They survived hurricanes and oil spills, but Gulf Coast shrimp processors say there’s no way they can battle foreign governments to stay in business.
While Americans gobble up imported shrimp as never before, processors from Florida to Texas say they can’t compete with billions in subsidies that are propping up shrimpers in places such as China and Thailand while driving down the price for American consumers.
“You can buy shrimp cheaper than you can buy bologna right now. . . . We just don’t have the kind of money and backbone to stay in business competing against these countries,” said Richard Gollott Sr., a co-owner of Golden Gulf Coast Packing Co. in Biloxi, Miss.
With imports now accounting for more than 90 percent of the U.S. shrimp market, processors say it’s time to fight back: They want the federal government to put new tariffs on imported shrimp, making it more expensive to sell in the United States.
“This is just survival. We’re trying to survive, and that’s what this is all about,” Gollott said.
As two federal agencies prepare to begin considering the tariffs case this week, opponents say it would be misguided for Washington to intervene.
“Instead of seeing our friends in the Gulf industry innovate and try to improve their practices in the marketplace, they’re just trying to regulate the competition out of the business,” said Travis Larkin, the president of Seafood Exchange, a seafood importing company in Raleigh, N.C. “If you look at the big picture of it, it just doesn’t make any sense.”
Processors such as Gollott, part of a group called The Coalition of Gulf Shrimp Industries, predict that they’ll win. They say that foreign governments in the seven biggest importing countries have engaged in unfair trade by giving more than $13.5 billion in subsidies to their shrimp industries since 2009.
The processors say the case bears close watching, with Gulf shrimp sales amounting to hundreds of millions a year and their industry employing thousands.
“The public ought to care, because what’s happening with the shrimp industry is symptomatic of what’s happening to many industries, maybe most industries in this country,” said David Veal, the group’s executive director and a former professor of agricultural engineering at Mississippi State University.
Gollott, 68, said he’d been in the shrimp business since he was 13, following his grandfather and father. He has more than 60 boats, one of the largest shrimp fleets in Mississippi, though that’s half his former fleet. Last year, he said, his company only broke even, and more jobs disappeared.
“There’s no such thing as free trade,” said Gollott, who has more than 50 employees. “Somebody’s paying a price: An American worker somewhere is paying the price for free trade. It’s about the dollar, and we are just little people in the middle who are getting squeezed.”
Jonathan McLendon, the vice president of Biloxi Freezing and Processing Inc., said some Gulf shrimpers weren’t making enough to cover fuel costs for their boats.
“When the boats are not making money, they’re closing up, and without the boats the processors are going downhill,” said McLendon, whose company employs more than 75 people. “And it’s not only the jobs. This is generations of a way of life on the Gulf Coast that they’re putting into jeopardy.”
The coalition is challenging seven countries that exported $4.3 billion worth of shrimp to the United States in 2011, accounting for 85 percent of all imports and more than three-fourths of the U.S. market: China, Thailand, Ecuador, India, Indonesia, Malaysia and Vietnam.
The group, which represents processors in Mississippi, Florida, Georgia, Louisiana, Alabama and Texas, said it had documented more than 100 programs that provided benefits to shrimp producers in those countries, including grants, low-interest loans, tax breaks, even shrimp feed.
Among the examples cited: Thailand buys shrimp from farmers and sells it to processors at low prices; India provides subsidies to reduce ocean freight costs; China has provided financing to build the world’s largest shrimp-processing and export plant; Malaysia is spending millions to build shrimp farms and processing plants aimed at exporting more shrimp.
On top of that, Veal said, the countries pay lower wages.
Veal, of Biloxi, said that as recently as 30 years ago, U.S. processors accounted for 80 percent of all shrimp sold in the country.
But the Gulf shrimp industry has been particularly hit hard in the past decade, he said, enduring at least a 50 percent reduction in the number of shrimp vessels, Hurricane Katrina in 2005 and the largest oil spill in the nation’s history five years later. He said the industry was still contending with false fears that Gulf shrimp weren’t safe to eat as a result of the spill.
The Commerce Department and the International Trade Commission are looking into the case. On Thursday, the Commerce Department will decide whether there are sufficient grounds to proceed with an investigation. On Friday, the International Trade Commission will have its first staff hearing to begin examining data. It could take a year or longer to resolve the case.
The Office of the U.S. Trade Representative said it didn’t comment on pending cases.
But Nkenge Harmon, the deputy assistant U.S. trade representative for public and media affairs, said President Barack Obama’s administration “has demonstrated that we will make our trading partners play by the rules.”
McLendon said the Gulf Coast processors were battling countries that were in much the same position as the United States not so long ago.
“They’re becoming industrialized, they’re putting people to work and the middle class is developing,” he said. “So they’re putting these stimulus programs together to not only put people to work but also to feed this newly developing middle class. And that’s fine and dandy if they keep the product in their own country.”
Shrimp is the most popular seafood in the U.S., with each American eating an average of 4.2 pounds per year, according to industry statistics.
Larkin, who in a previous job in the 1990s handled shrimp procurement for such restaurants as Red Lobster and Olive Garden, said the domestic industry – even in the best of times – no longer could provide enough shrimp for the vast U.S. market.
Imported shrimp has become a much bigger business than the domestic industry, Larkin said, providing thousands of jobs in the United States for truckers and longshoremen, on steamship lines and at ports, warehouses and supermarkets.
Overall, imported seafood accounts for roughly 454,000 jobs in the U.S., according to the National Fisheries Institute.
“Imports have stepped in to fulfill a market demand,” Larkin said. “The product is available all year around, the quality is consistent and the production is predictable. . . . This is a market-driven commodity.”
Gollott said prices had fallen sharply, noting that a pound of medium-sized shrimp, which sold for $4 in the mid-1980s, now goes for as little as $3, a drop of 25 percent. But while diesel fuel sold for 90 cents a gallon in 2001, it’s now $3.20 a gallon, he said.
McLendon, 34, said prices for some types of shrimp were even much higher than that in the 1980s.
“During Hurricane Katrina, our whole building was destroyed, and I actually found some financial statements and tickets from the late 1980s. They were paying as much as $11 a pound for some shrimp,” he said.