The challenge of oversupply for US catfish farmers

Encouraged by record live catfish prices in 2016, farmers in the catfish-producing states – Alabama, Arkansas, Louisiana, and Mississippi – raised more fish by building new ponds and increasing density in existing acreage.

“Some four or five years ago we didn’t have enough fish, people weren’t producing the fish because prices were down, and we couldn’t meet the demand,” recalls Sid Nelson, chairman of the Alabama Catfish Producers. “But when prices came back up, in 2015 and 2016, there was a pretty good expansion. A lot of the Mississippi farms went back into production. Some of them renovated ponds to make them more efficient and raise more fish per acre. Some went into producing hybrid catfish – the blue channel cross – you produce more per acre with that. So we produced more but it was just more than the market would stand.”

“The last year-and-a-half has been pretty bad,” acknowledged Townsend Kyser III, president of the Catfish Farmers of America. There was an oversupply caused by a lot of production increase and a warm winter in 2016 that allowed farmers to feed a lot more feed thus growing a lot more fish. If we have a 310-million-lb market and we raise 340 million lbs, the 30 million lbs of excess production takes about two years to work through the marketplace,” he says.

Big fish, no good
Compounding the oversupply problem is the addition of big fish in the mix – catfish weighing beyond the maximum ideal of 4 lbs that processors want. In a slow market, catfish processors that have their own ponds begin to process their own fish first and buy from other farmers only when needed. Delay in getting the fish to market means they spend another year or so in the pond where they continue to feed and get too big, consequently driving down the price paid to farmers, explains Nelson.

In 2017, the average price for “premium” catfish weighing 1 to 4 lbs was $1.2 per lb, while “very large” fish weighing over 4 lb was only $0.71 per lb on average, according to the Catfish Economic Outlook presentation of  Terry Hanson, professor and extension specialist at Auburn University.

“Big catfish give us problems. They depress the price,” Nelson says. “Processors pay less for those they can’t process if they are over a certain weight. And hybrids too, they grow so much faster so this adds to that problem.”

Asian imports
Another challenge – although lately to a lesser extent – are imports of catfish-like products from Vietnam and catfish from Thailand. Since the 2001 implementation of a bilateral trade agreement between the United States and Vietnam, imports have taken some of the market from US farm-raised catfish. 2017 saw for the first time a decline in imports – by 18 percent to 228 million lbs from 279 million lbs in 2016 – according to the US Census Bureau.

“Yes it is a little bit better than it’s been but they’ve stolen a lot of our markets with under-priced Vietnamese-government-subsidized fish. Its been hard to win those markets back,” says Kyser.

For Nelson, Asian imports are the biggest problem for the industry. “In early 2000 we were a 650-million-lb industry as processed, dressed fish. In 2018 we were at 320 million lbs; we’ve been this size for the past six to eight years now. All of that came about because of imported fish. They came in and undercut the price. That knocked the industry down by about half. That’s definitely the biggest problem.”

“All we ask for is to test them under the same strongest tests we US farmers are subjected to,” he adds.

In the third quarter of 2018, certification of Asian imports began, according to Kyser, but he is skeptical about the quality of inspections those imports are subjected to at the source.

Kyser explains: “As the letter of law reads, they (exporting countries) have set up their own inspection program that are inspecting fish like they are supposed to, but I find it  difficult to believe that they were able to put together in three months a program similar to ours that took us 18 months to set up, considering that the USDA was already up-and-running as an organization.

“I can’t believe a third-world country will be able to set up so quickly something that we have been doing for years with meat, poultry, pork, and for 18 months for catfish. I find difficult to believe that their standards are the same.”

He acknowledged however that the imports are re-inspected at the US border “and tested for residues which we know they’ve been using.” “We are watching that closely,” he adds.