Markets React to a String of Closures, Court
Rulings, and Campaigns
The perception of trouble drives away customers.
By Susan Chambers
Reprinted with the permission of Susan Chambers and Pacific Fishing Magazine
(originally published in Pacific Fishing, October 2000)
Court-imposed fishing closures hit fishermen hard in Alaska and Hawaii this summer, but the effects of those judges' orders reach far beyond the dock: buyers and wholesalers across the country are scrambling for new sources of supply, and some are dropping long-standing seafood items. Think lawsuits won't have a lasting effect? Think again.
The latest wave of restrictions land on a vulnerable spot for the seafood industry: reliability of supply. A whole world of swordfish, pollock, and cod consumers at restaurants from McDonald's to McCormick and Schmick's are accustomed to core items on menus. With less production coming in from U.S. fleets, wholesalers, retailers, and restaurants face not just a need to find product elsewhere but a decision on whether to carry some products at all. Apart from the guilt of carrying products that are viewed - right or wrongly - as "non-sustainable," these buyers are also acutely sensitive to prices. As supplies shrink, some buyers back away, expecting prices to climb out of their customers' range. Producers, meanwhile, wonder about the long term. If and when fisheries are reopened, will markets welcome them back?
This has all happened before. In the wake of New England groundfish closures, processors switched to buying nontraditional species before fishermen did. Some processors noticed increased costs in new equipment to handle the new products; sales dropped when customers could no longer afford seafood and switched to chicken. When specialized fish markets had to raise their prices, wholesalers sold instead to supermarkets because they kept prices lower, upped their efforts to attract seafood business, and took on some of the processing burden, thereby easing the processors' costs.
Now, faced with similar predicaments, many West Coast fish buyers are necessarily concerned. Others are waiting to see how much product comes in, especially from Alaska, as fishermen search for new fishing grounds beyond nearshore waters shut by a Seattle judge because federal fishery managers failed to prepare an adequate environmental report on potential fishing effects on Stellar sea lions. Swordfish buyers face loss of supplies from Hawaii, too, now that another judge has all but shut down the swordfish longline fishery in the islands over a concern about possible impacts on sea turtles.
It's a truism in the fish business that you need continuity of supply in order to establish a long-term market. "You have to really build on a resource that is consistent," says Tom Elliott, vice president and manager of Slade Gorton and Co. in San Francisco. Coupled with price stability, a wholesaler will develop those relationships to make sure his customers - restaurants and stores - have quality products available when consumers ask for them.
Buyers often work on cycles of supply, getting fish when it's inseason, harvestable according to regulations, and - as fishermen are well aware - when the weather is good. For swordfish, that could mean buying from Hawaii at one time of the year, California later in the year, and potentially from Chile, New Zealand, South Africa, or the Atlantic Coast if there are supplies available.
The Hawaii court ruling isn't the only event pinching supplies. Separate closures imposed by the National Marine Fisheries Service are taking effect in Florida and the Gulf of Mexico. A separate lawsuit aims to shut down most of California's swordfish fishery.
"California is just one supply group," says Elliott. "If the lawsuit shuts that off, we'd try to increase our purchases from traditional areas. But the problem is that everyone else is doing the same thing." The only option left is to switch to other sources, but local buyers will protect their supplies by upping the prices. The effect? Buyers who do manage to buy in will ultimately jeopardize their own markets by pricing out of the consumer's price range, Elliott predicts.
But closing an area outright, forcing a switch to foreign supply, doesn't solve any real problems, says Aiden Coburn, general marketing director of Farallon Fisheries in South San Francisco, a wholesaler for a string of fish markets and restaurants. "All it does is further the imports. And here you have 95,000 miles of coastline around the country, and you have to import," Coburn says. "They could manage it (the fishery) in an agreeable way."
He argues that domestic closures may force buyers to source from overseas fisheries that often are less conservatively regulated and potentially far more destructive - than the fisheries that are being shut down in the United States. Getting swordfish from Singapore is no different from getting fish from Peru when it was underdeveloped or from New Zealand in the 1970s, he says. Developing fisheries frequently face more demand than they can meet, and as boats pounce on the resulting high prices, rapid growth can outstrip fishery managers' ability to prevent overfishing. "look at those places now; they're just as heavily taxed to supply product," he says.
In the long run, the battle will come down to perceptions, the public's view of how well fisheries are managed, and which stocks they view as trouble. Coburn saw that coming 12 years ago when he took it upon himself to begin educating consumers. He goes to high schools, senior citizen centers, and other community meetings to talk about fish and answer questions about habitat, overfishing, and seafood in general. When asked about overfishing, he often replies, "Yes, but..."
Coburn believes such efforts to give consumers a balanced understanding of how seafood is produced could make the difference between a stable seafood company 10 years down the road and bankruptcy. "I'm fearful for the long term," he says. The children of today are the stewards of the oceans of the future, and in his opinion many environmental groups are putting out misinformation. "The lawsuit are merely hysteria. They're not scientifically driven, he says. "The point is that nobody's promoting both sides. They're only promoting one side. It will be hard for (the public) to make an unbiased decision."
A case in point is the "Give swordfish a Break" campaign started by conservation groups a few years ago. They recently ended the campaign and claimed victory. Swordfish buyers say the campaign hurt West Coast and Hawaii fisheries that had nothing to do with the problems it targeted. "There was eight months of sales in the tank,"Coburn says, noting that the campaign began as a result of concerns over North Atlantic swordfish, but confusion among consumers affected sword markets all over the country.
McCormick and Schmick's, which has 33 restaurants throughout the country, including Jake's Grill, Jake's Famous Crawfish, and Jake's Catering in Portland, Oregon, responded to the campaign by avoiding North Atlantic swordfish for a period of time. "through the course of looking at what's available to us, what's happening to the catch, and our perception of what's going on, we backed off," says Chris Westcott, the senior chef for the Seattle restaurants and catering services. "We're still mindful of what's happening in the North Atlantic."
McCormick nd Schmick's is like other seafood restaurant chains: The senior chefs get together and plan menus and the "corporate menu items" that are featured on every McCormick and Schmick's menu. This maintains identity while allowing for regional variations.
But whether the various campaigns and closures are warranted or not - and many scientists and fishermen have misgivings - they clearly signal seafood chefs to expect price hikes. In the case of Hawaii's swordfish fishery, some chefs even think the fish are on the brink of extinction when, in fact, the stock are healthy.
"From this point on we stopped selling swordfish," says Paulino Miranda, the executive chef at at a Portland McCormick and Schmick's restaurant, "due to pricing; that's the main thing. I heard the pricing's going up because the swordfish is going to (be an) endangered species. There's only so much they can get from Hawaii, so the price has gone up."
Miranda says the restaurant used to sell 25 to 30 pounds of swordfish a week; but when he had to buy at $9.50 a pound instead of $6.50, it left little choice but to drop it from the menu. "We don't want to have high-priced items," he says.