J. World Maricul. SOC. 15:391-397 (1984)

A COMPARISON O F MARKET CHANNELS FOR COMMERCIALLY-CAUGHT

CATFISH AND CULTURED CATFISH I N ALABAMA'S

LOWER TOMBIGBEE RIVER BASIN

Gregory Sullivan and David Hunt Department of Agricultural Economics

and Rural Sociology Auburn University Auburn, AL 36849

ABSTRACT

The domestic cultured catfish market, which in 1982 absorbed about one million liveweight pounds, evolved from a market originally supplied solely by wild catfish caught mainly by commercial fishermen on lakes and rivers of the southeastern United States. generated by the catfish processing industry largely omit wild catfish supplies, which have exceeded cultured supplies by as much as 100% as recently as 1976. Likewise, little is known about the marketing chan- nels through which wild and cultured catfish move to their respective retail users. Current marketing channels for wild-caught catfish were traced in a 1981 year-long survey of commercial fisheries along the lower Tombigbee River and the Mobile Delta. Those market channels for pond-cultured catfish were analyzed in a 1983 study of two major proces- sors in West Alabama.

Price and volume reports

Catfish supplied by the two sources, wild and cultured, were found to move to retail users along different, and almost mutually exclusive, marketing channels. Wild catfish caught by commercial fishermen in the lower Tombigbee River were sold largely through commercial sales (86%). The main market channel for these commercial sales of wild-caught fish was sales to private families (40%), according to fishermen responding. Cultured catfish were mainly sold by their producers to processors (ap- proximately loo%), who converted fish in the round into several types of products. These value-added products were then marketed mainly through wholesale channels to supermarkets (15%), wholesale distributors (67%), and hotels/restaurants/institutions (18%).

INTRODUCTION

The catfish industry in the Southeast has seen enormous growth over the last fifteen years. The domestic cultured catfish industry marketed close to one million liveweight pounds in 1982, and the amount increased to approximately 144 million pounds in 1983. tured catfish industry was stimulated by growth in a market once domi-

This growth in the cul-

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nated by wild catfish. As late as 1976, the National Marine Fisheries Service (NMFS) reported that the annual wild catfish catch exceeded the annual cultured fish harvest by approximately 12 million liveweight pounds (personal communication). Statistics on supplies of catfish from the wild are uncertain since 1976, but fishermen's responses during the 1982 survey indicate either constant or a downward trend in supplies. The supplies of imports, mainly from Brazil, peaked in 1978 at 18 mil- lion processed pounds and steadily declined to an estimated 4 million pounds in 1983. duction of cultured catfish. These trends reflect loss of market share to increasing supplies of higher quality domestic cultured catfish.

market structures for river-caught catfish and the cultured catfish. Differences in growth patterns of the respective industries give insight into the future direction of the catfish industry in Alabama. The meth- odology employed in the analysis could be useful in examining develop- ment of other fishing industries where similar competition might exist.

These factors have stimulated the recent growth in pro-

The objective of this paper is to contrast market development of

MATERIALS AND METHODS

Two field research projects were conducted to collect information on the marketing system for catfish in the study areas (Fig. 1). One project was conducted in 1982 as part of a U.S. Army Corps of Engineers grant to assess the economic impact of the Tennessee-Tombigbee waterway. The marketing channels for fish caught from the wild were described, and volumes of catch estimated for fish sold through the individual market channels (Malvestuto et al. 1982). Commercial fishermen fishing were interviewed in the study of the river area using two survey methods. State records on fishing licenses were obtained and a survey was mailed to 256 fishermen randomly selected from a total population of 1,336 license-holders from the counties in the study area. During the on- water survey to measure catch per unit of effort, fishermen were asked a series of questions about how they market their fish. In a final effort to gain information about the market channels for commercially-caught catfish, a telephone survey was conducted of wholesale and retail out- lets handling river-caught catfish.

Alabama funded a study in 1982-83 to determine the state-of-the-art in production and marketing of pond-raised catfish in West Alabama. Part of this study included interviews of management personnel at the two large processing plants in Hale County. market approximately 90% of all pond-raised catfish in the study area.

In the second project, the Soil and Water Conservation Committee in

These two plants process and

RESULTS

PRODUCPION AND COSTS FOR CATFISH The production of cultured catfish in the U.S. was approximately

3.2 million pounds in 1969 compared to 33.1 million pounds of wild cat- fish in the same year (USDC 1969-1980). In 1981, Alabama production of cultured catfish was 10 million pounds and far exceeded the production of wild-caught catfish (411,400 pounds) from the Lower Tombigbee river basin. The enormous growth in cultured catfish is evidence of the ca-

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pacity of producers to react quickly to economic incentives. The river as a source of commercial catfish is uncertain evidenced by the fact that the volume of catfish caught has stayed relatively constant or de- clined slightly. Variability in supplies of river-caught catfish is linked both to natural fluctuations in environmental conditions and to the environmental and economic impacts of human activities, such as the region's soon-to-be-completed Tennessee-Tombigbee Waterway.

Figure 1. Location of study area within the state of Alabama.

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Comparison of 1964 and 1981 da ta ind ica te declining average l ive- weight of river-caught c a t f i s h from an average of 1.2 kg t o .45 kg (Swingle e t a l . 1966; Malvestuto e t a l . 1982). The average weight of cultured c a t f i s h normally va r i e s between .34 kg and .68 kg liveweight. The average producer p r i ce i n 1981 f o r river-caught c a t f i s h was $1.98/kg which i s s ign i f i can t ly higher than cultured c a t f i s h a t $1.21/kg. This i s an unexpected finding and suggests t h a t t he two products do not com- pete i n the same market channels. Two reasons could explain the p r i c e differences. The cos t of supplying r i v e r c a t f i s h i s assumed t o be higher because of t h e higher cos t per u n i t of e f f o r t t o capture and process t h e f i sh . Also, t he narrow market f o r river-caught f i s h could mean t h a t consumers have a preference f o r t h i s product with not much p r i ce compe- t i t i o n from pond-raised ca t f i sh .

PRODUCT FORM FOR CATFISH

River-caught c a t f i s h were predominantly so ld as dressed (73%) with the next most important form of s a l e being whole f i s h (21%) (Table 1). Most river-caught c a t f i s h were marketed d i r e c t l y by fishermen, who a l so did t h e i r own processing. The information revea ls t h a t fishermen do very l i t t l e fur ther processing of t h e i r f i s h . This i s probably because of the lack of labor a s w e l l a s preferences of consumers.

Table 1. Product Form f o r Product Sold i n 1980-81 from t h e Lower Tom- bigbee River Basin, 1980-1981 ( i n percent)

~ ~

River Ponds caught Producer Processor Form

86 Dressed 1 3 -- Gutted 3 Whole 2 1 100 Whole/Drawn 3

12 F i l l e t -- -- Other a -- 2

-- -- --

-- --

aA very small number.

Source: Auburn University.

Pond-cultured c a t f i s h were so ld by producers d i r e c t l y t o processors

A t t he processing i n the Western Alabama study area (100%). I n f a c t , processors provided the harvesting serv ices t o c o l l e c t a producer's f i sh . l eve l , the major form of s a l e f o r c a t f i s h was dressed f i s h (86%) with t h e r e s t sold a s e i t h e r f i l l e t (12%) o r i n o ther forms ( 2 % ) . Not re- vealed from da ta i s t h e f a c t t h a t more fu r the r processing of f i s h i s occurring.

MARKET CHANNELS FOR CATFISH

River-caught c a t f i s h primarily move through commercial channels (86%); however, approximately 14% went d i r e c t l y t o e i t h e r home consump- t i on (10%) o r were given away ( 4 % ) . Cultured c a t f i s h were so ld almost exclusively through commercial s a l e s (100%) by processing p lan ts .

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Both personal and telephone interviews with commercial fishermen and wholesale/retail outlet managers indicate that river catfish are sold to private families ( 4 0 % ) , restaurants (24%) and groceries and supermarkets (24%) (Table 2 ) . Sales of catfish direct to families was the most difficult to trace relative to other market flows of river- caught catfish products.

Table 2. Commercial Sale Outlets for River-Caught Versus Pond-Cultured Catfish in the Lower Tombigbee River Basin, 1981 and 1983 (in percent

River Pond 1981 1981 1983

-- -- Processors 0 Restaurants/H.R.I. 24 15.5 17.5 Private families 4 0 -- Groceries/Supermarkets 24 15.0 15.0 Wholesalers/Distributors 8 69.5 67.5 Truck sales 4

Total 100 100 100

--

-- --

Source: Auburn University.

In the case of cultured catfish, it is much easier to determine market channels since all catfish are processed in commercial plants. Approximately 69% of catfish sales in 1981 were to wholesalers/distribu- tors with the rest almost evenly distributed between restaurants, gro- ceries or supermarkets. In 1983, the percentage of processors' sales to wholesalers and distributors declined slightly with corresponding in- crease in sales to restaurants.

POINT OF SALE OF CATFISH River-caught catfish was sold either from the fisherman's home

(27%) , at a business place (24%) or at both places (16%) (Table 3). The low level of investment in processing equipment and facilities by com- mercial fishermen contrasts sharply with that for cultured catfish, which are sold at the pond to the processor.

DISCUSSION

The amount of capital investment in the large commercial processing plants in Alabama influences the marketing channels for cultured cat- fish. Pond-raised catfish has become a high-value product with sales expanding into new regional markets such as the West and the Northeast. This expansion of markets, coupled with large capital-intensive invest- ment in plant and equipment, places pressure on regular supplies of mar- ketable catfish. highly dependent on these local processing plants as a market for their catfish. relationship borders on oligopsony.

Catfish producers in the West Alabama study area are

With only two major plants in the study area, the buyer-seller

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Table 3 . Place of Disposal of Catfish from Rivers Versus Ponds in the Lower Tombigbee River Basin, 1981 (in percent)

River Pond caught cultured

Home 27 -- Business place 24 Home of business 16

House to house 6 Other--river 17

-- -- -- Boat landing lo -- --

At the pond -- 100

Source: Auburn University.

In contrast, there is low investment in fishing gear and processing equipment for river-caught catfish. This low capital investment lends itself to ease of entry and exit into the captured catfish business. The resulting high turnover rate among commercial river fishermen is re- flected in the fragmented marketing system for river-caught catfish. The structure of market channels is not very developed. Each fisherman is responsible for many of the marketing functions. The higher producer price of river catfish could suggest that the productive efficiency of the river resource is lower than that of most commercial catfish ponds. Also, river-caught catfish are sold direct primarily to private families so that pond-raised catfish might not compete directly in this market.

The rapid development of the cultured catfish industry is driven by several growth pressures. Economic incentives exist which permit cul- tured catfish producers to make a fair return on their investment. Mar- ket channels are easily demarcated and have been expanding over time. Farmers have achieved greater control over management of the production system and the size of fish produced. This has occurred in response to types of products demanded by processors. These advancements have not occurred in the case of the river-caught catfish industry because of lack of fishermen's control over the river resource.

CONCLUSIONS

The wild catfish industry has been important to the local economy in the study area of the river basin. Most production is consumed in markets not far from the river. Perhaps because of this restricted mar- ket, the industry has remained small, consisting of private commercial fishermen fishing, processing and marketing their own fish. Future de- velopments in the industry, given the eventual opening of the Tennessee- Tombigbee Waterway, were too complex to be examined within the scope of this article. Nevertheless, this event, when it does occur, seem likely to confront the industry with a multiple-use conflict involving river resources.

In contrast, the cultured catfish industry in West Alabama has ex-

The resulting exponential growth in output has occurred simul- perienced dynamic growth that has responded to the increase in market demand.

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taneously with, and sometimes in excess of, the structured catfish mar- ket channels which have developed. Chief among these market channels are commercial outlets which operate through the use of wholesalers and distributors. Although the impact of the Tennessee-Tombigbee Waterway will not be as direct as on the river-caught catfish industry, multiple- use resource conflicts involving land and fresh water may develop in some areas. Nevertheless, future prospects appear bright for continued expansion of the industry in the West Alabama study area.

LITERATURE CITED

Malvestuto, S. P., G. M. Lucas, G. M. Sullivan, and W. D. Davies. 1982. Survey of the sport and commercial fisheries of the Lower Tombigbee River and Mobile River Delta. Job Completion Report, Contract No. DACW01-81-C-0047, U.S . Army Engineer District, Mobile. Mobile, Ala. 163 pp.

Sullivan, G. M., G. Barber, and D. S. Hunt. 1983. Product development and marketing trends in the catfish processing industry in the southeastern United States. Job Completion Report, Alabama Soil and Water Conservation Committee. Montgomery, Ala. 63 pp.

Swingle, W. E., S. L. Spencer, and M. T. Scott, Jr. 1966. Statistics on the sport fishery of the Mobile Delta during the period of July 1, 1963 to June 30, 1964. Proceedings Southeastern Association of Game and Fish Commissioners 19:439-446.

report. Little Rock, Ark. U.S. Department of Commerce. 1969-1980. Farm raised catfish processor's

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