The U.S. is involved in a number of free trade agreements in an effort to spread our exports abroad without tariffs or other obstructions. However, American catfish farmers have found that free trade has introduced free radicals into their domestic market, from other species masquerading as catfish to a massive influx of underpriced competition. For nearly 20 years, domestic farmers have fought to overcome what they believe is a government-sanctioned disadvantage.
The South handles the majority of all U.S. catfish farming, with 96 percent of the production located in Alabama, Arkansas, Mississippi and Texas. According to the USDA’s National Agricultural Statistics Service, domestic catfish growers saw sales of $380 million last year. Sales totaled $386 million in 2016 and $364 million in 2015.
However, after the U.S. and Vietnam entered a bilateral trade agreement in 2001, domestic producers have labored hard — both on the farm and in Washington — to hold on to their share of the market.
“We’re a small industry, and we have lost farmers since imports hit the market,” says Townsend Kyser, third-generation catfish farmer from Hale County and president of Catfish Farmers of America.
U.S. demand for catfish has climbed steadily since 1990, starting at just above 50,000 pounds of frozen fillet, almost entirely of American origin. Imported fillets began noticeably eating into the U.S. margin around 2005, and by 2016, imported frozen fillets outperformed U.S. product by a nearly five-to-one ratio out of 350,000 plus pounds.
“Since the early 2000s, the U.S. industry has been reduced by around 50 percent,” says Chad Causey, a spokesman for Catfish Farmers of America.
According to an industry assessment by the Alabama Cooperative Extension System, there were around 250 catfish farms operating in west Alabama in the early 2000s. By 2016, that number had dropped to 77. Beyond imports glutting the market, Alabama farmers faced an onslaught of challenges over the last decade. Recession and low demand, oversized fish, persistent disease and the cost of doing business have all eaten into the industry’s profitability. Feed prices leaped from $201 per ton in 2000 to $482 in 2014.
“Agriculture and aquaculture are a big part of Alabama business,” says Kyser. “We have wonderful resources here. We have good soil, good water and the right climate and environment to raise catfish.”
In Alabama, there are more than 17,000 water acres devoted to catfish farming, and the industry provides much-needed jobs to the surrounding communities — more than 2,600 jobs in 2016.
“A lot of small towns in the Black Belt are driven by catfish,” says Kyser. “There are farmers, but there are also stores that stock us, feed mills and other jobs tied to the farming. Looking around town, you can tell when the catfish business is doing well or not.”
The U.S. trade embargo against Vietnam ended in 1994, and by 2001, U.S. ports were open to ships bearing Vietnamese goods, including the pangasius, a relative of the U.S. catfish.
The National Oceanic and Atmospheric Administration states that over 80 percent of all seafood consumed in the U.S. is imported. Vietnam emerged as the largest source of catfish imports in 1999, yielding 83 percent of 217,000 pounds of fish shipped in. Live weight of food-size fish totaled from the four largest U.S. farming states was 355 million pounds. The gap between domestic and imported numbers tightened each year, however, and in 2007, 40.3 million pounds of U.S.-produced catfish were processed, the lowest round weight since 1997. Imports totaled 7.11 million pounds.
Advocates for domestic farmers feared that an inferior product flooding the market would degrade the public perception of all catfish products. “A different kind of fish was being dumped into the markets we built,” says Chad Causey. “The U.S. industry is at a disadvantage due to poor regulation and artificially low prices. Consumers didn’t discriminate on the location the food originated from. It wasn’t the domestic industry that posed risks, but a bad image hurt our market value. They shouldn’t be marketed as the same fish we raise. It’s burdensome and costly for us.”
Health and safety take precedence among quality concerns, and the CFA takes issue with the environment where imported fish are raised. “They grow in the Mekong River Delta, one of the most polluted waterways in the world,” says Kyser. According to the Vietnam Environmental Administration, the delta has been used as a wastewater outlet for industrial parks. The CFA also cites a study, funded by the European Union, which says Vietnamese farmers use antibiotics and pesticides that aren’t authorized for aquaculture in the U.S.
Earlier this year, the Department of Commerce announced new trade tariffs on imports, including record-high taxes on Chinese and Vietnamese fish. “The administration’s working to create a more level playing field for U.S. farmers,” says Causey. “We continue to see tariffs placed on those products because it’s apparent and factual that they have been dumping product in the market.”
For a decade, the CFA and advocates like Mississippi Senator Thad Cochran lobbied for tighter regulation of imported fish. In response, lawmakers included provisions in the 2008 and 2014 farm bills, which transferred catfish import inspection duties from the FDA to the USDA, which already inspects domestic catfish.
“It’s not at full enforcement yet,” says Causey. “We want to see all 100 percent of catfish consumed in the U.S. inspected first. Whatever product you choose, it should be a safe product.”
In April 2016, the USDA began laboratory testing of catfish imports. As part of its Food Safety and Inspection Service, USDA lab testing includes chemical and microbiological analyses. Chemical testing is used to determine food composition and detect food additives, nutrients and residues from veterinary drugs and pesticides. Microbiological testing is used to identify fish species and detect pathogens, toxins and antimicrobial residues.
The USDA laboratory guidelines categorize all catfish and related species under the order of siluriformes. From May 2016 to March 2018, a USDA record of import refusals indicates that around 14 shipments of Vietnamese siluriformes were turned away specifically for failed laboratory analyses. Nine shipments were refused from China on the same grounds, with one additional shipment testing positive for pathogens. Around 12 shipments from Thailand were refused based on failed lab analyses.
So far this year, shipping damage and improper shipping marks have made up the bulk of Vietnamese siluriforme refusals. According to an April through July USDA dataset of import refusals, two shipments of siluriformes were turned away this April for failed laboratory analysis or inspection. In May, there was one instance of refusal based on a failed lab analysis.
The transfer of responsibility has met substantial resistance in Washington. Some critics cite a Government Accountability Office study, which concludes that the change will be costly and result in duplication of effort. Groups like the National Fisheries Institute consider the move unnecessary. “Importers don’t want to pay more to bring in a cheap product,” says Causey, “so they wave off concerns.”
Proponents of free trade see the situation as a two-way street and warn that imposing tariffs on imports would impede U.S. exports as a result. While it never went into effect, the Trans-Pacific Partnership would have cut tariffs and other trade barriers among participating nations. The U.S. Chamber of Commerce was among the parties touting its potential economic benefits, dismissing domestic producers’ fears of a wider floodgate for imports.
While the larger economic impact is more complex, American farmers hope that continued import regulations will allow them to regain footing in the market. “It’s too soon to tell here on Chinese tariffs,” says Causey. “The tariffs on Vietnamese pangasius certainly helped some. It slowed the downward trend in domestic production, but we haven’t seen any growth as a result.”
In spite of how foreign markets may respond, farmers working on American soil believe that more tariffs would ultimately help their business more than free trade could. “There had been some unfavorable balance with Vietnam, but raising tariffs has leveled the playing field,” says Kyser. “We’ll need to get the old markets back. We’ve seen cycles before. The fish take time to grow, so it will take time for the results to get back to us. All the pieces are in place to get better, but it takes time.”
Tom Little and Art Meripol are freelance contributors to Business Alabama. Both are based in Birmingham.