The future of the U.S. shrimp industry and a way of life along the Gulf of Mexico are threatened if the government doesn’t set duties on the large volumes of foreign shrimp that are flooding the domestic market, shrimp producers told federal trade officials Tuesday.
“Shrimping is about much more than economics,” Louisiana Lt. Gov. Jay Dardenne told a hearing before the U.S. International Trade Commission. “The men and women who catch our prized Gulf shrimp would call it a way of life. Allowing foreign countries to continue to engage in unfair practices will force Louisiana folks to relinquish their heritage.”
The Coalition of Gulf Shrimp Industries, which represents producers from Mississippi, Texas, Florida, Alabama and Louisiana, claims that subsidized frozen warm water shrimp imports from seven countries are causing material injury to the domestic shrimp industry. The seven are China, Ecuador, India, Indonesia, Malaysia, Thailand and Vietnam.
Dardenne urged the commission to impose countervailing duties, which would increase the price of subsidized imports to how much they’d cost without subsidies.
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The domestic producers say subsidized foreign shrimp reduce prices in the U.S. But some distributors and retailers are fighting the proposed duties, saying shrimp prices have been rising.
“Prices for domestic and imported shrimp soared by 20 percent or more in the second and third quarters of 2013,” said Warren E. Connolly, general counsel for a group of seafood distributors and retailers.
The commission is expected to vote Sept. 19 to decide whether to impose countervailing duties.
For each pound of shrimp that’s produced domestically, the U.S. imports 6 to 8 pounds from the seven countries that are under investigation, the coalition said.
“Customers frequently quote import prices in negotiations,” said Elizabeth Drake, an attorney for the shrimp producers. “And if domestic producers cannot lower their prices to meet the import quote, they lose sales.”
Carson Kimbrough, the president of Carson & Co. Inc., a shrimp wholesaler from Bon Secour, Ala., said his “customers have been quoting lower prices for imported shrimp on a weekly basis” for the past three or four years.
According to Drake, the domestic industry’s gross profit margin decreased to 7 percent last year and U.S. producers were earning only 25 cents on each pound of shrimp.
“Domestic producers have also been forced to delay or forgo needed capital investments due to the instability in the market caused by subsidized imports,” she said.
But Connolly said conditions “have actually gotten much stronger this year, not worse.” He offered an alternative explanation for the low prices that domestic shrimpers have encountered.
“The domestic industry treats shrimp as a commodity and sees buyers as focused solely on getting the lowest price,” he said. “This view of the shrimp world is exactly the problem. They still don’t realize that many of their prices are low because they have endemic quality problems.”