Wednesday, September 24, 2014

Oregon's Crabbers Riding Market Value Wave

Quality good, landings down slightly, ex-vessel value at record high

By Terry Dillman

As the mid-August end of the 2014 Dungeness crab season loomed on the horizon, Oregon crabbers reflected on what many of them considered comparatively “dingy” dungy landings that still netted record to-the-boat value thanks to a record-setting opening price that soared early, then settled in at a level that maintained the fishery’s sterling value as the state’s top single species commercial fishery.

Hugh Link, executive director of the Oregon Dungeness Crab Commission (ODCC), said landings reached 14.4 million pounds, with most of the state’s signature crustaceans hauled in, as usual, during the first eight weeks of another delayed season that began in mid-December. Those landings were almost 4 million pounds below the 2013 haul and nearly 6 million less than the 10-year average of 20.2 million pounds.

“That said, our value to the crabbers was the highest on record at $49.7 million,” Link noted. It translates into at least a $100 million boost to Oregon’s economy and coastal communities, factoring in the processing plants, trucking companies, marine stores and other support industries involved.
As always, whether or not the season was a success depends on who’s talking.

Oregon crabbers from Astoria to Coos Bay said quality was excellent, but hauls were meager for some, fair-to-middling for some, and excellent for others.

Link said quality everywhere was “as good as we ever see,” but numbers as usual fluctuated, depending on location. Crabbers are well aware of the cyclical nature of the Dungeness crab population, and they expect drop-offs in landings after booms, and pragmatically ride the ups-and-downs of the crab population. They are individual business owners all chasing after the same highly valuable but limited resource, Link noted, yet they also work together to promote the fishery and keep it viable.

ODCC represents 423 limited entry crab permit holders, who fish primarily within 10 miles of Oregon’s coast. Not all are active, but anywhere from 330 to 400 of them ply the waters each season in search of prized Dungeness crabs. Link said some also have permits to fish for “dungies” in either Washington or California waters, or both.

Those natural boom-and-bust cycles, crabbers note, put them at the mercy of the marketplace, and fishery leaders say that successive high yield years can flood the market, pinching prices and leading to holdover inventories.

So they have turned their attention to diversifying marketing efforts to help offset those drawbacks.
Crabs – live, frozen, or processed in various forms - are shipped around the world, but the United States remains the main market, although Link and others say that is slowly changing. Analysts say strong marketing and promotion efforts have heightened the image of Dungeness crab, creating demand that is transforming it from primarily a regional favorite to a more nationwide appeal in restaurants and other seafood outlets, including supermarket chains. An industry marketing partnership that includes ODCC and the Oregon Department of Agriculture (ODA) focuses on promoting Dungeness crab in as many key markets as possible, including internationally. ODA officials, ODCC, fishermen and processors have collaborated to successfully introduce dungies to many markets, including Japan, Korea and China.

ODA officials also play a pivotal role by supervising negotiations for the season-opening crab price, which is vital to the crabbers’ livelihoods.

Even with a set opening price, crabbers remain at the mercy of the markets, and the flow of crabs from pots to boats to docks to markets still hinges on bringing in most of the annual catch during the first two months, providing a surge that benefits processors, who depend on volume to meet holiday market demand.

Fishery managers say Oregon has consistently led the way in Dungeness crab production since it began along the Pacific coast in 1848, and boasts a 12 million pound average catch per season during the past 25 years.

Since 1995, the fishery has operated under a limited entry permit system that capped the number of vessels allowed to ply the coastal waters for dungies. Crab pot limits were introduced in 2006, with a three-tier system of 200, 300 and 500 pots based on historical catch records. Fishery managers say the management strategies have helped scale back overcapitalization and prevent overfishing. Other non-regulatory limits are adversely affecting the lucrative industry, most notably the rising cost of putting a boat and crew on the water.

Yet they persevere. Why? It’s a way of life, say the crabbers, and many make a pretty good living. This year’s bottom line tells the tale.

The season began with the highest-ever negotiated opening price of $2.65 per pound. “That didn’t last long,” said Link.

In fact, the opening price didn’t hold long enough for fishermen to bring the first haul back into port. By then, the price had already reached $2.75 per pound and climbing. “Then it went to $3, then to $3.50,” Link noted. “At one point, some of the bigger companies were paying up to $4 a pound.”
Price negotiations between fishermen and processors generally involve representatives from port crab marketing associations, seafood processing companies and ODA. The opening price is set for the first 24 hours. Market conditions then dictate how much the stellar crustacean is worth.

Analysts say landings in central California play a key role in determining prices along the entire coast.

“The San Francisco Bay area used to be considered a boutique fishery, and weren’t a huge player in the market,” Link explained. “Now California has taken the reins, and it impacts the market.”

The 2011 haul in central California was 19 million pounds, and the state’s overall landings reached 27 million pounds. In 2012, central California landed 16 million pounds, and the overall state haul reached 31 million pounds. Usually, Newport, Astoria and Charleston dominate the landings in Oregon. But recently Brookings in southern Oregon led the way, which coincided with the boost in California landings, prompting Link to quip about the Dungeness crabs “heading south for the winter.” This year was seemingly business-as-usual, as Newport landings topped all other Oregon ports, with 5.1 million pounds worth $18 million to the crabbers.

Landings in California ebbed somewhat this year. Combined with high demand from China’s live crab market, it buoyed prices across the board, and continued a price trend that began in 2012.

Despite predictions of a possible “bust” in a twice-delayed season, Oregon’s crabbers landed 18.1 million pounds in 2013, exceeding the 2012 haul of 14.2 million pounds, well above the average annual harvest of about 12 million pounds during the past three decades, and not far behind the 20.2 million pound annual average hauled in during the past decade.

But the big story in 2012, 2013 and again this year is market price. Prices in 2012 and 2013 rose rather quickly from a record opener of $2.30 per pound, going as high as $4 or more in some markets before settling in to a weighted average around $3 per pound. Average price for 2014 ended up at $3.46 per pound. Fishery managers and crabbers said demand remained high, which boded well for the bottom line, despite lower than desired landings. Analysts said high demand and good market prices translated into excellent years for to-the-boat value.

A quick comparison of past seasons illustrates the difference: 33.7 million pounds harvested in 2004-05 with an average weighted price of $1.57 per pound, followed by 27.5 million pounds at $1.57 in 2005-06; 15.1 million pounds at $2.18 in 2006-07; 12.3 million pounds at $2.39 in 2007-08; 12.9 million pounds at $2 in 2008-09; 23.2 million pounds at $1.93 in 2009-10; 21.3 million pounds at $2 in 2010-11; 14.2 million pounds at $2.95 for 2011-12.

“I don’t have a crystal ball to help predict the future,” said Link.

What he does have is trends, charts, and records of a fishery that is, despite its ups and downs, thriving. For now, it’s the most valuable single species fishery in Oregon, and based on those trends, charts and records, it’s likely to remain so in the near future.

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