Research Clears Path From
Northeast to World's
Biggest Seafood Marketby Judith Hogan
New York Sea Grant
Fernando Goyeneche wants to expand his company's horizons by selling seafood products to Japan. But accessing the marketplace and determining what products are in demand is not simple, even though Goyeneche is no stranger to the ins and outs of seafood exporting. The 33-year-old New Yorker has brokered seafood imports from South America, and currently works for an exporter of textile goods and industrial parts to South American countries. But he's a bit stumped about how to get started in the Japanese seafood market.
His inquiries have led him to the U.S. Department of Commerce, where he's found information on how Japan's seafood auction houses set commission prices. Yet he's discovered little about "hooking up" with contacts, or which northern Atlantic seafood products might best lead to future success. "What I'm looking for is specific information on how to get started in this industry, information on the marketplace, what the Japanese consumer wants," said Goyeneche.
It wasn't until he read a magazine article that he learned of New York Sea Grant research involving both the Japanese seafood market and the American fishing industry, and began finding answers to his questions.
The article, published in American Seafood Institute REPORT, was written by Theodore C. Bestor, associate professor of anthropology at Cornell University, who has been studying Japanese culture since the 1960s. For the past decade, Bestor has focused specifically on wholesale trade networks and buying patterns. The article describes the workings of Japan's Tokyo Central Wholesale Seafood Market, Tsukiji, and details the seafood qualities Japanese consumers want, offering an outline of what it takes to sell to Japan, the biggest seafood importer in the world, and Tsukiji, the largest seafood market in the world. Tsukiji handles 5 million pounds of seafood every day - 11 times the volume of New York City's Fulton Fish Market, which is the largest seafood market in North America.
Bestor's current research effort, a two-year project begun in 1994 with funding from New York Sea Grant, is three-dimensional: He's analyzing how American fishing communities are linked to Japanese market systems; investigating ways American producers establish links with the Japanese market; and examining how demand for imported seafood is structured by cultural - and historical - driven food needs. It is exactly what Goyeneche, and others new to the marketplace, need to get started.
Bestor is interviewing potential trade partners in the United States and Japan. In 1995, he was asked to participate in a U.S. trade mission to the Tokyo International Seafood Show, where he interacted with 12 seafood producers from the Northeast, most of whom had no experience exporting to Asian markets. It was an opportunity to be "on the spot" as American seafood producers and exporters sized up a new market, sought out information, and tried to develop links to potential trade partners. The mission was one of several trips Bestor has made to Japan to gather information from auction houses and Japanese buyers. Following the trade mission, he's kept in touch with the American exporters to understand how particular trade patterns are established.
Due to the advent of air freight and advanced refrigeration technology, Japanese imports of fresh seafood from the Mid-Atlantic and Northeast regions has grown explosively in the past decade. At the Tsukiji market, over $7.8 billion worth of fish was sold in 1994, with nearly 2,000 varieties of seafood auctioned in the course of a year, according to Bestor.
Although the United States is the world leader when it comes to importing of frozen and prepared tuna, it exports virtually all landings of large Atlantic bluefin tuna - the world's leading tuna import - to Japan. Since 1987, the United States has supplied approximately 30 percent of the fresh tuna entering the Japanese market. Roughly 954 metric tons (2.1 million pounds) of Atlantic fresh bluefin tuna, valued at $22 million, was exported in 1992 (during the period of January to November, according to the Japan Marine Products Importer's Association). In 1991 to 1992, the average price of bluefin tuna from the United States was $14 per pound and jumped to $16 per pound in 1993, according to National Marine Fisheries Service (NMFS) data. A large share of this increase can be attributed to the increase in the exchange value of the dollar compared to the Japanese yen.
The magnitude of this market, and the Japanese consumer's demand for bluefin tuna, prompted Bestor to target seafood exporting in the Sea Grant-funded project. Northern bluefin tuna (Thunnus thynnus) is a highly migratory large oceanic pelagic species found all over the world, from Newfoundland to the Caribbean, and as far south as Venezuela and Brazil. In the United States, it's caught in the Atlantic and Pacific oceans, with fishermen primarily focusing their effort on Atlantic bluefin, yellow fin, and bigeye tunas. The largest landings in New England waters occur between July and September - the same time period that the tuna is hitting its top weight and fat content. High fat content is directly related to its value as an export.
"Bluefin tuna is a flagship item in Japanese seafood cuisine, like sirloin steak or prime rib is for the American consumer. Bluefin from the Northeast is especially in demand due to its peak fat content. Since tuna arrive in late summer and fall at their fullest possible weight, they are very nicely marbled and haven't begun to migrate south and eat up what they've stored," explained Bestor.
Economically, the commercial and recreational fisheries for Atlantic bluefin tuna are of importance, according to NMFS. In the Northeast, the fishery provides over 1,200 full-time jobs. Total commercial landings in 1994 were estimated to be at an ex-vessel value of nearly $21 million. Recreational expenditures were estimated at $3.19 million in the charterboat industry, and over $3.3 million in the private vessel recreational fishery. The Atlantic bluefin tuna fishery is characterized by a wide variety of user groups, each with varying motives, gear types, seasons, and areas fished.
In the eastern Atlantic Ocean and Mediterranean Sea, bluefin have been fished for thousands of years. Before the 20th century, little directed effort existed in the fishery simply because there was no market, and giant bluefin (over 310 pounds) were regarded as a nuisance because of the damage they caused to fishing gear. In the early 1900s, a sport fishery developed for small (up to 135 pounds) and medium (135 to 310 pounds) bluefin off New York and New Jersey. This rod and reel fishery expanded rapidly following World War II and continues today from Cape Hatteras to the Canadian border.
In the late 1950s and early 1960s, the fishery was directed at small and medium bluefin primarily for the canning industry. During the 1970s, a new market developed for giant bluefin when air freight technology made it possible for bluefin to be flown directly to Japan for processing into sushi or sashimi, the raw tuna market. The fast trip to market is essential since the Japanese consumer eats the tuna uncooked.
As the new Japanese marketplace became available, there was a sharp increase in ex-vessel prices from 20 cents per pound to today's average of $10 to $15 per pound, providing incentive for the fishing effort. Concerns about the decrease in the abundance of bluefin tuna in the North Atlantic mounted as the fishing effort increased. Minimum size limits were set in the 1970s - the start of over 20 years of regulatory action for maintaining the fishery.
The actual price per pound for an Atlantic bluefin tuna at any given time depends on a long list of variables: the purchasing power and preferences of Japanese consumers, supplies of competitive product in Japan, packing and transportation costs, and the exchange rate of the dollar and yen to name just a few. Quality characteristics of the bluefin tuna also significantly impact the selling price.
For one Long Island seafood wholesaler, the intricacies of selling bluefin and other tunas to Japanese auction houses is old news. Great Circle Fisheries, which operates in Montauk, N.Y., was one of the first Northeast wholesalers to reach the Japanese market when they began exporting in 1982. Back then, it was a situation of "learn as you go," since there was little formal information about the marketplace and the exporting variables, recalled Ralph Owen, one of Great Circle's six current owners.
"We started when the fresh tuna fishery was relatively young. Exporting tuna to Japan has steadily represented 30 percent of our business. We use major auction houses in nine Japanese cities, and in addition to blue-fin, we export bigeye tuna and yellowfin tuna, which are the majority of the catch we see on our dock," said Owen. Owen said the Sea Grant research project will prove useful to both new and longtime exporters since so many factors affect the Japanese market. Fishermen need to stay informed on every aspect of the marketplace - from current economic trends to cultural traditions practiced by the Japanese consumer.
That information can range from knowing which seafood product is wanted by Japanese consumers in the summertime and which are bought in wintertime, to the fact that lobster claws are not wanted at weddings since they resemble scissors and it is bad form to mention anything that can cut during the festivities. Presentation also plays an important role, said Bestor. "The Japanese use the word 'kata' for ideal shape or form and ideal shape is a fundamental element in Japanese food culture and notions of quality." For example, Japanese banquet halls will only serve lobster tails which are identical in size and color because everyone's plate has to look exactly like the one next to it so as not to offend any of the guests.
"The more the Northeast seafood market knows about the Japanese market and the needs of the Japanese consumer, the better prepared it will be to compete in a very competitive market," said New York Sea Grant Extension specialist Ken Gall. Gall's outreach efforts involve a myriad of seafood-related issues, including technology, retailing, and processing. Bestor's research results will also prove useful to trade organizations, such as the New York Seafood Council, an industry organization. New York Sea Grant and the council have worked together to develop programs for the consumer, the seafood industry, and government decision-makers to help them understand the state's industry and the products it produces.
When it comes to exporting to Japan, North Atlantic fishermen can go two routes to market: they can sell their catch to a federally licensed wholesaler right on the dock, or hire a dealer in Japan to sell the fish on consignment at the auction house. In the first scenario, the wholesaler determines whether or not each fish is export quality, and pays the costs of shipping it to market. In the second scenario, the fisherman makes the decision, pays expenses for shipping, handling, and tariffs, and an agent in Japan handles the sale at auction, taking a commission from the sale price.
For the bluefin tuna, the trip to market is fast and furious. Since freshness is of utmost importance to the buying consumer, and to the exporter in terms of market price, a high-quality fish can find itself traveling to Japan within hours of landing on the dock. At Great Circle Fisheries, boat captains radio ahead to let the wholesaler know what to expect in terms of numbers of fish and their quality. Much of the preparation work takes place while the fish are still on board. The fish are gutted and bled, covered in rice paper, and immersed in ice as they are landed. Upon arrival at the dock, the wholesaler weighs and grades the fish to determine sale destination. The catch is then refrigerated and covered in ice. Fish selected for export are packed in large boxes and are soon trucked to the airport for the 14-hour flight to a Japanese auction. With fresh product, time is everything, said Owen.
The grading process, which seems quick and easy to the uneducated eye, is a determining factor for all the players in the trade network. By taking a thin core of flesh from the fish, the fisherman or wholesaler ascertains the fat and oil content, appraises the coloring and outside appearance, and takes current market information into consideration. In less than a minute, the fish is tagged with a small slip of paper indicating its quality and destination.
The seller then informs the Japanese partner what's headed his way, in terms of species, quantity, and quality. On a given day, Great Circle Fisheries may ship anywhere from 8,000 to 10,000 pounds of different types of tuna to Japanese markets. Success, said Owen, depends on the numerous variables involved. Everything - from how the fish was handled by the fisherman, to the ever-changing regulations of the fishery and the climate of the marketplace in Japan - plays a part. "We try to get as much market intelligence as we can. But every year is a different cycle in terms of the different fisheries, and you have to take everything into account. Prices for bluefin tuna can go anywhere from $0 to $80 a pound during the season," said Owen.
Variability in supply and prices demonstrates the volatility of the Japanese market and the difficulty in predicting even general price trends on a monthly basis, according to Bestor. Although a fat bluefin may fetch a high price during a particular season, prices for lower quality bluefin in another month may be higher if Japanese market supplies are relatively low.
The Japanese market demand for fresh tuna has had an enormous two-fold impact on the Northeast and Mid-Atlantic fisheries. While it is has pumped millions into local fishing communities, it has also threatened some stocks, leading to national and international efforts to regulate tuna harvests.
When the bluefin market exploded in the 1970s, it ignited regulatory efforts by the International Commission for the Conservation of Atlantic Tunas (ICCAT), in which 22 countries currently participate. The United States, with the passage of the Atlantic Tunas Convention Act (ATCA) in 1975, began complying with ICCAT recommendations and limited U.S. harvests by imposing quotas and size limits. The ATCA's objective is to maintain fish populations at levels that will permit the maximum sustainable catch for food and other purposes.
Bestor's Sea Grant project is investigating the role regulatory actions play in the seafood export business. His research could provide information on how the trade relationship might be adjusted to ensure economic viability of American players and mitigate degradation of fisheries stocks.
"My project will contribute to more effective marketing of American seafood products, and provide knowledge of the trade patterns for identifying points of more direct access," he said, adding that although the bluefin tuna market is nearly 20 years old, it hasn't reached maturity.
"There is still a great deal of flux on the American side in terms of those getting into production and learning the ropes of the export market. Exporters still have many things they can work on to improve and expand their businesses. One of the big challenges is to think about products that are readily available here and match them up the best that you can with the kinds of demand that exist in Japan," said Bestor, adding that his project results will assist in that effort.
This is exactly what Fernando Goyeneche, and those currently in the tuna export business, want to hear. "This research will be of great help to me and other American companies hoping to enter the Japanese seafood market. I believe there may be new opportunities that could prove successful," said Goyeneche.
Judith N. Hogan is Acting Communicator of New York Sea Grant.