Desperately Seeking Seafood
Seafood Trade and the Environment: Balancing a Shrinking Resource
SPOTLIGHT ON WORLD TRADE:
Desperately Seeking Seafood:
Increasing Demand, Declining Resources
By Jack Greer
When it comes to seafood, the United States faces a predicament. On the one hand the U.S. is catching the majority of its commercial fish and shellfish species at capacity-or beyond capacity-and on the other hand it still relies on imports to put shrimp, fish and other seafood on the nation's dinner tables. In 1992, for example, over 40% of the seafood consumed in the United States came from foreign fishermen.
According to Bruce Norman, fisheries expert with the Chesapeake Bay Office of the National Oceanic and Atmospheric Administration (NOAA), there are precious few Atlantic fish species that are not, in the parlance of fisheries scientists, either "fully utilized or over utilized." Of these, says Norman, only the Atlantic mackerel is available in numbers high enough to make a measurable impact on our fishery balance sheet.
The current state of our major fisheries means that, in spite of intense fishing efforts, U.S. demand for seafood exceeds what its fishermen are able to catch. Since our exports of seafood are significantly less than our imports, we are left with a seafood trade deficit. Both Norman and University of Maryland marine economist Doug Lipton agree that the U.S. has faced a deficit for some time and that it is likely to persist.
That deficit is substantial. As recently as 1987 the U.S. deficit in edible fish was close to $4 million, according to Norman. Though that figure had dropped to $2.2 billion by 1992, early figures for 1993 show an upturn to $2.8 billion. "The gap in seafood trade has narrowed in recent years," Norman says, "but it is unlikely to close."
Just how significant is the nation's seafood deficit? In terms of our relative prosperity, according to Norman, the deficit alone may not tell us much. "The deficit is too much of an aggregate indicator," he says, "to serve as the measurement of our accomplishment." Norman points out that the deficit responds to macro-economic policy and exchange rates, and not simply to who is producing or buying more fish. Much of what affects U.S. seafood producers may happen "at the margin." Here the deficit may be affected as we export more fishery products, compete directly with like imported products in our own market, or "sop up" excess domestic demand through marketing and new products. In other words, we can nibble at the edges of the seafood deficit, but far beyond the shores of fishing grounds like the Chesapeake Bay lies a great sea of trade regulations, economic booms and busts, and the uncertain future of a developing world.
Here the deficit may affect us in more indirect ways.
Of Tariffs and Trade
What exactly is the effect of trade agreements, such as NAFTA and GATT, on the nation's seafood deficit?
First a word about these two trade agreements. NAFTA, the North American Free Trade Agreement, which took effect January 1, 1994, represents an attempt to even out trade relations among its partners- Mexico, Canada and the U.S. According to Norman, Mexico, for example, has had a 20% tariff on fishery imports. NAFTA will phase out such tariffs and increase demand - for seafood, for example - in Mexico. NAFTA will also work to eliminate import prohibitions and measures that could restrict trade. "Already, U.S. fishery exports to Mexico are increasing," Norman says, "with the growing prosperity of the Mexican economy." The new trade agreement should help to boost this trend.
For now, Norman says, the U.S. has the comparative advantage. Despite higher wages in the U.S., better equipment, including better processing and canning facilities, gives the American seafood industry the competitive edge. How long this remains the case will, he says, depend on how fast the Mexican economy grows, and how fast it adapts to economic reform and free trade.
NAFTA should open up opportunities for investment in aquaculture in Mexico, including shrimp aquaculture. It will not, however, have much effect on coastal fishing, since the trade agreement liberalizes fishing restrictions only for Mexicans (reducing, for example, the hold of the powerful cooperatives) but it does not ease limitations on foreigners fishing in the Mexican exclusive economic zone (EEZ). But then, the U.S. has not eased restrictions on foreign fishing in its coastal waters either.
The other major trade agreement in recent headlines is called the "Uruguay Round"-seven years of negotiations which led to changes in GATT, the General Agreement on Tariffs and Trade. GATT becomes more important when one thinks of the U.S.'s relationship with Europe and Asia, though it has had some unexpected effects on trade relations with Mexico and Canada as well.
For U.S. seafood dealers Europe is a mixed bag. While it is the U.S.'s second-largest trading partner, the European Union (EU) - which used to be known as the European Community (EC) - is still significantly protected by tariffs. These tariffs, which may hover around 15%, are augmented by a system of other (non-tariff) measures which Norman calls "Byzantine." In addition, according to Norman, European seafood businesses, like other European businesses, may receive significant support from the government, a fact that has caused heartburn among their American competitors.
At present the EU does not export much seafood, and the U.S. does not have major barriers to seafood trade to begin with-and since we do not have barriers, we do not have much to "bargain" with in trade discussions. Still, Norman says, "What happens with Europe will be very important for the American seafood industry, in that it represents the major opportunity for growth."
Asia is another matter. Japan already represents 64%, by value, of the U.S. seafood export market. The Japanese especially like our salmon and crabs, which represent 24% and 13% respectively, by value, of what we export to them. Norman points out that Chesapeake crabbers should not worry which of their Atlantic neighbors are getting rich selling crabs to the orient. Japan buys mostly king and Tanner crabs from Alaska, according to Norman.
The pattern of a limited number of products aimed at a few markets -essentially putting all your crabs in one basket-is common in the seafood industry, though slightly less pronounced in recent years. Signs of change can, for example, be seen in such products as surimi-the raw material for artificial crab meat, generally the main ingredient of "seafood salad." A relatively new product with a proven track record, surimi may begin to challenge crab for second place, according to Norman. But even in the case of surimi, the primary target remains the same market-Japan.
According to Norman, at least in the Pacific Northwest U.S. seafood providers are looking to expand their markets. He feels that smaller markets, such as Korea, Scandinavia, Australia and New Zealand will prove important in the overall mix of a robust export strategy under the new GATT regime. "Further down the road," he says, both China and Russia will be joining GATT, lowering tariffs and other barriers, and adopting new rules against unnecessary restraints. China and Russia, depending how fast and how well their economies expand, could prove to be major new markets.
Meanwhile, the U.S. continues to be a major customer at the stalls of the world's seafood market. And the stall we like most is the one where they sell shrimp. Shrimp, almost all of it cultured, represents 35%, by value, of our seafood imports. We get shrimp from all over the world, from Central America, from Ecuador, from Thailand, and increasingly from China. Since we do not have tariffs on shrimp, we have little to bargain there-the U.S. is wide open for shrimp imports . . . which is good news for shrimp lovers.
In the Chesapeake
For those who harvest and process seafood in the Chesapeake region, shrimp is a product we can only dream about. The Bay does not grow commercial species of shrimp, and the weather makes aquaculture of shrimp difficult at best. Competing with warm-weather producers to the south seems out of the question. "The only way we can compete for some of the shrimp market," says Norman, "is to develop a surimi product that is like shrimp."
The problem with producing surimi in the Bay is that we lack the plentiful, cheap, non-oily white-meat fish most popular for making the seafood substitute. Experiments have been tried with menhaden-a very oily fish-but according to Norman, commercialization has been elusive.
Ironically, the very oil that makes menhaden unsuitable for most food applications also makes it a primary export from the Bay region-in the form of fish oil. This oil is sent to Europe, where its main use is in margarine. Other Bay exports include blue crabs and eels. Farm-raised striped bass (rockfish) could become a major export item, Norman says, especially if local markets become glutted. "High productivity can prove to be a problem with farm-raised fish," Norman says. He points to Norway's pioneering salmon aquaculture industry, and to U.S. catfish farmers, who are also actively seeking new markets for their increasing production.
Oysters, the Bayfood that once left towns like Crisfield by the trainload, could re-establish their traditional niche, Norman says, perhaps as a specialty item in the upscale half-shell market. There are, however, two problems. The first is the well-publicized collapse of the Bay's oyster stocks due to overfishing, declines in water quality and most recently, disease. Until the disease problem is solved, for example, bringing oysters back will prove difficult.
The second problem with oysters lies on the demand side. "Substantial declines in production have been paralleled by substantial declines in imports," Norman says. In other words, not only are we producing fewer oysters; we are also importing fewer, perhaps because of health concerns or changes in the American palate. "We could be witnessing an overall decline in demand for oysters in the U.S. market," Norman says.
The best hedge against changing trends and tastes is "product differentiation," Norman says-providing seafood in new and creative forms, not only surimi, but also traditional species in new packages, new recipes. But this brings us back to where we started: to differentiate seafood products there must be product to begin with. The Bay's seafood harvest is ultimately limited by the limits of Bay's production.
"It may be," says Doug Lipton, "that the best way out of the double squeeze of shrinking stocks and increasing consumer demand will be the advent of new technologies, including aquaculture and biotechnology." Without new ways of increasing the availability of seafood on the one hand and protecting native stocks on the other, the nation's seafood deficit may be followed by a seafood collapse.