Hurricanes cost Louisiana’s commercial seafood sector USD 580 million since 2020

Published on
January 28, 2022
A new report released by Louisiana Sea Grant and the Louisiana Department of Wildlife and Fisheries found the four hurricanes since 2020 cost the seafood industry in the U.S. state of Louisiana almost USD 580 million.

Chauvin, Louisiana, U.S.A.-based shrimp firm Pearl Inc. suffered USD 8.5 million (EUR ) worth of damage due to Hurricane Ida in August 2021. The company’s plant sustained 180-mph winds for approximately six hours, with its freezer getting blown away and the plant getting nearly completely leveled, according to owner Andrew Blanchard.

Blanchard’s business was one of thousands in Louisiana’s seafood industry impacted by hurricanes Ida, Laura, Delta, and Zeta over the past two years. A new report released by Louisiana Sea Grant and the Louisiana Department of Wildlife and Fisheries found the four hurricanes since 2020 cost the seafood industry in the U.S. state of Louisiana almost USD 580 million (EUR 521 million) in losses to infrastructure, revenue, and resources. The report documents extreme damage and loss of revenue over all five sectors of the industry: commercial fishermen, recreational fishing, docks, processors, and marinas.

“Our fishermen have taken a pounding over the last several years. Hurricanes, floods, unfair trade practices, and government overregulation have taken their toll,” U.S. Representative Garret Graves (R-Louisiana) said. “This report verifies what we have been saying about the hurricane impacts and clearly justifies the fisheries assistance we’ve requested. We are going to get assistance to our fishing communities.”

Rex Caffey of Louisiana Sea Grant led the team that compiled information for the “Infrastructure, Revenue, and Resource Losses to Louisiana Fisheries from the Hurricanes of 2020 and 2021” report after a request by the Louisiana Fishing Community Recovery Coalition. The coalition is comprised of members from every aspect of the state’s seafood industry, as well as members of state and federal offices.

Total damage to fisheries infrastructure was estimated at USD 304.9 million (EUR 273.1 million), equating to a 22 percent reduction to the USD 1.36 billion (EUR 1.21 billion) in appraised value of infrastructure for the five sectors of the analysis. Revenue losses for 22 coastal parishes totaled USD 155.3 million (EUR 139.1 million).

“Our fisheries estimated value of USD 1.36 billion is just for seafood being caught, harvested and processed. Our seafood industry has an economic impact on our state much greater than just what this report shows. It touches wholesalers, restaurants, mom-and-pop shops, grocery stores, and other local markets all over the country and the word,” Louisiana Lieutenant Governor Billy Nungesser, whose office oversees the Louisiana Seafood Promotion and Marketing Board. “Our seafood industry has supported our state with its great harvests, now it’s our turn to support them and get them the help they need to recover their losses.”

Caffey said 8,503 individual business in the Louisiana coastal zone had been affected, “representing every aspect of the seafood industry.”

“It’s one thing to put them on a map. It’s another to try and find out a little bit more about what happened at that location,” Caffey said. “We were very fortunate to get all the data needed on all four storms from the LSU Coastal Emergency Risk Assessment Center that houses the advanced circulation model.”

Caffey said the USD 1.36 billion is not the damage number, but instead the total value of the infrastructure affected in the evaluations before damages.

“We have to estimate this economic baseline before we can know something about what happened to that value because of the storms,” he said.

The businesses were affected by four storms, so estimating damages based on maximum wind and maximum surge at each of the 8,503 business location required 68,024 storm observations.

“Knowing where they are, knowing what happened at their location, doesn’t say anything about their value,” he said. “For that we ran detailed business appraisal estimates using trip-ticket data for vessels and dealers; and for processors and marinas we used secondary data. When added together, the total value of the five sectors of seafood infrastructure was USD 1.36 billion.”

Caffey said he was surprised at the USD 304.9 million estimated damage toll for infrastructure damage.

“When I ran that number, I had to do a double-take. That seems pretty high,” Caffey said. “This is for four storms. I don’t believe it is high; I think it is actually pretty conservative. That number is much more sensible if you think about it as not one, but four storms.”

Of that amount, the Laura, Delta, and Zeta storms accounted for 30 percent, the rest came from Hurricane Ida.

“There were two big storms. But the really big one in terms of economic size was definitely Ida,” Caffey said.

High winds were the biggest cause of damage from all four storms, accounting for 85 percent of damage to vessels, 80 percent of damage to dealers, 80 percent for processors, 89 percent for charter, and 54 percent for marinas, where storm surges were more dominant in the most seaward locations. These numbers differ from earlier storms like Katrina and Rita, where surge dominated.

All locations in the report were integrated into Louisiana’s geographic information system. Information came from Louisiana Wildlife and Fisheries license and permit records or the Louisiana Department of Health. Storm information came from LSU Coastal Emergency Risk Assessment Center. The evaluation was based on actual revenue, so it is primary data for vessels and dealers; the rest relied on secondary data from economic studies. A linear model defined the upper bound of asset damage, and a nonlinear model was used to estimate the lower bounds. These damage curves were developed from the survey data and was applied to the broader population. The infrastructure damage ranges were developed for two years, for the three hurricanes in 2020 and Ida in 2021.

There were 5,739 seafood harvesting vessels geocoded in coastal Louisiana. To understand the value of the businesses, trip-ticket records were used for income capitalization appraisal averages for 2018 to 2020. For cases where trip-ticket information was insufficient, a market value appraisal of the length of the vessel was used as a secondary evaluation to approximate value. Docks and dealers were also valued on trip tickets.

All damage numbers were dampened by an assumed 20 percent evacuation rate collected from the survey, information not included in previous economic damage assessments.

“You see a trend. The 2021 damage values are much larger because Ida hit an area more heavily populated; It was a bigger storm with a larger impact area,” Caffey said.

Seafood processors were more difficult to value because of lack of primary information. Using business-permit fees, the committee was able to estimate revenues for the given years. Charter-fishing losses were evaluated from cost of earning data over the years. Marinas’ business appraisal was from cost and earnings from previous sources, including a recent covid study done the previous year. That information was extrapolated back to the larger population based on size.

The combined infrastructure losses for each sector were as follows: charter fishing: USD 31.2 million (EUR 27.9 million); docks and dealers: USD 77.4 million (EUR 69.3 million); marinas: USD 44.6 million (EUR 39.9 million); processors: USD 99.7 million (EUR 89.3 million).

Louisiana Marina Association Representative Chris Moran of Port Fourchon said the estimated damage numbers for his sector were lower than he expected. He is currently in the process of rebuilding his USD 5 million (EUR 4.4 million) in losses from Ida and does not expect to reopen until May 2022.

“We have been closed for five months now, and we are not the only one,” Moran said. “The USD 44.6 million [EUR 39.9 million] in infrastructure damages might be accurate for larger marinas like mine, but I feel there may be host of smaller operations’ infrastructure and revenue losses may not be accurately classified in the report.”

Revenue loss was estimated in a similar way. The baselines were the same, but wind and surge was averaged at the parish level because no direct revenue was available for all five categories. In addition, losses were not done by a single year, but instead a combined loss for both years from the storms.

The combined revenue losses for the 22 coastal parishes totaled USD 155.3 million (EUR 139.1 million). Two parishes, Cameron and Calcasieu, exceeded the 35 percent revenue threshold, though the threshold is usually not measured on a parish level.

“Federal disaster declarations are always measured on a management level for an entire species. There is little basis for a declaration for a parish. Now should there be? I know in agriculture there are county and parish level declarations,” he said. “Four hurricanes hit one state in 12 months and two days. These areas clearly had more than 35 percent in projected losses. Time will tell to see how these hold up.”

While examining commodities the committee found that resource losses estimated to be at USD 118.5 million (EUR 106.1 million) over the two-year period. The figure was derived from field surveys of LDWF biologists and restitution values obtained from natural resource damage assessments.

Brown shrimp was the only species under the models that came close to exceeding the 35 percent project loss-level. Caffey said he is not sure that is going to hold up, and instead is more interested in watching white shrimp-related losses.

“The reason I say that is because the model didn’t differentiate the season for when storms occurred,” he said. “[The] brown shrimp [season] was pretty much over when Ida hit, and white shrimp had yet to start. We will continue to watch these over the next year to see if these thresholds are met at the commodity level.”

In addition, a resource mortality report was done externally to the economic report. That data was brought over and added to the total score of infrastructure revenue.

“What we have here is a story of two big, big storms amongst the four hurricanes that drove the majority of the damages,” Caffey said. “Going forward, a list of short-, medium- and long-term priorities needs to be developed. Unfortunately, this report does not address this issue – it speaks to economic and damage assessment.”

Louisiana Department of Wildlife and Fisheries Assistant Secretary Patrick Banks said these industries are a large part of the cultural heritage in Louisiana, and helping them recover is vitally important to the state.

“The information provided by this report will be critical for our seafood industry as they seek recovery assistance from state and federal lawmakers,” Banks said. “Having a thorough and scientifically defensible damage estimate helps Louisiana not only show the impacts from hurricanes, but clearly documents the enormous value of our coastal fishing industries, both recreational and commercial,” Banks said. “The team of scientists and economists from both LDWF and LSU worked extremely hard on this initiative, and they couldn’t have completed the task without the cooperation of the industry leaders on the LFCRC and members of the fishing industries.”

LFCRC Chair Harlon Pearce said the report forms the basis of a strong case for further federal assistance for the state’s seafood sector.

“The LFCRC has been discussing numerous challenges that need to be addressed in the future, including the availability and affordability of both marine insurance and traditional insurance; exploring possible novel or creative alternatives like fisheries insurance, similar to crop insurance; the ongoing challenges to vessel-evacuation options; and the need for infrastructure hardening,” Pearce said. “We have to have a list of priorities developed before the seafood industry asks for economic damage compensation from our legislators.”

Reporting by Ed Lallo/Gulf Seafood News

Photo courtesy of U.S. Coast Guard

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