Bad debt is plaguing the U.S. seafood industry, and the only cure is another federal stimulus package. That was the message Kim Gorton delivered Wednesday, 30 September, to the U.S. House of Representatives Committee on Small Business.
Gorton, the president and CEO of Slade Gorton and a board member of the National Fisheries Institute, the U.S. seafood industry’s primary trade body, told the panel seafood industry businesses like her family’s have a combined USD 2.2 billion (EUR 1.9 billion) in bad debt and other foodservice companies carry about USD 10 billion (EUR 8.53 billion) in bad debt.
“This is not something that can be absorbed by small business,” she said in her testimony. “We need help to fix this.”
Much of debt is due to the way the supply chain works in the restaurant industry, she explained to the panel. Restaurants order food from suppliers like Slade Gorton and then pay for it later, typically within 30 to 60 days. When the COVID-19 pandemic forced states and communities to shut down restaurants more than six months ago, it led to restaurants either freezing or destroying product it could not move.
Even as restaurants have reopened in limited capacities, the seafood industry has not fared as well. Seafood is not a menu option that works well for take-out or delivery, Gorton said. In addition, with restaurateurs forced to reduce indoor dining capacities in many states, they’ve had to scale down their menu options.
And for those who are reopening at a greater capacity, seafood distributors face a choice, Gorton said. They can either extend additional credit to businesses that owe them significant amounts already or terminate the relationships, some of which been fostered for decades.
“My company has chosen to stick by our customers because without them we have no future,” she added.
Beyond giving small businesses aid in relieving bad debt, Gorton said the foodservice industry now faces substantial increases in costs as businesses must implement new worker safety protocols, provide protective equipment to employees and make changes to production lines and other facilities.
“As we struggle to adapt, I urge Congress to consider a federal grants or tax credits to help pay for these critical safety measures,” she said. “Ultimately jump-starting the economy requires continued support for those businesses who drive 80 percent of our GDP – small businesses.”
Photo courtesy of U.S. House of Representatives Committee on Small Business
