Low prices upend shrimpers

A SPECIAL TIMES REPORT

Banshee winds shrieked through the trawler Waymaker’s riggings and nets as wicked waves pounded the vessel starboard and port.

“Those waves were breaking, shaking, rattling, rolling and loud,” said James Blanchard, the Waymaker’s master. The 60-mph gusts pushed the 63-foot boat so hard its anchor dragged bottom, unable to hold it. Once the squall had passed and seas settled, the Waymaker’s keel was hard atop a beach at Wine Island Pass, lines and nets tangled alongside.

The vessel suffered no damage, although a full day was needed for Blanchard to get her afloat in the open water.

For the veteran shrimper, coping with the effects of the squall was hard but not impossible.

Dealing with a crash of shrimp prices that has devalued his catches and those of other Louisiana shrimpers, he acknowledg-

es, will not be nearly so easy.

“As long as we can make a little profit, we’ll keep at it but as soon as there is no profit we’ll lay up,” Blanchard said, who along with other local shrimpers is seeing the lowest prices in recent memory “It’s marginal right now. I have been out for a week and a half. I may make a little but it’s very marginal.”

Interviews with fishermen, processors, importers and seafood industry experts over the past two weeks confirm that Louisiana has been caught in a global shrimp glut unlikely to abate any time soon, with no immediate relief in sight.

Shrimp numbering 40 to 50 per pound, which earned fishermen as much as $2.30 per pound last year, have been sold this season to docks for as little as 68 cents per pound.

Some fishermen, not wanting to throw good money after bad, are tying up their boats.

Owners of local docks and processing plants, who buy the shrimp the fishermen harvest, say they are caught in the crash as well. Most paid high prices last year for shrimp that hasn’t been sold, increasing the likelihood of heavy losses.

“We are stuck in a business we don’t want to get out of, but we see the catastrophe that it’s in,” said Andrew Blanchard, who owns Indian Ridge Shrimp in Chauvin. “You’re in it to ride it out but it’s just been one hell of a ride. All we can do is put on our britches when we get up in the morning and go to work.”

FEWER PROCESSORS

The shrimp business is a regional icon in Terrebonne, Lafourche and other coastal Louisiana parishes. Its health and its issues relate very directly to the state’s overall image among tourists and commercial interests.

While its economic impact locally is not nearly that of oilfield service businesses, the shrimp industry still has a big footprint, accounting for 15,000 jobs and an annual impact of $1.3 billion for the state overall.

But it has been shrinking. The number of licensed shrimp vessels has been falling over more of a decade. The boats, while picturesque, ubiquitous in bayou communities and central to the identity of many, are only the tip of the industry’s economic iceberg.

Processing plants and dock operations play a major role in the local economy as well.

At one time as many as six plants in Terrebonne Parish bought shrimp from boats, peeled, froze and then sold them to brokers or buyers throughout the U.S. and beyond.

Only two local plants now peel shrimp. Others, like Blanchard’s, freeze and sell the paenieds after removing their heads or, through new technologies, sell them whole.

The bulk of what they sell must compete against a mountain of imports whose prices are set by a merciless global market, where small price fluctuations can make a big difference between success and ruin.

That market’s quirks, for better or worse, then filter through the processors to the individual boat owners or operators, who find it increasingly difficult to stay afloat.

“No one is happy in this industry right now,” said Kimberly Chauvin of the David Chauvin Seafood Company in Dulac. “There is no great joy.”

CONSPIRACY OF CIRCUMSTANCES

Like the conspiracy of wind, waves and kismet that grounded James Blanchard’s boat, the current crisis appears rooted in a variety of causes. Unlike the cure for his dilemma

– using muscle and wile to will the trawler back into the water – no one approach appears likely to create a market cure. Market experts agree that unprecedented cooperation between fishermen, processors and government – state and federal – will be needed to pull the industry out of a deepening hole.

Complicating matters is the fact that neither the problems nor their potential solutions are exclusive to Louisiana. Warm-water shrimp are fished throughout the Gulf of Mexico and the South Atlantic. The international shrimp market – whose imports make up nearly 90 percent of the shrimp consumed in the U.S.

– is having its own problems, according to interviews with importers, which are pushing both demand and prices down.

Todd Rushing, president and founder of New Jersey-based ShrimpTrader.com, an Internet operation that brings shrimp buyers and sellers together regardless of their national affiliations, watches both domestic and foreign markets closely, and is often quoted as a market expert in seafood business publications. Importers, he said, are facing many of the same problems that are are affecting local shrimpers and packers.

“There was a ride up in price last year,” said Rushing, who has no relation to Times publisher Brian Rushing. “It was a perfect storm of things. The price went up overseas because of disease issues, early mortality syndrome. Production dropped significantly in Thailand, and with other big producers like Indonesia and Vietnam.”

The disease made for a global shortage, and packers-as well as the local fishermen, who are further down in the supply chain – benefitted. Processors and wholesalers bought all they could, all at high prices.

Restaurants and retailers paid more for both domestic and imported product, at first.

SHRIMP GLUT

Contracts for overseas shrimp could not be filled, and agreements were broken. The standby domestic product continued increasing in value. But there were negatives that came with the market change.

Restaurants, Rushing said, removed shrimp from their menus in many instances, avoiding the high cost of inventory and the cost and trouble of re-tooling paper menus. Supermarkets, dependent on the ability to offer items like shrimp at sale prices could not do so because of the high price. That caused inventories to back up.

Once the early mortality syndrome was dealt with, according to Rushing and other experts, the supply shot up, and prices in the wholesale, overseas farm and wild-caught sectors began to fall.

“There is still a lot of inventory in the United States,” Rushing said. “Coming into where we are now all of a sudden the prices are starting to drop overseas. The prices are so cheap and there is no expensive shrimp around. Everyone is starting to operate on all eight cylinders. Now you have a glut of shrimp.”

Processors and wholesalers – domestic and foreign – are caught in a bad situation, Rushing said.

“They are upside down,” he explained. “They own more shrimp than they can replace the product for and there is no relief in sight. I’d like to say there will be better days but I am not seeing it.”

Although Rushing’s website deals primarily with overseas shrimp he has been approached by some domestic businesses.

The overall dilemma – being stuck with shrimp bought at high prices but can only be sold low – is precisely where local processors find themselves.

One small local operation disclosed it has 110,000 pounds of shrimp bought from boats last year, which, if currently sold, would go to big buyers for more than $3.50 per pound less than what they paid.

“I am still working on an inventory from the winter that we froze,” a buyer who asked not to be identified by name said. “Now I am getting pushed by customers to sell because they are hearing about these prices. So far this season I haven’t frozen anything.”

BUY HIGH, SELL LOW

Daniel Babin, a seafood processor who is also a Terrebonne Parish Council member, confirms the market situation as well.

“We paid way too much for shrimp in the brown shrimp season this past year,” he said. “Now the numbers are low. We are sitting on inventory we bought last year and now the prices are low. Sitting on more inventory than ever, a lot of shrimp.”

Relations between processors and fishermen in Terrebonne and Lafourche have always been a delicate matter. Interviews over many years have exposed enmity and resentments dating back to school years between shrimping and processing families.

The current situation is doing little to promote trust.

Montegut fisherman Ronnie “Chivo” Anderson stewed and ruminated while piloting his 60-foot boat, the Bub-Poot-Nae, through Terrebonne waters at the season’s start.

Millions of dollars spent promoting Louisiana seafood after the BP oil spill and other investments, he said, seem to be for naught. Forcing fishermen to accept low prices for their catches, he maintains, is equivalent to theft.

Noting a New York frozen price of $2.95 for shrimp numbering 41-50 per pound with shells still on – an official price from a list published weekly by the National Marine Fisheries Service – he questions how processors can justify paying rock-bottom prices.

HIDDEN COSTS

A check with NMFS officials confirmed the price lists, circulated through text messages and social networking by fishermen, reflect the prices for farmed shrimp from warehouses, rather than what is paid to the overseas shrimp farms.

It is those prices, processors say, that make it difficult for them to compete.

Processors also note that the cost of labor for peeling or otherwise working the shrimp they buy adds to costs, as well as product insurance, interest on loans for money used to buy shrimp, transportation expenses and off-premises cold storage.

Processors also say a move more fishermen have made to cope with market inconsistencies – retailing shrimp from their boats or from roadsides – have detracted from their profit margins. High-value large white shrimp, caught in inshore waters by large and small boats after Louisiana’s August season begins, tend to get retailed in many cases and not sold to processors.

Fishermen who retail contend processors are not paying a high enough price to warrant selling them, when available.

Some processors also say they understand the need of some fishermen to sell their own catch and are not offended by the practice.

“The fishermen, they are like the plant,” said Andrew Blanchard of Indian Ridge. “They do what they have to do to survive. If it means retailing, that’s what they do. It hurts us but you can’t blame a fisherman.”

POTENTIAL FOR CHANGE

Located ashore rather than at sea and able to access support services and a helping hand through credit lines, processors could be in a unique position to sculpt domestic industry changes that will offer greater protection for the local market rather than merely coping with global market changes with new price lists.

That’s the opinion of some industry sources, at least, that say just as some fishermen have adapted by changing how they do business, there is room for processors and docks to alter their business plans.

“We are 40 years behind on consumer education and other things,” Andrew Blanchard said.

But righting the course of a foundering industry, most agree, is easier said than done.

While more local fishermen tied up to ride out the market storm, a handful were still working this past weekend, hoping that volume might make the difference. Some continue on the basis of faith alone, some even expressing guarded optimism.

“I drained my savings in the spring with a new engine rebuild,” said Roy Loga of Chauvin. “I worked six days a week for three months getting her ready. For the last four years, 80 percent of my catch has been retail and that’s not an easy task. I couldn’t do it without my wife. I made one trip this week that ended in a breakdown after the first drag. I’m almost finished with the repair and will take the rest of the weekend off to serve the Lord. I may be broke but the Lord has always provided for my needs. So I trust all things will work out. My days of worrying are over. This too shall pass.”

James Blanchard’s trawler Waymaker rests atop a beach near Wine Island pass after dragging anchor in fierce squalls.

COURTESY

A small skimmer boat sits on a Dulac bayou. Many shrimpers have begun staying ashore rather than throw good money after bad as prices fall.

JAMES LOISELLE|THE TIMES