SIC 2092
PREPARED FRESH OR FROZEN FISH AND SEAFOODS



This category covers establishments that prepare seafoods, including shrimpcakes, crabcakes, fishcakes, chowders, and stews in raw or cooked frozen form. Prepared fresh fish are eviscerated or processed by removal of heads, fins, and scales. This industry also includes establishments primarily engaged in the shucking and packing of fresh oysters in nonsealed containers.

NAICS Code(s)

311712 (Fresh and Frozen Seafood Processing)

Industry Snapshot

During the 1990s, the perennial worries about the quality of fish and seafoods, which swiftly lose their taste and freshness, were compounded by growing consumer knowledge about the potential harmful effects of pollution and the consequences of improper handling and storage. A Consumer Reports analysis in early 1992 found that much of the seafood consumed by Americans was often of poor quality.

In the late 1990s, the National Fisheries Institute (NFI) commissioned a study that found that less than 30 percent of the younger generation—those 35 to 50—called themselves moderate seafood users. In an effort to boost per capita consumption, the NFI turned its attention to seafood marketing. The institute launched an "Eat Seafood Twice a Week for Better Health" campaign, similar to the catchy "5-a-day" program used by the produce industry. Marketing plans for 2001 included a program promoting seafood as "the protein next door," according to a report in ID: The Voice of Foodservice Distribution.

Despite these efforts, per capita U.S. consumption of seafood in 2001 declined 2.1 percent to 14.8 pounds. However, much of this decline was attributable to a 10 percent drop in canned food consumption; fresh and frozen seafood consumption actually increased 1 percent, from 10.2 pounds to 10.3 pounds per capita. This growth was fueled by a 9 percent increase in per capita shrimp consumption, which grew to a record 3.4 pounds.

Organization and Structure

In general, small-scale processing plants are tied to local fleets that are in turn tied to specific stocks of fish that in many cases fluctuate dramatically, discouraging processors from expanding operations, developing new products, or adopting new technology. Those fleets not equipped for processing at sea are obliged to return to land at short intervals, rather than when full, so that their harvest can be processed while the fish is still fresh. In addition to an expansion of at-sea processing operations and a greater use of fish and shellfish raised by aqua cultural means, vertical integration was seen as the key to a profitable restructuring of the American fish and seafoods processing industry. Some industry observers felt restructuring was necessary to bring about large-scale, sustained investment in under-utilized species, greater speed to market, and the ability to respond to shortages and gluts.

In an effort to boost consumption, a better program of inspection was regarded as a necessity for the future of the industry. While there was no mandatory inspection of fish and seafood by the federal government, processors, retailers, and wholesalers could pay for a U.S. Department of Commerce inspection. Approximately 10 percent of processors were participating in such voluntary inspection programs in 1992. But even in this restricted form there was no uniformity; three different seals were available, designating different levels of inspection. Regulations at the state level differed from region to region but in general gave little protection to consumers.

By the mid-1990s, the rising incidence of seafood poisoning, estimated at 20,000 to 60,000 cases per year, prompted the Food and Drug Administration (FDA) to apply the Hazard Analysis and Critical Control Points (HACCP) program to the seafood industry.

Followed on a voluntary basis by other food industries since 1959, HACCP is a scientific and systematic method used to monitor the microbiological, chemical, and physical safety of prepared foods. Under the plan, seafood distributors must identify any critical points at which their product's quality is endangered and then install safeguards. Although the regulations do not apply to fishing vessels or transporters, the processors are responsible for ensuring that the product reaches them in the purest form. For example, distributors are expected to only accept fish from government-approved waters.

Compliance with the HACCP program is expensive for the industry—$70 to $160 million to institute and $40 to $80 million per year thereafter. However, the FDA says the cost will be offset by the reduced incidence of food poisoning, the nutritional benefits of more people eating seafood, and increased export income.

Background and Development

Soon after World War II, American consumers began to rely increasingly on the convenience of fully or partially prepared fish and seafoods, often available in frozen form. These fish products were available with or without coatings of breading; batter coatings were introduced in the 1960s. Batter-fried fish and seafood reached the consumer only after an extensive preparation in whichthe product was dusted with flour, encased in batter, and then lightly fried to fix the batter and achieve specified standards of texture and quality.

Fish and seafood constituted about half of the frozen battered and breaded products consumed in the United States, the largest consumer of breaded fish and seafood in the world. The most frequently consumed type of coated seafood was precooked and raw portions of fish, followed by shrimp, fishcakes, and scallops. Among the breaded products most typically sold in frozen form were scallops, oysters, clam strips, clamcakes, and squid rings (calamari).

Freezing technology permitted great advances in an industry dependent on a product subject to rapid spoilage. However, not all species of fish and seafood responded well to freezing, and often delicacies of texture and flavor could be lost. For instance, whereas crabmeat generally was found to freeze less well and have a briefer shelf life than many other types of fish and seafoods, king crab was discovered to lend itself rather well to freezing. Well-suited to shrimp, catfish, and halibut, the technique of rapid freezing proved especially effective because it minimized losses of texture and flavor by guaranteeing uniformity of freezing. The "I.Q.F." marking, which referred to individually quick frozen products, thus became a selling point for the American consumer.

The United States was for a long period the world leader in terms of its versatility in processing, handling, distributing, and marketing frozen fish and seafoods. It was also an early leader in deploying techniques for freezing catches aboard ships, yet lost its edge in the commercial application of this technology, which allowed fishing vessels to remain at sea for greater periods of time. Ships could remain at sea until their load was full instead of frequently returning to shore to ensure the freshness of their catch.

After peaking in the 1980s at 16.2 pounds per person, per capita seafood consumption rates began to decline in the 1990s. Along with health concerns regarding fish quality and levels of pollution present in waterways and, therefore, fish, this downturn was also related to negative images of the fishing industry, which came under attack from recreational fishers and environmental groups who charged that certain waters were being over-fished. The Gulf Coast Conservation Association has been successful in pushing through legislation in Texas, Florida, Alabama, and Louisiana to prevent commercial fishers from destroying wetlands and endangering certain fish species. According to a 1998 report by the National Academy of Sciences, over-exploitation is causing a 30 percent decline of fish stocks worldwide, from orange roughy and shark to swordfish and tuna. The report also said that an additional 44 percent are nearing over-exploitation. It was alsonoted that in U.S. waters, 80 percent of commercial fish stocks, from Atlantic halibut to red snapper to Pacific ocean perch, were disappearing.

Current Conditions

Compared to a rate of 15.2 pounds in the mid-1990s, per capital seafood consumption stood at 14.8 pounds in 2001; fresh and frozen fish accounted for 10.3 pounds of this total. Consumption of fresh and frozen fillets and steaks grew from 3.3 pounds in 2000 to 3.4 pounds in 2001, while consumption of sticks and portions fell from 0.9 pounds to 0.8 pounds over the same time period. In 2001, shrimp consumption rose to a record high of 3.4 pounds per capita.

Although consumption was somewhat stagnant at the turn of the century, the value of shipments in the fresh and frozen seafood processing industry grew from $6.85 billion in 1999 to $7.22 billion in 2000. While the number of establishments involved in the processing is decreasing, the number of employees in the industry continues to rise. In 1996, there were 32,400 production workers; this number had reached 36,489 by 2000.

To increase sales, Gorton's Seafood, an industry leader in the prepared frozen fish and seafoods industry, began using its Web site in the late 1990s and early 2000s to try to increase consumption. The site includes everything from information on how to select fish at the store to cooking tips, nutritional facts, and recipes. Gorton's also promotes the Web site on its product packaging.

Industry Leaders

The number of establishments involved in the processing of fish and seafoods declined during the 1990s and was expected to continue declining. In 1993, 690 establishments were involved in processing fresh and frozen prepared fish, while the number slipped to 658 in 1995 and was expected to drop to 603 by 2000. These companies ranged in size from tiny operations, employing a handful of workers and concentrating on a single species or type of preparation, to large businesses engaged in many other areas.

The industry is concentrated along the coasts, with the Pacific Coast dominating. In the 1990s, the state of Washington had the most establishments, with 87, employing 7,200 workers and shipping $1.4 billion worth of product. Alaska followed with 84 establishments employing 8,000 workers and shipping $1.2 billion in product. Massachusetts was next with $967 million in shipments and 2,200 workers.

Major companies in this industry include Gorton's Seafood, based in Gloucester, Massachusetts (1,000 employees and $400 million in sales); Rich-SeaPak Corp., based in St. Simons Island, Georgia, (1,100 employees and $250 million in sales); and Icicle Seafoods Inc., based in Seattle, Washington (2,500 employees and $240 million in sales).

Workforce

According to the U.S. Department of Labor, little change in employment in the American fish and seafoods processing industry is expected through the year 2005, though there is likely to be a shift in the distribution of the work performed, with an increase of semi-skilled workers for processing plants and a decrease in skilled workers for markets and other retail centers.

The skills most important to processors include good eye-hand coordination, manual dexterity, depth perception, and color discrimination. These skills were usually acquired in apprenticeship programs or on the job, rather than in any formal educational settings. Work environments often require extended periods of standing for employees, as well as low temperatures needed to keep product fresh.

Aside from promotion to a supervisory position, employment in processing of fish and seafoods offers few career prospects. In this area, as in other areas of the fishing industry, wages are typically low, although there are some variances in salary scales based on geographic location. While the average wage stood at $7.94 per hour in 1996, Manufacturing USA predicted wages to increase to $9.16 in 2000.

America and the World

The United States is the third largest consumer of seafood worldwide and relies on imports to meet demand. Imports of processed fishery products reached $5.3 billion in 1992, while exports reached $3.2 billion. In 1998, U.S. imports of edible fishery products reached 3.6 billion pounds, 308.2 million pounds more than 1997. Those imports were valued at $8.2 billion, up $418.9 million from 1997. Fresh and frozen products accounted for 3.1 billion pounds of the imports and were valued at $7.4 billion.

In 1998, U.S. exports of fresh and frozen items were 1.4 billion pounds, a decrease of 331.6 million pounds from 1997. Principal exports included 153.4 million pounds of salmon, 255.3 million pounds of surimi, and 43 million pounds of lobsters, valued at $255.1 million, $284.4 million, and $187.8 million, respectively.

Research and Technology

According to Frozen Food Digest, between 1980 and 1990 the quantity of farm-raised processed catfish in the United States rose from 46 million pounds to 377 million pounds, and production of surimi also increased between 1987 and 1989 from 67 million pounds to 300 million pounds. Processing of both continued to rise during the 1990s. The growth of catfish consumption partly reflected a substantial increase in aquaculture, which Frozen Food Digest noted was "outpacing all other types of farming" in the United States. The trend toward aquaculture was a significant one, not only because of the growing proportion of the U.S. supply of fish and seafood to which it contributed, but also because it brought harvesting and processing into closer conjunction and thereby assured a higher and more consistent quality of product.

"Species such as catfish, salmon, shrimp and oysters, which are grown in aquaculture farms, are becoming increasingly important," Richard Gutting Jr., executive vice president of the National Fisheries Instate, told Frozen Food Digest. "We are growing more and more seafood each year." The Minaqua fish farm in Beckley, West Virginia, has devised a method for raising trout and arctic char in abandoned coal mines. The pure mine water remains a steady 55 degrees Fahrenheit year-round, which the company claims is perfect for breeding. The venture makes a landlocked state a competitor in the fishing industry.

New processing and packaging technologies that extend the shelf life of fresh and prepared fish and seafoods are keys to growth in the processing industry. Other challenges facing this industry include developing seafood products that can be microwaved without any loss of crispness and improving the overall quality of such products. Another focus will be creating new products to catch new customers.

Further Reading

"Around the Coasts." National Fisherman, October 1996.

"Foreign Trade." National Marine Fisheries Service, 14 December 1999. Available from http://www.nmfs.gov/trade/default.html .

Haltaman, Carol. "National Fisheries Institute: What We Can Do For You." ID: The Voice of Foodservice Distribution, September 1999.

Harrison, Dan. "Frozen Seafood Marketing Missing the Boat." Frozen Food Age, September 1999.

Hunter, Beatrice Trum. "Food for Thought." Consumers' Research, July 1996.

National Oceanic and Atmospheric Administration. "Shrimp Overtakes Canned Tuna As Top U.S. Seafood in 2001." Available from http://www.publicaffairs.noaa.gov .

"Per Capita U.S. Consumption." National Marine Fisheries Service, 14 December 1999. Available from http://www.nmfs.gov .

"Processed Fishery Products." National Marine Fisheries Service, 14 December 1999. Available from http://www.nmfs.gov/trade .

"Seafood." Frozen Food Digest, October 1999.

"Struggling to Stay Afloat." U.S. News and World Report, 5 August 1996.

United States Census Bureau. "Statistics for Industries and Industry Groups: 2000." Annual Survey of Manufacturers. February 2002. Available from http://www.census.gov .

Warren, Brad. "Salmon Glut May Force Changes." National Fisherman, March 1996.



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