Jerry Knecht is the founder and president of Bali, Indonesia-headquartered P.T. Bali Seafood International, and a 2018 finalist for the Seafood Champion Award for Innovation.
Knecht founded P.T. Bali Seafood in 2009 as a subsidiary of Portland, Maine, U.S.A.-based seafood supplier North Atlantic, Inc. Knecht originally focused on importing Pacific tuna for American retailers, but his firm eventually evolved into an importer of warm-water seafood, with a strong emphasis on sustainability and social impact.
Indonesia’s seafood industry has been severely affected by COVID-19 disruption, as factories have closed and exports have slowed to a trickle. In an interview with SeafoodSource, Knecht said his firm’s focus on U.S. retail clients has helped it survive, but finding Asian customers willing to pay for sustainability is an ongoing issue.
SeafoodSource: How badly impacted was P.T. Bali Seafood affected by the COVID-19 shutdown in Indonesia?
Knecht: Operations have been impacted negatively. Our constellation of supply partners have grown and thrived due to our retail focus. However, our own facility was burdened with the sudden withdrawal of a major investor, Aavishkarr Impact Capital, and the outbreak of COVID on a remote island shortly after our ramp-up year. It is presently not operating, however, [it] is being maintained for reopening. This is the site of all of our integrated fisheries management model (IFMM) development, so we are looking forward to picking up where we left off post-opening.
We are one of the fortunate few who have always been focused on retail business. This channel is more difficult than foodservice, as it has more inherent price risk. Therefore, most importers and distributors in the North American markets are focused on foodservice. Our parent company, North Atlantic Inc., has seen a significant increase in sales since quarantining began in North America. North Atlantic has also focused on the retail food store business for over 35 years.
SeafoodSource: Has external or local private investment in the Indonesian seafood sector increased?
Knecht: The Indonesian fisheries have always been fragmented. Some of [Indonesian Fisheries Minister] Susi [Pudjiastuti]’s licensing policies had significant adverse effects on the offshore fleet. Since COVID and the huge drop in exports to the North American foodservice market, there have been many plant closures. As foodservice is less demanding in terms of seafood credentials, most of the Indonesian industry was focused on that business and therefore badly hurt. Today, the industry is struggling for survival, with a few exceptions.
There are definite signs that China and some other foreign companies are getting ready to roll up undervalued, desperate Indonesian seafood players. The Chinese lost a lot of ground under the IUU policies of the past. However, they are positioning to retake their share of Indonesian seafood production from the processing and distribution side. This M&A activity will be interesting to track in the months ahead.
SeafoodSource: Are you still concentrating on the U.S. market, or has continued Chinese demand for seafood impacted what or where you sell?
Knecht: We are focused on North America. Next, we will open Europe. Our years on the ground here in Asia and the development of our integrated fisheries management model, with its triple bottom line [conservation, community development, financial return], is not attractive to all market segments, as these credentials have a cost. That said, our market is growing as consumer awareness increases. We service those customers who weigh value and integrity the same as price. Our mix of product and credentials does not resonate yet in Asian markets outside of Singapore and Hong King.
SeafoodSource: Is the Indonesian government policy on fisheries yielding any impact in terms of protecting stocks and sustainability while growing local fishing communities’ incomes?
Knecht: Unfortunately, there is little or no impact by the Ministry of Fisheries on sustainability and rational value distribution in small-scale fisheries supply chains. It is a complex problem, as the fishery is so fragmented and the ministry does not have the political will nor institutional structure to be effective. This is the reason we developed our IFMM, providing capital markets and industry with the tools to help manage fisheries while everyone in the supply chain is rewarded fairly. Our model is a bottom-up approach to changing fisher behavior and therefore best accomplished by industry on the ground.
SeafoodSource: In 2018, you spoke of a “very broken supply chain and poor cold chain control” in the seafood industry in Indonesia. Has much changed?
Knecht: We have successfully streamlined two small-scale fishery supply chains by eliminating middlemen, controlling transport costs, and methods, and providing monetary incentives for proper fish handling. We will continue our work with other supply chains once the industry shakes off a massive drop in demand primarily from foodservice in Western markets.
Photo courtesy of North Atlantic, Inc.