Global Aquaculture Alliance Conference

It has been a very informative and interesting week out here in Seattle at the 9^thannual Global Aquaculture Alliance Conference. The Global Aquaculture Alliance (GAA) is a group of members of the seafood industry from all different aspects of the business. There are Processors, Retailers, Foodservice Fortune 500 companies, Distributors and many scientists and industry professionals; all dedicated to the continuation of sound aquaculture practices for farm raised species all over the globe.

The largest topic at this meeting has been about trying to understand the “true” meaning of the word “sustainability.” The global marketplace today has many concerns with respect to aquaculture. The environmental aspects, the social aspects - workplace conditions, underage labor, the food safety issues of producing  healthy and wholesome foods and the traceability from the individual farms through to the processors and then to the distribution chains.  We learned that there are 4 major components of aquaculture which need to have standards and monitoring in order to be deemed a  sustainable system:  The Hatchery, the Individual Farms or Groupings of Farms, the Feed Mills and the Processors. Each group along the way must be committed to creating a sustainable way to bring the end product to the table while following the Best Practices set out by the GAA and others.

The conference focused on many different seafood products that are being farmed today. Salmon, Tilapia, Pangasius, Cod, Cobia, Trout, Catfish and Shrimp to name just a few.  As a whole, the group could vote on different questions put forward and automatically see the results with the new technology that the conference utilized (a smart board questionnaire). The group as a whole stated that we need a single certifying agency that all aquaculture can adhere to (presently there are many certifying agencies), and that the farmed products be wholesome and chemical-free. The group all agreed that the consumers are demanding that the seafood they eat be harvested in a way that does not hurt the surrounding environment and that the businesses involved have a strong sense of social responsibility. Interestingly enough, the group also agreed that while the consumers want these aspects in their farmed food the consumers were not willing to pay more for it!!!

As a buyer of many farmed species, I must say that it was a real pleasure to come together with my customers, vendors and notable scientific officials, to discuss the real time happenings of seafood aquaculture. There is an enormous amount of work still to be done; however there have been many successes as well. In two weeks I’ll be off to the real farms to take what I learned in “Aquaculture Class” this week.  I will be actually speaking  with the shrimp farmers in Thailand to see what is really happening at the farm level - stay tuned……..

General State of Seafood

Eat Seafood Twice a Week!

I just returned from attending the Groundfish Forum held in Iceland.  The leaders of the world’s groundfish industry were all present discussing the status of groundfishstocks and markets.  As this is an invitation only event I always feel privileged to be included in such esteemed company.  Two presentations stand out in my mind given by speakers reporting on the retail and foodservice sectors of the US.  Independently, both presenters had come to a similar conclusion:  Seafood has an unprecedented, historic opportunity ahead!

As a protein, seafood is always fighting the price issues compared to beef, pork and chicken.  Seafood historically has been higher priced than these alternatives.  This price difference has been a detriment to expanding seafood consumption in the US.  However the trends ahead might just level this playing field. 

Due to a variety of reasons, there are less cows and pigs being raised than in the past.  If the economic data is to be believed prices on these proteins should rise as supply decreases.  The price difference between seafood and warm blooded protein should be much less than in the past.  Also, warm blooded protein does not offer the health benefits that seafood does.  We have an aging, fatter population in the US that truly needs fish in their diet.  The health benefits are well documented. We, the seafood industry, need to get the message out there!  Eat seafood twice a week!

In the macro picture of protein this could be unprecedented times. There will be the less of a price difference for seafood when compared to warm blooded protein alternatives. We, the seafood industry need to take advantage of this minimized pricing differential.  But in order to take full advantage, we need to present seafood as one industry to the marketplace, not fragmented into specie groups.

Having battle scars from earlier efforts to form a cohesive seafood marketing plan, (does anyone remember “Generic Marketing”?), it really is time to put our specie differences aside and approach the marketplace with the healthy, cold blooded protein known as Seafood.  Whether it is squid, tilapia, shrimp, octopus or bluefish….seafood consumption in the US has a chance to grow.  The pricing barrier vs. other proteins will be at its lowest level and the need for a healthy, fun protein alternative is at its highest level. Let’s take advantage of this historic opportunity, join forces, and with one voice send a clear message to the consumer:  Eat seafood twice a week!

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 What’s my fish worth?

I remember a conversation I had with my Uncle Eddie back in the late 80’s when I was a relative greenhorn in the business.  I’d had 3 or 4 years of buying experience under my belt and thought that I had a pretty good idea what this business was about.  Ecuador was king when it came to Shrimp, and shell-on was the only way to go.  The import cost of 50/60 count shrimp had just plummeted from 3.20/lb down to the unheard of price of 2.80/lb!  I tried to make the argument with Ed to take whatever capital we had and buy as many 50/60’s as we could lay our hands on because the item had gotten so cheap that it was selling below the base intrinsic value for the Shrimp.  Ed was very quick to point out to me that there is NO intrinsic value in Seafood.  Your fish is only worth what your customer is willing to pay you for it.

20 years later Ed’s words hold up better than ever.  Those 50/60’s that I would have felt safe selling at 2.95/lb are now worth 2.60/lb or less, and that size is one of the least affected by the deflation in the value of Shrimp.  Most sizes of Black Tiger Shrimp are at prices in the low end of the 10 year trading range.  Domestic Shrimp has taken a bigger hit, as it is now considered to be less valuable in the market than tigers, a total reversal in attitude!  Domestic Shrimp are selling at prices lower than they were in 1985, and that’s not taking into account the erosion in the value of a dollar.  In real terms the shrimp is selling for less than half what it did back then!

Let’s not limit our discussion to the value of Shrimp.  You can find similar examples with other species including Snow Crab, Warm and Cold water Lobster tails and meat, fresh Swordfish, and dozens of other products, all of which are trading at or below the prices that they’ve sold at any time during the last 20 years.  At the same point we have other items where prices are zooming.  Farmed Salmon fillets were worth 4.10/lb on average in September 2007.  They’re selling for 5.50-5.75/lb now.  Scallops are selling at or slightly ahead of the prices that they were at last year.  Frozen Swordfish prices have jumped about 20% in the last 2-3 months.  The general trend at the moment is deflationary, but there are items that are bucking the trend.

What’s the answer to the question up top?  Your fish is worth what your customer will pay for it AT THE MOMENT WHEN IT IS NEEDED.  If you’re a speculator in stocks or precious metals you may want to speculate in seafood as well.  This is perfectly fine as long as you follow basic rules.  Don’t invest before you research the market.  Be careful buying commodities that are not openly traded, where it is more difficult to establish a current market price.  Be realistic about whether you can sell your purchase when it comes time to liquidate- don’t buy more than you can move in a reasonable timeframe.  Don’t gamble what you can’t afford to lose. Finally, don’t forget- fish is not gold or even wine- it doesn’t get better with age!

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The Luxury Backlash

This economic disaster has created widespread commodity deflation. With the exception of Farmed Salmon, which is suffering from a major crop failure in Chile, we have seen prices drop. Sometimes these price drops can be good for a product. Lower prices, historically, have lead to increased consumption, and we’ve seen this on a number of items this year. There are a category of items however that have experienced a disproportionate drop in value and seen consumption drop to boot. I’m talking about luxury seafood items. 

What is a luxury seafood item? You’d think that it would be defined by price, but that is only part of the story. Perception is the other part of the equation. How many people are buying Hummers right now? Not a lot. It’s not solely based on the cost.  According to Carprice.com the base price of a Hummer is $32,345. The base price of a Toyota Avalon is $32,145, virtually identical. The Hummer is actually cheaper on the lot. People aren’t buying Hummers because of the message of “in your face” luxury and crass commercialism. Three years ago it was a status symbol. Now, it’s an embarrassment. This same thing is happening in Seafood.

What have been the biggest losers this past year in seafood? Jumbo Lump Pasteurized Crabmeat, Jumbo Shrimp and Lobster tails. These items dropped in value precipitously when the economy softened. The worst part was that consumption dropped more quickly than the prices, and no amount of discounting could bring that customer base back into the fold. We’re almost a year into the new economic reality and what do we see with these items? The pricing is still at or near historic lows and demand is still relatively low. What’s to be done?

We have to reposition these seafood items and make them accessible to a wider range of customers. We have to take the smaller sizes of lobster tails and sell them at retail as an affordable luxury. We need to get large shrimp on the menus of midrange restaurants in preparations that are not too “snotty” and at prices that are reasonable. We need to change customers’ perceptions of the position of these items in the marketplace.

It wasn’t just our 401k values that changed when the economy went south. We also have experienced a major shift in culture, away from flash and pretention and towards modesty and value. No one is sure how long the economy will be bad. Similarly we don’t know when or whether we will see a shift in cultural values. We need to live in the present and build our business based on current realities. If we do this, we’ll create a stronger and more stable base of demand for all products.

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Welcome!

 This is your place to learn about a wide variety of fresh and frozen seafood.  Posts will cover a variety of topics.  Expect to see focus features on individual species of fish such as Cod or Pollock.  You’ll also see articles comparing different species of Shrimp, Crab, or Lobster.  Some posts will have pictures of fish and will teach you how to handle and prepare them.  Other posts will focus on the seafood commodity markets, helping you to anticipate rises and falls.  We’ll explain the different species of wild Salmon, the different countries of origin for farmed Salmon, and how to choose which to use.  Additionally we will have a recipe section with our favorite seafood recipes and a glossary of fish terms that may stump you.  The seafood experts who will be contributing to this website have an average of 20 years of experience.  In general, our focus is on posting and publishing articles, as such we will be moderated and are not likely to post many responses.  We will review your responses however, and will do our best to reply to you off-line.  Feel free to email us with suggestions for future posts as well.  Again, this website is for you.  Thank you for your attention, and welcome to seafoodexperts.net!

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