Illegal fishing is bad for business

Earlier this year I did some risk scoring for seafood imports to the United States.  This was part of a larger project to see how much illegal fishing is associated with the top import products.  In a project led by Pramod Ganapathiraju, we spent a few months tracing and verifying import flows from the top 3 products from the ten leading exporting countries to the USA by seafood volume in 2011, so 30 products total.

It took a long time to filter the shrimp.  Weeks.  US trade import data does not separate farmed from wild shrimp, so we had to take an in-depth look.  The proportion of farmed to wild shrimp imports seems to be rising daily and has well exceeded 50% since 2008/9 and may be as high as 70-80% today.  We had to knock out several import shrimp products from the analysis due to lack of clear evidence of wild vs farmed stats.  Still, we wanted to learn as much as we could about how illegally-fished products enter export supply chains destined for the USA, for wild shrimp and other every day products like whitefish, canned tuna and crab.

Why?  Fish stocks that are fished illegally can not be managed sustainably.  The way the science works for managing fish stocks is simple: fishing effort has to be known.  These days, some fish stocks are fully fished to the legal limit, then fished that much again (or more) by boats operating without a legal right to fish.

The same logic applies for unreported fishing, and to some degree for unregulated fishing, but we were concerned with products that were fished by boats in an area where they were supposed to have fishing rights  and didn’t.

Pramod prepared quantitative estimates for each product/country combination, using the filtered trade data and his proprietary database of illegal fishing information at the vessel level.  This work was sponsored by the World Wildlife Fund.  I prepared case studies for the project, but also went one step further to assign a score to each product/country combination based on the provenance of the import product, meaning where did it come from and how did it get there and what risk hotspots did it pass through?  These scores were not part of the project, but I was interested to see relative risks for a better understanding of how importers might screen their products to tackle the problem.

 Here are the scores.

Product/Country Combination

Illegal fishing Risk Score

(n/36)

Product/Country Combination

Illegal fishing Risk Score

(n/36)

Product/Country Combination

Illegal fishing Risk Score

(n/36)

THAILAND Tuna

33

PHILIPPINES Tuna

25

VIETNAM Tuna

19

INDIA Octopus

33

THAILAND Squid

24

ECUADOR Shrimp

18

PHILIPPINES Octopus

32

MEXICO Snapper

24

ECUADOR Tuna

17

INDONESIA Tuna

32

PHILIPPINES Crab

24

ECUADOR Mahi mahi

17

INDIA Squid

30

VIETNAM Crab

23

CHILE Swordfish

16

INDIA Crab

30

MEXICO Tuna

22

CANADA Herring

15

THAILAND Crab

29

CHINA Russia Pollock

21

CHILE Toothfish

14

INDONESIA Snapper

28

CHINA Squid

21

CANADA Lobster

11

INDONESIA Crab

25

MEXICO Shrimp

20

CANADA Crab

11

CHINA Salmon

25

CHILE Pacific Hake

19

VIETNAM Crab

10

In general higher scores indicate higher risks from mixed sources, less-developed regulatory regimes for seafood in exporting countries and low exposure to the issue for U.S. buyers.

Some of you will be interested in where these numbers came from.  The next paragraph is for you.  Following that, let’s talk about why illegal fishing is bad for business.

The risk scores were prepared by researching each product in detail to establish the species, fishery sources, trading characteristics in the export country, provenance measures and enforcement in the export country, and trade flows to US retailers.  A maximum score of 36 indicates the highest level of risk on nine parameters, each scored on a 1 to 4 scale.  The parameters are (1) product sourcing from multiple jurisdictions, (2) transshipping at sea and ports, (3) country-level traceability and certification requirements for seafood imports and exports, (4) enforcement in the exporting country, (5) size and profile of import companies, (6) import trend in 2011, (7) level of organization among producers or in the supply chain around fixing fishery-level problems, (8) biological impacts of illegal fishing in the export country, and (9) economic impacts of illegal fishing in the export country.  Detailed case studies were also prepared for the highest risk product/country combinations to understand the nuances and risk hotspots better.  Impacts were measured for the product/country combinations and their export supply chains only, and do not include spillover impacts for other markets, fishery jurisdictions, communities and ecosystems.

What does illegal fishing mean to the seafood business?

1. Pricing that is artificially low, temporarily.

2. Fish stocks are overfished or will become overfished.

3. Supply chains are leaky, because profit-taking is happening in the wrong spots.

4. Product origins are mixed; even ‘green’ supplies may be contaminated with illegal products during trans-shipping or consolidation of supplies at-sea.

5. Suppliers may not be accountable to the law, but importers and retailers may be liable to allegations of handling stolen goods.

6. Where there is illegal activity, there is illegal activity.  Other risks of theft can be attached to seafood products by the same brokers, for example trafficked labour.

7. Industry measures to reduce overfishing on fish stocks are less effective or ineffectual.

8. Important supplies run out faster.

In December 2010 the European Union illegalized the import of all seafood products fished illegally.  The United States has not done so yet.  European countries need the support of the seafood industry to make the no-illegal import law fail-safe.  North American countries need the support of the seafood industry to start checking into the provenance of imports for risk hotspots.  These can be handled with regulatory measures, or even faster with private sector measures.  McDonalds handled the issue very effectively with an intra-industry warranty a few years ago when illegal fishing was out of control on cod and haddock from the Barents Sea and Baltic Sea, supplies they relied on for an important product. European fisheries processors continue to host the warranty (AIPCE see http://www.nsrac.org/wp-content/uploads/2010/08/AIPCE_CEP_Principles_40482a.pdf).

Unfortunately, illegal fishing is rampant globally.  It’s a no brainer that illegal fishing is bad for business.  Solutions are remarkably simple.  Importers have all the influence they need to ask their exporters for proof that the products they are selling were fished legally.  Some paper trail is required, yes for now, but the information needed can readily be added to the coding in existing information systems for an integrated and automated solution.

Without a doubt this is the most certain way to manage supplies sustainably.  Action should be considered for supplies with risk scores over 20.

Cleaning up supply chains from products that were illegally fished is do-able.  Importers can take care of it inside the supply chains for sensitive products.  Just ask us how.

New kind artisanal

Writing that last blog wiped me out.   Returning my cup to the counter I admitted to the red bearded coffee guy that I was exhausted.  “From writing a blog?  You’re taking it too seriously.”  So I picked up my son and we went surfing.  He asked me in the car what a blog is.  He’s learning how to blog at school so the kids can share experiences with their aquaponics projects.  His question made me think.  “Do I even know?”

I’d like to communicate the dynamic wave-like energy I’m feeling over industry’s take-up of sustainability.  I predict sustainability work is just starting to get really interesting and will become ever more innovative in near days ahead.

A clear sign of the times happened in the Summer of 2008, when the people of the world changed from being more rural to being more urban.  Before that time, most people’s experience was country.  From here on, most people will experience density and city life.  I feel like that’s a pretty good analogy for how the seafood industry has changed over the question of sustainability in the same period.

In my case I started working on sustainability matters in the seafood industry in 1995, first in Tofino and Ucluelet then Prince Rupert in British Columbia, Canada.  At that time, resource battles played out locally, in rural settings among rural people, even if the instigators were thousands of miles away.  The epic Clayoquot Sound logging battle, which became the poster child for adverse impacts on a local environment from globalism, at the face of things was a deadlock between Greenpeace and international logging companies.  It arose from a local conflict that had pit local loggers on one side against shellfish growers, Aboriginal fishers and tourism operators.  Clearcuts on 40 degree slopes had silted out the foreshore, causing livelihood problems for other resource users.  Those people beat each other up, for over a decade.  Then slowly they got on with it, by figuring out some ways to improve the local economy.  Why, because each person involved made their livelihood from land or sea and needed to keep producing or move away.  They were rugged people and not the type to move on.  Today even Ucluelet the formerly hard core logging and fishing town has diversified to include tourism.  More shellfish growing and fish farming are happening in Tofino than before.  Instead for working for international loggging companies, the commercial logging operations in the area today are locally managed and native co-owned.

In Prince Rupert in the 1990s salmon fisheries were still managed as though there was the same amount of pie every year, reliably pitting gill-netters against trollers against purse seiners against First Nations over their due split each and every year.  But the annual returns of salmon to rivers were chaotic.  In short years everyone’s access shrunk, but the model made people compete for the same allocation as last year, turning resource users against one another.  In really bad years, Alaska salmon fishers were blamed for overfishing Canadian salmon.  The Alaska ferry terminal was blockaded.  Inside the harbour, people bombed each others boats.  Fred Hawkshaw’s smallish gill-net boat, the MV Tricia Lynn, was bombed and repeatedly sabotaged.  Fred, with his wife Linda and daughter Tricia, fished for sockeye with a tangle net.    They made short sets, only 15-20 minutes, and landed their fish alive.  They kept them alive onboard in a large oxygenated tank.  Net-mark free sockeye swam freely in the same part of the boat that others had a hold for dead fish.  The Hawkshaws were deft handling their fish and used such care the flesh never entered rigor.  This radically increased quality and prolonged freshness.  We measured and got up to 23 days commercial shelf life.  At that time most BC wild salmon was still caught derby style and handled roughly.   We had a sushi bar in Prince Rupert sited really close to where the fish are landed.  Nobody would sell to us directly from the boat, not because they didn’t want to but because they were afraid.  It was too sad, talking to fishermen who wanted to sell us their fish but couldn’t risk being caught ‘highgrading’ selling a few pieces of their filet-quality fish to a local buyer.  In-season the good stuff went straight into a truck waiting at the dock and immediately out of town.  No processing capacity in town.  Fishers who tried anything different couldn’t get ice or a place on the dock to land their fish.  One company, Lox Royale, operated by a Haida woman named Valerie had a great reputation with fishers in the late 1990s because she’d buy higher quality salmon offshore.  She wanted salmon that was handled more gently and she paid significantly more for it than the big company buyers.  As salmon returns got very chaotic one big company survived and developed a lot of fishing capacity in SE Alaska in order to produce enough salmon annually to run canneries.  Like clearcutting BC oldgrowth forests for pulp for toilet paper, most BC wild salmon is still purse-seined into $1 cans because the processing infrastructure is consolidated and looks like a funnel.  By stark contrast Valerie’s smoked salmon was a jewel – I bought a sockeye side every chance I could, about $35-50 wholesale.  That perfect side on a gold board was painstakingly cut into thin slices with a delicate paper between each slice.  (This memory makes me want some now!)  A spectacular product.  But even in bountiful years Valerie had difficulty getting enough fish.

We held a Quality Fishing Expo in 1998 in Prince Rupert to promote some new thinking about adding value locally to seafood products.  The night before several of the invited speakers, mostly business owners from the Pacific Northwest doing value-added processing or improving the efficiency of the fishing gear used on the Westcoast, received phone calls with ‘strong advice’ not to participate.  But they did show up the next day.  So did a couple of thousand local people.  They came down to the legion to meet fishermen and to sample sushi, smoked tako and salmon roe on crackers with cream cheese.  They came down to the dock in front of the legion and got their kids on fishing boats to see how the gear works.

Even big-time resource conflicts had a human face, then.  As hot as things got, people would see each other again, in the Chinese restaurant or late night at a bar, swimming at the lake in Summer, and definitely back on the dock at 5am.  We saw everybody at the sushi bar.

Today, things are a bit different.  About 80% of seafood products are imported and sourced from waters very far away.  The local and artisanal fisheries that not long ago were still important supplies for domestic markets have declined.  Lobster from Maine, crab from Chesapeake Bay, cod from Newfoundland and wild salmon from British Columbia are no longer available in quantities the seafood industry can rely upon year by year.  I feel for those fishers that weathered those conflicts, many no longer own boats, some still have debt.

I started feeling the change in 2004, upon starting a restaurant called Cafe New Orleans, on the waterfront in Gibsons, BC.  I did the chef hiring in New Orleans through a local newspaper ad.  It was amazing how many people applied, the economy still being rough.   What I enjoyed most was each chef’s ‘special offer’ to hook me up with their uncle’s (or brother’s or friend’s) supply of Louisiana crawfish. All but one, a fellow who came very highly recommended by Susan Spicer, a renowned  New Orleans chef.  Unlike the others, he made no effort in the interview to show off his local cred.  I asked him where we’d get crawfish in Canada.  “Same as we do here.” he said.  “I haven’t seen local crawfish in a New Orleans restaurant for a few years now. It’s all imported from Viet Nam”.

He got the job and we put on a really great restaurant.  Nobody else could cook up his halibut with ravigote sauce with comparable finesse, but oh man Chef Stephen’s food was good.  We still had a Japanese restaurant up the street and it was great eating everyday.  No I never got tired of eating fish.  Even having two large-ish restaurants, both sited on the waterfront steps above a harbour filled with fishing boats, we still had trouble sourcing local fish.  I bought from Albion, a BC company.  Chef Stephen wanted to buy from Sysco, because ordering once is easier than twice.  But opening the box you could smell the difference, Sysco fish was always 3-4 days older when it arrived.  No way.  We had to work a lot of things out.  We needed to fit a new restaurant into a small town while bringing in a new concept and a New Orleans chef and a lot of globally-sourced products.  People liked the atmosphere.  It was challenging and a lot of fun.  We cared a lot, and we crafted everything.  It was a new kind of artisanal business.

These days you can probably see someone in your own community trying to pull this off.  The red bearded coffee guy here at R/D in Honolulu can tell me a lot about each coffee on offer.  Many new businesses are consciously paying more attention to sourcing, like a restaurant here called Town that people just love.  They are asking their customers to pay more attention to sourcing and to value it too.

Yesterday I heard a great question yesterday, asking if there are differences between small scale artisanal and large industrial fisheries with the FIP process (FIP=fishery improvements project).  In another sign of the times I realized I don’t even think about fisheries that way anymore.  I asked some colleagues to weigh in on this question, for example Ernesto Godelman in Mar del Plata, Argentina, who supports many fishery improvement projects in Latin America for small-scale artisanal and large-scale industrial fisheries through his organization CeDePesca.  He said “Actually, I don´t see essential differences, except maybe the local ability to fund the improvement work.”

Ernesto also said “Although in the developing world, you will have to deploy a battery of always changing strategies to approach the goal.”  Getting too aggressively local isn’t always the most effective strategy anymore, at least not for businesses trying to grow and flourish from the inside of a commodity industry.   It can come off as too defensive, and besides most products are made from supplies coming from mixed sources these days, even in a little sushi bar situated steps from a dock.  In the same vein getting too large-scale and industrial and top down doesn’t work so well anymore either.  It can come off as too offensive.

Relationships inside supply chains matter to sustainability, a lot, and this is where the Sustainability Incubator is likely to do the most work.  I think the major differences in the FIP process for different parties are inside the supply chain.  Producers big or small will engage in a FIP if their buyer needs it, much like Marine Stewardship Council certifications happens where it’s a good investment for major buyers.  So FIPs are more likely to happen where there is more leverage from a major buyer over suppliers and less likely where the leverage is weak.  But I want to help launch FIPs that produce value not only for major buyers but for middle rung suppliers, importers and exporters too.   Not only because their buyers demand it, but to add investment security to their own product lines.  Operating a FIP means talking to producers and fishery regulators and scientists on a regular basis, it means engaging with the source fishery (or fish farm) to steadily improve how resources are managed over time.  That’s a pretty direct way to manage supplies.

Some people still think that sustainability will only happen through direct pressure on a company to comply with a buyer demand.  I disagree.  A new kind of seafood business is starting to emerge in towns and cities and the middles of supply chains that feels more plugged in, and kind of artisanal.  You know it when you walk into this business, or talk to one of their people on the phone.  They sound knowledgeable about their product. When they say something about sustainability and FIPs they talk about product security, about making their business more stable.  It sounds like they want to build a relationship with you, and like they’re playing for keeps.

Maybe that’s 8 blogs in one, or 9.  This time I’m not exhausted, maybe because I’m writing about what I have experienced first-hand …rather than what I’d like to see which is less concrete.

One season I bought out Fred’s boat.  It was still early 2000s and I paid $3.50/lb for live-caught sockeye, FOB Prince Rupert.  We could use quite a bit for our restaurants, but needed to blast freeze and glaze it, so all of it had to go to Vancouver (18 hours by truck).  The running costs were crazy.   We re-sold a lot fresh that Summer in Vancouver, to Karen at the Fish House in Stanley Park, to Tojo, and John Bishop’s chef.  They appreciated it, and we had a lot of fun.  I still miss running around a city with a giant tote in the back of my little gold Dodge Ram 50.  Not to say it wasn’t ridiculously challenging.  Even with in-house demand I’m not sure the economics were super sound.

Back then, the artisan route was treacherous with risk.  Not so today.  After so many years of struggle over uncertain product supplies, seafood businesses deserve some business growth and pride from their investments in sustainability.

Much Aloha and blessings to your seafood business.

Katrina

New ways to solve sustainability problems, with innovative thinking

I’ve been thinking a lot about the ways that sustainability problems take form and start to bother people to the point of motivating some action.  Seems it happens when the problem becomes personal, from a perception of losing access to resources.  If things reach a livelihood threat people will look up from what they are doing to find out what is going on. What’s causing the threat, who is to blame?

Not surprisingly solutions to sustainability problems tend to follow this line of inquiry and become very process-driven.  Things don’t often advance to solutions where hard commitments are made, pairing resource access to firm responsibilities.  This is a mistake.  Livelihood threats arise as natural resources decline.  Given the state of the world, ongoing access to natural resources is a privileged investment.  It must carry with it some mandatory stewardship obligations with measurable outcomes.  Industry itself knows this, and is becoming one of the most radical agents of change in the sustainability landscape.

We know that industry measures for sustainable procurement of natural resources generate positive outcomes and impacts.  At least, I know it because recently I completed a PhD thesis where this was researched very carefully for the 2008-2013 period in the seafood industry.  I identified many real world outcomes and impacts for oceans, fish and people.  To be honest I was very surprised by the evidence and extent of positive, game-changing impact.

I also observed that industry measures for sustainable procurement may be performing better and faster than technical people are ready to keep up with.  Innovative thinking is needed now.  In many instances industry has already engaged in sticky prickly sustainability problems and could move forward quickly to enact solutions.

A note to my peers – not much point us getting industry into a problem if we aren’t ready with a different level of thinking available to solve it.

I’m a sustainability practitioner and I think it’s time that as peers we up our game.  Sustainability problems in the natural resources sector are at a new stage due to companies’ investments in sustainable procurement for supply management.  Companies are adapting; practitioners too must adapt.  Many companies have already internalized sustainability in their buying decisions, but need to optimize things to add value to their business.

I’ve been lucky to work with companies whose sustainability targets include higher profits, more investment security, solid reputation in a sector, and increasing access to supplies; in exchange for firm responsibilities to steward natural resources with measurable outcomes.  Like my clients I want sustainability to add real value to products, and people, wherever supplies are traded and money changes hands.

Tweaking the deal upward requires new and innovative thinking.  I’ve been thinking about my role in sustainability incubating and how I can create new value to make deals better.  Just like every other businesses in this space, as owner of the Sustainability Incubator I’ve got to start adding new value to our deals too.

The Sustainability Incubator is a Hawaii-based company registered with the IRS in January 2013.  I thought it was going to be a consultancy, but I was wrong.  We will create business value from sustainability work, but that won’t happen efficiently through the action-reaction sequence of consulting.  To operate progressively we will need to build a network of contributors who are committed to creating value.

As a first step I’d like to announce that the Sustainability Incubator offers a peer-to-peer platform for solving sustainability challenges.  We engage sustainability practitioners with complementary skill sets in projects for industry users.  For costs lower than typical consulting fees we offer a project model that matches industry interests to existing expertise for creating positive environmental and social impacts, like fisheries improvements for sustainable seafood.

Our team is serious about creating a new peer-to-peer approach to support innovative thinking about sustainability solutions.  We invite your participation and welcome submissions for guest blogs.  We would like to publish links on our Resources page to project results from any sector where positive social and environmental impacts have been achieved or important lessons learned.

The Sustainability Incubator will also host industry working groups to oversee the development of new industry measures for sustainable procurement, for example our auditing protocol to clean up seafood supply chains from risks for labour trafficking.  The ultimate users of our tools are often industry executives, commodity buyers or suppliers whose roles must be included in solutions design.

Sustainability work is personal to me, on many levels, and from the inside definitely not from the perspective of an outsider looking in.  I see that it is time to build new network capabilities to support industry measures in the natural resource sector for sustainable procurement.  For us that will mean enriching the relationships among suppliers around product distribution and across supply chains.

I’d like to hear about your work too, and where things complement.  I hope you’ll join us to step things up.

Seven steps to start a fishery improvement project

Increasingly seafood suppliers are required to prove their products are sourced from fisheries and fish farms with sustainability certifications or credible improvement projects.  Some suppliers are choosing to launch their own fishery improvement projects for important seafood products.

Operating a fishery improvement project (FIP) is straightforward.  Start-up requirements can be summed up in seven steps:

Step One

Get agreement from local suppliers to participate in the project (Supplier’s task).

Step Two

Complete a sustainability evaluation, like a pre-assessment to the Marine Stewardship Council standard.  This needs to be done independently for credibility (Sustainability Incubator or other consultants can complete this task).  The results will show the gaps to sustainability in the fishery and provide a basis for fishery improvements recommendations to close gaps.

Step Three

Launch a website to make project details and progress available in the public domain.  For best impact, the content on the website should fulfill Walmart and Sam’s Club requirements and the criteria for a credible fishery improvement project published by the Conservation Alliance for Seafood Solutions (see http://www.solutionsforseafood.org).  The Sustainability Incubator can help you to complete this step.  The website should also be linked to the Supplier’s website so project details are easy to find.

Step Four

Share results from the pre-assessment with project participants, who will discuss the fishery’s deficiencies against the MSC standard and decide on some actions they are willing to take to support the fishery to improve (Supplier’s task).

Step Five

Write up the actions in a work plan that meets the Walmart and Sam’s Club requirements.  The Sustainability Incubator can provide the technical assistance needed for this step.

Once the project has a credible identity in the public domain, ongoing work is required to keep the project in good standing …and to actually improve the fishery!

Step Six

Project participants take specific actions to improve the fishery (Supplier to lead).

Step Seven

The seventh step is staff training to lead and operate the project.

The Sustainability Incubator can provide technical assistance to help your staff learn-by-doing to: (a) take actions to improve the fishery as spelled out in the detailed workplan and to meet deadlines, (b) sustain a dialogue with fishery managers and scientists and keep producers and suppliers active and involved, (c) report on the project’s progress on the website, and let buyers know about the project, (d) engage buyers or environmental advocates when leverage is needed to support a critical fishery improvement, and (e) celebrate achievements when they happen and turn that success into more momentum for fishery improvements.

Initially the Sustainability Incubator can provide technical assistance to participants to take actions that are simple and achievable.  This support is available as needed until the Supplier is ready to operate the project independently.

Skin in the Game

If a product line is important to business, it probably has vulnerabilities.  Some vulnerabilities can be reduced steadily over time, and those efforts can be good investments.

Those investments can become the core of a seafood company’s sustainability strategy.

Supply management is often the #1 sustainability goal for seafood, because insecure supplies are typical.  Reputation vulnerabilities may also be a priority, particularly for major suppliers and retailers.  Today’s seafood industry is to a large degree an import business, with lots of factors in production that are unseen but carry heavy risks.  Over-harvesting, illegal-harvesting and labour abuses are pretty typical in export countries where supplies aren’t yet well regulated, or managed at all.

Unexpectedly, this is where investing in sustainability comes in.  Today it is possible for seafood importers to improve how fish is fished.  Major seafood retailers have been on this track for five years.  It’s not new, but until recently only retailers had access to the technical services needed to turn product sustainability targets into a business investment.  Today standard and logical approaches are available that anyone can use, in much the same way that food safety concerns are prevented in supply chains by paying attention to hazard control points with HACCP.

Industry-led projects can bring seafood stakeholders together to solve problems like over-fishing, illegal fishing and labour abuses.  Importers may not know who to call to help verify their supplies are coming from a legitimate source.  But they can ask suppliers to provide simple information about where and how the fish are fished or farmed.  They can let the supplier know they are looking to invest in a good supply for the long-term and want to support fishery improvements.

This is a good investment strategy because it’s a straightforward way to reduce product vulnerabilities over time.  It’s direct not passive, and shows skin in the game on sustainability.  Fishery- and farm-level information is available for the asking.  Improvement results are easy to track.  It is currency that adds value to seafood products, particularly for sales to major suppliers and retailers who have sustainability policies to fulfill.