US Midwest’s seafood sector “a different world” post-COVID-19
The seafood sector in the U.S. Midwest was upturned during the COVID-19 pandemic, and now is coming back structured differently than it was prior to 2019.
Like the rest of the U.S. seafood industry, farmers, traders, and sellers of seafood in the center of the country experienced an existential challenge when COVID-19 first hit the country in early 2020, forcing nearly every company – large and small – to make drastic changes to their operating models to remain solvent.
Safety concerns and lockdowns combined with a major shift from foodservice and wholesale to retail to force those in the seafood industry in the Midwest to adapt or perish. In 2021, companies then had to deal with transportation difficulties, supply-chain interruptions, and rising prices. Many survived thanks to government support packages, though the seafood sectors in U.S. coastal states received additional benefits through the CARES Act.
Lauren Jescovitch, extension educator for fisheries and aquaculture for Michigan Sea Grant, said some companies were able to thrive during the pandemic as retail seafood sales soared, while others just barely managed to remain afloat, and some were forced to fold. In 2020, 248 companies held seafood-processing licenses in Michigan, while as of June 2022, just 233 remained. Jescovitch said Michigan’s seafood processing industry is now “just a different world” than before the pandemic, with a divide forming between companies that opened earlier on in the pandemic and those that waited to open, either because of market uncertainty or out of safety concerns.
“Those are the places that are having a harder time coming back,” Jescovitch said. “Those who remained open with extra precautions took a risk and ended up coming out ahead.”
Jescovitch told MiBiz most seafood businesses in Michigan changed their business to focus on retail, with a switch from 80 percent wholesale sales versus 20 percent retail to a flip of that in 2022, with 80 percent of sales going to retail now. Even seafood processors made a move into retail, opening storefront markets, with some installing drive-through windows.
In response to supply-chain challenges, many Midwestern seafood businesses sought out more local seafood options. Grand Rapids, Michigan, U.S.A.-based Fishmongers of Michigan was founded in 2016 on a business model of importing seafood from Asia and South America and selling to local restaurants and wholesalers, but shifted to more local and regional sourcing as a result of the COVID-19 pandemic, according to MiBiz. Fishmongers of Michigan Co-Owner Louis Hamper said the pandemic led more Michigan seafood processors to source products locally, and to focus on local sales, as his company did in shifting focus to the independent grocery store market.
“It was a good thing for us to focus more attention on those networks,” Hamper said. “That is pretty much how we weathered the storm. We pivoted really quickly, and we were really fortunate.”
Indianapolis, Indiana-based Caplinger’s Fresh Catch Seafood decided to go even more local in 2021, making the decision to farm its own catfish after suffering through frequent shortages. Owner Andrew Caplinger said catfish is one of the most-popular items his restaurant group sells – accounting for 800 to 1,000 pounds served weekly. He hopes to grow around 500 pounds of that catfish from his own farm in southern Indiana.
“I’ve never done anything like this – I’ve sold dead fish my whole entire life,” he said. “It’s tough, and it might be risky. But assuming things go well and these fish grow like they should, we won’t have to look at raising our store prices again for some time.”
Caplinger’s foray into fish farming is an exception to a decline in the size of the aquaculture industry in the Midwest, a trend that accelerated during the pandemic. The number of aquaculture farms in the Midwest fell to 271 from 336 in 2010, according to the Associated Press, and the region accounts for just one-third of U.S. fish-farming operations despite being one-fifth of the country’s landmass.
Mike Searcy, who owns White Creek Farms in Seymour, Indiana, said the biggest difficulty he faces is finding processing capacity for the trout he raises. While Searcy sends his fish to be processed in the nearby state of Kentucky, other aquaculture operations have only one market for their fish – Asian food markets, where the fish are sold live. In response, Searcy is also considering adding a processing facility on his farm.
“We have demand from our local customers, but the biggest hindrance is the lack of processing – filling that gap between the farmer and the restaurant owner. That holds us back,” Searcy said. “When we’re competing with foreign markets and much cheaper labor, they can supply a fillet to the grocery stores a heck of a lot cheaper than what I can.”
Both Searcy and Hamper said a labor shortage – a problem across the United States – has also emerged as a significant hindrance to their growth.
“After we went through that initial shift, we continued to grow,” Hamper said. “We are in a growth phase right now, and it is really hard to get people to work.”
Joseph Morris, the former director of the North Central Regional Aquaculture Center at Iowa State University, said buying patterns show Midwestern consumers are eating more seafood, reflecting a rise in seafood-consumption rates across the U.S., which is opening an opportunity for local seafood purveyors.
“The big hurdle to tackle – how can they produce a product, economically, to meet the consumer needs and still stay in business?” he said. “How do you reach the growing market of people wanting to eat fish?”
One solution being pursued by smaller and larger operations alike is land-based aquaculture, including recirculating aquaculture systems. Searcy is using such a system for his farming, and larger companies like AquaBounty, Superior Fresh, NaturalShrimp, TruShrimp, and others are in various stages of constructing land-based seafood-rearing facilities throughout the region.
Farming fish in the United States will also be a more-expensive proposition than importing them from abroad, where labor is cheaper, but with global seafood consumption expected to increase by 100 to 170 billion pounds by 2030, there’s an opportunity for Midwestern farmers to meet demand, according to Amy Shambach, an aquaculture marketing outreach associate with the Illinois-Indiana Sea Grant.
The key will be a successful marketing effort and proving to customers there’s a noticeable difference between cheaper imports and locally raised fish, Morris said.
“In terms of Midwest aquaculture overall, the growth has got to be with the food-fish operation. That’s where your market is — a consumer basis,” Morris said. “There are consumers wanting to eat more and more fish in Midwest. We have to focus on that. A new generation of folks are eating more fish, and they’re asking more often, ‘Where’s my food coming from?’ That’s where the Midwest comes in.”
Photo courtesy of Aquaculture Research Lab Purdue Extension