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Low prices, imports slow catfish industry

Catfish producers are feeling heat from a variety of sources. And there are legitimate reasons for farmers' current feelings of pessimism, says Terry Hanson, Mississippi State University agricultural economist.

“Since 2001, the prices they're getting for their product began going down, and it's continued to drop. Today, prices are between 52 cents and 55 cents per pound. Two-and-a-half years ago the price ranged from 70 cents to 80 cents,” says Hanson.

Coupled with the price drop are loans that are coming due for variable operating costs, equipment, land and pond construction. Many catfish producers just aren't able to cash flow.

“We're entering a third year of price drops. The cost of production, we estimate, is between 55 cents to 69 cents per pound. That's a broad range, but regardless of where you are on that scale, when the price for catfish drops to 52 cents, most can't help but lose money.”

Another problem is — while catfish prices dip — feed prices are increasing. During the last year, feed has gone up from $200 per ton to $220 per ton. Feed is the number one variable cost for growing catfish. If soybean prices increase, as many marketers suspect will happen, the situation will get even worse.

“Many of our farmers — many of our good farmers — are struggling,” says Hugh Warren, executive director of Catfish Farmers of America. “These struggles come even after measures to reduce expenses like lowering feed rates, stocking fewer fish per acre and other things. Right now, producers are — to use a good, old Southern term — ‘hunkering down’ and trying to wait out this bad spell of prices.”

There are two reasons given for the catfish price plunge. One is that cheap Vietnamese imports have snatched a large portion away from U.S. producers. Another is that there are simple too many fish in U.S. producers' ponds and the glut has lowered prices.

Over the last few years, millions of pounds of Vietnamese tra and basa (species raised by Vietnamese farmers) have snatched a large percentage of the U.S. market. In 2001, 29 million pounds of the fish were imported as catfish.

Last year, Congress passed a law prohibiting the use of the word catfish being used for the Vietnamese imports. For marketing purposes, now only farm-raised channel cats are allowed the label catfish.

But the imposed name change for Vietnamese imports has had a disquieting effect.

“We're now having trouble tracing Vietnamese imports of tra or basa. We used to be able to see where these fish were going because they were labeled catfish. Now, these fillets are labeled other things. As that's the case, these Vietnamese imports are lumped in with lots of miscellaneous fish from around the world. That means we've lost track of what's coming in from Vietnam,” says Hanson.

“We used to have a problem we could follow and see. Now, we've got a problem that's hard to keep a handle on. Believe it or not, the government labeling has actually helped obscure the truth,” says Hanson.

Hanson believes Vietnam is probably bringing in as much as or more fish than ever before.

Warren backs Hanson up. He says much effort went into obtaining accurate numbers of Vietnamese imports last year.

“There are four classifications that imported fish can fall under. We've found that even though the USDA reports a much lower import figure for Vietnamese fish, the truth is that up to 45 million pounds of fish came in last year.”

USDA and the National Agricultural Statistics Service — which last September claimed Vietnamese imports were down 40 percent from a year earlier — were citing incomplete numbers. It turns out the agency only counted Vietnamese catfish under the “frozen fillets of catfish” category of imports. In fact, Vietnamese basa and tra are also being imported under these categories: frozen fillets of fish, frozen fillets of freshwater fish, and frozen fillets of sole.

When all are factored in, says Warren, imports have increased markedly — perhaps to the tune of 16 million pounds over 2001 import totals.

But Vietnam doesn't get all the blame. Also to be factored in are things like 9/11 and the weakening of the economy.

“Catfish are often served in white tablecloth restaurants,” says Hanson. “As the economy goes south, one of the fallouts is fewer visits to a restaurant by consumers. Eating out is one of the first things consumers cut out of their budgets. Instead of going out five times a month, they go once or twice.”

When that occurs, the favored food is likely to be beef. When they are going out more often, says Hanson, folks tend to mix foods up — this time we'll eat a steak, next time catfish. When not eating out as much, variety tightens and catfish loses out.

This is the first time the U.S. catfish industry has been up against an international import that is affecting its market, says Hanson.

“Farmers in cotton, beef and soybeans were first exposed to this reality decades ago. Catfish hasn't ever had to deal with the world market.”

And U.S. producers had better get ready, says Hanson. There are reports that channel cats have already been sold to farmers in Southeast Asia to be raised. If that's the case, it's only a matter of time before shipments of Vietnamese channel cats are sent to U.S. ports.

“If they start shipping channel cats back here, the situation will be reduced to further chaos. This is uncharted territory,” says Hanson.

Warren says he'd be “surprised” if channel cats aren't already being raised by the Vietnamese.

“This is just normal business. You can't expect to have no competition — particularly when something is working well. Competition isn't a bad thing as long as it's fair. The United States spent $9 billion on imported seafood last year. It's here to stay,” says Warren.

The International Trade Commission (ITC) will be making a ruling Jan. 24 on CFA's anti-dumping suit against Vietnam. While only a preliminary ruling, it could well-indicate whether or not the ITC buys into CFA's arguments. If the ITC rules in CFA's favor, a huge tariff could be imposed on Vietnamese tra and basa imports.

“We've had no indication about which way the ITC is leaning,” says Warren. “We're very anxious to get a favorable ruling and hope that happens. The official ruling won't come down until April. But the thing about this preliminary finding is when it's announced bonds may be required or requested from buyers in the event that the final ruling supports the preliminary finding. We'll know something one way or the other by the end of this month.”

If the ITC agrees with CFA and imposes a tariff on Vietnamese fish, a new tracking system would be needed to keep tabs on imports.

“As a result of our research, we're aware of how these fish are being brought into the United States. Our concerns and the numbers we've uncovered have been made known to the Department of Commerce and the ITC. They weren't surprised,” says Warren.

Meanwhile, Hanson thinks there's hope for the U.S. catfish industry.

“We did a survey of consumers across the United States in early 2001. In that survey, 30 percent of the respondents said they'd try eating catfish if it was available in their markets. But it's not.

“Anecdotally, I hear from a lot of people who carry catfish from the Delta up to the Midwest or other areas to have a big fish fry with their friends and relatives. Everyone up there loves it, but they can't get it unless someone brings it to them. It seems there's a great, untapped market out there.

“I've talked to producers and processors about this. They say the lack of catfish in certain areas of the United States has to do with the expense of trucking the fish and bringing back empty trucks. I'm sure there are plenty of reasons for not doing it. But I also believe there are great opportunities for sharp marketers to make some money.”


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