El Nino, squid tariffs concern California’s ‘wetfish’ sector as prices dive
A California market squid. Photograph courtesy of the National Oceanic and Atmospheric Administration.
Facing difficulties in the other pelagic species it catches, squid was a much needed bright spot for the ‘wetfish’ sector in the US state of California. Until last week.
Landings of California market squid (Doryteuthis loligo opalescens) totaled over 68,211 metric tons for the 2017 to 2018 season, which ran from April 2017 until March. That compared to 38,510t for the 2016/17 season, a sign the fishery was climbing back from years of depressed catches due to El Nino.
Nearly 8,200t have been caught during the first three months of the current season, and with the news that the sector’s key export market, China, will impose 25% tariffs on the product on top of existing 27% tariffs, a bountiful season this year may not be a good thing.
“Fishing is slow right now which is probably better because it gives it a chance to adapt,” John DeLuca, president and CEO of the J DeLuca Fish Company, told Undercurrent News.
He said that like other ‘wetfish’ harvesters, his San Pedro, California-based firm has seen China-bound orders cancelled ahead of the July 6 deadline when the new rates are supposed to come into effect.
The solution, DeLuca said, will be to “wake up old customers and markets” such as Malaysia, Indonesia, and the Philippines, although none of those countries buy squid at the prices and volumes that China does currently.
The result, DeLuca predicted, will be lower prices for processors and fishermen. Ex-vessel prices for squid, currently around, $1,000 per metric ton, are poised to go lower to $700, perhaps even as low as $500, he said.
“How far its going to go down, what’s the bottom going to be, we still don’t know,” he said.
‘Wetfish’ worries
Days earlier, squid processors told Undercurrent that prior to the new tariffs China was paying roughly $3,500/t for squid, which included a 27% tariff already. However, once the new 25% tariff ($911.25) is added on, the cost of squid in China will go from a total of $3,645/t to $4,556.25/t, which Chinese buyers likely won’t bear.
For Diane Pleschner-Steele, the executive director of the California Wetfish Producers Association, that means the fishermen and processors could be forced to receive less for their efforts.
“That gets down the slippery slope of, if you’re going to reduce the price you have to pay the boats less and are the boats going to be able to go fishing at the lower price given the fact that fuel is now $4 per gallon?” she said.
New markets remain an option, she added, although it will depend on global supply and demand for squid.
The processors that her group represents are historically known as “wetfish” producers because their target pelagic species — sardine, anchovy and mackerel — were canned while still wet.
But in addition to the trade woes, Pleschner-Steele said that the return of El Nino conditions could cause further issues. The National Oceanic Atmospheric Administration issued an “El Nino watch” earlier this month for the Pacific.
The agency predicted “neutral” El Nino conditions for the Northern Hemisphere for the rest of the summer with “the chance for El Nino increasing to 50% during fall, and ~65% during winter 2018-19”.
“We’re starting to see all the signs of it again. We’re seeing the red crabs coming again. We’re seeing fish pushing north. Usually when they start catching squid in Oregon it means that El Ninos aren’t far behind,” Pleschner-Steele said.
Unfortunately for wetfish fishermen, conditions for the pelagic species they catch haven’t been optimal either. Anchovy landings have been low, and a judge recently invalidated a rule allowing for a 25,000t quota, mackerel haven’t been plentiful, and the sardine fishery has been closed to directed commercial fishing although an incidental fishery is allowed.