by Tom Riley and Lorrie Barr
Special to Arkansas Agriculture
This spring, Jerry Seamans will plant seeds where he once raised catfish. In addition to the 1,000 water acres still devoted to catfish ponds, the owner of Chicot Farms will work 400 acres of rice and soybeans. As with other livestock operations, soaring feed prices in the last several months have combined with higher energy costs to increase aquaculture producers’ overall production costs.
“At this point, it makes better business sense to grow grain than to buy it,” said Seamans.
“Competition from lower-priced imports, mostly from countries like China and Vietnam has created a particularly difficult situation,” said Carole Engle, director of the Aquaculture/Fisheries Center at the University of Arkansas at Pine Bluff. “Especially when farmers in China and Vietnam are not held to the same food safety, environmental, and labor standards as U.S. farmers.”
Arkansas was the first state to develop commercial catfish farms in the late 1950s. The number of catfish farms in the state grew through the 1990s as farmers entered the catfish business as a way to provide additional income during a time of low prices for cotton and soybeans. Banks loaned money to support what they saw as a stable source of revenue. But catfish farming is hard work and is capital intensive, requiring a steady flow of capital throughout the year.
Today’s catfish producers, such as Seamans, a 40-year veteran of the industry, have made great strides in improving their operations by collaborating with researchers to improve feed efficiency, streamlining their operations and maximizing yields. They’ve contributed millions of dollars to rural economies in the Delta, where the majority of catfish farms are located. And catfish producers have helped make Arkansas the nation’s third-largest producer of farm-raised catfish, behind Mississippi and Alabama. In 2007, the state’s catfish producers generated sales of $71.5 million – 16 percent of the total U.S. market.
The catfish harvest goes on year-round, although the busiest times are between April and September.
“Our producers work 80 to 100 hours a week during the growing season. They are up all night in hot weather to monitor the ponds’ oxygen level, move aeration equipment and keep their fish alive,” said Engle. “It’s not an easy job.”
Weather also plays a factor. Adverse weather conditions such as drought, below-normal temperatures and severe rainstorms can interfere with feeding or harvesting. The U.S. Department of Agriculture recently made funds available to catfish producers who lost feed as a result of a natural disaster such as a prolonged heat wave. Carl Jeffers, chairman of the Arkansas Catfish Promotion Board, believes all of Arkansas’ 128 catfish producers have experienced such losses and should apply for the assistance program.
As a whole, the catfish industry appears to be at a turning point. A report by IntraFish Media, which provides analysis of current seafood industry trends, stated that per-person consumption of farm-raised catfish was 0.97 pounds in 2006. This reflects a decline from 2001 when per capita consumption was 1.15 pounds, according to the Mississippi State University Extension Service.
At the same time, producers are being squeezed by record high feed and energy prices, which makes it all the more difficult to make ends meet. Farm-raised catfish are fed a diet of floating pellets made primarily from soybeans, corn, and other grains.
“Grain producers are reaping the benefits of higher prices,” said Engle. “But it’s straining other agricultural sectors.” Corn and soybeans are the primary feedstock for ethanol and biodiesel, respectively; those commodity prices have shot up as the market reacts to federal legislation. The Energy Independence and Security Act of 2007 increases the Renewable Fuels Standard, which sets annual requirements for the amount of renewable fuels produced and used in motor vehicles.
The price of corn and soybeans has nearly doubled in the past two years. According to USDA, the average price of a bushel of corn over the past 20 years has been $2.28. In 2007, the average price of corn was $3.40 per bushel. At the end of March, corn prices closed at $5.52 a bushel. Soybean prices hit a record high of $15.86 in the first week of March 2008. However, prices have been declining and on April 1 the soybean May future prices had declined to $11.64 per bushel.
“Speculators have also played a role in driving up prices as investment dollars have moved from the ailing real estate market and stock markets to grain commodities, driving grain prices up,” Engle said.
Jeffers, manager of Mallard Brake Catfish Farm, said recently that the farm’s owners have decided to get out of catfish production entirely. He predicts more will follow.
“You just can’t make a profit solely on farming catfish,” Jeffers said. “I believe there is going to be a shakeout of the industry and more will get out.”
Catfish production requires more capital per acre than commodity row crops. The largest cost component of catfish farming is the feed.
“Unlike commodity crops that typically need capital twice a year, catfish operations incur expenses year-round,” Jeffers said. “With production costs between $2,500 and $3,000 per acre, it’s hard to see a profit.”
Some catfish producers believe reducing the number of farms may stimulate the industry.
“I think the catfish industry is going to have to shrink back to meet the demands of its loyal customer base,” said Joey Lowery, owner of Lowery Aquaculture near Newport.
In 2007, the amount of farm-raised catfish processed in the U.S. was just shy of 500 million pounds, a 10-year low. In 2003, the industry hit a record high of 660 million pounds of processed catfish. Lowery estimates that only 300-400 million pounds are necessary to meet the nation’s current needs until public demand increases.
State, regional and national efforts are underway to market catfish to a broader consumer base and educate consumers on the benefits of eating U.S. farm-raised catfish. “People need to know their catfish is safe to eat,” Seamans explained. “After the Chinese fish scare, people stopped eating catfish. They didn’t say ‘We’ll eat only U.S. catfish.’ Instead, they stayed away from the product altogether.”
Tests conducted last year by the Federal Drug Administration on catfish imported from China and Vietnam revealed traces of banned antibiotics and known carcinogens. The Alabama State Department of Agriculture and Industries found antibiotics in nearly 50 percent of Chinese catfish imported into this country. Repeated tests by Mississippi, Alabama, and Arkansas have consistently found the presence of antibiotics and carcinogens. According to a report by Food & Water Watch, a non-profit consumer group based in Washington D.C., fish farmers in China and elsewhere use medications banned in the U.S. to prevent disease among animals raised in unsanitary conditions.
Conversely, U.S. farm-raised catfish are grown under strict environmental standards. Domestic catfish producers raise fish in a quality-controlled environment of clay-based ponds filled with fresh water pumped from underground wells. Fish are fed a purified high-protein food pellet – a mixture of soybeans, corn wheat, vitamins, and minerals – produced by area feed mills. In addition, ongoing research has led to better disease resistance, improved aeration equipment and a reduced mortality rate for pond-raised catfish.
Mislabeling of imported catfish has also posed a challenge to the catfish industry. During the past decade, Vietnamese fish known as basa or tra were being imported in the U.S. and labeled and marketed as “catfish.” Similar to channel catfish, which is commercially grown in the U.S., the imported substitute took a large share of the domestic market and had a devastating impact on domestic catfish farmers. This was especially true with respect to producers in the four states that produce 95 percent of all catfish eaten in the U.S. – Mississippi, Louisiana, Arkansas and Alabama.
Congress enacted legislation requiring that the Vietnamese species be labeled properly to avoid confusion with domestic catfish. The catfish industry is currently working with Congress on federal legislation for country of origin labeling (COOL), which proponents say, would help U.S. catfish producers.
“Seventy percent of catfish is sold to restaurants, so it makes sense that people eating out know where their catfish comes from,” said Jeffers.
According to a national survey funded by The Catfish Institute, 97 percent of U.S. consumers want to know whether they are eating imported or U.S. farm-raised catfish in restaurants and 90 percent believe COOL for catfish should be a legislative requirement for restaurant menus. Arkansas already has a state mandate for catfish sold in grocery stores and retail outlets as well as in restaurants.
Marketing and legislation are important components for stabilizing the catfish industry. And it appears the economic factors are leveling out. Feed costs peaked in February and have declined somewhat throughout March, while the farm-gate price for catfish has risen.
“It’s at 80 cents per pound and all indications are that it will go higher,” said Engle.
“I think if we can keep our price up and maintain our production costs that we’ll be in a good place in a couple of years,” Lowery said.
“Arkansas catfish producers encourage the public to ask for U.S. farm-raised catfish the next time they are at a restaurant or market,” said Jeffers. |