Duties could aid isles
Proposed shrimp tariffs
could drive up prices but
aid Hawaii's industry
U.S. duties on shrimp imports from China and Vietnam might benefit Hawaii's aquaculture industry, despite some fears of higher prices, according to the Hawaii-based director of the U.S. Marine Shrimp Farming Program.
The Commerce Department's preliminary decision last week places tariffs of as much as 113 percent on imported shrimp from China and up to 93 percent on those from Vietnam.
The decision was prompted by a complaint from U.S. harvesters and processors that alleged "dumping" of foreign shrimp at below-market prices. It is the second of four decisions that the U.S. industry must win to get final duties imposed on the more than $1 billion in imports of shrimp, America's most popular seafood.
The largest exporters from China face duties of 49 percent, and the largest Vietnamese exporters will pay average duties of 16 percent, the Commerce Department said. Those companies represent more than three-quarters of U.S. shrimp imports from each of those nations. Prices could jump 44 percent, according to a study published last month by shrimp importers.
But Anthony Ostrowski, director of the U.S. Marine Shrimp Farming Program, said implementation of the tariffs would make locally produced shrimp more price-competitive because "it's already superior in quality."
"If the tariffs did increase the prices of shrimp, then it would be positive for the shrimp farming industry in Hawaii because it's much more expensive to produce shrimp in Hawaii, and it would make our products more competitive.
"Then, people would taste the quality of the U.S.-grown product and probably prefer that in the future. People want to buy the cheapest, but it's not always the best. I think the freshness and the quality of the locally grown product is the best."
Ostrowski said there are a couple of strategies to continue the flow of shrimp into the United States. One, he said, is to increase imports from other countries, such as Indonesia, that are not listed in the anti-dumping suit.
Another strategy, he said, is that some of the affected countries could shift their operations to another country not hit by the duties.
The United States produces 13 million pounds of shrimp a year with Americans consuming 1.1 billion pounds annually. Hawaii contributes about 1 million pounds to the U.S. production, and Hawaii imports about a million pounds of shrimp from Indonesia and Thailand.
There are 13 to 15 companies in the state engaged in shrimp aquaculture, according to Ostrowski. About half of those produce the broodstock -- the parents -- and the seedlings -- the offspring -- that are sold to shrimp farms that use ponds to raise the shrimp for food.
"The shrimp are bred for certain characteristics, like disease resistance and fast growth," Ostrowski said.
He said the United States has among the strictest environmental and health regulations for shrimp anywhere.
"What we need is a way to differentiate ourselves from commodity imports," he said. "You can't get any fresher shrimp than you can get locally, and the way they're produced is the most environmentally sound and sustainable way there is."
The tariffs are expected to increase costs for companies such as Darden Restaurants Inc., which operates Red Lobster; and Sysco Corp., North America's largest food-service distributor.
"This is going to be paid for by the American consumer," said Wally Stevens, president of the American Seafood Distributors Association in Virginia. "There will be a price increase quite soon, and it will be passed on to the consumer."
U.S. producers say wholesale shrimp prices have fallen more than 26 percent since 2000, and as a result the U.S. seafood industry had been able to generate wide profit margins. Companies selling shrimp say lower prices increased shrimp's popularity.
The Oceanic Institute in Makapuu administers the U.S. Marine Shrimp Farming Program and is a research partner in a seven-member consortium that includes research institutions in six other states. The program is dedicated to resolving the constraints to expansion of marine shrimp farming in the United States and to make U.S. marine shrimp competitive in the global marketplace.
Bloomberg News contributed to this report.
U.S. Marine Shrimp Farming Program
www.usmsfp.org
U.S. Commerce Department
www.doc.gov
Oceanic Institute
www.oceanicinstitute.org