Thursday, March 19, 2009

The Death of Fish Sticks: the Pangasius

Will Success Kill the Pangasius?
By Barbara Hardinghaus

The Pangasius, or striped catfish, began taking the European fish market by storm a few years ago. It satisfied a voracious appetite for inexpensive white fish. But its success may become its downfall.

Manuela Wendland looks through her round glasses at the many different kinds of fish in the fresh food counter. The saleswoman sees whole fish, half fish and fish fillets, all of them arranged on ice and surrounded by lettuce leaves.

Wendland wears a wide, blue apron and a hood over her ash-blond hair. These days, she says, she is seeing more and more Pangasius, a fresh-water species also known as the striped catfish.

It arrives frozen, Wendland says, and has practically no bones; it's mild-tasting and a good fish for kids. She picks up a piece and places it on a scale in a Hamburg supermarket. It weighs 198 grams (7 ounces) and costs €1.96 ($2.50).

The Pangasius made its first appearance in the fresh food counter three years ago. It was a new fish, a crisis fish that had been slated to fill the gap created by overfishing. Every year, the average German eats 16 kilograms (35 pounds) of fish, or about 50 percent more than in 1970. Varieties like cod, ocean perch and spiny dogfish are becoming scarce.

Nowadays, the customers standing in front of Wendland's counter know not to buy cod, wild salmon, ocean perch, tuna or North Sea plaice. According to a recent study by the United Nations Food and Agricultural Organization (FAO), 77 percent of edible fish populations have been fished to the limit or beyond. Even pollack, an inexpensive, white fish commonly used in fish sticks, is become harder to find.

The People's Fish

But customers want inexpensive white fish with low fat content, and the Pangasius has all the beneficial characteristics a fish variety needs for the wealthy world to buy it. It is the new people's fish -- born in Vietnam and bred to suit the tastes of people around the world. It could become the fish of the future -- if it weren't for the fact that mankind is producing the Pangasius to death.

The white and healthy filets of Pangasius in Manuela Wendland's counter are more than just fish filets. They represent a small slice of the global economy. Wendland wraps the Pangasius filet in paper, puts it in a bag, staples the price tag to the bag and says: "This fish swims in the Mekong." In fact, three million tons of Pangasius swim in the Mekong, almost 10,000 kilometers (6,200 miles) away from Wendland's fish stand, where they live in ponds the size of football fields or in cages in the water beneath houses.

This year, Vietnam will export 1.5 million tons of Pangasius filets to the rest of the world, including 143,000 tons to Germany alone. It arrives by ship in the northern ports of Bremerhaven or Hamburg, where it is loaded onto trucks bound for wholesale markets, from which it eventually reaches places like Wendland's or the frozen food sections of many other German supermarket chains as both filets and fish sticks.

Relative to 2006, 22 percent more Pangasius was shipped to Germany in 2007. And if importers have their way, the volume will continue to grow. But, if what the fishermen farming the fish halfway around the world say is true, there might not be as much Pangasius next year.

The Middle Man

One of the importers with a sense of what is happening to the Pangasius is Ulf Blaes. He is standing in a large building on the Mekong River with 1,500 women wearing numbers, white aprons, hoods and masks over their mouths. They look like doctors dissecting fish on long operating tables. "As a wholesaler," says Blaes, "you have to have Pangasius in your product line."

Blaes, a 49-year-old German businessman, runs the Food Company. He works as a middleman in the global food market whose job entails traveling around the world to transform the wishes of customers into demand and then convert the demand into supply. He buys fish from around the globe, including plaice from the world's oceans, zander from Kazakhstan, tuna, barramundi, swordfish and Pangasius from Vietnam.

Blaes mixes himself among the women to get a closer look at their work. Like them, he is wearing an apron, a hood and rubber boots. He travels to Vietnam six times a year to inspect the fish he is buying and the way they are farmed. Each trip involves flying from Germany to Ho Chi Minh City, driving six hours south in his dark Mercedes through small villages and on narrow roads, then taking a ferry across the enormous Mekong River to a fish farm owned by the Ntaco Corporation.

The fishermen arrive in their small boats to meet with Blaes behind the factory. They bring him fish in large tubs with water splashing from the top. The Pangasius industry is now responsible for the livelihoods of 5 million people. Workers in 34 plants can turn the fish into packaged fillets in two hours. The packages are then loaded into containers and shipped to 107 countries.

Blaes is the tallest person in the building and his head sticks out high above those of the Vietnamese workers. He wears canvas tennis shoes. Beneath his work coat, you can see his jeans, his untucked shirt and his Blackberry in his pocket. He uses the device often, reading and typing messages or making calls. His Blackberry connects him from here -- Long Xuyen, a city in the southern Vietnamese province of An Giang -- to the rest of the world. He also uses it to set prices and help him broker trades between the Mekong and the global community of consumers.

An example of the types of messages Blaes types into his Blackberry is: "Color: premium white or light pink. 120 to 230 grams. Five to no more than 10 percent protective glaze." The world wants a fish that is as standardized as a meat patty in a fast food restaurant. This is Blaes's goal -- and, on some days, his problem.

A fish is not an uncomplicated creature. It lives in a body of water that sometimes receives a lot of rain, and sometimes almost no rain at all. Sometimes there is a lot of oxygen in the water, and sometimes not much. Sometimes the fish does well, and sometimes it doesn't.

Global appetite and declining fish populations have made Pangasius a farmed species. But, for centuries, it remained a wild fish that traveled upstream to search for food along the riverbed.

As the fish grew and became more powerful, it reached lengths of up to 1.5 meters (five feet) and weights of up to 45 kilograms (100 pounds). When it was 3 or 4-years-old, it would leave the river's main tributary. The females would deposit their egg sacks and the males their sperm on tree roots in remote, flooded fields. Then, the fish would return to the Mekong and drift back downriver from Cambodia to Vietnam's Mekong Delta. Each year, 20-30 million fish would migrate into the delta region, where they were greeted by fishermen standing ready on the banks to catch the fish with fishing rods, nets and baskets.

French biologists were first to think about bringing the Pangasius onto the world market. They wanted to find out whether the fish could be cultivated, which entailed raising, feeding and breeding it. They wanted to intervene in the slow-moving course of nature.

The biologists built wooden cages, dug deep ponds and developed two species of the fish exclusively for farming purposes. The first was the Basa.

But the scientists soon realized that the Basa grew too slowly. It took an entire year before it weighed the two kilograms (4.4 pounds) it needed to go on the market, and it was also too fatty.

The Crisis of Falling Fish Prices

The second species they developed was the Tra, which spent most of its time swimming along the bottom of the river. But the Tra was a fast grower and only needed six months to reach the right weight. What's more, it also had little fat, was not susceptible to very many diseases, had white meat and was robust. By feeding the fish a mixture of rice bran and insects, the scientists coaxed it to the surface. This was the beginning of modern aquaculture in Vietnam and a new age, one in which an edible fish, the Pangasius, was added to the country's existing exports of coffee, cacao, pepper and crude oil.

Most of the fish went to the United States, that is, until American corn farmers -- who had themselves started farming Pangasius in flooded fields -- began protesting that Vietnamese producers were dumping their fish onto the market. Then, five years ago, the Pangasius-farming industry in the US successfully lobbied for legislation that slapped a 650 percent duty on Pangasius from Vietnam.

This made the American corn farmers happy, but now the Vietnamese fishermen needed a new market for their fish. They eventually found it halfway around the world and began exporting most of their fish to Russia, Spain, the Netherlands, Germany and Poland. In 2001, Vietnam exported 300,000 tons of fillets. Seven years later, that number had jumped to 2.1 million tons.

'Constantly Going Uphill'

The Pangasius transformed the Mekong Delta into a proud region -- and made many fishermen rich. It became a source of affluence and attracted farmers, craftsmen and laborers to the region, including Ky Anh, a businessman. "In the past," he says, "things were constantly going uphill with the fish."

While men work nearby, sawing wood on a Sunday morning, Anh sits at a table with a calculator. A sign on the side of the driveway, which leads down to the bank of the Mekong, reads: "Sawmill, Buying and Selling, Round Logs as Construction Material."

Anh pushes up his visor and sets out a tray of red lemonade and ice. His wife is sitting on a bench, her lips painted a bright red. They own a big car and a big house. Anh can't say whether the wood or the fish has been more profitable. "At first," he says, "I just provided the fishermen with wood for cages. Then I started farming myself."

Houses on stilts stand above the water at the point where the edge of the sawmill reaches the riverbank. Beneath these houses are cages full of fish, which grow so quickly that they have to be removed from the enclosures after only eight weeks. At this point, they are six months old and weigh about one kilogram (2.2 pounds), which makes their filets the perfect size: between 120 and 230 grams (four-to-eight ounces).

If the fish are not removed from the cages at this point, they will continue to grow until they reach a size at which no one wants them anymore -- not the local factory and certainly not brokers like Blaes.

'The Crisis'

"We are hoping for a good price," says Ky Anh.

The price early last year was 12,000 dong (€0.50; $0.65) per kilogram. By June, the price had gone up to 14,000 dong, but it was still too low. And, in November, it fell to 13,000 dong. The only problem, Anh says, is that farming Pangasius costs him 15,000 dong a kilogram.

In the past, he says, he could sometimes get 17,000 dong or even 18,000 Dong a kilogram. That was when the fish was still a success story, "before the crisis," as Anh says.

If you ask Anh where the crisis comes from, he doesn't know -- at least not exactly. He shrugs his shoulders and speculates that the problem might have something to do with inflation or the financial crisis. But one thing he is sure of is that part of the problem can be attributed to the cost of feed.

In the past, when the fishermen sold their catch at the local market in Chau Doc, they knew what drove prices up and down. But now that they produce for the world market, things have become too complex. For instance, the exchange rate is unsteady, and the dong has lost value against the dollar.

In the evening, when darkness descends over the Mekong, Anh returns to his big house and sits down in front his computer to look up prices online. The price of soybeans, the main type of feed for the fish, is up. The beans -- which are produced in the United States, Brazil, Argentina and China -- are a rich source of protein. But that's not a problem exclusive to the Pangasius farmed in Vietnam -- it also applies to other animals around the world, including the cattle used to produce the meat that goes into hamburgers sold at fast food restaurants. Likewise, the fact that soybeans are also used to make biodiesel is also driving prices up.

Each fish has to be fed for four months, and feed makes up 3,000 dong of the total per-kilogram cost. When the fish are six-months-old, the farmers are suddenly faced with the need to get rid of them as quickly as possible -- and at any price.

The Farmers Respond

On Sundays, while Anh goes to work early, the other fish farmers attend a 5 a.m. mass at Pastor Khoa's church, a white building near the river. The men wear light-colored shirts, and the women colorful dresses. Together, they sing, pray and ask for favors under a banner that reads: "Dear God, please answer my prayers."

Anh goes to Pastor Khoa's white church, too, but he does it in the afternoon. There, he prays and asks God for favors. "If things remain this bad," says Anh, "I too will have to shut down my business."

And now that the price of Pangasius has dropped by 3,000 dong per fish, a third of the fishermen in the countryside have given up.

But Anh and 800 other fishermen have kept at it. To protect themselves against the vagaries of the world market, they formed the An Giang Fisheries Association, a professional association of fish farmers and factory owners. The association offered courses, such as "Techniques for Egg Incubation," "Standards and Norms," "Protection against Disease without Antibiotics." The members knew that there were problems a few years ago, and they wanted to make their Pangasius even better and more profitable.

But none of this did any good because higher feed costs forced the fishermen to cut their fish populations in half. Nowadays, the An Giang Fisheries Association is bracing itself against world markets in an effort to safeguard Pangasius revenues.

From Feast to Famine

Le Chi Binh is the chairman of the An Giang Fisheries Association. Today, he is sitting in his office several kilometers downriver from the factory where Ulf Blaes, the German businessman, is inspecting fillets. If the association's plan to safeguard revenues doesn't succeed, Binh says, the fish that brought prosperity to the delta could quickly turn into a big problem for Mekong fishermen.

Smoking a cigarette, Binh looks out the window at the river. "Now we are trying to prevent a situation in which there will soon not be enough fish," he says. In other words, where there was once a surplus, there might soon be a shortage.

First the fishermen could disappear, he says, followed by the factory owners and, finally, by the fish.

Can Pangasius Survive?

"We have asked for help," Binh adds, referring to the association's request for donations in the summer and the petition it submitted to the government. The association wants the government to reduce interest rates. However, since Vietnam is a member of the World Trade Organization (WTO), which prohibits subsidies, this might be a difficult proposition. It also wants the government to order the banks to approve new loans to factory owners and fish farmers that they can use to buy new fish stocks.

In fact, at the moment, sales are so poor that, if they don't get these loans, the farmers and factory owners cannot continue to operate. The government, says Binh, should set a minimum price for the fish, adding that the association has proposed 14,200 dong each. He also points out that, at this price, the fishermen would still be losing money -- but at least it would be a start.

The High Price of Cheap

In recent years, as profits rose, the fishermen built themselves big red-brick houses on Tan Loc Island. Those who couldn't afford to live on the island referred to it as "Trillion-Dong Village." Today, the fishermen have become targets of ridicule because many are now -- unsuccessfully -- trying to sell their houses.

Ironically, the Mekong fishermen who had started out breeding a good variety of fish for consumers around the world now find themselves in the middle of the real-estate crisis.

Binh, who is also a former district secretary for the Communist Party, longs for the security that socialist Vietnam once offered the fishermen in the form of fixed prices -- but without the poverty. And Blaes, the fish broker, wants to force prices down even further so that he can buy cheap, good fish for customers in Germany and take advantage of the market. In addition to being at opposite ends of the market for Pangasius, Blaes and Binh represent two different worldviews.

Blaes says that he pays the factory $3.30 (€2.58) a kilogram. He also pays the laboratories that test the fish, duties and sea freight, which together costs him another €0.25 ($0.20) per kilo. He pays a lot for the fish, says Blaes, so that the world can eat inexpensive fish.

Blaes has put away his Blackberry and is now walking along the worktables, watching the Vietnamese women cut the fish into bite-size pieces for Germany's fish eaters.

He watches the still-living fish drop onto a conveyor belt and then onto the first table, where workers slice first into the gills, then along the spine. A third slice produces one fillet, a fourth the second. Then he walks past long tables where the women are cleaning the fish, removing the skin, the fat and their innards. The fillets are then tossed into small baskets, sorted by size and quality, and screened for red spots and blood. After inspection, the fish pieces are frozen on giant trays at minus 22 degrees Celsius (minus 8 degrees Fahrenheit) -- fillets next to fillets, white on white -- and packed into cardboard boxes, which are taken to the refrigeration building where they are stacked in storage rooms.

"We are scheduled to deliver 25 containers to Bremerhaven at the middle of the month," says Blaes, adding that he sends 3,500 tons a year to Germany. "Pangasius is inexpensive, too inexpensive for air freight," he says.

"At the moment, there is still enough fish," says Binh.

Michael Schulz arrives in Ho Chi Minh City on the same day Blaes is flying back to Germany. He is standing in the lobby of his hotel, showered and ready to go. He is about to head out to the countryside where, as he says, he wants to put his ear to the rail.

Schulz is from the western German city of Dortmund, where he is the head of HMF Food Production, a negotiator for Aldi, the discount supermarket chain and king of cheap food products.

"You look to see what's happening on the world market, and that's how we discovered Pangasius," Schulz says quickly, almost stumbling over his words. "It's certainly an attractive fish, especially when it comes to retail pricing."

For a long time, Schulz says, the fish was not consistent enough for a German discounter. "We need a stabile product," he says, "and that also applies to price." In other words, his company is looking for a fish that looks and tastes the same -- and costs the same -- 365 days a year. "We have this type of product now, an honest product," he says, referring to Pangasius and the fact that it is raised in water with no additives. It has no agents that make it absorb more water. It's all natural. It meets Greenpeace standards. And it comes in 500-gram (a little more than one pound) bags. "It's a beautiful bag," says Schulz.

Aldi's Aldi-South division has already tested Pangasius in some of its stores, "and customers want it," says Schulz. The fish, he says, is now ready -- ready for discounters, for Aldi and for the world. In that world, the borders are no longer an issue; but protection has vanished, too.

There is no longer any protection for fishermen like Ky Anh, who used to get eight cents for 100 grams of Pangasius. Today he earns six cents per 100 grams, which isn't enough to make farming the fish worth his while. Six cents for 100 grams. This is too little to guarantee the survival of the Pangasius, a species once lauded as the fish of the future.

But this is only one way of looking at the world. Another view is part of Michael Schulz's calculations.

If all goes according to plan, in 2009, Aldi will begin selling 500-gram bags of Pangasius in all of its German stores. Each bag will contain three to five fillets, which, with a 5 percent water content, comes to 475 grams of fish. A bag will cost €3.49 ($4.47), says Schulz.

That comes to retail price of 74 cents per 100 grams, or 25 cents less than the price of Pangasius at Manuela Wendland's fresh food counter.

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