

When fresh oyster supplies withered last June, shucking stopped at P&J Oyster Co., the nation’s oldest oyster processor. Since then, the 130-year-old business in New Orleans’ French Quarter has lost two-thirds of its customers.

“What little we could get in May we had to sell so high it priced us out of the market,” says co-owner Al Sunseri. “What [those customers] have done is substituted our oysters with less expensive ones because of the sticker shock. So since we’re not shucking, we’re just a glorified distributor of oysters.”

Even if his customers return in 2011, Sunseri wonders whether Gulf oyster growers will be able to meet demand, much less return to their normal annual haul of about 400 million pounds (in the shell, 20 million pounds of meat). In an effort to push the oil slick away from coastal oyster beds, fresh water was diverted from the Mississippi River into Gulf waters, killing millions of bivalves that require saltwater for survival.

And just like the oil spill, “we’ve got another manmade problem,” Sunseri says. “If I was to guess now how long it would take to get back to where we were — barring any natural or unnatural disaster — I’d say two to three years.”

In an effort to help the oyster crop recover, officials have closed numerous fishing grounds, a move Kevin Voisin calls “completely unnecessary,” one that will tighten supplies this year.

“People are claiming that you’re depleting the resource to harvest now, but that’s exactly the opposite of what would happen,” says Voisin, who recently became marketing and communications director for Maryland seafood manufacturer Handy International after leaving his post as VP of marketing for oyster processor Motivatit Seafoods in Houma, La. He left his family’s oyster business when sales plummeted in the wake of the BP disaster.

“When you harvest the right size and throw back smaller ones, you’re making the resource better,” adds Voisin. “That’s next year’s crop and you’re giving it room to feed and grow. It’s been done that way for 100 years.”

Voisin also is a Terrebonne Parish councilman in Houma, and maintains regular communication with seafood processors. They’re telling Voisin there’s no lack of crab, finfish, shrimp or oysters, only a lack of fishermen willing to catch them.

But given the risks fishermen take buying and operating the pricey tools of their trade, the offer of guaranteed money without expenses is hard to refuse, he adds.

“How can you argue with the logic of getting paid not to fish?” says Voisin. “It’s a tough thing to say ‘no’ to, so I’m certainly not criticizing them. What I’m saying is this will cause problems down the road.”

The long-term effects of keeping those boats in port, even for a few months, gravely concerns Harlon Pearce, owner of Harlon’s LA Fish, a seafood processor-wholesaler in Kenner, La. While he says it was fair for BP to compensate fishermen for lost earnings, he warns that any reduced incentive to fish ultimately lowers the supply of Gulf seafood.

“And that could mean we lose our place on the menu,” Pearce says. “That could be extremely difficult to get back, especially if brand perception is weak like it is since the spill. We can’t afford this with so many alternatives out there from other markets.”

Since so little Gulf shrimp was harvested and frozen this summer, Pearce is forecasting a shortage. What’s currently coming to shore is going directly to end users, not warehouses.

“We’re not catching enough shrimp right now to put in freezers for the winter months (when it’s not being fished), so I expect a shortage by February or March,” he says. “Right now prices are already jumping up ahead of that.”

James Breuhl, seafood manager for Thibodaux, La.-based Rouses Supermarkets, says the chain’s frozen shrimp inventory is solid for the time being, though he paid about 20 percent more for it this year.

“The quality was pretty good, but large shrimp were pretty scarce this year,” he says. “Whether that had to do with the spill, I don’t know, so we hope to see that change.”

Spill or none, Breuhl says finding supplies for the 34-unit chain is always a challenge.

“You never know what’s coming anymore, be it a disaster like this or the next storm,” he says. “Every year is a coin toss.”

American restaurant icon Ralph Brennan, owner and operator of Red Fish Grill, Ralph’s on the Park and co-owner of Commander’s Palace in New Orleans, says his Gulf seafood supply has been good, too, but he’s not overjoyed about the reason why.

“The truth is not much seafood was being exported out of Louisiana to other markets, so there was more available for us,” he says. “The region still faces a big challenge in overcoming the negative perception of Gulf seafood, and we’ve not done enough yet to communicate that it’s safe to eat, though we know it is.”

An industry exodus? 

Southern Fish & Oyster’s Atkins chairs a Mobile Chamber of Commerce taskforce that’s brainstorming how to slow the exodus of fishermen from the Gulf seafood industry. Older salts retiring is expected, but an equal number of younger fishermen aren’t signing on to take the tiller. Atkins doesn’t believe the hard labor is what’s scaring newcomers away, rather he suspects a combination of government regulation and monumental catastrophes such as hurricanes and the oil spill make an ancient trade look too trying and unprofitable.

“The fact is, new kids aren’t coming into the seafood program, and without them, this industry dies,” he says. “More and more regulations hit us all the time, and it’s damn-near impossible to make good money. No wonder all these fishermen are taking BP’s money.”

Pearce sees the decline as well. Prior to Hurricane Katrina, he says there were 16,000 Louisiana-based Gulf fishermen, and after the storm their ranks declined by about 25 percent.

“And I’m expecting we’ll lose more from this event,” he says, “because of the nature of the work and the risks involved.”

To ignore the situation could spell the death of a centuries-old culture, he says, not to mention deprive fish lovers of arguably some of the world’s finest seafood. Around the Gulf, he says, the fishing industry is a way of life.

“Without the fishermen, we’ve got no fish, and I don’t think people understand yet how devastating that could be,” Pearce says.

Like Atkins, he sees too few youngsters picking up the trade, and believes greater education about this way of life is necessary.
“We talk too much about the safety, sustainability and traceability of our food supply, but all these buzzwords need to become real words if we’re going to enjoy Gulf seafood for a long time to come,” Pearce says. “But we keep limiting our (food) producers in this country, and once we eliminate them, we’re dead.”

Contributing writer Steve Coomes lives in Louisville, Ky.

February 2011 - SeaFood Business 

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