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Finfish Updates

Alaska pollock and surimi

Fillet production is up due to a weak surimi market

After a 27-percent bump in the U.S. Bering Sea Alaska pollock quota in 2001 to a record 1.3 million metric tons, don’t expect much of an increase in 2002. Although the 2002 quota won’t be announced until December, most processors say that in the best scenario the quota will remain the same, but they won’t be surprised if there’s a 10-percent cut.

While the overall U.S. pollock quota was up, fillet production was up even more due to a weak surimi market. In early October, with more than 90 percent of the Bering Sea quota in the bag, it was estimated that surimi production was down about 10 percent, to approximately 150,000 metric tons. But fillet production, mostly blocks, was up almost 50 percent, to around 100,000 metric tons. Even the large Japanese-owned processors in Dutch Harbor put in fillet lines. 

Much to the joy of Alaska processors, the market easily absorbed the extra fillet production. Prices for single-frozen blocks rose from 88 cents a pound at the beginning of the year to 95 cents a pound, delivered to Europe or the East Coast.

In October, even the moribund surimi market showed signs of life, as the price of FA grade surimi rose 20 yen, to about 260 yen per kilo ($1.01 U.S.).

The bullish market for Alaska pollock is a result of continued disarray in the Russian Far East, traditionally the largest source of Alaska pollock. The new auction system started this year for fishing quotas has caused considerable confusion and some large producers ended up without any quota to fish.

Also, a fleet of 11 Russian factory trawlers remained tied up in Korea this year due to a protracted international lawsuit between Russian boat owners and Norwegian and Greek companies that chartered the boats.

As if that’s not enough, serious questions remain about the health of Russia’s pollock resource. Scientists keep arguing for deep quota cuts to conserve stocks, but that could be the nail in the coffin of an industry that can barely survive as it is. At any rate, Russia’s pollock catch in 2001 could be less than Alaska’s for the first time ever.

With Russian H&G pollock in short supply, it’s no surprise that twice-frozen fillets from China keep getting more expensive and imports keep dropping. Chinese 2/4 fillets that sold to distributors for about 80 cents a pound last fall were at $1.03 in October. The price of twice-frozen pollock blocks, meanwhile, jumped from 70 cents to 90 cents a pound. Through July, U.S. imports of twice-frozen pollock fillets were off about 20 percent to 29,000 metric tons.

Whether it’s single or double frozen or imitation crab sticks, don’t be surprised if the price of Alaska pollock increases another 10 percent or more in 2002. Demand from European buyers, who used to rely on Russian production, is strong. Germany, for example, bought 16,000 metric tons of U.S. pollock blocks in the first seven months of 2001, versus just 155 metric tons the year before.

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Catfish

Processors are optimistic prices will increase

When is a catfish a catfish? When it’s grown in the U.S.A., of course.

This October, while American bombs rained down on Afghanistan and anthrax spores were being delivered to the U.S. Senate mail room, the Catfish Farmers of America decided it was high time to get the attention of U.S. members of Congress.

In a full-page ad in Roll Call, Capitol Hill’s must-read newspaper for legislators, the catfish farmers took their basa beef to new heights.

Under the banner “Something’s Fishy: It’s Called Fraud,” the ad once again tried to make the case that the catfish farmed in Vietnam should not be allowed to be called “farm-raised catfish” at the consumer level.

Calling the substitution illegal, the catfish farmers likened it yet again “to selling kangaroo meat as ground beef.”

But the problem for the U.S. catfish farmers, of course, is that more and more committed catfish customers have acquired a taste for Vietnamese catfish fillets, which can sell for as much as a $1 a pound less than U.S.-produced catfish fillets.

In the kitchens of dinner clubs in Branson, Mo., in the casinos stretching up and down the Mississippi River, and even in the state parks of Kentucky, chefs and restaurant owners can’t help but wonder why they should pay so much more to fry American catfish when their guests can’t tell the difference.

And since Vietnamese catfish is a catfish, and it is farm-raised, they see no reason why they shouldn’t be allowed to sell it simply as farm-raised catfish.

But U.S. catfish farmers don’t buy that argument, and they have enlisted the help of their local congressmen. Rep. Marion Berry, a Democrat from Arkansas, which is  the third-largest producer of catfish after Mississippi and Alabama, introduced legislation this fall that would require Vietnamese catfish to be labeled by country of origin.

 The rationale was that Americans simply wouldn’t buy catfish if they knew it was grown in a place like Vietnam.

“That catfish is produced in disgusting conditions on the Mekong River, which is one of the most polluted watersheds in the world,” Berry told a reporter shortly after introducing his amendment.

Even though the Food and Drug Administration has given Vietnamese catfish a clean bill of health, Berry argues that the fish may contain residues of Agent Orange, the defoliant widely used during the Vietnam War.

The sense of urgency and the rhetoric in the catfish fight have ratcheted up as U.S. catfish prices have dropped. Since April 2000, the pond price paid to catfish farmers has fallen from 79 cents a pound to 60 cents a pound, which is the break-even point for most catfish farmers.

The price of fresh fillets, meanwhile, dropped from $3 a pound to just $2.35 a pound this October. That’s the lowest price most catfish processors can remember.

But not all U.S. catfish farmers are laying all the blame for the lower prices on the Vietnamese.

“The truth is, there are a number of factors for the lower prices, and basa is just one of them,” says one farmer, who also points out that foodservice sales have slowed along with the economy.

Another big problem, he says, is excess processing capacity in the industry. There have been a number of big, new processing plants built in the past two years, during which time catfish production has been flat.

These new processors have been “panic selling,” driving prices down lower than they need to be in a fight for market share.

“The price cutting and fighting in our own industry are hurting us as much as the Vietnamese are,” the farmer says.

Catfish processors also blame record low prices of farmed salmon for some of their woes.

“There’s no doubt that some of our retailer customers have been promoting farmed salmon more often at the expense of catfish,” says another processor.

“We’ve seen our same-store catfish sales decline in a number of retail chains.”

Most catfish processors are optimistic that the catfish market will follow its typical seasonal pattern of tightening supplies and higher prices through the winter, as production slows.

 “Typically,” one farmer explains, “we slow down our harvesting in the winter to make sure we still have enough fish to meet the demand for Lent, which is when prices are usually at their highest level of the year.”

If that’s the case, you can look for ex-processor catfish prices to head back up close to $2.75 a pound by March, which is a price  level the catfish industry has lived with before.

“We can live with that,” says one processor. “Remember, this is a mature industry.”

But even if catfish prices head back up, don’t expect catfish farmers to abandon their battle with the Vietnamese.

If they can’t get the labeling laws passed, the domestic catfish farmers and their powerful allies have already laid the groundwork for an anti-dumping petition.

And if they are successful with a petition, that will mean that buyers should be prepared to pay more for their catfish, whether they’re getting it from the Mekong River or the Mississippi Delta.   

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Salmon

Look for the glut of farmed product to continue

Just when salmon farmers and fishermen thought things couldn’t get any worse, they did. The glutted salmon market, which was a mess before Sept. 11, tumbled in October as fears of a looming recession sent foodservice orders skidding.

After falling all year, from $2.40 a pound in January to an unprecedented $1.98 a pound in July, the f.o.b.-Miami price of 3- to 4-pound skin-on pinbone-on fillets recovered to $2.25 a pound the first week in September.

And then, as they say, the world changed forever.

With cargo capacity suddenly at a premium, Chilean farmers scrambled to find a way to get their fish to Miami, as prices briefly stabilized and B.C. farmers pumped more fish into the U.S. market.

But by the time the Chileans got their fish back in the air, the market resumed its search for yet another new low and the price of fillets fell back under $2.

Frozen farmed  fillets, meanwhile, were being dumped for $1.50 a pound.

While some supermarket buyers were happy to pass on the savings with $2.99 fresh salmon fillet ads and watch their sales double, the farmed-salmon industry was busy bickering as bottom lines turned as red as fillets.

“Blame the Chileans!” was the rallying cry for industry groups from as far away as Japan, who visited Chile and urged the Chileans to turn their salmon spigot down.

Just when — or even if — the Chileans rein in their runaway production, which grew 50 percent in 2001 alone, is the $64,000 question in the salmon business.

Although there was talk in Santiago of slaughtering smolts and starving fish, the freewheeling Chileans pride themselves on the fact that they’re not on a short leash like the Norwegians, who have watched their market share steadily shrink because their farmed salmon industry operates under government-imposed production controls.

Still, there’s a good chance that prices for farmed salmon will start to recover somewhat, as companies begin to cut back their growth projections.

One of the largest salmon companies, for example, postponed plans to build a huge new feed plant, figuring at the current prices there won’t be many more fish to feed for awhile.

Look for the ex-importer price of PBO fillets to bump along in the low $2s until next spring when the market could tighten.

But even salmon farmers doubt prices will head back above $2.50 anytime soon given the uncertain economic outlook.

Wild salmon

A plethora of pinks in Alaska pushed the state’s total salmon harvest up to 172 million fish, compared to last year’s catch of 137 million fish. But because pinks are small and sockeye and chum catches were down this summer, the total tonnage will be similar to last year. But the money won’t.

The Alaska salmon industry is looking at a harvest that may be worth just $200 million to fishermen. If that proves to be the case, it would put less money in the pockets of fishermen than any season since the 1970s, when salmon harvests were less than 40 million fish.

Processors, meanwhile, were sharing the pain. A strong egg market in Japan this spring and a smaller Alaska chum harvest (chum catches were off 40 percent from last year) led processors to bid the ex-vessel price of chums up in the hope they could cash in on the egg shortage.

Unfortunately, though, by October it was painfully clear that a huge chum run in Japan was turning an egg shortage into an egg glut and prices were plummeting. 

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Cod

New England’s stocks have rebounded, but imports and cold-storage supplies are down

The Brits can rest easy — for now. In October, Captain Birdseye debunked rumors that he was going to replace the cod in his fish fingers with a cheaper whitefish like hoki or pollock. The Captain’s fish fingers are a culinary institution in the United Kingdom, where consumers eat more than 500 million of them a year — almost 50 years after the product was introduced.

It’s not hard to see why the Captain is a little nervous about cod. In the Barents Sea, the health of the largest cod resource in the world is in some doubt. In 2001, Russia and Norway split a cod quota of about 400,000 metric tons, a slight increase over the previous year.

Biologists have been warning for several years that the Barents Sea is warming and that the cod resource could collapse.

As a result, they have recommended cutting the quota in half to less than 200,000 metric tons. But the Russians argue that the resource is actually in great shape, and they see no need to cut the quota yet.

If the biologists prevail, look for a huge scramble in the cod market — and don’t be surprised if Captain Birdseye goes back on his word and switches to a cheaper, more sustainable whitefish.

After all, Birdseye is owned by Unilever, the Anglo-Dutch food giant that was the driving force behind creation of the Marine Stewardship Council.

In the meantime, the cod market was very quiet most of the year, and in some parts of the world the debate is over when to raise the quota — not when to cut it.

U.S. fisheries biologists were crunching cod numbers after their annual summer survey to see if it was really true that the cod stocks in the Bering Sea had increased by more than 50 percent over the past year. If the scientists stick by their numbers, Alaska fishermen could see their Bering Sea cod quota bumped up from 188,000 metric tons this year to at least 220,000 metric tons — but the big question is: When?

Although there are rumors the quota could be bumped up next year, there’s a chance it could actually be reduced slightly until enough young fish recruit into the fishery.

On the other hand, the catch from the Gulf of Alaska is expected to remain similar to this year’s quota of about 50,000 metric tons.

Meanwhile Alaska longliners who complained that fishing was lousy still had enough quota left to last them through the end of the year. In early October, prices for large, collarbone-on fish for salting was a relatively high $1.38 a pound, f.o.b. Dutch Harbor.

However, some Norwegian buyers were nervous because of an early Easter, which is the peak consumption period for salt cod, and a weak economy in Brazil, which is the largest market for salted Pacific cod.

Sales of frozen H&G Alaska cod to refreshers on the East Coast have slowed way down as cod landings rebound off of New England.

“That market’s gone,” complains one Seattle cod trader. “I used to sell rail cars back to Boston, but I haven’t had a call in months.”

Cod fishing has been so good off New England that there’s a chance fishermen will land more than 15,000 metric tons of cod in 2001, their best catch since 1994. The strong landings have kept the auction price of fresh cod in the $1- to $1.50-a-pound range since summer. As a result, fresh, skinless, boneless cod fillets have been readily available for $3 to $4 a pound, f.o.b. New England, most of the time.

The price of frozen cod fillets to distributors has barely budged all year and in early October remained at about $2.25 to $2.30 a pound for 8- to 16-ounce skinless, boneless shatterpack fillets.

“Sales have been very slow,” says one Alaska processor, who blames the dirt-cheap price of farmed salmon fillets for the lack of interest in cod. “Sales usually pick up after summer, but this year, there’s been nothing.”

Sales of double-frozen fillets from China were also slow at between $1.50 and $1.75 a pound, depending on size, f.o.b. West Coast.

Imports of frozen cod fillets are running well below 2000’s tallies. Through July, imports were down by almost 20 percent, to about 30,000 metric tons.

Imports from Iceland, the largest source of frozen cod fillets, were off substantially, down from 8,000 metric tons to less than 5,000 metric tons. Imports from China and Canada, on the other hand, were off only slightly, to about 4,000 metric tons each.

Reported cold storage holdings of cod were also down. At the end of August, U.S. cod cold storages  reported about 10,000 metric tons, down 30 percent from holdings the previous year.

Despite the lower imports and cold-storage holdings, buyers would be well-advised to exercise caution when placing cod orders in the early part of the year. If the Alaska quota is indeed increased, processors will be highly motivated to move product they already have lingering in inventory.

Still, keep a bird’s eye on the Barents Sea and watch what the Captain decides to do. If that cod quota is cut, prices could head north very quickly.  

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Hybrid striped bass

Striper prices will likely remain the same through 2002

Salmon, catfish, trout and tilapia may get all the headlines when it comes to fish farming in America, but hybrid-striped-bass producers just go slowly and steadily about their business.

The U.S. production of hybrid stripers, a cross between white bass and striped bass, should come in at about 10 million pounds again in 2001.

“Even though every year we get new farms coming on line, others go out of business,” says one veteran striped-bass farmer. Although more than 50 farms in the United States grow striped bass, just three farms in California, Texas and Mississippi produce half the national production.

A Florida firm, which had ambitious plans to produce more than a million pounds of hybrid stripers in recirculating tanks, threw in the towel this fall.

“It’s tough to make money growing striped bass,” says a manager with the nation’s largest producer, which operates a tank and raceway farm in the desert near California’s Salton Sea. “You have to be very good at what you do.”

One of the reasons hybrid stripers remain a niche market is because of the relatively high production cost. It costs about $2 to $2.25 a pound to grow stripers, more than twice as much as salmon, and more than three times as much as catfish or tilapia. After factoring in transportation and packaging, producers have to sell at delivered prices of almost $3 a pound for fresh, whole fish to get a decent return on investment.

And at a time when production costs should be going down as farmers gain more experience with stripers, they’re actually going up. Rising energy costs added 15 cents a pound earlier this year to the production costs of some growers, for example.

The California striped bass farm, the largest and most successful in the country, plans to produce about 3.5 million pounds of stripers this year, about the same as last year.

“We’ve looked at adding capacity,  and we’ve found new sites,” says the farm’s marketing manager, “but it would take a very large investment, and I’m not sure the market is ready to absorb millions of pounds of new production at the price we need to get.”

The delivered price of fresh, whole, tank-raised stripers has held steady to West Coast wholesalers at between $2.85 and $3 a pound this year, depending on quantity, while live fish have been selling for between $4 and $5 a pound.

The price of fresh, whole pond-raised stripers from farms in the South has averaged about $2.50 to $2.75 a pound, although periodic gluts have driven prices lower, especially when failed farms unload inventory on the market.

Look for similar pricing for hybrid stripers in 2002. You’ll see  better availability of larger fish, too. The California farm has adapted a new growing technology, which holds fingerlings at a lower temperature to slow growth, which results in a more consistent production of larger fish throughout the year. 

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