| Special to The Journal
Chris Brown captains the Proud Mary out of Point Judith and says that in a good year, he sells the squid he catches for $1.60 a pound.
This year, he’s getting 90 cents.
Brown and other commercial fishermen in Rhode Island say the impact of the coronavirus has reduced the demand for seafood and caused the cut in prices for their catch that has cost the industry tens of millions of dollars.
There was some recovery this summer, when people adapted to the virus and government restrictions were eased on travel, gatherings and business.
But this fall, Brown and others worry that the spike in coronavirus cases and the reimposition of government restrictions will deepen losses and permanently damage one of Rhode Island’s oldest industries.
“We expect we are going to have a very cold winter, financially,” Brown said.
The crisis resulted, in part, from the closure and cutback in hours at restaurants and bars that sell the fishermen’s catch, including squid that is served as calamari.
But there’s another, more complex reason. COVID-19 disrupted the local and out-of-state network of middlemen — processors, wholesalers, auction houses, distributors and others — who sell seafood here, across the country and around the world.
In normal years, Brown can sell all the squid he catches into the supply chain for processing and sale to domestic and overseas markets, including Europe and China. But COVID-19 knows no boundaries, and the virus is spreading globally again.
“The local restaurant trade is down,” Brown said, “The export market is down, too, because it has the same problems we do.
“It’s a double hit. We are taking a beating.”
Rhode Island’s fishing industry was expanding before the outbreak of the coronavirus in March and the government actions to stop the spread.
The last comprehensive study of the fishing and seafood sector by the nonprofit Commercial Fisheries Research Foundation, in 2018, showed that 428 companies in the industry generated 3,147 jobs and sales of $538 million. The spillover effect of suppliers and others who support the fishing industry increased total jobs to 4,381.
Tom Sproul, an economist and associate professor at the University of Rhode Island, helped conduct the count. He recently calculated, based on data of fish landings compiled by the National Marine Fisheries Service, that Rhode Island’s industry had been growing by 4.9% annually since 2016.
Seafood sales benefited during the last few years from increased consumer spending in an expanding economy and promotion by the industry and state government of the catch from one of Rhode Island’s greatest natural resources, the ocean.
Rhode Island’s reputation for fresh seafood grew. The state became known as “the squid capital of the world” after Cornell University researchers found more pounds of squid are brought to shore here than any other seafood. Also, Rhode Island accounts for 54% of all squid landings in the Northeast.
Then there was the calamari craze and state legislators declared it the state’s official appetizer. More recently, there’s been international attention from the plug at the Democratic National Convention that touted Rhode Island as the “Calamari Comeback State.”
The coronavirus, however, halted that momentum.
“There’s been a huge drop in seafood demand,” said Sproul. “Some species have been hit especially hard.”
High-value seafood, such as squid and fluke, have taken the biggest hits because they are ordered mostly at restaurants, and people don’t buy much squid to cook at home, said Brown.
He added that the schools of fish move further offshore in the winter. So it costs more in fuel and time to reach and catch the fish. There’s a tipping point where it costs more to bring in the fish than what it can be sold for, especially when the reduced demand has lowered the price.
“The revenue for the majority of the fleet is off 25 to 30%,” said Brown, who also heads the Rhode Island Commercial Fishermen’s Association.
The fishing industry and the prices for the catch have always fluctuated widely because of bad weather, changing consumer tastes, the abundance of the stock and where the fish are running.
The coronavirus added another level of uncertainty.
Almost all of the 54 restaurants on or near Federal Hill in Providence serve seafood, according to Rick Simone, executive director of the Federal Hill Commerce Association.
He said restaurant revenue is off an average of 35% this year because of government orders that first shut them down, then restricted hours.
He said Rhode Island’s latest restrictions, requiring end of service at 10 p.m. on weekdays and 10:30 p.m. on weekend, will reduce sales another 25 percent. That’s because it deters the second and third seatings of the night, when many diners spend their time and their money for a lengthy dining experience and socializing.
That cutback has reduced the restaurants’ purchase of seafood.
“There’s a trickle-down effect across the board to all suppliers,” Simone said.
The new restrictions also have disrupted future plans, such as trying to keep calamari in the spotlight by holding the first calamari festival on Federal Hill next August. The event could attract 15,000 people.
“Whether it goes forward depends on what happens next,” Simone said.
On Thursday, Gov. Gina Raimondo announced new, targeted restrictions to stop the spread of the virus and to avoid another lockdown.
She said the early closings of restaurants would be extended until Dec. 13. Also, for the two weeks from Nov. 30 to Dec. 13, indoor dining will be limited to 33 percent of capacity and only one household can be served per table. All bar areas in restaurants will be closed during that two weeks and drinks can only be delivered to tables where people are eating meals.
“I know this economy is hanging by a thread and I’ve tried to hold off as long as possible,” she said.
She said any continuation of restrictions after Dec. 13 will depend on an evaluation of whether the number of coronavirus cases continues to grow.
Also last week, Central Falls Mayor James Diossa ordered bars and restaurants in his city to operate as takeout only. Mayor Jorge Elorza reduced the limits on social gatherings of people to one household.
It’s not just fishermen
Besides commercial fishing, Rhode Island has developed other segments of the industry, including processors, wholesalers, dealers, importers, exporters, charters and bait-and-tackle shops.
Robert Ballou, assistant to the director of the Rhode Island Department of Environmental Management, regulates and studies the fishing industry. He said there have been some bright spots this year.
Party and charter boat fishing, he said, have expanded as people looked for activities to do outdoors with friends. Others rediscovered recreational fishing as a safe, enjoyable, outdoor sport.
Commercial fishing industry relies on a complex out-of-state network
But Ballou added, “The commercial sector has taken the brunt of the impact from the coronavirus and the crisis.”
He said a key reason is because the industry has grown dependent for orders on a complex out-of-state network of seafood purchasers and distributors.
“An immediate effect we saw at the onset of the crisis was the sudden breakdown of the seafood supply chain and markets,” he said.
For example, he said summer flounder, or fluke, is sold into markets in Boston, New York, and the mid-Atlantic region, including Philadelphia and Baltimore.
“Everything just collapsed,” he said.
Brown said the price of fluke can vary from $5 to $2 a pound, but fell as low as 50 cents a pound when the demand-and-supply chain broke down.
It was a similar story for squid. Because fishermen here catch much more squid then can be sold in the state, much of it is marketed to the rest of the country and overseas, especially to China.
“The resource is abundant and we can harvest it,” said Ballou. “But if the demand is not there, the industry is damaged.”
When the coronavirus struck globally, the overseas market was disrupted. The trade war with China also added retaliatory tariffs to exports from the U.S., reducing the margins from overseas sales.
“When you can sell fish to an overseas frozen market, you put pressure on local markets to raise prices to compete,” said Brown. “That stopped happening.”
At its Point Judith landing, Town Dock unloads, cuts, processes and packs fish caught by its own fleet and from independent fishermen. The 40-year-old company has grown into one of the largest squid suppliers in the United States and is a key player in overseas markets.
The privately held company does not release financial results.
But Kat Smith, senior manager of marketing and communications, said, “We felt the impact of restaurants closing down in the spring. We saw a good recovery over the summer, as restaurants were able to open and customers felt comfortable dining out, especially outdoors.”
The company expanded its retail presence in markets such as Whole Foods and Dave’s Fresh Marketplace, and increased social-media marketing to encourage people to prepare calamari at home.
The export markets also started to recover.
Lyndsay Owirka, export sales manager, said, “Many of our international customers import to sell into retail, and there is still a strong demand for seafood.”
But this fall, the resurgence of COVID-19 and government restrictions has left Smith with more questions than answers about the winter.
“Will we see a drop off in colder states with no outdoor dining?” she asked. “Or will customers decide to bundle up and head out? Will we see an increase in the South, as the heat breaks and some people who haven’t been comfortable eating indoors take it outside? Will we see states pushed back into stay-at-home orders?”
Ballou, the DEM official, has heard the worries in the industry.
“Commercial fishermen are expressing deep concerns that we may be circling back to another depressed market where they may not be able to sell at all, or if they can sell, at a price that doesn’t cover their costs,” he said.
Brown, the Proud Mary captain, also is not sure what the winter will bring.
He has been fishing for 41 years and said in times of trouble, commercial fishermen try to break even by putting off maintenance to their boats and equipment, petitioning regulators for a break in docking fees at state piers, and asking bankers to defer loan payments.
“We are an industry always pulling our belt in,” he said. “But you can only hold your breath so long.”
Despite the financial pressures, Brown said he’s certain the priority has to be beating the coronavirus first, then getting the business back in order.
He’s also sure that he will continue to fish this winter.
“People have to eat,” he said, “It’s certainly not a great year, but we are good Americans, trying to ride it out and do what we have to do.”
RI seafood industry, facing COVID-induced crisis, pleads for help
Seventy-four commercial fishermen, shellfish farmers and processors in Rhode Island have applied for federal grants after suffering about $20 million in losses this year after the outbreak of the coronavirus, according to the Rhode Island Department of Environmental Management.
The grants, administered by DEM, will be drawn from a pool of $3.3 million provided by the Coronavirus Aid, Relief and Economic Security (CARES) Act.
Applicants have to show a loss in revenue of at least 35 percent during March, April and May compared with the average for the same period during the prior five years. The application process is closed and grants will be awarded by year’s end.
“The grants fall short of making folks whole, but it will help,” said Robert Ballou, assistant to the director at the DEM.
The grants are among a series of federal and state relief efforts created to help the fishing industry weather the coronavirus pandemic. Other programs include:
* Fishermen for the first time are eligible for new unemployment benefits.
* The Payroll Protection Program was opened to fishermen to provide funds to keep their crews paid during the crisis.
* The DEM awarded about 150 new licenses to fishermen to sell directly to consumers, restaurants and retail markets.
* Some state regulations were relaxed on quotas and the length of fishing seasons.
* Quarterly docking fees were deferred at state piers in Galilee and Newport.
* The DEM and the Rhode Island Seafood Marketing Collaborative continue to promote fish and seafood caught in Rhode Island and last week announced a new feature on the SeafoodRI.com website that provides weekly updates of all seafood landings in the state. Consumers can find what’s available, where it can be purchased, how it’s harvested and how to cook it.
* Regulators and fishing industry representatives are working on the network of buyers and sellers to shorten the out-of-state supply chain that collapsed after the outbreak of the coronavirus and decreased orders and sales of locally caught fish.
John Kostrzewa, a former assistant managing editor/business at The Providence Journal, can be reached at [email protected]