Blue Harvest finalizes acquisition of portion of Carlos Rafael fleet

Published on
February 20, 2020

Last year in New England, U.S.A., 90 percent of the haddock quota and 92 percent of the pollock quota was left in the water.

Blue Harvest, based in New Bedford, Massachusetts, is aiming to change those numbers and the company’s recent acquisition of 12 groundfish vessels and 27 fishing permits is a part of its efforts to begin utilizing the resource. The vessels, and permits, were formerly part of the fleet of Carlos Rafael – a.k.a. "The Codfather” – who pleaded guilty in 2017 to falsifying fish quotas, tax evasion, and conspiracy and then subsequently settled a civil case with NOAA that forced him to permanently stop all commercial fishing by 31 March, 2020.

The vessels and permits Rafael owned have since sat idle, but according to Blue Harvest CEO Keith Decker, that is going to change as soon as possible now that the company has purchased them.

“Our goal is to start fishing as many of the vessels as we can,” Decker told SeafoodSource. “Our goal is to go over the vessels, do whatever capital improvements and maintenance is required, and fish them.”

Decker declined to reveal the purchase cost.

Blue Harvest has the capacity to handle whatever fish its new fleet manages to catch, according to Decker. The company already bought a different small fleet at the end of 2018 called Atlantic Trawlers, which consists of five fishing vessels. Those vessels, Decker said, don’t represent nearly enough supply to match the processing capacity that Blue Harvest has on hand at their processing facility in New Bedford – a 160,000 square foot, SQF-certified facility that the company has upgraded through millions of dollars of investment.  

“What we quickly realized was the landings of our five vessels were not going to be enough to support even a series of smaller customers, just from a volume perspective and a stability of landings,” he said. “So the Carlos Rafael fleet was interesting from the perspective that it is capacity that hasn’t been utilized for the last three or four years, and was going to give us some additional opportunity to bring more fishing vessels to bear, and more landings, to stabilize our availability.”

The challenge currently, Decker said, is that the fishery in the area, which catches haddock, Atlantic pollock, and ocean perch – also known as redfish – leaves a huge portion of its quota in the water each year.

“Our estimate last year was that USD 200 million [EUR 184.9 million] of fish was left in the water in New England, and that’s been consistent for the last several years,” Decker said. “I’ve not seen a situation before, in my working career, where a first-world nation will leave the majority of its fish in the water and not harvest it to its maximum sustainable yield. You don’t see it in Canada or Russia or Iceland or Norway, or any of the other first-world fishing nations.”

There’s multiple reasons why that’s the case, he added.  

“There’s a few reasons for it. First is a lack of fishing capacity. There just aren’t enough vessels left any more to be able to catch the quota. Second of all, processing capacity. There’s not enough processing capacity left to cut the fish,” Decker said. “So even at a small level today, everyone fishes in the same time-period, the market collapses, prices collapse – because they’ve overwhelmed the fish processors – and then the fishermen have to go and either tie their boats up or go fish for something else.”

That cycle has led to further issues down the line. Most customers in the business don’t want an inconsistent supply of seafood that’s hard to predict and often will only last for a short period of time.

“The major customers want stability of supply followed by a quality product,” Decker said. “Most restaurant chains, a lot of them will print their menus once every six months, some will do every three months … if they’re printing menus on an infrequent basis, the last thing they can have is no product in the restaurant for the customer.”

In addition to the Rafael fleet offering Blue Harvest the ability to bring in a larger and more consistent supply of seafood, the acquisition also satisfies another of the company’s goals: Partnering with local, independent fishermen.

“We’ll never be able to catch the volumes required to support all of our customer base,” Decker said. The company plans to get the vessels working as soon as possible, and being able to control the vessels allows Blue Harvest to fix the price and add to the consistency of supply – which in turn will hopefully increase the demand for the fish.

“Today’s acquisition by Blue Harvest represents a level of investment in New Bedford and the groundfish fishery we haven’t seen in years,” New Bedford Port Director Ed Anthes-Washburn said in a release. “The port is pleased to see that Blue Harvest is continuing to invest in vessels, processing and facilities. Combined with the port’s continued investment in infrastructure and dredging, there’s a great deal to be optimistic about on the New Bedford waterfront and with our diverse commercial fishing industry.”

Getting to the point that Blue Harvest could actually purchase the vessels, however, wasn’t easy. The company has been working on the deal since 2018.

“We started working on this, the first emails were exchanged, in May of 2018,” Decker said. “So it has been a long process.”

That process involved oversight from two separate departments in the National Marine Fisheries Service.

“National Marine Fisheries Service, they had some criteria that they were focused on,” Decker said. “They wanted to be sure whoever was buying the assets was going to be a good steward of the fishery, and operate in a transparent manner.”

Over the last 18 months, Blue Harvest had to navigate a combination of securing approvals from the two departments in the NMFS, negotiating a selling price with Rafael’s attorneys, and spending time with the city and the port – which Decker said he felt was important.

“These are assets that the city and the port were focused on trying to be retained in the greater New Bedford area,” Decker said.

Another slight hiccup arose when the Buyers and Sellers Exchange of New Bedford exercised its right of first refusal over the vessels in January, citing a desire to protect distribute the permits to local fishermen, only to later withdraw that.

Decker said that Blue Harvest’s goal has always been to keep the vessels in New Bedford.

“Our focus was to acquire the asset, fish them out of New Bedford, land the fish here in New Bedford, process them here in our processing plant, and distribute them from here,” he said. “I think it’s also important that we’re able to buy additional fish from independent fishermen, which creates market for the fish that either today is being left in the water or they’re not receiving fair value for the fish and they have to go fish for something else."

Now that the obstacles have been overcome, the company is on tis way to continuing its vision of building a vertically-integrated fishing company.

“Our focus is to build an enduring verticall-integrated fishing company in New England,” Decker said. “There really hasn’t been one probably since the early '90s, when the fisheries collapsed.”

Another key part of the company’s mission is to be as transparent as possible, which is why Decker has said the company is committed to 100 percent dockside monitoring of all landings at the New Bedford facility.

“The sustainable harvest sector, which like all groundfish sectors has a fiduciary reporting responsibility to NOAA Fisheries, will hire an independent firm to conduct the monitoring. This will ensure that all product landed from our vessels is properly reported under the supervision of independent monitors,” Blue Harvest stated in a release announcing the purchase of the vessels. “We are also working with regional partners on electronic monitoring aboard our vessels to develop that technology for use throughout the industry, and to advance the goal of complete transparency of our product from the moment it leaves the water to the time it’s sold.”

The market for New England-caught seafood, Decker said, is there. The story of New England fishermen is one that resonates well, and the fisheries – which were once essentially collapsed – have recovered and are an example of how sustainable practices can bring a resource back.

“Our first focus will be on the U.S. market, because the fish is locally caught, caught in the U.S.A., processed in a U.S. plant, we have full traceability to the individual vessel and we are the certificate holder for the [Marine Stewardship Council] certificate for the fishery,” Decker said. “There are a group of customers that are interested in New England-caught seafood.” 

Photo courtesy of Blue Harvest

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