What to Feed fighting fish?

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Although domestic production of farm-raised catfish has been falling for years, low demand this year has sent prices plummeting.
Credit
James Patterson for The New York Times

WASHINGTON — In the federal government’s efforts to help farmers and ranchers survive this year’s devastating drought, perhaps the most surprising step has been a dose of support for struggling producers of catfish.

It’s not that their ponds, shimmering across some of the poorest counties from Alabama to Arkansas, were drying up, although the catfish industry has been shriveling for 10 years.

Rather, catfish assistance came as part of a $170 million federal purchase of pork, chicken, lamb and fish announced in early August, all intended to prop up farmers hit by skyrocketing prices of feed like corn and soybeans.

That would be more catfish than the government bought all last year, and enough to put a significant dent in a glut of catfish that has left fish farmers squeezed this year between rising feed costs and falling prices for the fish.

Whether it is enough to head off the continuing collapse of the industry is another question, catfish specialists say.

A $10 million purchase, at recent prices paid by the government, would be more than three million pounds of frozen catfish.

“That’s not a lot, but it can’t help but help, ” said Craig Tucker, a catfish expert and former director of the Thad Cochran National Warmwater Aquaculture Center of Mississippi State University, in Stoneville.

The glut that has depressed fish prices built up suddenly this year, to the industry’s surprise, after a shortage last year after increasing numbers of farmers bailed out.

Inventories of frozen catfish doubled to about 10 million pounds from about 5 million in the last year, according to the government. In effect, the government will soak up most of that increase.

But nobody expects the federal purchases, equivalent to about one week’s national sales of processed catfish, to bring the price at the pond up to the break-even point or to affect the price of feed in any way, or to offset import competition, which was up 30 percent in June from a year earlier.

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The federal government is trying to help stabilize catfish prices.
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Dana Mixer/Bloomberg News

Domestic production of farm-raised catfish has been declining for years, and the trend has accelerated as feed prices and imports have risen. By various measures, the industry has shrunk by half since its peak a decade or so ago.

That caused a shortage last year of fully grown catfish for the companies that cut them up, process them for cooking and freeze them, eventually selling them through brokers to restaurants and supermarkets. The price of catfish, both at the farm and after processing, went up as a result, and the business was reasonably profitable last year.

As recently as the start of this year, Mr. Hanson predicted in an annual report that there would not be enough fish to supply processors in 2012 and 2013.

But instead, the supply has exceeded the demand. As the price of domestic catfish increased last year, customers substituted other fish like inexpensive tilapia, or imported catfish and similar species from countries like Vietnam and China.

These buyers, unlike the federal government, have not come back even though prices have fallen.

“What makes the situation so dire is that the processors are not getting these sales back, ” said Dr. Hanson. “And now, everyone is uncertain — if they grow fish, will there be anyone to sell them to?”

The prospect of continuing high feed prices is deeply worrying to farmers, who can easily spend roughly 75 cents on feed to produce each pound of fish in the two years it takes to raise a fingerling to fillet size. Today, they are getting about 85 cents a pound for grown fish, not enough to generate a profit. They sell on the spot market, not under production contracts.

The price of catfish feed drifted between about $200 and $300 a ton for 20 years before suddenly rising above $400 a ton in the last two years, and to nearly $600 this summer.

“It’s impossible to make even a napkin calculation showing that this is profitable, ” said Mr. Tucker.

In Arkansas, for example, farmers raised more than 75 million market-ready fish 10 years ago, weighing well over 100 million pounds; this summer there were barely 15 million food-size fish in ponds, with a live weight of 20 million pounds, according to a July census.

Many farmers, especially those in Mississippi and Arkansas, where ponds replaced marginal plantings of row crops decades ago, are tempted to simply drain the ponds and plant beans and corn — “to grow grain rather than feed grain, ” as Mr. Barlow of the catfish farmers’ group put it. Among other considerations, those crops qualify for federal insurance.

In Mississippi’s Delta region, the heart of the catfish belt, Mr. Tucker said, “You can drive down roads and see soybeans growing in what is obviously an old catfish pond.”