At one time the U.S. catfish industry was a fairly predictable, and more importantly, profitable industry. Like all livestock industries, catfish producers were vulnerable to price swings, but overall the good years offset the bad years.
All of that changed about a decade ago. Imports from overseas began bringing prices down and after 9/11 many people stopped eating out. As a result, the catfish industry is now contracting. At the moment, hopes of a recovery seem dim as commodity prices continue to rise and feed alternatives – and feed producers – are few. If ever there was a time for a solid catfish feed alternative, it is now.
In addition to tracking the acres devoted to catfish ponds and the amount of fish processed, the U.S. Department of Agriculture also tracks monthly catfish feed deliveries. Total catfish feed delivered in the U.S. during August 2012 was 73,483 tons, down 27 percent from August 2011.
But that’s also 38 percent lower than August 2008, the last time feed prices made a similar price jump. According to the USDA, total catfish feed delivered in August 2008 was 117,723 tons, which was down 19 percent from 2007.
Carole Engle, director of the Aquaculture/Fisheries Center of Excellence at the University of Arkansas at Pine Bluff, Ark., often runs farm budgets for catfish farms. She used to use $225 per ton as the long-term average for feed costs. Once in a while she would run a budget with feed costs as high as $350 per ton, a figure she considered to be the highest feed would ever go.
The “we’ll-never-see-prices-that-high-in-our-lifetime” scenario was topped in 2008 when catfish feed pushed $400 per ton. Prices had already topped $500 per ton by October 2012. “We have never seen prices at this level before,” Engle said. High feed prices combined with sluggish sales are driving the nail in the industry’s coffin, she added.
Feed mill difficulties
Feed mills have tried to work with their catfish customers to find alternate ingredients to keep diets as low-cost as possible, but it has been difficult. And catfish don’t always perform as well on the substitutes.
David Brock, a nutritionist with Rangen Feeds in Buhl, Idaho, remembers a time when the industry thought corn gluten would be the answer to lowering feed costs. Unfortunately, it quickly became apparent that although catfish would readily eat diets formulated with corn gluten, the fish didn’t gain weight on those diets. Furthermore, any advantage gained by the lower ingredient cost was offset by the longer feeding time.
Those kinds of experiences have left both catfish producers and feed mills more cautious. But Engle says the price environment that agricultural commodities are in right now makes finding cheaper alternatives even more difficult than when feed prices have spiked in the past.
Recently Engle was involved in a study looking at a solvent-extracted distillers grains product that showed promise both in terms of fish performance and slightly lower feed costs. “Maybe twenty dollars a ton,” she said, “but anything is helpful now.”
By the time the study was completed, the ingredient price had increased to the point there was no longer any economic benefit to including it in a diet. “We did an entire study on an ingredient we thought would help and by the time we were done, the price had gone up so much it couldn’t help,” she said.
Sluggish demand for catfish
Compounding the problems caused by high feed costs is a decade of sluggish consumer demand. Just as the industry was hitting the bottom of a normal price cycle in 2001-02, the U.S. was flooded with cheap imports of catfish substitutes from Southeast Asia. And then 9/11 occurred and consumers stopped eating out.
Debt mounted on many catfish farms as producers struggled to compete with both the volume of cheap imports and safety concerns many consumers had regarding those imports. The industry was finally starting to inch back toward profitability in 2006 and 2007 as prices improved, but then feed prices skyrocketed in 2008 and the U.S. economy faltered.
At that point, producers couldn’t pass high feed costs through to consumers in the form of higher product prices because consumers weren’t spending money. Engle said many catfish producers, even those with good balance sheets, couldn’t get credit as banks tightened lending standards following the credit crisis. As a result, many were forced to dry ponds.
U.S. production levels
According to the USDA, the total number of catfish operations in the three major producing states on July 1, 2012, was 348, down 62 percent from the 908 operations in July 2001. Water surface used for catfish production totaled 78,300 acres in July 2012 compared to 185,700 acres in 2001.
At the same time, imports for consumption of Ictalurus spp., Pangasius spp., and other catfish of the order Siluriformes for July 2012 totaled 22.6 million pounds, up 25 percent from the amount imported in July 2011.
Although the outlook seems grim, Engle remains confident that U.S. catfish producers can compete with their Asian counterparts on price if Asian farmers are held to the same production standards. That means not adulterating product or using banned substances. And she is hopeful that a proposal to shift inspection of seafood imports to the federal Food and Drug Administration will be enacted and consumer confidence can be regained.
In the meantime, the infrastructure that supports the U.S. catfish industry is undergoing its own contraction. The only feed mill in Arkansas that was making catfish diets has converted to manufacturing pet food, forcing catfish producers in Arkansas to buy feed from mills in Mississippi, which increases transportation costs. One catfish processor in Isola, Miss., has reduced its workforce from 1,200 employees to about 400.
“That’s the big concern,” Engle said. “If we lose too much of the infrastructure, can the industry go on? I don’t know what the answers are or where they are, but the playing field is not level with regards to imported product.”
However, at this point one thing seems clear; unless there is a dramatic turnaround, the catfish industry will be smaller going forward than it was in its heyday when it boasted annual sales of 660 million pounds.