News Alert: The Petitions for Countervailing Duties

On Friday, December 28, petitions for trade relief from subsidized shrimp imports from seven countries were filed with the U.S. government.  These petitions were filed by the Coalition of Gulf Shrimp Industries and seek countervailing duties to be imposed on shrimp imports from China, Ecuador, India, Indonesia, Malaysia, Thailand, and Vietnam, due to the alleged subsidization of shrimp exports by those countries.

Although the Southern Shrimp Alliance was not involved in the preparation of these cases, efforts to counteract unfair trade benefit the entire shrimp industry.  Because the petitions are of interest to many within the industry, some of the more frequent questions posed regarding the petitions are addressed below.

What is the Coalition of Gulf Shrimp Industries?

The Coalition of Gulf Shrimp Industries LLC is a Louisiana corporation registered with the state in August of 2012.  The registered agent for the corporation is Edward Hayes, identified by the Coalition’s web-site as legal counsel.  The only listed officer is Andrew Blanchard (manager), although the Coalition’s web-site notes that David Veal, the executive director of the American Shrimp Processors Association, is the executive director.

The petitions list 28 members of the Coalition of Gulf Shrimp Industries.

• Thirteen of these members list addresses in Louisiana:  (1) Bayou Shrimp Processors, Inc. (Delcambre); (2) Bluewater Shrimp Company, Inc. (Dulac); (3) Dean Blanchard Seafood, Inc. (Grand Isle); (4) Gulf Crown Seafood Co., Inc. (Delcambre); (5) Gulf Fish Inc. (Houma); (6) Gulf Island Shrimp and Seafood, LLC; (7) Hi-Seas of Dulac, Inc.; (8) Indian Ridge Shrimp Co. (Chauvin); (9) Lafitte Frozen Foods Corp. (Lafitte); (10) Paul Piazza & Sons, Inc. (New Orleans); (11) Tidelands Seafood Co., Inc. (Dulac); (12) Tommy’s Seafood (New Orleans); and (13) Vincent Piazza & Sons Seafood, Inc.

• Six list addresses in Mississippi:  (1) C.F. Gollott & Sons Seafood, Inc. (Biloxi); (2) Golden Gulf Coast Packing Co., Inc. (and Gollott’s Oil Dock & Ice House) (Biloxi); (3) Gulf Pride Enterprises, Inc. (Biloxi); (4) M&M Shrimp (Biloxi Freezing and Processing) (Biloxi); (5) Oceans Springs Seafood Market, Inc. (Ocean Springs); and (6) R.A. Lesso Brokerage Co., Inc. (Biloxi).

• Five list addresses in Alabama:  (1) Carson & Co., Inc. (Bon Secour); (2) Dominick’s Seafood (Bayou La Batre); (3) Graham Fisheries, Inc. (Bayou La Batre); (4) Graham Shrimp, Inc. (Bayou La Batre); and (5) Sea Pearl Seafood Co., Inc. (Bayou La Batre).

•  Two list addresses in Texas:  (1) Fisherman’s Reef Packing Plant (Beaumont); and (2) JBS Packing Co., Inc. (Port Arthur).

•  The remaining two list addresses in Florida – Wood’s Fisheries (Port St. Joe) – and Georgia – Smith and Sons Seafood (Darien).

Does the Coalition of Gulf Shrimp Industries represent both processors and shrimpers?

In contrast to the antidumping petitions filed by the domestic shrimp industry nine years ago, the Coalition of Gulf Shrimp Industries has submitted their petition on behalf of processors only.  In fact, the Coalition repeatedly states in its petitions that it is not seeking to have domestic shrimp fishermen included as part of the domestic industry.

•  At page I-5:  “The petitioner is not requesting that the Commission add fresh warmwater shrimp to the definition of the domestic like product in these petitions.

• At page I-34:  “As noted in section III.B, above, the petitioner is not requesting that the Commission include raw shrimp in the domestic like product and thus is not requesting that fishermen be included in the domestic industry.

The Coalition nevertheless argues that the unfair trade practices alleged are harming shrimpers:

• At page I-46:  “While the petitioner does not advocate including producers of raw shrimp (fishermen) in the domestic industry, publicly available data indicate that shrimp fishermen are also being adversely impacted by rising volumes of subject imports, price undercutting, and price suppression and depression.”

Do the members of the Coalition of Gulf Shrimp Industries account for over 90% of domestic shrimp production?

The petitions include claims that the 28 members of the Coalition of Gulf Shrimp Industries “account[] for 94% for domestic industry production” in 2011 (p. I-7).  Both on its promotional materials and in its press release, the Coalition claims to account for over 90% of U.S. production.

A review of the numbers relied upon by the Coalition indicates that the claim is significantly overstated.  In response to the 2003 antidumping duty petitions, the Department of Commerce found that according to statistics maintained by NOAA, 247,556,885 pounds of the “domestic like product” had been produced in 2002.  The current petitions argue that, again according to statistics maintained by NOAA, 192,696,582 pounds of the “domestic like product” were produced in 2011 – substantially less than the total produced in 2002.

The 2011 number provided in the petitions does not reconcile with NOAA’s reporting.  In the table below, the processing volumes reported for “shrimp headless,” “shrimp whole,” “shrimp peeled,” and “shrimp peeled and cooked” are provided in actual weight for 2009, 2010, and 2011.  These figures undercount the total amount of “domestic like product” produced as they do not include two other categories maintained by NOAA which are considered by the agency to be confidential (and, as such, not reported):  “shrimp cooked whole” and “shrimp cooked in sauce.”

Production volumes were down in 2010, but even during this depressed year the total volume of production of the “domestic like product” exceeded the figure used in the petitions.  Moreover, because of the need to express weight in similar terms, the actual product weight has to be converted to a headless, shell-on weight.  For whole warmwater shrimp, the conversion factor used by NOAA is 0.629.  In contrast, for peeled shrimp, the conversion factor used by NOAA is 1.28.  Applying these conversions to the totals above results in even higher volumes of domestic production.  For 2011, the converted total is similar to that reported by NOAA in 2002:

For 2003 through 2011, NOAA reports domestic shrimp processing production along a relatively consistent band.  Applying the same conversion factors listed above for every year of the nine years, NOAA’s shrimp processing figures averaged 246,158,127 pounds (HLSO equivalent) annually

The most striking difference in the NOAA data is the significant change in types of production between 2008 and 2009, where substantially more “shrimp whole” are reported.  From the data available, this appears to reflect an increase in the number of processors reporting whole shrimp production that participated in NOAA’s data-gathering efforts.

For the 2011 numbers, after deducting out shrimp presumed to be coldwater, the total production of the “domestic like product” in 2011 was 199,525,496 pounds.  In the petitions, the Coalition claims that its members produced 139,098,943 pounds of shrimp that same year, meaning that if that production figure is accurate, they were potentially responsible for 70% of domestic production in 2011 rather than 94%.

However, even an estimate based on accurate NOAA data appears to be substantially overstated.

NOAA maintains shrimp processing statistics based on the geographic location of the processor as well as by product.  Of the 28 COGSI members, four are from cities that are not included in NOAA’s shrimp processing data (Darien, GA; Ocean Springs, MS; Lake Charles, LA; and Grand Isle, LA).  Moreover, while two of COGSI’s members have addresses in New Orleans, Louisiana, NOAA’s shrimp processing data only includes one processor in the city.  Thus, it appears that the production of at least five of COGSI’s members is unlikely to be included in NOAA’s data.

In 2011, the four largest shrimp (including breaded, canned, and shrimp in meals) processing states were, in order, Louisiana (71,517,931 lbs.), Texas (71,294,001 lbs.), California (42,974,599 lbs.), and Florida (41,511,623 lbs.).  These four states accounted for 70% of the shrimp produced nationwide in 2011.  NOAA’s shrimp processing statistics from those four states are derived from 48 processors (LA = 19; TX = 9; CA = 9; and FL = 11).  The locations of the Coalition’s members suggest that the group would, at most, account for only 14 of those 48 processors.

The Coalition also does not fully cover all of the reporting processors in Mississippi or Alabama.  NOAA’s statistics incorporate eight processors in Mississippi, of which the Coalition could potentially include only five.  For Alabama, NOAA’s statistics incorporate eleven processors, of which the Coalition could potentially include only five.

In short, although the Coalition claims to account for over 90% of domestic industry production, a review of public data regarding shrimp processing in this country indicates that it is unlikely that such a claim is accurate.